STOCK PURCHASE AGREEMENT by and among PROJECT PLANNING, INCORPORATED, RICHARD BOWE, ITS SHAREHOLDER, and SM&A

EXHIBIT 99.2

by and among

PROJECT PLANNING, INCORPORATED,

▇▇▇▇▇▇▇ ▇▇▇▇, ITS SHAREHOLDER,

and

TABLE OF CONTENTS

		Page

ARTICLE 1	SALE AND TRANSFER OF SHARES; CLOSING	1
1.1	Shares	1
1.2	Purchase Price; Payments at Closing	1
1.3	Closing	2
1.4	Closing Deliveries	2
1.5	Determination of Purchase Price; Initial Adjustment	4
1.6	Closing Balance Sheet; Dispute Resolution; Purchase Price Adjustment	4
1.7	Earn-Out Consideration	6
1.8	Pledge of Shares	11
1.9	Withholding Rights	11
ARTICLE 2	REPRESENTATIONS AND WARRANTIES REGARDING THE SHAREHOLDER	11
2.1	Authority and Enforceability	11
2.2	No Violation of Law and Agreements	12
2.3	No Litigation or Regulatory Action	12
2.4	Ownership of Shares	12
2.5	Investment Intention	13
2.6	Legends	13
ARTICLE 3	REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY	13
3.1	Organization and Power	13
3.2	Authority and Enforceability	14
3.3	Conflicts	14
3.4	Capitalization	14
3.5	Financial Statements	15
3.6	No Undisclosed Liabilities	15
3.7	Operations Since Most Recent Balance Sheet Date	15
3.8	Taxes	17
3.9	Permits	20
3.10	Real Property	20
3.11	Intellectual Property	21

		Page

3.12	Compliance with Laws	24
3.13	Contracts	24
3.14	Status of Contracts; Government Contracts	26
3.15	Employee Benefits	26
3.16	Environmental Compliance	28
3.17	Employee Relations and Agreements	28
3.18	Litigation	29
3.19	Insurance	29
3.20	Customers	29
3.21	Accounts Receivable	30
3.22	Properties	30
3.23	Bank Accounts	30
3.24	Powers of Attorney; Guarantees	30
3.25	Related Party Transactions with Affiliates	30
3.26	No Brokers	31
3.27	Subsidiaries	31
3.28	Indebtedness	31
3.29	Certain Payments	31
3.30	Books and Records; Internal Controls	31
3.31	Disclosure	31
ARTICLE 4	REPRESENTATIONS AND WARRANTIES OF BUYER	32
4.1	Organization of Buyer	32
4.2	Authority of Buyer	32
4.3	No Violation of Law and Agreements	32
4.4	No Litigation or Regulatory Action	33
4.5	Investment Intention	33
4.6	No Other Representations	33
4.7	SEC Documents	34
4.8	No Material Adverse Change	35
4.9	No Brokers	35
ARTICLE 5	PRE-CLOSING COVENANTS	35

		Page

5.1	Buyer’s Due Diligence Investigation	35
5.2	Preparation of Financial Statements	35
5.3	Consents of Third Parties; Governmental Approvals	35
5.4	Operations Prior to the Closing Date	36
5.5	Access; Reasonable Efforts	36
5.6	Notification of Certain Matters	36
5.7	Exclusivity	36
ARTICLE 6	AGREEMENTS REGARDING EMPLOYEES	37
6.1	Continuation of Employment	37
6.2	Stock Options; Non-Compete Payments	37
6.3	No Third Party Beneficiaries	38
ARTICLE 7	ADDITIONAL AGREEMENTS	38
7.1	Tax Covenants	38
7.2	Tax Indemnification	40
7.3	Non-Competition	41
7.4	Confidentiality	43
7.5	Conduct of Business During Earn-Out Term	44
7.6	Sale or Transfer of Buyer Shares	45
7.7	Transaction Expenses	45
ARTICLE 8	CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDER	45
8.1	Representations and Warranties	45
8.2	Compliance with Covenants	45
8.3	No Injunction	45
8.4	Appointment of Officer	45
8.5	Employment Agreements	46
8.6	Option Pool	46
8.7	Other Buyer Deliveries	46
ARTICLE 9	CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER	46
9.1	Representations and Warranties	46
9.2	Compliance with Covenants	46

iii

		Page

9.3	Material Adverse Effect	46
9.4	No Injunction	46
9.5	Outstanding Bank Debt	46
9.6	Required Consents	47
9.7	Securities Matters	47
9.8	Secretary’s Certificate	47
9.9	Employment Agreements	47
9.10	Resignations and Releases from Directors and Officers	47
9.11	Corporate Minute Books and Stock Records	47
9.12	Change in Company Relationships	47
9.13	Cooperation in Audit	47
9.14	Other Shareholder Deliveries	48
ARTICLE 10	INDEMNIFICATION	48
10.1	Survival of Covenants, Representations and Warranties	48
10.2	Indemnification by the Shareholder	48
10.3	Indemnification by Buyer	49
10.4	Notice of Claims	49
10.5	Third Person Claims	50
10.6	Additional Provisions	51
10.7	Payment of Claims	52
10.8	Indemnity Payments as Adjustments to Purchase Price	52
ARTICLE 11	TERMINATION	52
11.1	Termination	52
11.2	Procedure and Effect of Termination	53
ARTICLE 12	GENERAL PROVISIONS	53
12.1	No Public Announcement	53
12.2	Notices	53
12.3	Successors and Assigns	55
12.4	Entire Agreement	55
12.5	Interpretation	55
12.6	Amendments and Waivers	56

		Page

12.7	Expenses	56
12.8	Partial Invalidity	56
12.9	Execution	56
12.10	Governing Law	57
12.11	References to U.S. Dollars	57
12.12	Further Assurances	57
12.13	Release	57
12.14	No Rescission	57
ARTICLE 13	DEFINITIONS	58
13.1	Definitions	58
13.2	Index of Defined Terms	64

EXECUTION COPY

SCHEDULES AND EXHIBITS

Schedule 1.5		Example Working Capital Calculation
Schedule 1.7(a)(ii)		Earn-Out Calculation Example
Schedule 2.2		Potential Conflicts - Shareholder
Schedule 3.1		Foreign Qualifications
Schedule 3.3		Potential Conflicts - Company
Schedule 3.4		Capitalization
Schedule 3.5		Financial Statements
Schedule 3.6		No Undisclosed Liabilities
Schedule 3.7		Operations Since the Most Recent Balance Sheet Date
Schedule 3.8(b)		Tax Reserves
Schedule 3.8(i)		Tax Elections
Schedule 3.8(w)		Nonqualified Deferred Compensation Plans
Schedule 3.10(b)		Real Property Agreements
Schedule 3.10(c)		Compliance with Real Property Agreements
Schedule 3.11(a)		Company Registered Intellectual Property
Schedule 3.11(b)		Exceptions to Title in Intellectual Property
Schedule 3.11(d)		Creation of Intellectual Property
Schedule 3.11(e)		Technology and Intellectual Property Rights
Schedule 3.11(h)		Intellectual Property Contracts
Schedule 3.11(i)		Form of Invention Assignment Agreements
Schedule 3.11(k)		Open Source Materials
Schedule 3.13		Contracts
Schedule 3.14		Status of Contracts
Schedule 3.15(a)		Benefit Plans
Schedule 3.15(b)		Defined Benefit Plans and Obligations
Schedule 3.15(h)		Classification of Personnel
Schedule 3.15(i)		Acceleration of Benefits
Schedule 3.15(j)		Taxable Interests in Nonqualified Deferred Compensation Plans
Schedule 3.17(a)		Employee Agreements
Schedule 3.17(c)		Employees
Schedule 3.18		Litigation
Schedule 3.19		Insurance Policies
Schedule 3.20		Material Customers
Schedule 3.23		Bank Accounts
Schedule 3.25		Related Party Transactions
Schedule 3.28		Indebtedness
Schedule 6.2(a)		Stock Options Vesting Terms
Schedule 6.2(c)		Allocation of Stock Options and Non-Compete Payments
Schedule 7.1(d)		Example Purchase Price Allocation
Schedule 8.5(1)		Form of Key Employee Agreement (Tier 1 Employees)
Schedule 8.5(2)		Form of Key Employee Agreement (Tier 2 Employees)
Schedule 9.6		Required Consents
Schedule 9.12		Changes in Company Relationships

Exhibit A:		Form of Employment Agreement with Shareholder

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of January [30], 2007, by and among (i) SM&A, a Delaware corporation (“Buyer”), (ii) Project Planning, Incorporated, a Massachusetts corporation (the “Company”), and (iii) ▇▇▇▇▇▇▇ ▇▇▇▇ (the “Shareholder”). Buyer, the Company, and the Shareholder are sometimes individually referred to as a “Party,” and collectively as the “Parties.”

RECITALS

A. The Shareholder owns all of the issued and outstanding shares of capital stock of the Company (the “Shares”).

B. The Shareholder desires to sell, and Buyer desires to purchase, all of the Shares for the consideration and on the terms set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and agreements herein contained, and intending to be legally bound hereby, the Parties agree as follows (Section 13.1 contains definitions of certain capitalized terms used in this Agreement, and Section 13.2 contains an index of other capitalized terms defined elsewhere in this Agreement):

ARTICLE 1

SALE AND TRANSFER OF SHARES; CLOSING

1.1 Shares. On the terms and subject to the conditions of this Agreement, at the Closing, the Shareholder will sell, transfer and deliver the Shares to Buyer, free and clear of any Encumbrances, and Buyer will purchase the Shares from the Shareholder.

1.2 Purchase Price; Payments at Closing.

(a) As full consideration for the transfer of the Shares, the Shareholder shall be entitled to receive, on the terms and conditions set forth in this Agreement, an aggregate amount equal to the sum of (i) Three Million Five Hundred Thousand Dollars ($3,500,000); (ii) minus the aggregate amount of Indebtedness of the Company outstanding on the Closing Date; (iii) plus or minus the Net Working Capital Adjustment, if any; (iv) plus three hundred and thirty-three thousand, three hundred and thirty-three (333,333) shares of common stock of Buyer (the “Buyer Shares”); (v) plus the Earn-Out Consideration, and subject to adjustment in accordance with Sections 1.5 and 1.6 (as so adjusted, the “Purchase Price”), payable as described below. The Earn-Out Consideration shall be earned, calculated and paid in accordance with Section 1.7.

(b) At the Closing, Buyer shall:

(i) pay and discharge the Indebtedness of the Company outstanding on the Closing Date by payment(s) to each creditor thereof of the amount set forth on the Closing Payment Certificate required to discharge in full the portion of the Indebtedness held by such creditor by wire transfer of immediately available funds to the bank account specified in the payoff letter provided by such creditor;

(ii) deliver to Buyer’s corporate secretary Shareholder certificates representing the Buyer Shares (to be held in accordance with Section 1.8 hereof); and

(iii) deliver to the Shareholder, in immediately available funds, an amount in cash equal to (A) Three Million Five Hundred Thousand Dollars ($3,500,000), (B) minus the Estimated Working Capital Deficiency if any, and (C) minus the aggregate amount of Indebtedness of the Company outstanding on the Closing Date (such cash, the “Closing Cash Payment”).

1.3 Closing. The closing of the transactions contemplated hereby (the “Closing”) will occur on February 9, 2007, at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other place and time as shall be agreed upon by Buyer and the Shareholder. The time and date on which the Closing is actually held is referred to herein as the “Closing Date.” The sale of the Shares contemplated by this Agreement shall be deemed to take place and to be effective at 11:59 p.m., Pacific time, on the Closing Date.

1.4 Closing Deliveries. At the Closing:

(a) the Shareholder will deliver to Buyer:

(i) certificates representing the Shares, duly endorsed (or accompanied by duly executed stock powers), for transfer to Buyer, free and clear of any Encumbrances;

(ii) a certificate certified by a duly authorized officer of the Company, setting forth the amount of Indebtedness owing by the Company as of the Closing Date, and the Persons to whom such amounts are to be paid at the Closing (the “Closing Payment Certificate”);

(iii) resignations from each director and officer of the Company then in office;

(iv) a copy of the Company’s articles of incorporation certified by the Secretary of State of the Commonwealth of Massachusetts within five (5) days prior to the Closing Date;

(v) a good standing certificate of the Company from the Secretary of State of the Commonwealth of Massachusetts, dated within five (5) days prior to the Closing Date;

(vi) a certificate of the secretary or an assistant secretary of the Company dated the Closing Date, in form and substance reasonably satisfactory to Buyer, as to (A) there being no amendments to the articles of incorporation of the Company since the date of the certificate referred to in Section 1.4(a)(v) above; (B) the bylaws of the Company; and (C) the resolutions of the board of directors and Shareholder (which are in full force and effect on the Closing Date) authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby;

(vii) a certificate of the Company, dated the Closing Date, executed by a duly-authorized officer of the Company, certifying the incumbency and genuineness of the signatures of each officer of the Company executing this Agreement and such other documents relating to the transactions contemplated by this Agreement;

(viii) all documents reasonably requested by the Buyer prior to the Closing Date in connection with the Section 338(h)(10) Election, including an Internal Revenue Service Form 8023 (and any forms or schedules similar to Form 8023 that are required to make the Section 338(h)(10) Election effective under provisions of applicable state or local law) executed by the Shareholder and each Person (other than the Buyer) required to execute such Form 8023 (or such other forms or schedules);

(ix) a properly executed statement dated as of the Closing Date, in a form reasonably acceptable to Buyer, that meets the requirements of Treasury Regulations Section 1.1445-2(b)(2); and

(x) such other documents as Buyer may reasonably request for the purpose of evidencing the satisfaction of any action to be taken on the Closing Date referred to in Article 8 or otherwise facilitating the consummation or performance of any of the transactions contemplated hereby;

(b) Buyer will deliver to each creditor to whom any Indebtedness is owing by the Company on the Closing Date, the payment in full of such Indebtedness in accordance with Section 1.2(b)(i);

(i) the Closing Cash Payment;

(ii) a certificate of Buyer, dated the Closing Date, executed by a duly-authorized officer of Buyer, certifying the incumbency and genuineness of the signatures of each officer of Buyer executing this Agreement and such other documents relating to the transactions contemplated by this Agreement;

(iii) such other documents as the Shareholder may reasonably request for the purpose of evidencing the satisfaction of any action to be taken on the Closing Date referred to in Article 8 or otherwise facilitating the consummation or performance of any of the transactions contemplated hereby; and

(d) Buyer will issue the Stock Options as set forth in Section 6.2.

1.5 Determination of Purchase Price; Initial Adjustment.

(a) On or before a date not less than five (5) Business Days prior to the Closing Date, the Company shall prepare and deliver to Buyer (i) an estimated balance sheet as of the close of business on the Closing Date (the “Estimated Closing Balance Sheet”) and (ii) a good faith estimate of the Working Capital as of the Closing Date (the “Estimated Closing Working Capital”), calculated in a manner consistent with Schedule 1.5. The Estimated Closing Balance Sheet will be prepared in accordance with GAAP, using the same accounting methods, policies, practices and procedures, with consistent classifications and estimation methodologies, as were used in the preparation of the Most Recent Financial Statements, to the extent applicable, and will not include any changes in assets or liabilities as a result of purchase accounting adjustments arising from or resulting as a consequence of the transactions contemplated hereby.

(b) On the Closing Date, if the Estimated Closing Working Capital is less than the Target Working Capital, the Buyer shall reduce the Purchase Price and the Closing Cash Payment by the dollar amount of the shortfall (the “Estimated Working Capital Deficiency”).

1.6 Closing Balance Sheet; Dispute Resolution; Purchase Price Adjustment.

(a) Within the sixty (60) day period following the Closing Date, Buyer shall prepare and deliver to the Shareholder a balance sheet of the Company as of the close of business on the Closing Date (the “Closing Balance Sheet”) and a working capital statement (the “Closing Working Capital Statement”) setting forth Buyer’s calculation of the Working Capital as of the close of business on the Closing Date (the “Closing Working Capital”). The Closing Balance Sheet and the Closing Working Capital Statement each will be prepared in accordance with GAAP, using the same accounting methods, policies, practices and procedures, with consistent classifications and estimation methodologies, as were used in the preparation of the Most Recent Financial Statements, to the extent applicable, and will not include any changes in assets or liabilities as a result of purchase accounting adjustments arising from or resulting as a consequence of the transactions contemplated hereby. In connection with the review of the Closing Balance Sheet, Buyer shall provide to the Shareholder reasonable access to all relevant books and records and personnel of the Company.

(b) If the Shareholder disagrees with the determination of the Closing Working Capital as shown on the Closing Working Capital Statement, the Shareholder shall notify the Buyer in writing of such disagreement within thirty (30) calendar days after delivery of the Closing Working Capital Statement to the Shareholder, which notice shall describe the nature of any such disagreement in reasonable detail, identify the specific items involved and the dollar amount of each such disagreement, and provide reasonable supporting documentation for each such disagreement. After the end of such thirty (30) calendar day period, neither Buyer nor the Shareholder may introduce additional disagreements with respect to any item in the Closing Working Capital Statement or increase the dollar amount of any disagreement, and any item not so identified shall be deemed to be agreed to by the Shareholder and will be final and binding upon the Parties except to the extent that corollary adjustments thereto are necessarily required as a result of resolution of the disputed items that were so identified.

(c) Buyer and the Shareholder shall negotiate in good faith to resolve any such disagreement. If Buyer and the Shareholder are unable to resolve all disagreements properly identified by the Shareholder pursuant to Section 1.6(b) within fifteen (15) calendar days after delivery to Buyer of written notice of such disagreements, then such disagreements shall be submitted for final and binding resolution to a Neutral Accounting Firm to resolve such disagreements (the “Accounting Arbitrator”). The Accounting Arbitrator shall be a Neutral Accounting Firm selected by mutual agreement of Buyer and the Shareholder; provided, that (i) if, within twenty (20) calendar days after the Shareholder has delivered its notice of disagreement to the Buyer pursuant to Section 1.6(b), the Parties are unable to agree on a Neutral Accounting Firm to act as Accounting Arbitrator, each Party shall select a Neutral Accounting Firm and such firms together shall select the Neutral Accounting Firm to act as the Accounting Arbitrator, and (ii) if any Party does not select a Neutral Accounting Firm within two (2) calendar days of written demand therefor by the other Party, the Neutral Accounting Firm selected by the other Party shall act as the Accounting Arbitrator. Each of Buyer and the Shareholder may present a supporting brief to the Accounting Arbitrator (in which case the presenting Party shall provide a copy thereof to the other Party) within ten (10) days following the appointment of the Accounting Arbitrator. Within ten (10) days of receipt of a supporting brief, the receiving Party may present a responsive brief to the Accounting Arbitrator (in which case it shall provide a copy thereof to the other Party). Each of Buyer and the Shareholder may make an oral presentation to the Accounting Arbitrator (in which case it shall provide prompt prior notice of such presentation to the other Party) within twenty (20) days of appointment of the Accounting Arbitrator. The Accounting Arbitrator will only consider such briefs and presentations and those items and amounts set forth in the Closing Working Capital Statement as to which Buyer and the Shareholder have disagreed within the time periods and on the terms specified in this Section 1.6 and shall not conduct an independent review. The Accounting Arbitrator shall deliver to Buyer and the Shareholder, as promptly as practicable and in any event within sixty (60) days after such Accounting Arbitrator’s appointment, a written report setting forth the resolution of any such disagreement determined in accordance with the terms of this Agreement. The Accounting Arbitrator shall make its determination based solely on presentations and supporting material provided by the Parties and not pursuant to any independent review. The determination of the Accounting Arbitrator shall be final and binding. The fees, expenses and costs of the Accounting Arbitrator shall be borne equally by Buyer and the Shareholder; provided that if the difference between the Accounting Arbitrator’s determination of the disputed items and the determination of the disputed items that would have resulted from the use of the proposed calculations of Buyer, on the one hand, and the Shareholder, on the other hand (the “Erroneous Party”), is more than twice as great as the difference between the Accounting Arbitrator’s determination of the disputed items and the determination of the disputed items that would have resulted from the use of the other Party’s proposed calculations, the Erroneous Party shall pay all fees and expenses of the Accounting Arbitrator.

(d) For the purposes of this Section 1.6, “Adjusted Target Working Capital” shall be the lesser of the Target Working Capital and the Estimated Closing Working Capital. If the Closing Working Capital as finally determined in accordance with this Section 1.6 is less than the Adjusted Target Working Capital, then, within fifteen (15) days following the final determination of the Closing Working Capital, the Shareholder shall pay to Buyer an amount in cash equal to such deficiency. If the Closing Working Capital as finally determined in accordance with this Section 1.6 is more than the Adjusted Target Working Capital, then, within fifteen (15) days following such final determination, Buyer shall pay to the Shareholder an amount in cash equal such excess.

1.7 Earn-Out Consideration. Certain capitalized terms used in this Section 1.7 are defined in Section 1.7(d) below.

(a) The Shareholder shall be entitled, subject to the terms and conditions hereof, to receive as additional cash consideration for the transfer of the Shares, additional cash payments (the “Earn-Out Consideration”) based on the Annual Revenue of the Buyer during each of the three consecutive twelve-month periods following the Closing Date (each, an “Earn-Out Period” and the entire period from the Closing Date to the end of the final Earn-Out Period, the “Earn-Out Term”), as follows:

(i) If the Annual Revenue for each of the first two Earn-Out Periods exceeds the Minimum Revenue for such Earn-Out Period, then (A) for the First Earn-Out Period, the Shareholder shall be entitled to be paid one dollar for each dollar of Annual Revenue achieved for such Earn-Out Period in excess of the Minimum Revenue for such Earn-Out Period up to Annual Revenue of seven million five hundred thousand dollars ($7,500,000) (i.e. such payment shall not exceed the Maximum Status Quo Payment for such Earn-Out Period), and (B) for the Second Earn-Out Period, the Shareholder shall be entitled to be paid the Maximum Status Quo Payment for such Earn-Out Period, in each case together with interest on such payment at the rate of five percent (5%) for the period from the Closing Date until such payment is made (such payments described in this Section 1.7(a)(i) collectively being the “Status Quo Payments” and each individually being a “Status Quo Payment”).

(ii) In addition to the foregoing, the Shareholder shall receive the Earn-Out Payment (as defined and calculated below) for each Earn-Out Period. In the event that the Percentage Growth Achieved for the Third Earn-Out Period is less than one hundred percent (100%), then the Unearned Earn-Out for the Third Earn-Out Period shall be forfeited, and Buyer shall have no further obligation to pay such amount to the Shareholder. Example calculations of the Earn-Out Payments for the three Earn-Out Periods are set forth on Schedule 1.7(a)(ii).

(b) Annual Revenue and the resulting Status Quo Payment (as applicable) and Earn-Out Payment for each Earn-Out Period shall be determined, and Status Quo Payments and Earn-Out Payments shall be paid, as follows:

(i) Within thirty (30) days following the end of each Earn-Out Period, Buyer will deliver to the Shareholder a statement in writing setting forth Buyer’s determination of the Annual Revenue for such Earn-Out Period, and a calculation of the resulting Status Quo Payment (as applicable) and Earn-Out Payment to be made by Buyer for such Earn-Out Period (each such statement, a “Buyer Earn-Out Statement”).

(ii) The Shareholder shall have a period of up to thirty (30) days following the Shareholder’s receipt of a Buyer Earn-Out Statement to review Buyer’s calculation of Annual Revenue and the resulting Status Quo Payment (as applicable) and Earn-Out Payment. In connection with the review of the Buyer Earn-Out Statement, Buyer shall provide to the Shareholder reasonable access to all relevant books and records and personnel of

the Company. If, as a result of such review, the Shareholder disagrees with Buyer’s calculations, the Shareholder shall deliver to Buyer a written notice of disagreement (a “Dispute Notice”) prior to the expiration of such thirty (30) day review period setting forth the basis for such dispute. Upon Buyer’s receipt of a Dispute Notice, Buyer and the Shareholder agree to negotiate in good faith to resolve the dispute set forth in the Dispute Notice. If Buyer and the Shareholder have not resolved the dispute within thirty (30) days following Buyer’s receipt of the Dispute Notice (or such longer period of time as Buyer and the Shareholder may mutually agree), then Buyer and the Shareholder agree to finally resolve such dispute in accordance with Section 1.7(b)(iii) below.

(iii) If Buyer and the Shareholder cannot reach agreement as described in Section 1.7(b)(ii) above, then the dispute shall be promptly referred to an Accounting Arbitrator, who shall be selected in accordance with the same process described in Section 1.6(c), for binding resolution. The Accounting Arbitrator shall determine the applicable Status Quo Payment (as applicable) and Earn-Out Payment owed at such time, in accordance with the provisions of this Agreement, as promptly as may be reasonably practicable and shall endeavor to complete such process within a period of no more than sixty (60) days. The determination of the Accounting Arbitrator, absent manifest error, shall be final and binding on Buyer and the Shareholder, effective as of the date the Accounting Arbitrator’s written opinion is received by Buyer and the Shareholder. Buyer and the Shareholder shall each pay their own respective costs and expenses in connection with the foregoing dispute resolution process, but Buyer and the Shareholder shall share equally the costs and expenses of the Accounting Arbitrator; provided that if there is an Erroneous Party as described in Section 1.6(c) with respect to the disputed items at issue, then the Erroneous Party shall pay all fees and expenses of the Accounting Arbitrator.

(iv) In the event that the parties agree (based on the calculations set forth in the Buyer Earn-Out Statement and the Dispute Notice for the First Earn-Out Period or the Second Earn-Out Period) that Buyer has achieved the Minimum Revenue for such Earn-Out Period, then Buyer shall pay to the Shareholder the relevant Status Quo Payment within ten (10) Business Days following the Shareholder’s delivery of the relevant Dispute Notice. Prior to the date that is the later of (A) ten (10) days following the final determination of the Status Quo Payment (as applicable) and Earn-Out Payment in accordance with this Section 1.7(b) (whether by failure of the Shareholder to deliver a Dispute Notice within the required time period, by agreement of the parties, or by receipt of an opinion of the Accounting Arbitrator), and (B) two (2) months following the end of the relevant Earn-Out Period, Buyer shall pay to the Shareholder an amount in cash equal to the Status Quo Payment (as applicable, and if not already paid pursuant to the first sentence of this Section 1.7(b)(iv)) plus the Earn-Out Payment, each as finally determined in accordance with this Section 1.7(b).

(c) The calculation of Earn-Out Consideration set forth above assumes that the Shareholder remains employed by the Company during the entire Earn-Out Term. Otherwise, the following adjustments shall be made to the calculation of Earn-Out Consideration:

(i) In the event that the Shareholder voluntarily terminates his employment with the Company or Buyer, or Shareholder is terminated for Cause (as defined in Shareholder’s employment agreement with the Company and Buyer), or in the event of the Shareholder’s death or disability, during any Earn-Out Period, then:

(A) the Shareholder shall not be entitled to any Earn-Out Payments for any subsequent Earn-Out Period; and

(B) the Earn-Out Payment for such Earn-Out Period shall be adjusted as follows: (1) Unearned Earn-Out for any previous Earn-Out Period shall not be included in the calculation of the Maximum Payment for such Earn-Out Period; (2) the Annual Revenue for such Earn-Out Period (the “Annualized Revenue”) shall equal (a) the Annual Revenue for such Earn-Out Period through the month during which the Shareholder’s employment is terminated as described above (such number of months, the “Elapsed Months”), divided by (b) the number of Elapsed Months, multiplied by (c) twelve (12); (3) the Percentage Growth Achieved for such Earn-Out Period shall be determined by replacing Annual Revenue in the definition of Actual Revenue Growth with Annualized Revenue; and (4) the Maximum Payment for such Earn-Out Period shall equal the Maximum Payment that would otherwise have been applicable, divided by twelve (12), and multiplied by the number of Elapsed Months.

(ii) In the event that the Shareholder is terminated by the Company or Buyer after the Closing without Cause or the Shareholder terminates his employment for Good Reason (as such terms are defined in Shareholder’s employment agreement with the Company and Buyer) during any Earn-Out Period, then the Shareholder shall be entitled to receive the Maximum Payment for such Earn-Out Period and any subsequent Earn-Out Period(s), provided that no Unearned Earn-Outs relating to any previous Earn-Out Period(s) shall be included in the calculation of such Maximum Payment(s).

(iii) In the event that the Shareholder’s employment by the Company or Buyer is terminated after the Closing before the expiration of the First Earn-Out Period and/or the Second Earn-Out Period for any reason, then the Shareholder shall still be entitled to receive the Status Quo Payment to which he would otherwise have been entitled (at the same time at which he would have otherwise been entitled to such payment, and not, for purposes of clarification, at the time of such termination) based on the Annual Revenue for the relevant time periods.

(d) For purposes of calculating the Earn-Out Consideration, and subject to the terms of Section 1.7(c), the following terms shall have the following meanings:

(i) “Actual Revenue Growth” means:

(A) for the First Earn-Out Period, Annual Revenue for such Earn-Out Period less Prior Year Revenue;

(B) for the Second Earn-Out Period, Annual Revenue for such Earn-Out Period, plus any Excess Revenue for the First Earn-Out Period, less Total First Period Revenue; and

(C) for the Third Earn-Out Period, Annual Revenue for such Earn-Out Period, plus any Excess Revenue for the Second Earn-Out Period (including any carryover of Excess Revenue from the First Earn-Out Period as a result of such excess being included in the Actual Revenue Growth for the Second Earn-Out Period), less Annual Revenue for the Second Earn-Out Period.

(ii) “Annual Revenue” means, for any Earn-Out Period, (A) the amount of revenue from the Business generated by personnel employed by the Company immediately prior to the Closing Date and personnel hired by Buyer after the Closing Date, whether or not designated as part of the PPI Division, but other than personnel hired by Buyer (or any Affiliate of Buyer) in connection with any acquisition of an existing business or company by Buyer after the Closing Date (it being understood that any such acquisitions would be grounds for the adjustment of Target Revenue Growth pursuant to Section 7.5 hereof), and (B) only with respect to the Second Earn-Out Period and the Third Earn-Out Period, plus Legacy Buyer Revenue for such periods, each as determined in accordance with GAAP and the dispute resolution procedure set forth in Section 1.7(b) above.

(iii) “Earn-Out Payment” means, for any Earn-Out Period, the Maximum Payment for such Earn-Out Period multiplied by the Percentage Growth Achieved for such Earn-Out Period.

(iv) “Excess Revenue” means, for any Earn-Out Period, the amount by which Actual Revenue Growth for that Earn-Out Period exceeds Target Revenue Growth for the Earn-Out Period, if any.

(v) “First Earn-Out Period” means the time period beginning on the Closing Date and ending on the date that is twelve months following the Closing Date.

(vi) “Legacy Buyer Revenue” means, for any Earn-Out Period, revenue generated from the Business during such Earn-Out Period from personnel that were employed by Buyer immediately prior to the Closing Date, whether or not designated as part of the PPI Division after the Closing Date.

(vii) “Maximum Payment” means:

(A) for the First Earn-Out Period, two million, three hundred thousand dollars ($2,300,000);

(B) for the Second Earn-Out Period, two million, one hundred thousand dollars ($2,100,000) plus the amount of any Unearned Earn-Out for the First Earn-Out Period; and

(C) for the Third Earn-Out Period, one million, six hundred thousand dollars ($1,600,000) plus the amount of any Unearned Earn-Out for the Second Earn-Out Period (including any carryover of Unearned Earn-Out from the First Earn-Out Period as a result of such Unearned Earn-Out being included in the Maximum Payment for the Second Earn-Out Period).

(viii) “Maximum Status Quo Payment” for each of the First Earn-Out Period and the Second Earn-Out Period means one million seven hundred and fifty thousand dollars ($1,750,000).

(ix) “Minimum Revenue” means (A) for the First Earn-Out Period, five million seven hundred and fifty thousand dollars ($5,750,000), and (B) for the Second Earn-Out Period, seven million five hundred thousand dollars ($7,500,000).

(x) “Percentage Growth Achieved” means, for any Earn-Out Period, the percentage obtained by dividing (A) the Actual Revenue Growth for such Earn-Out Period, by (B) the Target Revenue Growth for such Earn-Out Period, and then multiplying by one hundred (100); provided that Percentage Growth Achieved may not exceed one hundred percent (100%).

(xi) “PPI Division” means the division of Buyer that will be created after the Closing Date to conduct the business of the Company.

(xii) “Prior Year Revenue” means seven million, five hundred thousand dollars ($7,500,000).

(xiii) “Revenue Shortfall” means, for any Earn-Out Period, the amount by which Target Revenue Growth for that Earn-Out Period exceeds Actual Revenue Growth for that Earn-Out Period, if any.

(xiv) “Second Earn-Out Period” means the time period beginning on the first day following the expiration of the First Earn-Out Period and ending on the date that is twelve months thereafter.

(xv) “Target Revenue Growth” means:

(A) for the First Earn-Out Period, three million, seven hundred thousand dollars ($3,700,000);

(B) for the Second Earn-Out Period, three million, six hundred thousand dollars ($3,600,000) plus the amount of any Revenue Shortfall for the First Earn-Out Period; and

(C) for the Third Earn-Out Period, four million, five hundred thousand dollars ($4,500,000) plus the amount of any Revenue Shortfall for the Second Earn-Out Period (including any carryover of Revenue Shortfall from the First Earn-Out Period as a result of such Revenue Shortfall being included in the Target Revenue Growth for the Second Earn-Out Period).

(xvi) “Third Earn-Out Period” means the time period beginning on the first day following the expiration of the Second Earn-Out Period and ending on the date that is twelve months thereafter.

(xvii) “Total First Period Revenue” means the amount of Annual Revenue generated during the First Earn-Out Period plus the Legacy Buyer Revenue generated during the First Earn-Out Period.

(xviii) “Unearned Earn-Out” means, for any Earn-Out Period, the amount by which the Maximum Payment for such Earn-Out Period exceeded the Earn-Out Payment for such Earn-Out Period.

1.8 Pledge of Shares. The Shareholder hereby agrees that the Buyer Shares issued to the Shareholder pursuant hereto will be held by Buyer’s corporate secretary for a period of one (1) year following the Closing as security for the Shareholder’s payment of any indemnification obligations to Buyer hereunder, and in connection therewith the Shareholder hereby pledges the Buyer Shares to Buyer effective as of the Closing Date. Between the date hereof and the Closing Date, Buyer and the Shareholder will agree upon the form of agreements, documents or other information that Buyer may request be executed and delivered by the Shareholder at the Closing in order to evidence the pledge of Buyer Shares granted pursuant to this Section 1.8 and to permit Buyer to exercise its rights with respect to such Buyer Shares in the event that there is an indemnification claim hereunder.

1.9 Withholding Rights. Buyer shall be entitled to deduct and withhold (or cause to be deducted and withheld) from the amounts otherwise payable pursuant to this Agreement such amounts as are required to be deducted and withheld 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, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES REGARDING THE SHAREHOLDER

As an inducement to Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Shareholder represents and warrants to Buyer as set forth below.

2.1 Authority and Enforceability. The Shareholder has the legal capacity to execute, deliver and perform his obligations under this Agreement and each of the Transaction Documents to which the Shareholder is a party. The execution and delivery of this Agreement and the other Transaction Documents to which the Shareholder is a party, and the performance of his obligations hereunder and thereunder, have been duly authorized and approved by the Shareholder and do not require any further authorization or consent. This Agreement has been, and each such Transaction Document will be as of the Closing, duly authorized, executed and delivered by the Shareholder and (assuming the due authorization, execution and delivery by

Buyer and the Company), this Agreement constitutes, and each of the Transaction Documents to which the Shareholder is a party when executed and delivered will constitute, the legal, valid and binding agreement of the Shareholder, enforceable against the Shareholder in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws of general application relating to or affecting creditors’ rights and to general equity principles.

2.2 No Violation of Law and Agreements. Except as set forth on Schedule 2.2, the execution and delivery by the Shareholder of this Agreement and each of the Transaction Documents to which the Shareholder is a party, and the performance by the Shareholder of his obligations hereunder or thereunder, does not and will not:

(a) violate any Court Order or arbitration award that names the Shareholder, or violate any provision of applicable Law relating to the Shareholder; or

(b) require a registration, filing, application, notice, consent, approval, order, qualification, authorization, designation, declaration or waiver with, to or from any Governmental Authority or any other Person; or

(c) require a consent, approval or waiver from, or notice to, any party to any contract, agreement or commitment to which the Shareholder is a party; or

(d) result in a breach or creation of an Encumbrance upon the Shares; or

(e) constitute a default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under, or result in the acceleration of obligations, loss of benefit or increase in any liabilities or fees under, or create in any party the right to payment under or the right to terminate, cancel or modify, any contract, agreement or commitment to which the Shareholder is a party.

2.3 No Litigation or Regulatory Action. There is no Action pending or, to the Knowledge of the Shareholder, threatened, against the Shareholder or its Affiliates before any Governmental Authority that seeks to prevent, hinder, delay, enjoin or otherwise challenge the consummation of any of the transactions contemplated hereby. There is no Action pending or, to the Knowledge of the Shareholder, threatened, that questions the legality or propriety of the transactions contemplated by this Agreement. There are no outstanding Court Orders or arbitration awards against the Shareholder, the Shares, or any other of his assets or properties which would prohibit or enjoin the consummation of the transactions contemplated by this Agreement.

2.4 Ownership of Shares. The Shareholder is the owner, both beneficially and of record, of the Shares, free and clear of Encumbrances or any other restrictions on transfer (other than any restrictions under federal and state securities Laws). The Shareholder is not a party to any option, warrant, right, contract, call, put or other agreement or commitment providing for the disposition or acquisition of any Shares (other than this Agreement). The Shareholder is not a party to any voting trust, proxy or other agreement or understanding with respect to the voting of any Share.

2.5 Investment Intention. The Shareholder has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of acquiring the Buyer Shares. The Shareholder confirms that Buyer has made available to him the opportunity to ask questions of the officers and management of Buyer and to acquire additional information about the business, assets and financial condition of Buyer. The Shareholder will acquire his interest in Buyer for investment only, and not with a view toward or for sale in connection with any distribution thereof or with any present intention of distributing or selling any interest therein. The Shareholder understands that the transactions contemplated hereby have not been, and will not be registered or qualified under the Securities Act, nor any state or any other applicable securities Law, by reason of a specific exemption from the registration or qualification provisions of those Laws, based in part upon the Shareholder’s representations in this Agreement. The Shareholder understands that no part of the interest in Buyer which the Shareholder acquires may be resold unless such resale is registered under the Securities Act, and registered or qualified under applicable state securities Laws or an exemption from such registration and qualification is available. The Shareholder represents that he is familiar with Securities Act Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

2.6 Legends. The Shareholder understands that the certificates evidencing the Buyer Shares may bear one or more restrictive legends, including, without limitation, legends substantially as follows:

“These securities have not been registered under the Securities Act, or any state securities laws. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act and any applicable state securities laws or pursuant to an exemption under such laws, together with, in certain cases, an opinion of counsel satisfactory to the issuer that such registration is not required.”

“A portion of these securities may not be sold, offered for sale, pledged or hypothecated during the first six (6) month period following the lapse of any holding period imposed by the Securities Act or any state securities laws.”

ARTICLE 3

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

As an inducement to Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Company and the Shareholder hereby represent and warrant to Buyer as set forth below.

3.1 Organization and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of the Commonwealth of Massachusetts. Except as set forth in Schedule 3.1, the Company is licensed or qualified to conduct its business and is in good standing in every jurisdiction where it is required to be so licensed or qualified. Schedule 3.1 sets forth a true and complete list of all jurisdictions in which the Company is qualified or licensed to do business as a foreign corporation. The Company has all necessary corporate power and authority to own or lease the assets it purports to own or lease and to carry on its business in the manner currently conducted.

3.2 Authority and Enforceability. The Company has all requisite corporate power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement and each Transaction Document to which the Company is a party and to perform its obligations hereunder and thereunder. This Agreement has been, and each such Transaction Document will be as of the Closing, duly authorized, executed and delivered by the Company and has been duly approved by the Company’s board of directors and the Shareholder of the Company, and (assuming the due authorization, execution and delivery by Buyer and the Shareholder) this Agreement constitutes, and each Transaction Document when so executed and delivered will constitute, the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws of general application relating to or affecting creditors’ rights and to general equity principles.

3.3 Conflicts. The execution and delivery by the Company of this Agreement and each Transaction Document to which it is a party, and the performance by it of its obligations hereunder or thereunder, does not and will not:

(a) violate or conflict with any provision of the articles of incorporation or bylaws of the Company;

(b) (i) violate any provision of applicable Law relating to the Company, (ii) violate any provision of any Court Order or arbitration award to which the Company is subject, or (iii) except as set forth on Schedule 3.3, require a registration, filing, application, notice, consent, approval, order, qualification, authorization, designation, declaration or waiver with, to or from any Governmental Authority or any other Person; or

(c) except as set forth on Schedule 3.3, (i) require a consent, approval or waiver from, or notice to, any party to a Material Contract, or (ii) conflict with, result in a breach or creation of any Encumbrance, constitute a default (or an event which would, with the passage of time or the giving of notice or both, constitute a default) under, or give rise to a right of payment under or the right to terminate, amend, cancel, modify, abandon or accelerate any provision of any Material Contract to which the Company is a party.

3.4 Capitalization. The total authorized capital stock of the Company consists of twenty thousand (20,000) shares of Common Stock, no par value (the “Common Stock”), of which fifty-five (55) shares are issued and outstanding. All issued and outstanding shares of the Common Stock are validly issued, fully paid and nonassessable, were issued in compliance with all federal and state securities Laws and were not issued in violation of any preemptive rights, rights of first refusal or similar rights. Except as set forth on Schedule 3.4, no preemptive rights, rights of first refusal or similar rights exist with respect to any shares of capital stock of the Company and no such rights arise by virtue of or in connection with the transactions contemplated by this Agreement. There are no outstanding (i) securities convertible into or exchangeable for any capital stock of the Company; (ii) options, warrants or other rights to purchase or subscribe to capital stock of the Company or securities convertible into or exchangeable for capital stock of the Company; or (iii) contracts, commitments, agreements, understandings, arrangements, calls or claims of any kind relating to the issuance of any capital stock of the Company, any such convertible or exchangeable securities or any such options,

warrants or rights. There are no outstanding stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company; there are no proxies, voting rights or other agreements or understandings with respect to the voting or transfer of the capital stock of the Company; and the Company is not obligated to redeem or otherwise acquire any of its outstanding shares of capital stock. All of the issued and outstanding shares of Common Stock are held of record by the Shareholder.

3.5 Financial Statements. Attached as Schedule 3.5 are true and complete copies of the Company’s (i) unaudited balance sheet dated October 31, 2006, reviewed by independent accountants (the “Most Recent Balance Sheet Date”), and the related unaudited income statement for the ten (10) month period ended on the Most Recent Balance Sheet Date (together, the “Most Recent Financial Statements”); and (ii) unaudited balance sheet dated December 31, 2005 and the related income statementfor the fiscal year then ended (collectively, the “Year-End Financial Statements”, and together with the Most Recent Financial Statements, the “Financial Statements”). The Financial Statements present fairly the financial position of the Company as at and for the respective periods then ended, and have been prepared in accordance with GAAP except as set forth on Schedule 3.5.

3.6 No Undisclosed Liabilities. The Company does not have any liabilities, debts or obligations (whether absolute, accrued, contingent, matured, unmatured or otherwise) except for (a) liabilities disclosed, reflected or reserved against on the Most Recent Balance Sheet, (b) liabilities incurred since the Most Recent Balance Sheet Date in the ordinary course of business, (c) liabilities and obligations incurred in connection with this Agreement and the transactions contemplated hereby, (d) those liabilities set forth on Schedule 3.6, and (e) liabilities that would not, individually or in the aggregate, be material. To the extent that there is a representation or warranty in this Agreement that specifically addresses any particular type of liability, debt or obligation, the terms of such specific representation or warranty and any limitation regarding such representation or warranty (including but not limited to any Knowledge qualification) shall apply to such type of liability, debt or obligation and the representation contained in this Section 3.6 shall not apply.

3.7 Operations Since Most Recent Balance Sheet Date. Except as set forth on Schedule 3.7, since the Most Recent Balance Sheet Date, the Company has conducted its business in the ordinary course and there has not been a Material Adverse Effect. Except as set forth on Schedule 3.7, since the Most Recent Balance Sheet Date, the Company has not:

(i) mortgaged, pledged or otherwise encumbered any of its properties or assets or sold, assigned, leased (as lessor or lessee), licensed, transferred, abandoned or otherwise disposed of any of its properties or assets, tangible or intangible, with a book or fair market value of more than Fifty Thousand Dollars ($50,000), except for the sale of inventory in the ordinary course of business consistent with past practices;

(ii) acquired any assets with a value of more than Fifty Thousand Dollars ($50,000), or made or committed to make (individually or in a series of interdependent commitments) any capital expenditures in excess of Fifty Thousand Dollars ($50,000);

(iii) (A) made, granted or instituted any bonus, wage or salary increase or committed, orally or in writing, to any such increase to any director, officer, employee or group of employees (other than bonus, wage and salary increases in the ordinary course of business consistent with past practice), (B) made, granted or instituted any increase or committed, orally or in writing, to any such increase in any existing Benefit Plan, amended any of the Benefit Plans, or adopted any new additional pension, profit-sharing, deferred compensation, severance pay, retirement or other employee benefit plan or similar arrangement, (C) hired new employees other than in the ordinary course of business consistent with past practice, or (D) entered into any new employment, severance, consulting or other compensation agreement with any existing director, officer or employee;

(iv) suffered any damage, destruction, loss or casualty with respect to any property or any interruption in the use of its property (whether or not covered by insurance), or experienced any changes in the amount and scope of insurance coverage;

(v) created, incurred, assumed or guaranteed any Indebtedness;

(vi) set aside, paid or declared any dividends or made any other distributions on its equity securities of any class (whether in cash or in kind) or purchased, redeemed or otherwise acquired any of its equity securities of any class;

(vii) accelerated, terminated or made modifications to, or cancelled any Business Agreement;

(viii) made any capital investment in, or acquired any capital stock of or line of business or division of any Person;

(ix) transferred, assigned or granted any license or sublicense of any rights with respect to any Intellectual Property Rights of the Company;

(x) made or authorized any change in its articles of incorporation or bylaws;

(xi) issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;

(xii) entered into any transaction with any of its shareholders, directors, officers or employees (or any Affiliate of any thereof), other than related to written employment arrangements existing on the Most Recent Balance Sheet Date and disclosed on Schedule 3.17(a);

(xiii) made any loans or advances of money;

(xiv) changed its accounting methods or principles or practices, or reversed any accruals, other than as required by GAAP;

(xv) changed any of its practices or policies with respect to the collection of accounts receivable or the payment of accounts payable; or

(xvi) other than agreements with Buyer or its Affiliates relating to the transactions contemplated hereby, agreed or committed, whether orally or in writing, to do any of the foregoing.

3.8 Taxes.

(a) S Corporation. The Company has made a valid election pursuant to Section 1362 of the Code to be treated as an “S corporation” pursuant to Subchapter S of the Code commencing January 1, 1993, and the Company and the Shareholder have not since that date taken any position on any Tax Return or otherwise that is inconsistent with the Company’s status as an “S corporation”. The Company has been an “S corporation” within the meaning of Section 1361(a)(1) of the Code at all times since January 1, 1993. The Company will continue to qualify as an “S corporation” within the meaning of Section 1361(a)(1) of the Code up to the Closing. The Company has no potential liability for any Taxes under Section 1374 of the Code. The Company has not in the past ten (10) years acquired assets from another Person in a transaction in which the Company’s tax basis for the acquired assets was determined, in whole or in part, by reference to the tax basis for the acquired assets (or any other property) in the hands of the transferor.

(b) Filing of Tax Returns and Payment of Taxes. The Company has timely filed all Tax Returns required to be filed by it, each such Tax Return has been prepared in compliance with all applicable laws and regulations, and all such Tax Returns are true, accurate and complete in all respects. All Taxes that have become due and payable by the Company have been timely paid, and the Company is not and will not be liable for any additional Taxes in respect of any Taxable period or any portion thereof ending on or before the Most Recent Balance Sheet Date in an amount that exceeds the corresponding reserve therefor separately identified in Schedule 3.8(b), if any, as reflected in the Most Recent Financial Statements, and any Taxes of the Company arising after such date and at or before the Closing have been or will be incurred in the ordinary course of the Company’s business. The Company has delivered to the Buyer true, correct and complete copies of all Tax Returns filed by or with respect to it with respect to Taxable periods ended after December 31, 2001 (the “Delivered Tax Returns”), and has delivered or made available to the Buyer all relevant documents and information with respect thereto, including without limitation work papers, records, examination reports, and statements of deficiencies proposed, assessed against or agreed to by the Company.

(c) Deficiencies. No deficiency or adjustment in respect of Taxes has been proposed, asserted or assessed by any Tax authority against the Company. There are no outstanding refund claims with respect to any Tax or Tax Return of the Company.

(d) Liens. There are no liens for Taxes (other than current Taxes not yet due and payable) on any of the assets of the Company.

(e) Extensions to Statute of Limitations for Assessment of Taxes. The Company has not consented to extend the time in which any Tax may be assessed or collected by any Tax authority.

(f) Extensions of the Time for Filing Tax Returns. The Company has not requested or been granted an extension of the time for filing any Tax Return that has not yet been filed.

(g) Pending Proceedings. There is no action, suit, Tax authority proceeding, or audit with respect to any Tax now in progress, pending or, to the Knowledge of the Company, threatened against or with respect to the Company.

(h) No Failures to File Tax Returns. No claim has ever been made by a Tax authority in a jurisdiction where the Company does not pay Tax or file Tax Returns that the Company is or may be subject to Taxes assessed by such jurisdiction.

(i) Elections. All elections with respect to Taxes affecting the Company that were not made in the Delivered Tax Returns are described in Section 3.8(a) or in Schedule 3.8(i).

(j) Membership in Affiliated Groups, Liability for Taxes of Other Persons, Etc. The Company has never been a member of any affiliated group of corporations (as defined in Section 1504(a) of the Code) or filed or been included in a combined, consolidated or unitary Tax Return. The Company is neither a party to nor bound by any Tax sharing agreement or Tax allocation agreement. The Company is not presently liable, nor does the Company have any potential liability, for the Taxes of another Person (i) under Treasury Regulations Section 1.1502-6 (or comparable provision of state, local or foreign law), (ii) as transferee or successor, or (iii) by contract or indemnity or otherwise.

(k) Adjustments under Section 481, Etc. The Company will not be required, as a result of a change in method of accounting for any period ending on or before or including the Closing Date, to include any adjustment under Section 481(c) of the Code (or any similar or corresponding provision or requirement under any other Tax law) in Taxable income for any period ending after the Closing Date. The Company will not be required to include any item of income in Taxable income for any Taxable period (or portion thereof) ending after the Closing Date as a result of any (i) prepaid amount received on or prior to the Closing Date, or (ii) “closing agreement” described in Section 7121 of the Code (or any similar or corresponding provision of any other Tax law).

(l) Withholding Taxes. The Company has timely withheld and timely paid all Taxes which are required to have been withheld and paid by it in connection with amounts paid or owing to any employee, independent contractor, creditor or other Person.

(m) Permanent Establishments and Branches Outside the United States. The Company does not have a permanent establishment in any country with which the United States of America has a relevant Tax treaty, as defined in such relevant Tax treaty, and does not otherwise operate or conduct business through any branch in any country other than the United States.

(n) U.S. Real Property Holding Corporation. The Company is not and has not been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii).

(o) Safe Harbor Lease Property. None of the property owned or used by the Company is subject to a Tax benefit transfer lease executed in accordance with Section 168(f)(8) of the Internal Revenue Code of 1954, as amended by the Economic Recovery Tax Act of 1981.

(p) Tax-Exempt Use Property. None of the property owned by the Company is “tax-exempt use property” within the meaning of Section 168(h) of the Code.

(q) Security for Tax-Exempt Obligations. None of the assets of the Company directly or indirectly secures any indebtedness, the interest on which is tax-exempt under Section 103(a) of the Code, and the Company is not directly or indirectly an obligor or a guarantor with respect to any such indebtedness.

(r) Section 341(f) Consent. The Company has not filed any consent agreement under Section 341(f) of the Code (as in effect prior to its repeal by the Jobs and Growth Tax Relief Reconciliation Act of 2003) or agreed to have Section 341(f)(2) of the Code (as in effect prior to such repeal) apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code prior to such repeal) owned by the Company.

(s) Parachute Payments, Etc. The Company has not made any payments, is not obligated to make any payments, and is not a party to any agreement that under certain circumstances could obligate it to make any payments, that will not be deductible under Code Sections 162(m) or 280G.

(t) Rulings. There are no outstanding rulings of, or requests for rulings by, any Tax authority addressed to the Company that are, or if issued would be, binding on the Company.

(u) Divisive Transactions. The Company has never been either a “distributing corporation” or a “controlled corporation” in connection with a distribution of stock qualifying for tax-free treatment, in whole or in part, pursuant to Section 355 of the Code.

(v) Section 83(b) Elections. All Persons who have purchased shares of the Company’s stock that at the time of such purchase were and on the Closing Date will be subject to a substantial risk of forfeiture under Section 83 of the Code have timely filed elections under Section 83(b) of the Code and any analogous provisions of applicable state and local Tax laws.

(w) Nonqualified Deferred Compensation Plans. Each plan, program, arrangement or agreement maintained by the Company which constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code is identified as such on Schedule 3.8(w). Since December 31, 2004, each plan, program, arrangement or agreement there identified has been operated and maintained in accordance with a good faith, reasonable interpretation of Section 409A of the Code and its purpose, as determined under applicable guidance of the Department of Treasury and the Internal Revenue Service, with respect to amounts deferred (within the meaning of Section 409A of the Code) after December 31, 2004.

(x) The Company has not participated, within the meaning of Treasury Regulations Section 1.6011-4(c), in (i) any “reportable transaction” within the meaning of Section 6011 of the Code and the Treasury Regulations thereunder, (ii) any “confidential corporate tax shelter” within the meaning of Section 6111 of the Code and the Treasury Regulations thereunder, or (iii) any “potentially abusive tax shelter” within the meaning of Section 6112 of the Code and the Treasury Regulations thereunder.

For purposes of this Section 3.8 (other than Section 3.8(a)), references to the Company shall be deemed to include the Company and all of its Subsidiaries.

3.9 Permits. The Company holds all Permits that are necessary to entitle it to own or lease, operate and use its assets and to carry on and conduct its business as currently conducted.

3.10 Real Property.

(a) The Company does not own any real property.

(b) Schedule 3.10(b) contains a true and complete list of the following, and true and complete copies of the following, or access thereto, has been provided to Buyer prior to the date hereof:

(i) all leases, subleases, licenses or similar agreements (the “Leases”) of real property and interests in real property and the buildings, structures and improvements thereon pursuant to which the Company is the lessee, sublessee or licensee and which are for the use or occupancy of real property owned by a third party (each, a “Facility” and collectively, the “Facilities”), in each case, setting forth the street address or legal description of each Facility covered thereby;

(ii) all contracts or options (and all amendments, extensions and modifications thereto) held by the Company or contractual obligations (and all amendments, extensions and modifications thereto) on the part of the Company to purchase or acquire any interest in real property (the “Purchase Option Agreements”); and

(iii) all contracts or options (and all amendments, extensions and modifications thereto) granted by the Company or contractual obligations (and all amendments, extensions and modifications thereto) on the part of the Company to sell or dispose of any interest in real property (the “Sale Option Agreements”, and together with the Leases and the Purchase Option Agreements, the “Real Property Agreements”).

(c) The Real Property Agreements are in full force and effect and have not been amended except as disclosed on Schedule 3.10(c), and neither the Company, nor to the Knowledge of the Company, any other party thereto is in default or breach of any such Real Property Agreement. No event has occurred which with the passage of time or the giving of notice or both would cause a breach or default by the Company, or to the Knowledge of the Company, any other party to such Real Property Agreement, or permit the termination, modification or acceleration of rent or any other obligation thereunder. Except as disclosed on Schedule 3.10(c), the sale of the Shares contemplated by this Agreement does not require the

consent of any other party to any Real Property Agreement. Neither the Company nor any other party to any Real Property Agreement has repudiated any provision thereof. The Company does not intend, nor has it received written notice that any other party to any Real Property Agreement intends, to cancel, not renew or terminate such Real Property Agreement or to exercise or not exercise any option under such Real Property Agreement. There are no disputes, oral agreements or forbearance programs in effect as to any such Real Property Agreement and no such Real Property Agreement has been modified from the copy provided to Buyer. The Company has a valid leasehold interest in each of the Facilities pursuant to the Leases, which leasehold interests are free and clear of any Encumbrances.

(d) The Facilities, to the extent of Company’s interest therein, have received all required approvals of Governmental Authorities (including, without limitation, Permits and a certificate of occupancy or other similar certificate permitting Company’s lawful occupancy of the Facilities) required in connection with the operation thereof. The improvements constructed on the Facilities are (x) in good operating condition and repair, subject to ordinary wear and tear, and safe for their current occupancy and use, (y) sufficient for the operation of the business of the Company as presently conducted, and (z) in conformity in all respects with applicable Law.

(e) The Company has not received any written notice that it is in violation of any zoning, use, occupancy, building, wetlands or environmental regulation, ordinance or other Law relating to the Facilities, including, without limitation, the Americans With Disabilities Act and Environmental Laws. There are no pending or threatened condemnation proceedings, suits or administrative actions with respect to the Facilities relating to any such parcel or other matters adversely affecting the current use, occupancy or value thereof.

3.11 Intellectual Property.

(a) Schedule 3.11(a) lists all Company Registered Intellectual Property rights and lists any proceedings or actions before any court, tribunal (including the PTO or equivalent authority anywhere in the world) related to any of the Company Registered Intellectual Property Rights or Company Intellectual Property. Each item of Company Registered Intellectual Property Rights is currently in compliance with all formal legal requirements (including payment of filing, examination and maintenance fees and proofs of use) and is valid, subsisting and enforceable. The Company has no Knowledge of any facts or circumstances that would render any Company Intellectual Property invalid or unenforceable.

(b) Except as set forth in Schedule 3.11(b), the Company possesses all right, title and interest in and to each item of material Company Intellectual Property, free and clear of any Encumbrances. The Company owns exclusively, and has good title to, all Company Source Code and copyrighted works that are included or incorporated into or used to provide Company Products or which the Company otherwise purports to own.

(c) The Company has not transferred ownership of, or granted any exclusive license of or right to use, or authorized the retention of any exclusive rights to use or joint ownership of, any Technology or Intellectual Property Right that is or was material Company Intellectual Property, to any Person. The Company has not allowed the Company’s rights in any Technology or Intellectual Property Right that is or was material Company Intellectual Property to lapse or enter the public domain.

(d) Except as set forth in Schedule 3.11(d) and other than Open Source Materials and off-the-shelf software licensed by the Company from a third party that has not been customized for use by the Company, all material Technology and Intellectual Property Rights used in, necessary to, or which would be infringed by the conduct of business by the Company as presently conducted or currently contemplated to be conducted, were written, invented, developed and created solely by either (i) employees of the Company acting within the scope of their employment, or (ii) by third parties who have validly and irrevocably assigned all of their rights, including Intellectual Property Rights in any Technology, to the Company, and no third party owns or has any rights to any such Technology or Intellectual Property Rights. The Company holds, and at all times during the conduct of its business has held, a sufficient number of licenses to use any off-the-shelf software used by it in connection with the conduct of its business in order to permit it to use such software in the manner currently used without violation of any third party rights.

(e) Schedule 3.11(e) sets forth all material Technology and Intellectual Property Rights used in and/or necessary to the conduct of the business of the Company as it currently is conducted, and as it is currently planned or contemplated to be conducted by the Company. Other than Intellectual Property Contracts with respect to the Technology or Intellectual Property Rights of third Persons, the Company Intellectual Property constitutes all material Technology and Intellectual Property Rights used in and/or necessary to the conduct of the business of the Company as it currently is conducted.

(f) To the Knowledge of Shareholder, the operation of the business of the Company as it is currently conducted, or is contemplated to be conducted, does not and will not when conducted by Buyer in substantially the same manner following the Closing, infringe or misappropriate any Intellectual Property Right of any Person, and the Company has not received notice from any Person claiming that such operation or any act, product, technology or service of the Company infringes or misappropriates any Intellectual Property Right of any Person (nor does the Company have Knowledge of any basis therefor). To the Company’s Knowledge, no Person is infringing or misappropriating any Technology or Intellectual Property Rights used in the operation of the business of the Company as it is currently conducted, or is contemplated to be conducted.

(g) No Company Intellectual Property or Company Product is subject to any proceeding or outstanding Court Order or settlement agreement or stipulation that restricts in any manner the use, transfer, provision, sale or licensing thereof by the Company or may affect the validity, use or enforceability of such Company Intellectual Property or Company Products.

(h) Schedule 3.11(h) lists all material Intellectual Property Contracts. The Company is not in breach of, nor has the Company failed to perform under, any of the Intellectual Property Contracts and, to the Company’s Knowledge, no other party to any such Intellectual Property Contracts is in breach thereof or has failed to perform thereunder. All

material Intellectual Property Contracts will continue in force to the benefit of Buyer after consummation of the transaction contemplated herein without the need for approval by any Person. The consummation of the transactions contemplated in this Agreement will neither violate nor result in the breach, modification, termination or suspension of (or give the other party thereto the right to cause any of the foregoing) any of the material Intellectual Property Contracts and, following the Closing Date, Buyer will be permitted to exercise all of the Company’s rights and receive all of the Company’s benefits (including payments) under material Intellectual Property Contracts to the same extent the Company would have been able to had the transactions contemplated by this Agreement not occurred, and without the payment of any additional amounts or consideration other than the ongoing fees, royalties or other payments which the Company would otherwise have been required to pay to had the transactions contemplated by this Agreement not occurred. The Company has not received any notices from any parties to the material Intellectual Property Contracts of any intention to terminate or not renew any portion of such material Intellectual Property Contracts or to discontinue provision, development or support of any products or services provided thereunder. No Person who has licensed any Technology or Intellectual Property Rights to the Company has ownership rights or license rights to improvements or modifications made by the Company in or to such Technology or Intellectual Property Rights. No Person who has licensed any Technology or Intellectual Property Rights from the Company has ownership rights or license rights to improvements or modifications made by such Person in or to such Technology or Intellectual Property Rights.

(i) Except as set forth on Schedule 3.11(i), all current and former employees of the Company and independent contractors to the Company involved in the development of Technology or Intellectual Property Rights have signed the Company’s standard forms of agreements regarding invention assignment and confidentiality, which forms are attached hereto as Schedule 3.11(i) and all of which have been provided to Buyer, pursuant to which all Technology and Intellectual Property Rights developed by such employees within the scope of their employment and by such independent contractors within the scope of their contracting relationship with the Company are assigned to Company. No current or former employees or independent contractors have excluded any prior inventions from assignment to the Company in any such agreements.

(j) Neither this Agreement nor the transactions contemplated by this Agreement, by operation of law or otherwise, will result in (i) either Company or the Buyer granting to any third party any right to or with respect to any Technology or Intellectual Property Right owned by, or licensed to, either of them, (ii) either the Company or Buyer being bound by, or subject to, any non-compete or other restriction on the operation or scope of their respective businesses, or (iii) either the Company or Buyer being obligated to pay any royalties or other amounts to any third party in excess of those payable by Company or Buyer, respectively, prior to the Closing.

(k) Schedule 3.11(k) lists all Open Source Materials used by the Company in any way, and describes the manner in which such Open Source Materials were used (such description shall include, without limitation, whether (and, if so, how) the Open Source Materials were modified and/or distributed by the Company). Except as set forth in Schedule 3.11(k), the Company has not (i) incorporated Open Source Materials into, or combined Open Source Materials with, any Company Product or Company Intellectual Property or used Open

Source Materials to provide any Company Product; (ii) distributed Open Source Materials in conjunction with or for use with any Company Product or Company Intellectual Property; or (iii) used Open Source Materials that create, or purport to create, obligations for the Company with respect to Intellectual Property Rights or grant, or purport to grant, to any third party, any rights or immunities under Intellectual Property Rights (including, but not limited to, using any Open Source Materials that require, as a condition of use, modification and/or distribution of such Open Source Materials or that other Software incorporated into, derived from or distributed with such Open Source Materials be (x) disclosed or distributed in source code form, (y) be licensed for the purpose of making derivative works, or (z) be redistributable at no charge or with any restriction on the consideration charged therefor).

(l) All products sold, licensed, leased or delivered by the Company to customers and all services provided by or through the Company to customers on or prior to the Closing conform in all material respects to applicable contractual commitments, express and implied warranties, service level commitments, product specifications and product documentation and to any representations made to customers. The Company has no liability (and, to the Knowledge of the Company, there is no legitimate basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand against the Company giving rise to any material liability relating to the foregoing contracts) for replacement, repair or redelivery thereof or other damages in connection therewith in excess of any reserves therefor reflected on the Financial Statements.

(m) No (i) government funding; (ii) facilities of a university, college, other educational institution or research center; or (iii) funding from any Person (other than funds received in consideration for Company capital stock) was used in the development of the Technology and Intellectual Property Rights owned by the Company.

3.12 Compliance with Laws. The Company is in compliance in all material respects with all applicable Laws. The Company has not received any notice to the effect that it is not, and the Company has not received notice that any Action has been filed or commenced against the Company alleging that it is not, in compliance in any respect with any Law.

3.13 Contracts. Schedule 3.13 lists all Material Contracts, whether written or oral, that are legally enforceable by or against the Company, to which the Company is a party or by which the Company or any of its assets or properties may be bound, and specifically includes:

(a) Contracts between the Company and any current or former officer, director, consultant, independent contractor or employee thereof, any partnership, corporation, joint venture or any other entity in which any such Person has an interest or any third party agency supplying the services of any consultants, employees (including temporary employees or “leased” employees) or independent contractors to the Company (including any non-competition, confidentiality, trade secret or similar agreement);

(b) notes, mortgages, indentures and other agreements and instruments under which the Company has created, incurred, assumed or guaranteed any Indebtedness or under which the Company has imposed an Encumbrance on any of its assets, tangible or intangible;

(d) personal property leases to which the Company is a party involving total future payments in excess of Fifteen Thousand Dollars ($15,000);

(e) Contracts to which the Company is a party containing covenants of the Company not to compete in a line of business or with a Person;

(f) Contracts for the purchase of supplies or services and involving any future expenditures of more than $5,000 by the Company;

(g) Contracts for the sale or lease of the Company’s products or the furnishing of the Company’s services;

(h) warranties relating to the Company’s products or the furnishing of the Company’s services not on the Company’s standard forms;

(i) sales agency, sales representative, broker, distributor, employment agency or similar contracts to which the Company is a party relating to the sale or lease of the Company’s products or the furnishing of the Company’s services or involving another Person’s products or services;

(j) Contracts involving the Company pursuant to which a party other than the Company has a right to renegotiate or require a reduction in price or refund or rebate of payments made to the Company or which provide for any rebates, marketing allowances or cooperative payments, including contracts containing volume discounts or favorable early payment terms;

(k) Contracts involving the Company providing for payment by the Company of liquidated damages or penalties in excess of Twenty-five Thousand Dollars ($25,000) in the event of breach;

(l) letters of credit, performance or payment bonds, or guarantees of performance, or contracts or commitments involving the Company to provide same;

(m) license or franchise agreements involving the Company not listed on Schedule 3.11(d);

(n) Contracts involving the Company with respect to the acquisition or sale of the business, assets or shares of any corporation, partnership or other business entity regardless of whether the transaction has been consummated to which the Company was a party in the past five (5) years or which contain obligations currently binding on the Company;

(o) other contracts involving an estimated total future payment or payments or liability, individually or, with respect to a group of related written contracts with a single third party, taken as a whole, in excess of Fifty Thousand Dollars ($50,000) to or by the Company that may not be canceled by the Company upon thirty (30) or fewer days notice without any liability;

(p) Contracts or other agreements under which the Company agrees to indemnify any party with respect to, or to share, Tax liability of any party;

(q) agreements with any labor union or association representing any employee; and

(r) any contracts with Governmental Authorities and subcontracts (at any tier) under prime contracts with Governmental Authorities (“Government Contracts”).

3.14 Status of Contracts; Government Contracts.

(a) Each of the Contracts listed on Schedule 3.13 and the other Contracts listed on any of the other Schedules in Article 3 hereto, other than Schedules 3.11(d), 3.15(a) and 3.19, as to which the relevant representations and warranties in those sections should apply (collectively, the “Business Agreements”), is legal, valid, binding and enforceable, in accordance with its terms (except to the extent such enforceability is limited by general equitable principles or by applicable bankruptcy, insolvency, moratorium or similar Laws which affect creditors generally), and is in full force and effect. The Company has either delivered to Buyer or has given Buyer access to copies of the Business Agreements. The Company is not, and to the Company’s Knowledge, no other party thereto is, in breach or default under any of the Business Agreements, nor does there exist any event that, with the passage of time or the giving of notice or both, would constitute a breach of or default under any of the Business Agreements. The Company has performed all obligations required to be performed by it to date under each such Business Agreement. Except as set forth on Schedule 3.14, no approval or consent of any Person is needed in order that the Business Agreements continue in full force and effect following the consummation of the transaction contemplated by this Agreement and the Transaction Documents, and no Business Agreement includes any provision the effect of which may be to enlarge or accelerate any obligation of the Company thereunder or give additional rights to any other party thereto or will in any other way be affected by, or terminate or lapse by reason of, the transactions contemplated by this Agreement and the Transaction Documents. The Company does not intend, nor has it received notice, nor is it otherwise aware, that any other party to any Business Agreement intends, to change, cancel, not renew or terminate such Business Agreement.

(b) The Company is not a party to any Government Contract, nor is it required by any customer to maintain books and records in accordance with regulations governing Government Contracts.

3.15 Employee Benefits.

(a) The term “Employee Benefit Plan” includes any pension plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder (“ERISA”)) (“Pension Plan”), welfare plan (as defined in Section 3(1) of ERISA) (“Welfare Plan”), or any deferred compensation, stock option, bonus, incentive, vacation pay, tuition reimbursement, severance pay, or other benefit plan, program or arrangement, whether any of the foregoing is funded, insured or self-funded,

written or oral. The term “Benefit Plan” means any Employee Benefit Plan sponsored or maintained by the Company or in respect of which the Company or any ERISA Affiliate has any outstanding liability for the benefit of active or former employees, directors or consultants (or their beneficiaries) of the Company or an ERISA Affiliate. Schedule 3.15(a) contains a true and complete list of all Benefit Plans, true and correct copies of which have been previously made available to Buyer.

(b) Except as disclosed on Schedule 3.15(b), neither the Company nor any ERISA Affiliate maintains, sponsors, contributes to, has any obligation to contribute to, or has any current or potential liability or obligation under or with respect to any Employee Benefit Plan that is a “defined benefit plan” (as defined in Section 3(35) of ERISA) or otherwise has any current or potential liability or obligation under Title IV of ERISA, including with respect to any Employee Benefit Plan that is a “multiemployer plan” (as defined in Section 3(37) of ERISA). No Benefit Plan is a multiple employer welfare arrangement (within the meaning of Section 3(40) of ERISA). The term “ERISA Affiliate” means any entity or trade or business (whether or not incorporated), other than the Company, that together with the Company is treated as a single employer under Sections 414(b), (c) or (m) of the Code.

(c) With respect to each Benefit Plan intended to qualify under Section 401(a) of the Code, each such Benefit Plan has either received a determination letter from the Internal Revenue Service (the “IRS”) stating that such plan is so qualified, or is relying on an opinion letter issued with respect to the prototype plan document upon which such plan is based. No facts or circumstances exist that could adversely affect the qualified status of any such Benefit Plan. All such Benefit Plans have been timely amended for the requirements of the legislation known as “GUST” and, to the extent required under guidance issued by the IRS, “EGTRRA.”

(d) Each Benefit Plan (and each related trust, insurance contract, or fund) has been operated and administered in all respects in compliance with its terms and all applicable Laws, including ERISA and the Code, as applicable. All required reports and descriptions with respect to each Benefit Plan (including Form 5500 annual reports, summary annual reports, and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the Code.

(e) Except as would not reasonably be expected to result in liability to the Company, all contributions, distributions and premium payments that are due with respect to any Benefit Plan have been made and all contributions, distributions and premium payments with respect to any Benefit Plan for any period ending on or before the Closing Date that are not yet due have been made or properly accrued.

(f) Neither the Company nor any other “disqualified person” or “party in interest” (as defined in Section 4975 of the Code and Section 3(14) of ERISA, respectively) with respect to any Benefit Plan has engaged in any nonexempt “prohibited transaction,” as such term is defined in Section 406 of ERISA or Section 4975 of the Code, with respect to any Benefit Plan giving rise to any liability to the Company. The Company has not been notified that any Benefit Plan or any trust which serves as a funding medium for any such Benefit Plan is currently under examination by the IRS, the Department of Labor, or any court, other than

applications for determinations pending with the IRS. Except as would not reasonably be expected to result in liability to the Company, neither the Company nor any other fiduciary (as defined in Section 3(21) of ERISA) of any Benefit Plan, has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any Benefit Plan. No Action with respect to any Benefit Plan (other than routine claims for benefits) is pending or, to the Knowledge of the Company, threatened.

(g) Neither the Company nor any ERISA Affiliate maintains, sponsors, contributes to or has an obligation to contribute to, or has any current or potential liability or obligation with respect to, any Welfare Plan or similar benefit plan, program or arrangement that provides for retiree medical or other retiree welfare benefits for current or future retired or terminated directors, officers, employees or contractors (or any dependent or beneficiary thereof), other than in accordance with the continuation coverage requirements of Section 4980 of the Code and Title I, Subtitle B, Part 6 of ERISA (“COBRA”). The Company and each ERISA Affiliate has complied and is in compliance in all respects with the requirements of COBRA.

(h) Except as set forth in Schedule 3.15(h), the Company has correctly classified those individuals performing services for the Company as common law employees, leased employees, independent contractors or agents.

(i) Except as set forth on Schedule 3.15(i), the execution of this Agreement and the consummation of the transactions contemplated herein will not, by itself or in combination with any other event, result in any payment (whether of severance pay or otherwise) becoming due from or under any Benefit Plan to any current or former director, officer, consultant or employee of the Company or result in the vesting, acceleration of payment or increases in the amount of any benefit payable to or in respect of any such current or former director, officer, consultant or employee.

(j) Other than as set forth on Schedule 3.15(j), the Company has not (i) granted to any Person an interest in a nonqualified deferred compensation plan (as defined in Section 409A(d)(1) of the Code) which interest has been or, upon the lapse of a substantial risk of forfeiture with respect to such interest, will be subject to the Tax imposed by Section 409A(a)(1)(B) or (b)(4)(A) of the Code, or (ii) modified the terms of any nonqualified deferred compensation plan in a manner that could cause an interest previously granted under such plan to become subject to the Tax imposed by Section 409A(a)(1)(B) or (b)(4) of the Code.

3.16 Environmental Compliance. The Company is not in violation of, and has no liability under, any Environmental Laws.

3.17 Employee Relations and Agreements.

(a) Schedule 3.17(a) contains a complete and accurate list of (i) all employment agreements to which the Company is a party as of the date of this Agreement, other than employment agreements terminable by either party at-will and without any severance obligation on the part of the Company, (ii) all other agreements that entitle any employee to compensation or other consideration as a result of the acquisition by any Person of control of the

Company, and (iii) each employee, manager, consultant, independent contractor and director of the Company whose annual compensation exceeds Fifty Thousand Dollars ($50,000), together with the base salary paid to such Person for the fiscal year ended December 31, 2005, the rate, character and amount of such Person’s current annual salary for the fiscal year ending December 31, 2006, and the current position of each such Person.

(b) The Company is not a party to or bound by any collective bargaining agreement or other labor contract. The Company is not subject to any (i) unfair labor practice complaint pending before the National Labor Relations Board, (ii) pending or, to the Knowledge of the Company, threatened, labor strike, slowdown, work stoppage, lockout, or other organized labor disturbance, (iii) pending grievance proceeding, (iv) pending representation question, or (v) attempt by any union to represent employees as a collective bargaining agent.

(c) Schedule 3.17(c) contains a complete and accurate list of all Persons employed by the Company as of the Closing Date.

3.18 Litigation. Except as set forth on Schedule 3.18, there is no Action in law or in equity before any Governmental Authority or arbitrator pending against the Company or, to the Knowledge of the Company, threatened against the Company or any of the Company’s officers, directors or Affiliates, with respect to or affecting the Company’s operations, business or assets, or that questions the validity of this Agreement or seeks to prohibit, enjoin or otherwise challenge the consummation of the transactions contemplated hereby. Neither the Company nor its assets is subject to or bound by any outstanding Court Order, injunction, judgment, order, decree, ruling or charge against the Company, nor is the Company, to the Knowledge of the Company, threatened to be made a party to any such Court Order, injunction, judgment, order, decree, ruling or charge.

3.19 Insurance. All policies or binders of fire, liability, product liability, workers’ compensation, vehicular and other insurance and bond and surety arrangements (the “Insurance Policies”) held by or on behalf of the Company which names the Company as the policy holder or named insured are listed and described on Schedule 3.19. All premiums on all such policies have been paid to date and the Company has complied with all conditions of such policies applicable to it. Schedule 3.19 sets forth, with respect to each Insurance Policy, the name of the insurer, the name of the policyholder, the policy number and the period of coverage. Correct and complete copies of all Insurance Policies have been delivered to and/or made available to Buyer.

3.20 Customers. Schedule 3.20 sets forth a complete and accurate list of the ten (10) largest customers of the Company based on net revenues for the fiscal year ended December 31, 2005 and for the ten (10) month period ended October 31, 2006 (the “Material Customers”), and the percentage of overall net revenues of the Company attributable to each such Material Customer during such year or period. Since December 31, 2005, except as set forth on Schedule 3.20: (i) no Material Customer has cancelled or otherwise terminated or intends to cancel or otherwise terminate its business relationship with the Company, (ii) there has not been any adverse change in the business relationship, and there has been no dispute, between the Company and any Material Customer, (iii) no Material Customer has reduced or, to the Knowledge of the Company, intends to reduce, its business with the Company, and (iv) no Material Customer is the subject of any bankruptcy proceeding.

3.21 Accounts Receivable. All of the accounts receivable owing to the Company, reflected on the balance sheet included in the Year-End Financial Statements, and all of the accounts receivable owing to the Company arising subsequent to the date of the Year-End Financial Statements, in each case constitute valid and enforceable claims arising from bona fide transactions for goods sold to, or services performed for, Persons who are not Affiliates of the Company or any Shareholder in the ordinary course of business. No account debtor has refused or threatened to refuse to pay its obligations for any reason, including by reason of set-off or counterclaim and no account debtor is insolvent or bankrupt.

3.22 Properties.

(a) The Company has legal, good and marketable title to or the right to use all of the properties and assets it purports to own or lease used in the business of the Company, whether real, personal, tangible or intangible, including all those assets and properties reflected on the balance sheet included in the Year-End Financial Statements (except as since sold or disposed of in the ordinary course of business) free and clear of all Encumbrances.

(b) All items of machinery, equipment, and other tangible assets of the Company are in operational condition, normal wear and tear excepted, have been regularly and properly serviced and maintained in a manner that would not void or limit the coverage of any warranty thereon, and are adequate and fit to be used for the purposes for which they are currently used in the manner they are currently used.

3.23 Bank Accounts. Schedule 3.23 sets forth the names and locations of all banks, trust companies, savings and loan associations and other financial institutions at which the Company maintains accounts of any nature, the account numbers of all such accounts and the names of all Persons authorized to draw thereon or make withdrawals therefrom.

3.24 Powers of Attorney; Guarantees. The Company does not have an obligation to act under any outstanding power of attorney and there are no outstanding powers of attorney executed on behalf of the Company. The Company does not have any obligation or liability, either accrued, accruing or contingent, as guarantor, surety, co-▇▇▇▇▇▇, endorser, co-maker or indemnitor in respect of the obligation of any Person.

3.25 Related Party Transactions with Affiliates. Schedule 3.25 sets forth a list of all existing business relationships (other than employment) between the Company, on the one hand, and the Shareholder, any Affiliate of the Shareholder, any officer or director thereof, any other Affiliate of the Company, or any officer or director of the Company, on the other hand, including any direct or indirect ownership interest (other than ownership of less than one percent (1%) of the publicly traded shares of any Person) in any customer, supplier or competitor of the Company or in any Person from whom or to whom the Company leases real or personal property. Except as set forth on Schedule 3.25, neither the Shareholder, nor any Affiliate of the Shareholder, any officer or director thereof, any other Affiliate of the Company or any officer or director of the Company, is a party to any contract or transaction with the Company or has an

interest in any property used by the Company. No such Person is engaged in competition with the Company with respect to any line of the products or services of the Company in any market presently served by the Company. The Company is not indebted or otherwise obligated to any such Person, except for amounts due under normal arrangements applicable to all employees generally as to salary or reimbursement of ordinary business expenses not unusual in amount or significance or with respect to salary advances to employees.

3.26 No Brokers. Except for Minuteman Ventures, the fees and expenses of which shall be paid by the Shareholder, neither the Company nor the Shareholder nor any Person acting on behalf of the Company or the Shareholder, has any liability or obligation to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement.

3.27 Subsidiaries. The Company does not own, directly or indirectly, any outstanding voting securities or shares, debentures or other securities of or other interests of any nature whatsoever in, nor does it control, any other corporation, partnership, joint venture or other entity.

3.28 Indebtedness. Except as disclosed on Schedule 3.28, the Company has no outstanding Indebtedness and is not an obligor with respect to any bankers acceptance or letter of credit.

3.29 Certain Payments. Neither the Company, nor any director, officer, agent, or employee of the company, or any other Person associated with or acting for or on behalf of the Company, has directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any Affiliate of the Company, or (iv) in violation of any Law, or (b) established or maintained any fund or asset that has not been recorded in the books and records of the Company.

3.30 Books and Records; Internal Controls. The books of account and other financial records of the Company, all of which have been made available to Buyer, are complete and correct and represent actual, bona fide transactions and have been maintained in accordance with sound business practices and the requirements of Section 13(b)(2) of the Exchange Act (regardless of whether the Company is subject to that Section or not), including the maintenance of an adequate system of internal controls. The minute books of the Company, all of which have been made available to Buyer, contain accurate and complete records of all meetings held of, and corporate action taken by, the shareholders, the board of directors and committees of the board of directors of the Company, and no meeting of any such shareholders, board of directors or committee has been held for which minutes have not been prepared or are not contained in such minute books.

3.31 Disclosure. To the Knowledge of the Company, no representation or warranty of the Company or the Shareholder in this Agreement and no statement in the schedules attached hereto omits to state a material fact necessary to make the statements herein or therein,

in light of the circumstances in which they were made, not misleading. No notice given pursuant to Section 5.6 will contain any untrue statement or omit to state a material fact necessary to make the statements therein or in this Agreement, in light of the circumstances in which they were made, not misleading.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

As an inducement to the Company and the Shareholder to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer hereby represents and warrants to the Company and the Shareholder as follows:

4.1 Organization of Buyer. Buyer is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware. Buyer has all necessary corporate power and corporate authority to own or lease its assets and to carry on its business as currently conducted.

4.2 Authority of Buyer. Buyer has the corporate power and corporate authority to execute and deliver this Agreement and each of the Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder. This Agreement has been, and each such Transaction Document will be as of the Closing, executed and delivered by Buyer, duly authorized and approved by its board of directors and do not require any further authorization or consent of its shareholders, and (assuming the valid authorization, execution and delivery of this Agreement by the Company and the Shareholder) this Agreement constitutes, and each Transaction Document when so executed and delivered will constitute, the legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar Laws of general application relating to or affecting creditors’ rights and to general equity principles. The Buyer Shares, when issued, delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer referenced in this Agreement and under applicable state and federal securities laws. Assuming the accuracy of the representations of the Shareholder in Section 2 of this Agreement, the Buyer Shares will be issued in compliance with all applicable federal and state securities laws.

4.3 No Violation of Law and Agreements. The execution and delivery by Buyer of this Agreement and each Transaction Document to which Buyer is a party, and the performance by Buyer of its obligations hereunder or thereunder, does not and will not:

(a) violate or conflict with any provision of the certificate of incorporation or bylaws of Buyer;

(b) (i) violate any provision of applicable Law relating to Buyer, (ii) violate any provision of any Court Order or arbitration award to which Buyer is subject, or (iii) require a registration, filing, application, notice, consent, approval, order, qualification, authorization, designation, declaration or waiver with, to or from any Governmental Authority or any other Person; or

(c) (i) require a consent, approval or waiver from, or notice to, any party to any contract, agreement or commitment to which Buyer is a party, or (ii) conflict with, result in a breach or creation of any Encumbrance, constitute a default (or an event which would with the passage of time or the giving of notice or both, constitute a default) under, or give rise to a right of payment under or the right to terminate, amend, cancel, modify, abandon or accelerate any provision of any contract, agreement or commitment to which Buyer is a party.

4.4 No Litigation or Regulatory Action. There is no Action pending or, to the knowledge of Buyer, threatened, against Buyer which would reasonably be expected to prevent, hinder or delay the consummation of any of the transactions contemplated hereby. There is no Action pending or, to the knowledge of Buyer, threatened, that questions the legality or propriety of the transactions contemplated by this Agreement.

4.5 Investment Intention. Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of acquiring the Shares. Buyer confirms that the Company has made available to Buyer the opportunity to ask questions of the officers and management of the Company and to acquire additional information about the business, assets and financial condition of the Company. Buyer will acquire its interest in the Company for investment only, and not with a view toward or for sale in connection with any distribution thereof or with any present intention of distributing or selling any interest therein. Buyer understands that the transactions contemplated hereby have not been, and will not be registered or qualified under the Securities Act of 1933, as amended, nor any state or any other applicable securities Law, by reason of a specific exemption from the registration or qualification provisions of those Laws, based in part upon Buyer’s representations in this Agreement. Buyer understands that no part of the interest in the Company which Buyer acquires may be resold unless such resale is registered under the Securities Act of 1933, as amended, and registered or qualified under applicable state securities Laws or an exemption from such registration and qualification is available.

4.6 No Other Representations.

(a) Buyer acknowledges that, except for the representations and warranties of Company and the Shareholder contained in this Agreement, the Disclosure Schedules hereto or in any other Transaction Document or schedules thereto, (i) none of the Shareholder or Company or any of its directors, officers, employees, Affiliates, controlling persons, agents, advisors or representatives, makes or shall be deemed to have made any representation or warranty, either express or implied, and (ii) none of the Shareholder or Company or any of its directors, officers, employees, Affiliates, controlling persons, agents, advisors or representatives, makes, or shall be deemed to have made, any representation or warranty, express or implied, as to the accuracy or completeness of any of the information or documents, financial or otherwise (including, without limitation, any estimates, projections, forecasts, budgets or other forward-looking information) provided or otherwise made available to Buyer or any of its directors, officers, employees, Affiliates, controlling persons, agents, advisors or representatives (including, without limitation, in any management presentations, information or offering memorandum, supplemental information or other materials or information with respect to any of the above). With respect to any such estimate, projection, budget or forecast delivered by or on behalf of Company or any Shareholder to Buyer, Buyer acknowledges that

(i) there are uncertainties inherent in attempting to make such estimates, projections, budgets and forecasts, (ii) Buyer is aware that actual results may differ materially and (iii) Buyer shall have no claim against Company or Shareholder with respect to any such estimate, projection, budget or forecast; provided, that such estimate, projection, budget or forecast was prepared and furnished in good faith.

(b) Buyer agrees that neither Company nor the Shareholder shall have any liability or responsibility whatsoever to Buyer or any of its directors, officers, employees, Affiliates, controlling persons, agents, advisors or representatives on any basis other than fraud or willful misconduct (including, without limitation, in contract or tort, under federal or state securities laws or otherwise, or where specific performance is available) based upon any information provided or otherwise made available, or statements made (or omissions to so provide, make available or state) to Buyer or any of its directors, officers, employees, Affiliates, controlling persons, agents, advisors or representatives, including, without limitation, in respect of the representations and warranties of Company and the Shareholder set forth in Section 3 hereof, except as and only to the extent set forth herein, and subject to the limitations and restrictions contained herein and in the Disclosure Schedules hereto.

4.7 SEC Documents. Buyer has timely filed with the SEC all forms, reports, schedules, statements and other documents (including exhibits and other information incorporated therein) required to be filed by it since July 1, 2004 under the Securities Act, or the Exchange Act (such documents, as supplemented and amended since the time of filing, collectively, the “Buyer SEC Documents”). No subsidiary of Buyer is required to file any form, report, registration statement, prospectus or other document with the SEC. To the knowledge of Buyer, the Buyer SEC Documents, including any financial statements or schedules included in the Buyer SEC Documents, at the time filed (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of mailing, respectively and, in the case of any Buyer SEC Document amended or superseded by a filing prior to the date of this Agreement, then on the date of such amending or superseding filing): (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be. The financial statements of Buyer (including the related notes) included in the Buyer SEC Documents at the time filed (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of mailing, respectively, and, in the case of any Buyer SEC Document amended or superseded by a filing prior to the date of this Agreement, then on the date of such amending or superseding filing) complied in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q or Form 10-QSB of the SEC), and fairly present (subject, in the case of unaudited statements, to normal, recurring audit adjustments not material in amount and giving effect to amendments of Buyer SEC Documents) in all material respects the consolidated financial position of Buyer and its consolidated subsidiaries as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended.

4.8 No Material Adverse Change. Since September 30, 2006, there has been no change, circumstance or effect that is materially adverse to the business, assets, financial condition, projected financial performance, results of operations or prospects of Buyer.

4.9 No Brokers. Except for Venture Management, Inc., the fees and expenses of which shall be paid by Buyer, neither Buyer nor any Person acting on Buyer’s behalf has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement.

ARTICLE 5
PRE-CLOSING COVENANTS

5.1 Buyer’s Due Diligence Investigation. From and after the date hereof until the Closing, the Shareholder and the Company shall give Buyer and its counsel, accountants, investors and other authorized representatives, full access on reasonable advance notice to the assets of the Company and such copies of the Company’s financial statements, books and records, and other documentation of every nature as may be reasonably requested by Buyer to inspect and evaluate all aspects of the operations, assets, operating results, financial condition, future prospects, capitalization, ownership, and legal and regulatory affairs of the Company, and to verify the accuracy of the information heretofore furnished to Buyer, and the representations and warranties made in this Agreement by the Shareholder and the Company. Buyer agrees to use commercially reasonable efforts to conduct its review in a manner designed to minimize any disruption of the Company’s operations. All information and records obtained by Buyer pursuant to this Agreement shall be maintained as confidential prior to the Closing and shall not be used by the Buyer except for the purposes of the transaction contemplated in this Agreement nor disclosed to any third party prior to the Closing without the prior written consent of the Shareholder, except (a) in response to legal process, (b) to the extent required to comply with applicable Law, or (c) to the extent disclosed to any bank, finance company or other lender or investor in connection with the financing of the transactions contemplated by this Agreement. Buyer shall not be obligated to maintain as confidential any information which is publicly available, readily available from public sources, known to Buyer at the time the information was disclosed or which was rightly obtained from a third party.

5.2 Preparation of Financial Statements. The Company has engaged a certified public accountant to prepare a financial statement compilation in accordance with GAAP for the ten (10) months ended October 31, 2006 (the “Financial Statement Compilation”).

5.3 Consents of Third Parties; Governmental Approvals. Each of the Parties agrees to use commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable, including under applicable Laws, to consummate and make effective the transactions contemplated by this Agreement, including using commercially reasonable efforts to obtain all Required Consents, Permits and approvals required under this Agreement, whether from Governmental Authorities or otherwise. The Parties shall cooperate in a timely manner with each other in exchanging information, reviewing and executing documents and verifications and providing all assistance as the other Party may reasonably request in connection with all of the foregoing. The Company and the Shareholder shall use commercially reasonable efforts, and Buyer will reasonably cooperate with such efforts,

to obtain as promptly as practicable all Required Consents in a manner that will avoid any default, conflict or termination of rights under the Company’s Contracts, and the Shareholder shall solely be responsible for any fees or expenses related to obtaining such Required Consents.

5.4 Operations Prior to the Closing Date.

(a) Between the date hereof and the Closing Date, but except as otherwise contemplated herein, the Company shall use commercially reasonable efforts to operate and carry on its business in the ordinary course consistent with past practices. Consistent with the foregoing but except as otherwise contemplated herein, the Company shall use its commercially reasonable efforts, consistent with good business practice, to preserve the goodwill of the customers, suppliers, contractors, licensors, employees and others having relations with the Company.

(b) Without limiting the provisions of Section 5.4(a), except as otherwise contemplated by this Agreement or with the prior written approval of Buyer or unless otherwise disclosed on Schedule 3.7, between the date hereof and the Closing Date, the Company shall not engage in any practice or take any action or enter into any transaction of the sort described in Section 3.7.

5.5 Access; Reasonable Efforts. The Company shall permit Buyer and its representatives (including legal counsel and accountants) to have full access during normal business hours to all of the properties, books, contracts, documents, insurance policies, records and personnel of or with respect to the Company and shall furnish to Buyer and its representatives such information as Buyer or its representatives may at any time and from time to time reasonably request.

5.6 Notification of Certain Matters. Each Party shall give prompt written notice to the other Party of any material adverse development causing a breach of any of his or its representations and warranties in Articles 2, 3 and 4. Between the date hereof and the Closing Date, Company and the Shareholder shall be entitled to update the Disclosure Schedules to the extent information contained therein becomes untrue or incomplete or inaccurate after the date hereof due to events occurring after the date hereof other than as a result of a breach by Company or the Shareholder of the covenants contained herein; provided that, upon any such update, the Buyer may terminate this Agreement without any further obligation or liability.

5.7 Exclusivity. The Shareholder shall not, and shall not permit the Company or any of its officers, directors, employees, investment bankers, consultants and other agents to, directly or indirectly, take any action to solicit, initiate, encourage or facilitate the making or submission of any proposal or offer from any Person relating to the acquisition of all or substantially all of the capital stock or assets of the Company (including any acquisition structured as a merger, consolidation or share exchange). The Shareholder shall not vote his Shares in favor of any such transaction, except for the transactions contemplated by this Agreement. The Shareholder agrees not to (a) sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the transfer by him of any of the Shares or offer any interest in any thereof to any Person other than pursuant to the terms of this Agreement, (b) enter into any voting arrangement

or understanding, whether by proxy, power of attorney, voting agreement, voting trust or otherwise, with respect to the Shares, or (c) commit or agree to take any of the foregoing actions. The Shareholder shall notify Buyer immediately if any Person makes any proposal, offer, inquiry or contact with respect to any of the foregoing and shall disclose to Buyer the terms of any such proposal, offer, inquiry or contact and the identity of the party making such proposal, offer, inquiry or contact.

ARTICLE 6
AGREEMENTS REGARDING EMPLOYEES

6.1 Continuation of Employment.

(a) Buyer shall cause the Company or Buyer to continue to employ after the Closing Date all employees of the Company actively employed on the Closing Date (all such employees, the “Business Employees”) at the same location where each such employee was employed immediately prior to the Closing Date on at least the same wage rates or cash salary levels, and on such other terms and conditions that are not less favorable than those provided to similarly situated employees of Buyer. The foregoing sentence shall not restrict the Company’s or Buyer’s ability to terminate any employee with or without cause. Buyer and its Affiliates shall, for the benefit of the Business Employees, provide credit for all years of service provided prior to the Closing Date for all purposes under all compensation and benefit plans, programs and policies maintained by Buyer and/or its Affiliates for the benefit of such employees after the Closing Date to the extent such credit was given under corresponding Benefit Plans as in existence immediately prior to the Closing Date. With respect to Benefit Plans provided by the Company that Buyer will not continue, Buyer and Shareholder shall develop, prior to Closing, an alternative approach to compensation of Company employees in light of such plans not being continued.

(b) Effective no later than the day immediately preceding the Closing Date, but contingent upon the Closing, the Company shall terminate any and all Employee Benefit Plans (other than the Company’s health insurance plan with Blue Cross Blue Shield) (the “Terminated Employee Benefit Plans”) and the ▇▇▇▇▇▇▇▇ Agreement. The Company shall provide Buyer with evidence that such Terminated Employee Benefit Plans and the ▇▇▇▇▇▇▇▇ Agreement have been terminated (effective no later than the day immediately preceding the Closing Date) in accordance with their respective terms. The Company also shall take such other actions in furtherance of terminating such Terminated Employee Benefit Plans as Buyer may reasonably require. Buyer shall bear all costs associated with terminating the Terminated Employee Benefit Plans. Shareholder shall bear all costs that may be associated with the ▇▇▇▇▇▇▇▇ Agreement (for termination or otherwise) and any benefits provided pursuant thereto or any insurance policies maintained in connection therewith to the extent that such costs were not included as liabilities in the calculation of Closing Working Capital.

6.2 Stock Options; Non-Compete Payments.

(a) Buyer has set aside a pool of 30,000 Stock Options to be divided up amongst the Tier 1 Key Employees, and 20,000 Stock Options to be divided up amongst the Tier 2 Key Employees, each in the amounts and to the Key Employees designated by the

Shareholder and the SVP of Program Services. In the discretion of the Shareholder and the SVP of Program Services, up to 10,000 of such Stock Options may be allocated to certain other employees of the Company instead of to the Key Employees. Such Stock Options will be granted to the Key Employees in connection with and as consideration for their execution of the Key Employee Agreements and shall be subject to vesting in accordance with the terms set forth on Schedule 6.2(a) and the Key Employee Agreements.

(b) Buyer has set aside a pool of $600,000 to be divided up amongst the Tier 1 Key Employees, and $300,000 to be divided up amongst the Tier 2 Key Employees, each in the amounts and to the Key Employees designated by the Shareholder and the SVP of Program Services (such payments, the “Non-Compete Payments”).

(c) Prior to the Closing Date, the Shareholder and Buyer shall mutually determine the allocation of the Stock Options and Non-Compete Payments amongst the Key Employees (or, with respect to the Stock Options, other of the Business Employees). The grant of Stock Options and the payment of any Non-Compete Payment to any Key Employee shall be reflected in such Key Employee’s Key Employee Agreement entered into with Buyer or the Company at the Closing, together with the terms and conditions of vesting of such Stock Options and the payment of such Non-Compete Payments. The parties shall deliver a Schedule 6.2(c) hereto reflecting such allocation.

6.3 No Third Party Beneficiaries. Nothing herein is intended to, and shall not be construed to, create any third party beneficiary rights of any kind or nature, including, without limitation, the right of any Business Employee or other individual to seek to enforce any right to compensation, benefits, or any other right or privilege of employment with Company or Buyer.

ARTICLE 7
ADDITIONAL AGREEMENTS

7.1 Tax Covenants.

(a) Pre-Closing Covenant. During the period from the date hereof until the earlier of the Closing or the termination of this Agreement, the Company shall not make or change any election in respect of Taxes, adopt or request permission of any Tax authority to change any accounting method in respect of Taxes, enter into any closing agreement in respect of Tax obligations of the Company, settle any claim or assessment in respect of Tax obligations of the Company, surrender or allow to expire any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Tax obligations of the Company, or take (or permit any Subsidiary to take) any such actions with respect to any Subsidiary.

(b) Cooperation on Tax Matters. The Buyer and the Shareholder shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns and any audit, litigation or other proceeding with respect to Taxes, including any Tax Claim. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually

convenient basis to provide additional information and explanation of any material provided hereunder or to testify at any proceeding. The Shareholder and the Buyer agree, and the Buyer agrees to cause the Company and its Subsidiaries, to retain all books and records with respect to Tax matters relating to the Company and its Subsidiaries for any Taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Buyer or the Shareholder, any extensions thereof) for the respective Taxable periods, and to abide by all record retention agreements entered into with any Tax authority. The Buyer and the Shareholder further agree, upon request, to use their commercially reasonable efforts to obtain any certificate or other document from any Tax authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed on the Company or any Subsidiary (including, but not limited to, with respect to the transactions contemplated by this Agreement).

(c) Section 338(h)(10) Election. The Shareholder and the Buyer shall jointly make an election under Section 338(h)(10) of the Code (and any comparable provision of applicable state or local income Tax law) with respect to the purchase of the stock of the Company and the parties shall cooperate with each other to take all actions necessary and appropriate (including filing such forms, Tax Returns, elections, schedules and other documents as may be required) to effect and preserve a timely election under Section 338(h)(10) of the Code, in accordance with the provisions of Treasury Regulations Section 1.338(h)(10)-1 (or any comparable provisions of state or local tax law) (the “Section 338(h)(10) Election”). The parties shall prepare and timely file an Internal Revenue Service Form 8023 (and/or any successor form, and any forms or schedules similar to Form 8023 that are required to make the Section 338(h)(10) Election effective under provisions of applicable state or local law), along with any required attachments thereto, and the parties shall take no position inconsistent with such forms.

(d) Purchase Price Allocation. Buyer shall prepare a proposed purchase price allocation schedule (the “Proposed Allocation Schedule”) allocating the gross purchase price, as determined for federal income tax purposes, among the assets of the Company in accordance with Section 338 of the Code, the Treasury Regulations promulgated thereunder, and the principles set forth on Schedule 7.1(d). Buyer shall deliver the Proposed Allocation Schedule to the Shareholder within ninety (90) days after the Closing Date. If, within ten (10) days after receiving Buyer’s Proposed Allocation Schedule, the Shareholder notifies Buyer that the Shareholder disputes any item(s) reflected on the Proposed Allocation Schedule, Buyer and the Shareholder shall cooperate in good faith to resolve any dispute. Should the parties fail to reach an agreement within thirty (30) days after the Shareholder notifies Buyer that the Shareholder disputes any item(s) reflected on Buyer’s Proposed Allocation Schedule, the determination of the disputed item or items shall be made by a mutually agreed upon and jointly engaged public accounting firm of national reputation, whose decision shall be final. The Proposed Allocation Schedule, as revised (if necessary) to reflect the resolution of any dispute in accordance with this Section 7.1(d), shall represent the Buyer’s and the Shareholder’s final agreement regarding the allocation of the gross purchase price among the assets of the Company (the “Final Allocation Schedule”); provided, that if the Shareholder does not notify Buyer that he disputes any item(s) on Buyer’s Proposed Allocation Schedule within ten (10) days after receiving Buyer’s Proposed Allocation Schedule, Buyer’s Proposed Allocation Schedule shall be the Final Allocation Schedule. The Buyer and the Shareholder further agree that they will prepare and timely file Form 8883 (and/or any successor forms, and any forms or schedules

similar to Form 8883 that are required to be filed in connection with the Section 338(h)(10) Election under provisions of applicable state or local law) in a manner reflecting such allocation, and each party will cooperate with the other party in connection with such preparation and filing. The Shareholder and Buyer shall inform each other promptly of any challenge by any Tax authority to the Form 8883 (or such other form(s)) or the allocation set forth on the Final Allocation Schedule. The Final Allocation Schedule shall be modified as appropriate in accordance with this Section 7.1(d) to reflect any adjustments in the Purchase Price made following the Closing in accordance with this Agreement, including adjustments made pursuant to Sections 1.5, 1.6, 1.7 and 10.8. The Shareholder and Buyer agree not to take any Tax position that is inconsistent with the Form 8883 or the Final Allocation Schedule (unless required to do so under applicable law).

7.2 Tax Indemnification.

(a) From and after the Closing, the Shareholder shall indemnify, save and hold harmless the Buyer Indemnitees from and against: (i) all liability for Taxes of the Company and its Subsidiaries for all Pre-Closing Tax Periods; (ii) all Taxes of the Company and its Subsidiaries resulting from the Section 338(h)(10) Election, including all such Taxes of the Company and its Subsidiaries under Massachusetts General Laws chapter 63, section 32D; (iii) all Transfer Taxes; and (iv) without duplication of Section 10.2, any and all Losses arising out of, resulting from or incident to any breach by the Shareholder or the Company of any representation or covenant contained in Sections 3.8, 7.1 or this 7.2.

(b) In the case of any Straddle Period:

(i) real, personal and intangible property Taxes and any other Taxes levied on a per diem basis (“Per Diem Taxes”) of the Company and its Subsidiaries for a Pre-Closing Tax Period shall be equal to the amount of such Per Diem Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Tax Period (including the Closing Date) and the denominator of which is the total number of days in the Straddle Period; and

(ii) the Taxes of the Company and its Subsidiaries (other than Per Diem Taxes) for any Pre-Closing Tax Period shall be computed as if such Tax Period ended as of the close of business on the Closing Date.

(c) The Shareholder’s indemnity obligations in respect of Taxes for a Pre-Closing Tax Period, as determined pursuant to Section 7.2(a), shall initially be effected by the Shareholder’s payment to Buyer of the excess of (i) any such Taxes for a Pre-Closing Tax Period (as indicated by written notice from Buyer to the Shareholder) over (ii) (A) the amount of such Taxes with respect to the Company and its Subsidiaries paid by the Shareholder at any time plus (B) the amount of such Taxes paid or reserved for by the Company and its Subsidiaries on or prior to the Closing Date. Such excess shall be paid to Buyer in accordance with Section 10.7 within ten (10) days after written demand therefor is made by Buyer (but not earlier than five (5) days before the date on which the Taxes for the relevant Tax Period are required to be paid to the relevant Tax authority). In the case of a Tax that is contested in accordance with the provisions of Section 7.2(d), payment of the Tax to the appropriate Tax authority shall not be considered to be due earlier than the date a final determination to such effect is made by the appropriate Tax authority or court unless payment of the Tax is required as a condition to such contest.

(d) If a claim shall be made by any Tax authority, which, if successful, might result in an indemnity payment to a Buyer Indemnitee pursuant to this Section 7.2, the Buyer Indemnitee shall promptly and in any event no more than twenty (20) days following the Buyer Indemnitee’s receipt of such claim, give written notice to the Shareholder of such claim; provided, however, the failure of the Buyer Indemnitee to give such notices shall only relieve the Shareholder from his indemnification obligations hereunder to the extent he is actually prejudiced by such failure. With respect to any Tax Claim relating to a Tax Period ending on or prior to the Closing Date, the Shareholder shall, upon his written confirmation of his obligation to indemnify the Buyer Indemnitees in full with respect to such Tax Claim, control all proceedings and may make all decisions taken in connection with such Tax Claim (including selection of counsel) at his own expense; provided, however, that if the resolution of any portion of a Tax Claim would increase the Taxes of the Company and its Subsidiaries for a Tax Period after the Closing Date, the Shareholder shall give written notice to the Buyer, and the Buyer shall be entitled to control the proceedings taken in connection with such portion of such Tax Claim. The Buyer shall control at its own expense all proceedings taken in connection with any Tax Claim relating to Taxes of the Company and its Subsidiaries for a Straddle Period and in connection with any Tax Claim relating to Taxes of the Company and its Subsidiaries for a Tax Period beginning after the Closing Date. A party shall promptly notify the other party if it decides not to control the defense or settlement of any Tax Claim for a Tax Period ending on or prior to the Closing Date which it is entitled to control pursuant to this Agreement, and the other party shall thereupon be permitted to defend and settle such proceeding without prejudice. No Tax Claim for which the Shareholder is obligated to indemnify the Buyer Indemnitees and in which the Buyer is entitled to control all proceedings may be settled without the written consent of the Shareholder, such consent not to be unreasonably withheld or delayed. The Buyer, the Shareholder, the Company and its Subsidiaries and each of their respective Affiliates shall reasonably cooperate with each other in contesting any Tax Claim in accordance with Section 7.1(b). The parties shall satisfy their indemnity obligations pursuant to this Section 7.2(d) within 10 days after a final determination (within the meaning of Section 1313(a) of the Code or analogous provisions of state, local or foreign Tax law) of the relevant Tax is made.

(e) The Buyer covenants that it will not and will not cause or permit the Company or any Affiliate of the Buyer to (i) take any action on or after the Closing Date other than in the ordinary course of business, which would result in any tax liability to the Shareholders, or (ii) make any election or deemed election on or after the Closing Date or amend any Tax Return of the Company on or after the Closing Date for the period prior to the Closing Date.

7.3 Non-Competition.

(a) The Shareholder agrees and acknowledges that it is necessary that the Shareholder undertake not to utilize his special knowledge of the Business and his relationship with customers, suppliers and employees to compete with the Business. The Shareholder further agrees and acknowledges that: (i) upon the Closing, Buyer will be actively engaged in the Business throughout the United States, Great Britain and Canada (the

“Territory”); (ii) the agreements and covenants contained in this Section 7.3 are essential to protect Buyer, including protecting the goodwill of the Business; (iii) Buyer would be irreparably damaged if the Shareholder were to breach the provisions contained in this Section 7.3; (iv) the consideration received by the Shareholder in connection with the transactions contemplated by this Agreement is sufficient and the Shareholder has the means to support such Person and such Person’s dependents other than by engaging in the Business, and the provisions of this Section 7.3 will not impair such ability; (v) the Shareholder’s ownership of the Shares has provided the Shareholder with trade secrets of, and confidential information concerning, the Company; and (vi) the agreements and covenants contained in this Section 7.3 are a material inducement for Buyer to enter into this Agreement and Buyer would not have entered into this Agreement and would not have agreed to consummate the transactions contemplated hereby but for the agreements and covenants contained in this Section 7.3. Accordingly, the Shareholder covenants and agrees to comply with the Shareholder’s obligations hereunder.

(b) As an inducement for Buyer to enter into this Agreement, the Shareholder hereby agrees that, for a period commencing on the date of the Closing and ending on the later of the date that is three (3) years following the Closing Date and the date that is one (1) year following Shareholder’s termination as an employee of the Buyer or the Company for any reason, so long as Buyer, or any Person deriving title to the goodwill or ownership interest from Buyer, carries on a like business therein (“Restricted Period”), the Shareholder will not:

(i) directly or indirectly, as an agent, employee, consultant, distributor, representative, stockholder, manager, partner or in any other capacity, own (other than through the passive ownership of less than one percent (1%) of the publicly traded shares of any Person), operate, manage, control, engage in, invest in (other than through the passive ownership of less than one percent (1%) of the publicly traded shares of any Person) or participate in any manner in, act as a consultant or advisor to, render services for (alone or in association with any Person), or otherwise assist any Person that directly or indirectly engages in or owns, operates, manages or controls any venture or enterprise that engages anywhere in the Territory in the Business;

(ii) directly or indirectly, for Shareholder’s own account, or as an officer, director, stockholder, employee, consultant, partner, proprietor, broker or otherwise, whether in a paid or unpaid position, solicit or attempt to solicit for employment any employee of Buyer who was an employee of the Company on the date of the Closing or who was an employee of the Company at any time during the six (6) month period immediately preceding the Closing; or

(iii) directly or indirectly, for the Shareholder’s own account, or as an officer, director, stockholder, employee, consultant, partner, proprietor, broker or otherwise, whether in a paid or unpaid position, (a) solicit or attempt to solicit business from any Clients or Customers (as defined below), provided, however, nothing contained herein shall prohibit the solicitation of business or services which are not in any way engaged in the Business; (b) suggest, refer or recommend that any Clients or Customers terminate, cancel or withdraw any proposed or pending job, bid or order; (c) suggest, refer or recommend that any Clients or Customers patronize any other business in direct or indirect competition with the Business; or (d) interfere in any other way with the prospective relationship between the Buyer

and any Clients or Customers. For purposes hereof, the term “Clients or Customers” shall be defined as those individuals, entities or businesses to which the Company had provided services within the one (1) year period immediately preceding the date of the Closing or to which the Company had submitted a bid or proposal within said one (1) year period.

(c) The Shareholder acknowledges and agrees that the covenants set forth in this Section 7.3 are reasonable and necessary for the protection of the Business, that the remedies at law for damages on account of any breach of the provisions of this Section 7.3 will be inadequate and that such damages are not readily ascertainable or susceptible to being measured in monetary terms. The Shareholder accordingly agrees that in the event of any actual or threatened breach by the Shareholder or any of the Shareholder’s Affiliates or any of their respective successors and assigns of any of the provisions contained in this Section 7.3, Buyer shall be entitled to seek such injunctive and other equitable relief, without the necessity of showing actual monetary damages and without posting any bond or other security, as may be deemed necessary or appropriate by a court of competent jurisdiction. Nothing contained herein shall be construed as prohibiting Buyer from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages which it is able to prove.

(d) The Shareholder and Buyer agree that, if any term or provision of Section 7.3 is determined by a court of competent jurisdiction to be invalid or unenforceable as written because such provision covers too extensive a Territory, too broad a range of activities, too long a period of time or otherwise, then such provision shall automatically be modified to cover the maximum Territory, range of activities, and period of time as permissible by applicable Law under the circumstances, and, in addition, a court is hereby expressly authorized to so modify this Agreement and to enforce it as so modified. No invalidity or enforceability of any section of this Agreement or any portion thereof shall affect the validity or enforceability of any other section or the remainder of such section, or any revision or modification to such section as contemplated by this Section 7.3.

(e) If Shareholder violates any provision of this Section 7.3 and Buyer brings legal action for injunctive relief, Buyer shall not, as a result of the breach by Shareholder or the time involved in obtaining the relief, be deprived of the benefit of the full time period specified in this Section 7.3. Accordingly, Section 7.3 shall be deemed to have the duration specified above, computed from the date the relief is granted, but not to include any period of time during which Shareholder is in violation of this Section 7.3.

7.4 Confidentiality.

(a) If the transactions contemplated hereby are consummated, the Shareholder agrees not to disclose or use at any time (and to cause each of the Shareholder’s Affiliates not to use or disclose at any time) any confidential or proprietary information of the Company, except (i) in connection with the performance of the Shareholder’s obligations under this Agreement, or (ii) to the extent permitted by paragraph (b) below. Subject to the foregoing exceptions, the Shareholder further agrees to take all commercially reasonable steps (and to cause each of the Shareholder’s Affiliates to take all commercially reasonable steps) to safeguard such information and to protect it against disclosure, misuse, espionage, loss and theft. The information intended to be protected hereby shall include, but not be limited to, financial

information, product cost or margin information, customer information, information concerning possible acquisition targets, product development information, strategic plans, lease terms, and anything else having an economic or pecuniary benefit to the Company; provided, however, that information that has been published or is publicly known at the time of disclosure or use shall not be subject to the provisions of this Section 7.4. In the event any Shareholder or any Shareholder’s Affiliate is required by applicable Law to disclose any confidential or proprietary information of the Company, other than pursuant to the exceptions set forth in clauses (i) and (ii) above, the Shareholder or Affiliate, as the case may be, shall promptly notify Buyer in writing, which notification shall include the nature of the legal requirement and the extent of the required disclosure, and shall cooperate with Buyer to preserve the confidentiality of such information consistent with applicable Law.

(b) If there shall be a dispute between the Parties arising out of or relating to this Agreement, each Party shall keep confidential the existence, the nature of and any information concerning such dispute. In addition, if any action or other proceeding is held with respect to such dispute, the Parties shall use their reasonable efforts to cause such action or other proceeding to be conducted in confidence and the results thereof to be maintained in confidence (subject to the rules of the forum of the dispute). Nothing in this Section 7.4(b) shall prohibit a Party from (i) initiating any action or other proceeding relating to a dispute or from disclosing information concerning a dispute in any action or other proceeding relating to such dispute, or (ii) disclosing information concerning a dispute to its current or potential advisors, direct or indirect equity holders, investors or lenders, provided that such Party informs the recipient of the confidential nature of the information (it being agreed that the disclosing Party will be responsible to the other Parties for any non-permitted disclosure by such recipient).

(c) The provisions of Section 7.4(a) shall survive and be binding upon the Shareholder for a period of three (3) years after the termination of the Shareholder’s employment or consulting engagement, whichever is later.

7.5 Conduct of Business During Earn-Out Term. Buyer acknowledges and agrees that the ability of the Company to meet Annual Revenue objectives and the ability of the parties to calculate fairly and measure the performance of the Company relative to revenue objectives will depend to a significant degree upon maintaining the Business as a whole and as a discrete operating unit. Buyer and the Shareholder shall (i) act in good faith at all times during the Earn-Out Term, (ii) not fail to take any action that would be required by reasonable, skillful, prudent and diligent business persons engaged in the independent operation of a business similar to the Business, and (iii) not take any action that would be unfairly prejudicial or discriminatory to the Business, the Company or the interests of the Shareholder in receiving the Earn-Out Consideration. Buyer shall provide the Company’s management team reasonable authority to participate in the management and operation of the Business throughout the Earn-Out Term, including reasonable authority to direct business strategy, pricing, sales and marketing during the Earn-Out Term in a manner consistent with the current plans of the Business. In the event that Buyer makes any change to the operations of the Company after the Closing Date that has a material adverse effect on the Company’s ability to achieve Target Revenue Growth during the Earn-Out Term, then the Target Revenue Growth shall be adjusted as agreed upon by the Parties; provided that the Parties agree that Buyer’s operation of the Company as a division and not a subsidiary after the Closing Date shall not in itself be considered a material adverse effect on the Company’s ability to achieve Target Revenue Growth.

7.6 Sale or Transfer of Buyer Shares. The Shareholder acknowledges and agrees that the Buyer Shares are restricted from resale, subject to meeting the one-year holding period and other requirements of Rule 144 under the Securities Act. In addition, the Shareholder agrees that he will not sell, transfer or otherwise dispose of more than half of the Buyer Shares during the first six (6) month period following the lapse of any holding period imposed by applicable Law, and that prior to any sale of Buyer Shares, the Shareholder shall have notified Buyer of the proposed disposition and shall have furnished Buyer with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by Buyer, the Shareholder shall have furnished Buyer with an opinion of counsel, reasonably satisfactory to Buyer, that such disposition will not require registration of such shares under the Securities Act.

7.7 Transaction Expenses. At least two (2) business days prior to the Closing Date, the Shareholder shall provide to Buyer an itemized and complete list of all of the Company and the Shareholder’s Transaction Expenses. The Shareholder or the Company shall pay the Transaction Expenses prior to the Closing, and the Closing Working Capital shall be calculated as though all of such payments have been made.

ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDER

The obligation of the Shareholder to enter into and consummate the transactions contemplated by this Agreement shall be subject to fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by them, to the extent permitted by Law.

8.1 Representations and Warranties. The representations and warranties of Buyer contained herein shall be true and correct in all respects when made and on and as of the Closing Date as though made at and as of that date (except for representations and warranties, if any, made as of a specified date, which shall be true and correct in all respects as of the specified date), and Buyer shall have delivered to the Shareholder a certificate, executed by a duly authorized officer of Buyer, to such effect.

8.2 Compliance with Covenants. Buyer shall have performed and complied with in all material respects all terms, agreements, covenants and conditions of this Agreement to be performed or complied with by it on or prior to the Closing Date, and Buyer shall have delivered to the Shareholder a certificate, executed by a duly authorized officer of Buyer, to that effect.

8.3 No Injunction. There shall not be any Action commenced or threatened by a Governmental Authority or any Court Order restraining or enjoining the carrying out of this Agreement or the consummation of the transactions contemplated by this Agreement.

8.4 Appointment of Officer. The Shareholder shall have been appointed as an officer of the Company, effective as of the Closing Date.

8.5 Employment Agreements. The Company, Buyer and each of the Tier 1 Key Employees shall have entered into an Employment and Non-Competition Agreement in substantially the form attached hereto as Schedule 8.5(1), and the Company, Buyer and each of the Tier 2 Key Employees shall have entered into an Employment and Non-Competition Agreement in substantially the form attached hereto as Schedule 8.5(2), each of which shall reflect the allocation of Stock Options and Non-Compete Payments amongst the Key Employees as determined by Buyer and Shareholder pursuant to Section 6.3. The Company, Buyer and the Shareholder shall have entered into an Employment and Non-Competition Agreement in substantially the form attached hereto as Exhibit A.

8.6 Option Pool. Buyer’s board of directors shall have passed resolutions reserving Stock Options for Key Employees and other Business Employees in accordance with Section 6.2, and having other attributes reasonably satisfactory to Buyer and the Shareholder.

8.7 Other Buyer Deliveries. Buyer shall have delivered those items required to be delivered by Buyer at the Closing pursuant to Section 1.4.

ARTICLE 9

CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

The obligation of Buyer to enter into and consummate the transactions contemplated by this Agreement shall be subject to fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by it, to the extent permitted by Law.

9.1 Representations and Warranties. The representations and warranties of the Shareholder contained herein shall be true and correct in all respects when made and on and as of the Closing Date as though made at and as of that date (except for representations and warranties, if any, made as of a specified date, which shall be true and correct in all respects as of the specified date), and the Shareholder shall have delivered to Buyer a certificate executed by the Shareholder to such effect.

9.2 Compliance with Covenants. The Shareholder shall have performed and complied with in all material respects all terms, agreements, covenants and conditions of this Agreement to be performed or complied with by it on or prior to the Closing Date, and the Shareholder shall have delivered to Buyer a certificate executed by the Shareholder to that effect.

9.3 Material Adverse Effect. There shall not have occurred with respect to the Company a Material Adverse Effect since the date of the Most Recent Balance Sheet Date, and the Shareholder shall have delivered to Buyer a certificate to that effect executed by the Shareholder.

9.4 No Injunction. There shall not be any Action commenced or threatened by a Governmental Authority or any Court Order restraining or enjoining the carrying out of this Agreement or the consummation of the transactions contemplated by this Agreement.

9.5 Outstanding Bank Debt. Payoff letters or payoff confirmations from the holders of the Company’s Indebtedness set forth on Schedule 3.28 shall have been obtained, and assuming receipt of the amounts set forth in such payoff letters or payoff confirmations, the Company shall not have any Indebtedness or any Encumbrances.

9.6 Required Consents. The consents, approvals, waivers and notices set forth on Schedule 9.6 shall have been obtained (the “Required Consents”).

9.7 Securities Matters. Buyer shall have received all necessary consents and otherwise complied with any state or federal securities laws applicable to the issuance of the Buyer Shares in connection with the transactions contemplated hereby.

9.8 Secretary’s Certificate. The Shareholder shall cause the Company to deliver to Buyer a certificate of the secretary of the Company (a) attaching (i) the Articles of Incorporation and Bylaws of the Company, (ii) certified resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and (iii) certificate(s) (long-form if applicable) from the appropriate Governmental Authorities, dated within ten (10) days prior to the Closing Date, as to the good standing and/or qualification to do business of the Company in the jurisdictions where it is organized or qualified to conduct business, and (b) certifying the incumbency, titles and signatures of certain officers of the Company.

9.9 Employment Agreements. The Company, Buyer and each of the Tier 1 Key Employees shall have entered into an Employment and Non-Competition Agreement, and the Company, Buyer and each of the Tier 2 Key Employees shall have entered into an Employment and Non-Competition Agreement, each of which shall reflect the allocation of Stock Options and Non-Compete Payments amongst the Key Employees as determined by the Shareholder and Buyer pursuant to Section 6.3. The Company, Buyer and the Shareholder shall have entered into an Employment Agreement substantially in the form attached hereto as Exhibit A.

9.10 Resignations and Releases from Directors and Officers. Each member of the Company’s board of directors and each of the Company’s officers as in effect prior to the Closing shall have executed and delivered to Buyer a resignation and a release of the Company in a form satisfactory to Buyer.

9.11 Corporate Minute Books and Stock Records. The Shareholder shall have delivered to Buyer all original corporate minute books and stock records, ledgers and registers, corporate seals, if any, and other corporate records relating to the ownership and maintenance of the Company.

9.12 Change in Company Relationships. Since the Most Recent Balance Sheet Date and except as disclosed on Schedule 9.12, there shall have occurred no material change in the compensation (salary, bonus or consulting fees) paid to Key Employees, and no material customer of the Company shall have terminated, or indicated that it intends to terminate, its Contract with the Company.

9.13 Cooperation in Audit. The Company and the Shareholder shall have cooperated fully in any audit Buyer is required to obtain under regulations and requirements of the SEC.

9.14 Other Shareholder Deliveries. The Shareholder shall have delivered those items required to be delivered by the Shareholder at the Closing pursuant to Section 1.4.

ARTICLE 10
INDEMNIFICATION

10.1 Survival of Covenants, Representations and Warranties. The representations and warranties of the Company, the Shareholder and Buyer contained in this Agreement will survive the Closing until the date that is twenty-four (24) months following the Closing Date (the “Expiration Date”), except that any representation, warranty, covenant or agreement that would otherwise terminate will continue to survive if a Claim Notice shall have been timely given in good faith based on facts reasonably expected to establish a valid claim under Section 7.2 or Article 10 on or prior to the Expiration Date, until the related claim for indemnification has been satisfied or otherwise resolved as provided in Section 7.2 or Article 10; provided, however, that (a) the representations, warranties and covenants set forth in Section 2.1 (Authority and Enforceability of the Shareholder) and Section 2.4 (Ownership of Shares) shall survive indefinitely, (b) the representations, warranties and covenants set forth in Section 3.1 (Organization and Power of the Company), Section 3.2 (Authority and Enforceability of the Company), Section 3.4 (Capitalization), Section 3.8 (Taxes), Section 3.14(a) regarding Government Contracts and 3.14(b) (Government Contracts), Section 3.l5 (Employee Benefits), Section 3.16 (Environmental Compliance), Section 3.26 (No Brokers), Section 7.1 (Tax Covenants) and Section 7.2 (Tax Indemnification) shall survive and remain in full force and effect until the date that is thirty (30) days following the expiration of the applicable statutory period of limitations applicable to the underlying claim, including any extension thereof, and (c) any breach of any representation or warranty that constitutes fraud shall survive indefinitely. All covenants and agreements to be performed prior to the Closing Date shall terminate upon the Closing except as expressly provided herein. All covenants and agreements to be performed after the Closing Date shall survive for the respective periods set forth herein.

10.2 Indemnification by the Shareholder. After the Closing Date and subject to the limitations set forth herein, the Shareholder shall indemnify and hold harmless Buyer, its directors, officers, employees and their successors and assigns (the “Buyer Indemnitees”), payable in accordance with Section 10.7 hereof, from and against any and all Losses suffered, sustained, incurred or paid by any Buyer Indemnitee in connection with, relating to, as a result of or arising from (a) any breach or inaccuracy of any warranty or representation of the Company or the Shareholder, (b) any breach by the Shareholder or the Company of, or failure by the Shareholder or the Company to perform, any of his or its covenants or obligations contained in this Agreement, (c) the ▇▇▇▇▇▇▇▇ Agreement (whether for payments to be made in connection with the consummation of the transactions contemplated hereby, from termination thereof or otherwise, and notwithstanding any disclosure of such agreement in this Agreement or the Schedules or otherwise) to the extent such Losses were not included as liabilities in the calculation of Closing Working Capital, or (d) any unlicensed use of software by the Company prior to the Closing Date that is disclosed on Schedule 3.11(d) (for royalties, penalties or otherwise, and notwithstanding any disclosure of such use in this Agreement or the Schedules or otherwise); provided, however, that:

(i) The Shareholder shall be required to indemnify and hold harmless under clause (a) of this Section 10.2 with respect to Losses only if the aggregate amount of such Losses exceeds an aggregate amount equal to Seventy-Five Thousand Dollars ($75,000) (the “Basket Amount”), and then only in respect of such excess (except with respect to breaches of Sections 2.1, 3.1, 3.2, 3.4, 3.26 and 3.27, for which no basket or cap shall apply; provided, that the aggregate amount required to be paid by the Shareholder under clause (a) of this Section 10.2 shall not exceed an amount equal to the lesser of (A) Five Million Dollars ($5,000,000), or (B) one third of the cash actually paid by Buyer to the Shareholder (the “Indemnification Cap”) (except with respect to any breach of the representations contained in Section 2.1 (Authorization and Enforceability of the Shareholder) or Section 3.2 (Authorization and Enforceability of the Company) and, provided further, damages paid in the manner set forth in 10.7(B) shall not be treated as applicable to the limit set forth in Clause (B) hereof, or in the event of any breach involving fraud, as to which no Indemnification Cap shall apply); and

(ii) The determination of whether a breach of any representation or warranty by the Company or the Shareholder has occurred for the purposes of determining whether the Basket Amount has been met or exceeded shall be made without regard to any qualification as to “materiality”, “Material Adverse Effect” or words of similar effect contained in such representations or warranties (except in the case of the representation contained in the first sentence of Section 3.6).

10.3 Indemnification by Buyer. After the Closing Date and subject to the limitations set forth herein, Buyer agrees to indemnify and hold harmless the Shareholder, his employees, trustees, beneficiaries and their respective successors and assigns (the “Shareholder Indemnitees”) from and against any and all Losses suffered, sustained, incurred or paid by the Shareholder Indemnitee in connection with, relating to, as a result of or arising from: (a) any breach or inaccuracy of any warranty or representation of Buyer contained in this Agreement, (b) any breach by Buyer of or failure by Buyer to perform any of its covenants or obligations contained in this Agreement, and (c) the operations of the Company after Closing.

10.4 Notice of Claims.

(a) Any Shareholder Indemnitee or Buyer Indemnitee seeking indemnification hereunder (the “Indemnified Party”) shall give promptly to the Party obligated to provide indemnification to such Indemnified Party (the “Indemnitor”) (it being understood, however, that where the Shareholder would otherwise be Indemnified Parties or Indemnitors, all references to such term as used in the procedural provisions of this Section 10.4(a) and in Section 10.4(b) shall instead refer to the Shareholder) a written notice (a “Claim Notice”) describing in reasonable detail the facts giving rise to the claim for indemnification hereunder and shall include in such Claim Notice (if then known) the amount or the method of computation of the amount of such claim, and a reference to the provision of this Agreement or any other agreement, document or instrument executed hereunder or in connection herewith upon which such claim is based; provided, however, that the failure of any Indemnified Party to give the Claim Notice promptly as required by this Section 10.4(a) shall not affect such Indemnified Party’s rights under this Article 10 except to the extent such failure is actually prejudicial to the rights and obligations of the Indemnitor.

(b) After the giving of any Claim Notice pursuant hereto, the amount of indemnification to which an Indemnified Party shall be entitled under this Article 10 shall be determined: (i) by the written agreement between the Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any court of competent jurisdiction; or (iii) by any other means to which the Indemnified Party and the Indemnitor shall agree. The judgment or decree of a court shall be deemed final when the time for appeal, if any, shall have expired and no appeal shall have been taken or when all appeals taken shall have been finally determined. The Indemnified Party shall have the burden of proof in establishing the amount of Losses suffered by it. All amounts due to the Indemnified Party as so finally determined shall be paid by wire transfer within five (5) Business Days after such final determination.

10.5 Third Person Claims.

(a) In order for a Person to be entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving a claim or demand made by any third Person against the Indemnified Party, such Indemnified Party must notify the Indemnitor in writing, and in reasonable detail, of the third Person claim promptly after receipt by such Indemnified Party of written notice of the third Person claim. Thereafter, the Indemnified Party shall deliver to the Indemnitor, within five (5) days after the Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnified Party relating to the third Person claim. Notwithstanding the foregoing, should a Person be physically served with a complaint with regard to a third Person claim, the Indemnified Party must notify the Indemnitor with a copy of the complaint within five (5) days after receipt thereof and shall deliver to the Indemnitor within five (5) days after the receipt of such complaint copies of notices and documents (including court papers) received by the Indemnified Party relating to the third Person claim (or in each case such earlier time as may be necessary to enable the Indemnitor to respond to the court proceedings on a timely basis).

(b) In the event of any claim or initiation of any legal proceeding against the Indemnified Party by a third Person, the Indemnified Party shall permit the Indemnitor to assume the defense of such claim or legal proceeding, at its option and at its own expense, if the Indemnitor notifies the Indemnified Party of its election to assume such defense within thirty (30) calendar days after it receives notice of such claim and the Indemnitor acknowledges without qualification (other than by reference to the limitations in this Article 10) its indemnification obligations provided in this Article 10 with respect to such third Person claim or legal proceeding in writing to the Indemnified Party to control, defend against, negotiate and otherwise deal with any proceeding, claim, or demand which relates to any loss, liability or damage indemnified against hereunder; provided, however, that the Indemnified Party may participate in any such proceeding with counsel of its choice and at its expense unless the named parties in such third Person claim include both the Indemnitor and the Indemnified Party and the Indemnified Party has been advised by legal counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnitor (provided that in such situation, the Indemnified Party shall not be entitled to employ more than one law firm). The Party controlling the defense of such third Person claim (the “Controlling Party”) shall keep the non-Controlling Party advised of the status of such third Person claim and the defense thereof and shall consider in good faith the recommendations made by the non-Controlling Party with respect thereto. To the extent the Indemnitor elects not to defend such proceeding, claim or demand, and the Indemnified Party defends against or otherwise deals with

any such proceeding, claim or demand, the Indemnified Party may retain counsel, at the expense of the Indemnitor, and control the defense of such proceeding. If the Indemnitor elects to assume control of the defense of a third Person claim, any fees and expenses of legal counsel employed by the Indemnified Party with respect to such third Person claim shall be considered Losses for which the Indemnified Party may be entitled to indemnification under this Article 10 only if the named parties in such third Person claim include both the Indemnitor and the Indemnified Party or the Indemnified Party has been advised by legal counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnitor (provided that in such situation, the Indemnified Party shall not be entitled to employ more than one law firm). Neither the Indemnitor nor the Indemnified Party may settle or compromise any such third Person claim or legal proceeding, which settlement or compromise obligates the other Party to pay money, to perform obligations or to admit liability without the written consent of the other Party, such consent not to be unreasonably withheld or delayed; provided that the consent of the Indemnified Party shall not be required if the Indemnitor agrees in writing to pay any amounts payable pursuant to such settlement or compromise and such settlement or compromise includes a complete written release of the Indemnified Party from further liability and does not impose any injunctive relief or other operational restrictions on the Indemnified Party.

(c) The parties agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. Such cooperation shall include the retention and the provision of records and information which is reasonably relevant to such third Person claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

(d) After any final Court Order shall have been rendered and the time therefrom in which to appeal has expired, or a settlement shall have been consummated, or the Indemnified Party and the Indemnitor shall arrive at a mutually binding agreement with respect to each separate matter alleged to be indemnifiable by the Indemnitor hereunder, the Indemnified Party shall forward to the Indemnitor notice of any sums due and owing by it with respect to such matter and the Indemnitor shall pay all of the sums so owing to the Indemnified Party by wire transfer within five (5) Business Days after the date of such notice.

(e) Sections 10.2 through 10.5 shall not apply to any Tax Claims, which shall instead be subject to the provisions of Section 7.2.

10.6 Additional Provisions

(a) For purposes of determining the amount of any Losses of a Buyer Indemnitee, such amount shall be reduced by the amount of any insurance benefits and proceeds (collectively, “Insurance Benefits”) actually received by Buyer or the Company in respect of the Losses (net of any deductible amounts). Furthermore, in the event any losses, liabilities or damages related to a claim by Buyer are covered by insurance, Buyer agrees to use commercially reasonable efforts to seek recovery under such insurance; provided that no payment required to be made by Shareholder pursuant to this Article 10 shall be delayed until Buyer seeks such recovery or actually collects insurance benefits. In the event that Buyer recovers Insurance Benefits at any time in respect of Losses for which Shareholder has previously indemnified Buyer pursuant to this Article 10, then Buyer agrees to remit such Insurance Benefits to Shareholder promptly upon its receipt thereof.

(b) In calculating any Losses there shall be deducted any indemnification, contribution or other similar payment actually recovered by the Indemnified Party or any Affiliate thereof from any third Person with respect thereto. Any such amounts or benefits received by an Indemnified Party or any Affiliate thereof with respect to any indemnity claim after it has received an indemnity payment hereunder shall be promptly paid over to the Indemnitor; provided that the Indemnified Party shall not be obligated to pay over any such amount or benefit in excess of the amount paid by the Indemnitor to the Indemnified Party with respect to such claim.

(c) Except for remedies that cannot be waived as a matter of Law, claims of fraud or willful misconduct and injunctive and provisional relief, if the Closing occurs, Section 7.2 and this Article 10 shall be the sole and exclusive remedy for breach of, or inaccuracy in, any representation or warranty contained herein or any breach of this Agreement.

(d) Prior to the Closing, Buyer agrees to use its reasonable best efforts to notify Shareholder and the Company if it becomes aware of any breach by Shareholder or the Company of their representations and warranties set forth herein; provided, however, that the representations and warranties of the Shareholder and the Company shall not be affected or deemed waived by reason of any investigation made by or on behalf of Buyer (including but not limited to by any of its advisors, consultant or representatives) or by reason of the fact that Buyer or any of such advisors, consultants or representatives knew or should have known that any such representation or warranty is or might be inaccurate.

10.7 Payment of Claims. Buyer Indemnitees shall seek payment for any amounts due with respect to all claims for indemnification under Section 10.2 or Section 7.2 as follows: (A) first, the Buyer Indemnitees shall be entitled to recover the Buyer Shares, which, for purposes of this Section 10.7, shall be valued at fair market value at the time of delivery of the relevant Claim Notice, (B) any remaining amounts shall be deducted by Buyer from any future Earn-Out Payments to which the Shareholder may be entitled, and (C) thereafter, Buyer Indemnitees shall have a claim against the Shareholder for payment in cash.

10.8 Indemnity Payments as Adjustments to Purchase Price. The parties agree that to the greatest extent possible the payment of any indemnity under this Agreement shall be treated as an adjustment to the Purchase Price.

ARTICLE 11
TERMINATION

11.1 Termination. Notwithstanding anything contrary in this Agreement, this Agreement may be terminated at any time prior to the Closing Date:

(a) by either the Shareholder or Buyer, by giving written notice to the other Party on or after thirty (30) days after the date of this Agreement, if any of the conditions set forth in Articles 8 or 9 are not satisfied or waived by such date or have become incapable of fulfillment, unless such satisfaction has been frustrated or made impossible by any act or failure to act by the notifying Party;

(b) by either the Shareholder or Buyer by giving notice to the other Party at any time, if the other Party has breached any material representation, warranty, covenant or agreement contained in this Agreement and such breach has not been cured within thirty (30) days after notice of such breach or, if cure is not possible within thirty (30) days, if cure has not been commenced and is not being diligently pursued within thirty (30) days after notice of such breach; or

11.2 Procedure and Effect of Termination. In the event of termination of this Agreement pursuant to Section 11.1, no Party shall have any liability or further obligation to any other Party, and no Party shall be entitled to any monetary damages or injunctive relief (including specific performance) as a result of such termination, or any indemnification under Article 10; provided, however, that in no event shall any termination of this Agreement limit or restrict the rights and remedies of any Party against any other Party which has intentionally and willfully breached any of the agreements or other provisions of this Agreement prior to the termination hereof; and provided further, that the provisions of Section 7.4 (Confidentiality) and Article 12 (General Provisions) shall remain in full force and effect.

ARTICLE 12
GENERAL PROVISIONS

12.1 No Public Announcement. From the date of this Agreement, no Party shall, without the written approval of the other Parties (which approval shall not be unreasonably withheld or delayed), make any press release or other public announcement concerning the execution of this Agreement or the transactions contemplated by this Agreement (other than a mutually agreeable joint press release to be issued on or after the Closing Date), except as and to the extent that any such Party shall be so obligated by applicable Law, in which case such Party shall allow the other Parties reasonable time to comment on such release or announcement and the Parties shall use their reasonable efforts to cause a mutually agreeable release or announcement to be issued; provided, however, that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with any Law, accounting or SEC disclosure obligations or the rules of any stock exchange or national market system.

12.2 Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (a) when delivered personally, against written receipt, (b) if sent by registered or certified mail, return receipt requested, postage prepaid, when received, (c) when received by e-mail transmission, and (d) when delivered by a nationally recognized overnight courier service, prepaid, and shall be addressed as follows:

		If to the Company prior to the Closing, to:

		Project Planning, Incorporated
		▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
		▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
		Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
		E-mail address: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

		with a copy to:

		Holland & Knight LLP
		▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
		Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
		E-mail address: ▇▇▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇

		If to the Shareholder, to:

		▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
		▇▇ ▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
		E-mail address: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

		with a copy to:

		Holland & Knight LLP
		▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
		▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
		Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
		E-mail address: ▇▇▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇

		If to Buyer or to the Company after the Closing, to:

		SM&A
		▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
		▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
		Attention: Chief Financial Officer
		E-mail address: ▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

		with a copy to:

		▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
		▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
		▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
		Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
		E-mail address: ▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇

or to such other address as such Party may indicate by a written notice delivered to the other Parties.

12.3 Successors and Assigns. This Agreement shall not be assignable by the Shareholder without the prior written consent of the Buyer, or by Buyer without the prior written consent of the Shareholder. The Shareholder hereby consents to (a) Buyer’s (and, after the Closing, the Company’s) collateral assignment of its rights under this Agreement to the lenders who are financing the transactions contemplated by this Agreement (and all extensions, renewals, replacements, refinancings, and refundings thereof), and (b) Buyer’s (and, after the Closing, the Company’s) assignment of its rights under this Agreement to any of its Affiliates and to any purchaser of a material portion of its assets, so long as Buyer and/or the Company, as the case may be, remains liable for such Affiliate’s or purchaser’s obligations hereunder. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to confer upon any Person other than the Parties any right, remedy or claim under or by reason of this Agreement.

12.4 Entire Agreement. This Agreement, the Schedules and the Exhibits referred to herein, and the documents delivered pursuant hereto, contain the entire understanding of the Parties with regard to the subject matter contained herein or therein, and supersede all other prior agreements, understandings, term sheets, or letters of intent between or among any of the Parties.

12.5 Interpretation.

(a) Titles and headings to articles, sections and subsections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

(b) The Schedules referred to herein shall be construed with and as an integral part of this Agreement to the same extent as if they were set forth verbatim herein. Disclosure of any fact or item in any Schedule hereto referenced by a particular Section in this Agreement shall be deemed to have been disclosed with respect to all other representations, warranties or covenants contained in this Agreement to which such matter is relevant to the extent it is reasonably apparent on the face of such disclosure that it is relevant to such other representations, warranties or covenants, notwithstanding the presence or absence of an appropriate Schedule with respect to such representations, warranties or covenants or an appropriate cross-reference thereto. Neither the specification of any dollar amount in any representation or warranty contained in this Agreement nor the inclusion of any specific item in any Schedule hereto is intended to vary the definition of “Material Adverse Effect” or to imply that such amount, or higher or lower amounts, or the item so included or other items, are or are not material, and no Party shall use the fact of the setting forth of any such amount or the inclusion of any such item in any dispute or controversy between the parties as to whether any obligation, item or matter not described herein or included in any Schedule is or is not material for purposes of this Agreement. Unless this Agreement specifically provides otherwise, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in any Schedule hereto is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business,

and no Party shall use the fact of the setting forth or the inclusion of any such item or matter in any dispute or controversy between the Parties as to whether any obligation, item or matter not described herein or included in any Schedule is or is not in the ordinary course of business for purposes of this Agreement.

(c) For the purposes of this Agreement, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof”, “herein” and “herewith” and words of similar import shall be construed to refer to this Agreement in its entirety and to all of the Schedules and not to any particular provision, unless otherwise stated, and (iii) the term “including” shall mean “including without limitation.”

(d) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.

12.6 Amendments and Waivers. Any term or provision of this Agreement may be amended or waived, or the time for its performance may be extended, by the Party or Parties entitled to the benefit thereof. The failure of any Party to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any Party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach.

12.7 Expenses. Except as otherwise provided herein, each Party will pay all costs and expenses incident to its negotiation and preparation of this Agreement and to its performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including the fees, expenses and disbursements of its counsel, accountants, advisors and consultants; provided, that the Shareholder shall be liable for all Transaction Expenses incurred by the Company and the Shareholder in connection with the transactions contemplated by this Agreement to be performed prior to Closing, and such Transaction Expenses shall be paid by the Company or the Shareholder on or before the Closing Date, and the Closing Working Capital shall be determined assuming payment of all such amounts.

12.8 Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such a manner as to be effective and valid under applicable Law. In case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such provision or provisions shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability, without invalidating the remainder of such invalid, illegal or unenforceable provision or provisions or any other provisions hereof, unless such a construction would be unreasonable.

12.9 Execution. This Agreement may be executed and delivered in counterpart signature pages executed and delivered via facsimile transmission or via email with scan or email attachment, and any such counterpart executed and delivered via facsimile transmission or via email with scan or email attachment will be deemed an original for all intents and purposes.

12.10 Governing Law. This Agreement and any disputes hereunder shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware.

12.11 References to U.S. Dollars. All references in this Agreement to amounts of money expressed in dollars are references to United States dollars, unless otherwise indicated.

12.12 Further Assurances. Each Party shall execute such documents and other papers and take such further actions as may be reasonably required or desirable to carry out the provisions hereof and the transactions contemplated hereby.

12.13 Release. Effective as of the Closing Date, the Shareholder hereby releases and discharges the Company (solely in the Shareholder’s capacity as a shareholder, director, officer, or employee) from any and all claims, demands and causes of action, whether known or unknown, liquidated or contingent, relating to, arising out of or in any way connected with the dealings of the Company and the Shareholder (solely in the Shareholder’s capacity as a shareholder, director, officer or employee) from the beginning of time through the Closing, it being understood, however, that such release shall not operate to release the Company or Buyer from indemnity obligations, if any, under Article 10. Effective as of the Closing Date, the Company hereby releases and discharges the Shareholder (solely in the Shareholder’s capacity as a shareholder, director, officer, or employee) from any and all claims, demands and causes of action, whether known or unknown, liquidated or contingent, relating to, arising out of or in any way connected with the dealings of the Company and the Shareholder (solely in the Shareholder’s capacity as a shareholder, director, officer or employee) from the beginning of time through the Closing, it being understood, however, that such release shall not operate to release the Shareholder from indemnity obligations, if any, under Article 10. Each of the Shareholder and the Company acknowledges that the Laws of many states provide substantially the following: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.” Each of the Shareholder and the Company acknowledges that such provisions are designed to protect a party from waiving claims which it does not know exist or may exist. Nonetheless, the Shareholder and the Company each agree that, effective as of the Closing, the Shareholder and the Company shall be deemed to waive any such provision (solely in the Shareholder’s capacity as a shareholder, director or officer and not with respect to employment). Each of the Shareholder and the Company further agrees that the Shareholder and the Company shall not (i) institute a lawsuit or other legal proceeding based upon, arising out of, or relating to any of the released claims, (ii) participate, assist, or cooperate in any such proceeding, or (iii) encourage, assist and/or solicit any third party to institute any such proceeding.

12.14 No Rescission. Except in the event of fraud, no Party shall be entitled to rescind the transactions contemplated hereby by virtue of any failure of any Party’s representations and warranties herein to have been true or any failure by any Party to perform its obligations hereunder.

ARTICLE 13
DEFINITIONS

13.1 Definitions. In this Agreement, the following terms have the meanings specified in this Section 13.1.

“Action” means any action, claim, charge, complaint, lawsuit, legal proceeding, litigation, investigation, inquiry, subpoena or arbitration.

“Affiliate” means, with respect to any Person, any other Person, which directly or indirectly controls, is controlled by or is under common control with such Person.

“Business” means the business of providing products and services in the areas of Integrated Master Planning, Integrated Master Scheduling, Program Planning, Earned Value Management, and Scorecards.

“Business Day” means a day other than Saturday, Sunday or any day on which banks located in the State of Delaware are authorized or obligated to close.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

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

“Company Intellectual Property” means any Technology and Intellectual Property Rights (including Company Registered Intellectual Property Rights) that are owned by, or exclusively licensed to, the Company.

“Company Products” means all products, software or service offerings that have been sold, distributed, made commercially available, provided or otherwise disposed of by or for the Company.

“Company Registered Intellectual Property Rights” means all Registered Intellectual Property Rights owned by, filed in the name of, or applied for, by the Company.

“Company Source Code” means, collectively, any Software source code, any material portion or aspect of Software source code, or any material proprietary information or algorithm contained in or relating to any Software source code, owned by Company or embodied or incorporated in, or used to provide, any Company Product.

“Contract” means any written or oral contract, agreement, license, lease, guaranty, indenture, sales or purchase order or other legally binding commitment in the nature of a contract to which the Company is a party.

“Copyrights” means all copyrights, copyrights registrations and applications therefor, all moral rights, mask works, mask work registrations and applications therefor, and all other rights corresponding thereto throughout the world.

“Court Order” means any judgment, order, writ, decision, injunction, award or decree of any foreign, federal, state, local or other court or tribunal and any ruling or award in any binding arbitration proceeding.

“Encumbrance” means any lien, encumbrance, claim, charge, security interest, mortgage, deed of trust, pledge, easement, conditional sale or other title retention agreement, defect in title or other restriction of a similar kind.

“Environmental Laws” means all federal, state, local or foreign Laws, statutes, ordinances, regulations, rules, judgments, orders, notice requirements, court decisions, agency guidelines or principles of Law, restrictions and licenses pertaining to environmental matters, including, without limitation, those arising under the Resource Conservation and Recovery Act, CERCLA, the Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any other Law, order, judgment or decree relating to health, safety or the environment.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“GAAP” means United States generally accepted accounting principles, consistently applied.

“Governmental Authority” means any foreign, domestic, federal, territorial, state or local governmental authority, quasi-governmental authority, court, commission, board, bureau, agency or instrumentality, or any regulatory, administrative or other department, agency, or any political or other subdivision, department or branch of any of the foregoing.

“Indebtedness” means, as applied to any Person, all indebtedness of such Person for borrowed money, whether current or funded, or secured or unsecured, including without limitation, (a) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or debt securities, (b) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (c) all indebtedness of such Person secured by a purchase money mortgage or other Encumbrance to secure all or part of the purchase price of the property subject to such Encumbrance, (d) all obligations under leases which shall have been or must be, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable as lessee, (e) any liability of such Person in respect of banker’s acceptances or letters of credit, (f) all interest, fees, prepayment premiums and other expenses owed with respect to the indebtedness referred to above, and (g) all indebtedness referred to above which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.

“Intellectual Property Contract” means any written Contract to which Company is a party with respect to any Technology or Intellectual Property Rights, other than “shrink-wrap” or similar widely available commercial end-user binary code licenses.

“Intellectual Property Rights” means any or all of the following and all rights in, arising out of, or associated therewith: (A) all Patents; (B) all trade secrets and other rights in know-how and confidential or proprietary information; (C) all Copyrights; (D) all industrial designs and any registrations and applications therefor throughout the world; (E) all rights in World Wide Web addresses and domain names and applications and registrations therefor, all Trademarks; and (F) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

“▇▇▇▇▇▇▇▇ Agreement” means the Deferred Compensation Agreement between the Company and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated January 15, 2002.

“Key Employee Agreements” means the Employment and Non-Competition Agreements to be entered into among Buyer, the Company and the Key Employees in connection with the Closing.

“Key Employees” means the Tier 1 Key Employees and the Tier 2 Key Employees.

“Knowledge” of the Company or Shareholder means the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇, after inquiry of each of the Tier 1 Key Employees and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ regarding the applicable subject matters.

“Law” means any law, statute, rule, regulation, ordinance, order, decree, consent decree or similar instrument or determination or award of a court or any other Governmental Authority.

“Losses” means any and all losses, claims, damages, liabilities, expenses, penalties, fines, reasonable amounts paid in reasonable settlement, obligations and fees (including court costs and reasonable attorneys’ and accountants’ fees), assessments and Taxes, including, as the context may require, any of the foregoing which arise out of or in connection with any Actions or Court Orders of any Governmental Authority.

“Material Adverse Effect” means any change, circumstance or effect that is materially adverse to the business, assets, financial condition, projected financial performance, results of operations or prospects of the Company; provided, however, that Material Adverse Effect shall exclude any adverse changes or conditions as and to the extent such changes or conditions relate to or result from (a) the announcement or publicizing of the transactions contemplated by this Agreement in accordance with this Agreement, (b) the communication by Buyer of its plans or intentions with respect to the Company, (c) the consummation of the transactions contemplated by this Agreement or any actions by Buyer, the Company or the Shareholder taken pursuant to this Agreement, or (d) general deterioration in the economic conditions or other conditions generally affecting the industry in which the Company competes (except to the extent such deterioration is disproportionately adverse to the Company relative to other Persons in the industry).

“NASDAQ” means the NASDAQ National Market.

“Neutral Accounting Firm” means an independent accounting firm of nationally recognized standing that is not at the time it is to be engaged hereunder rendering services to any Party, or any Affiliate of any Party, and has not done so within the two (2) year period prior thereto.

“Net Working Capital Adjustment” means the adjustments to be made to the Purchase Price in respect of the Company’s Working Capital pursuant to Sections 1.5 and 1.6.

“Open Source Materials” means any software or other material that is distributed as “free software”, “open source software” or under a similar licensing or distribution model (including but not limited to the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL) the Sun Industry Standards License (SISL) and the Apache License).

“Patents” means all United States and foreign patents and utility models and applications therefor and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights anywhere in the world in inventions and discoveries including, without limitation, invention disclosures.

“Permits” means all licenses, permits, franchises, approvals, authorizations, consents or orders of, or filings with, any Governmental Authority or any other Person, necessary for the conduct of, or relating to the operation of, the Company.

“Person” means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“Post-Closing Tax Period” means any Tax Period beginning after the Closing Date and that portion of any Straddle Period beginning after the Closing Date.

“Pre-Closing Tax Period” means any Tax Period ending on or before the Closing Date and that portion of any Straddle Period ending at the close of business on the Closing Date.

“PTO” means the United States Patent and Trademark Office.

“Registered Intellectual Property Rights” means all United States, international and foreign: (A) Patents; (B) registered Trademarks, applications to register Trademarks, including intent-to-use applications, or other registrations or applications related to Trademarks; (C) Copyright registrations and applications; and (D) any other Intellectual Property Right that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by, any state, government or other public legal authority at any time.

“Schedules” means the schedules attached to this Agreement.

“SEC” means the Securities and Exchange Commission.

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

“Software” means any and all computer software and code, including applets, applications, operating systems, libraries, assemblers, compilers, design tools, source code, object code, data (including image and sound data) and user interfaces, in any form or format, however fixed. Software shall include source code listings and documentation.

“Stock Option” means an option to purchase one share of Common Stock of Buyer at a price equal to the last reported sale price of shares of Buyer’s Common Stock, as listed on NASDAQ (or such other securities market, quotation system or exchange on which Buyer’s common stock is then trading), on the Closing Date, issued under Buyer’s stock incentive plan.

“Straddle Period” means any Tax Period that includes but does not end on the Closing Date.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons owns a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

“SVP of Program Services” means Buyer’s Senior Vice President of Program Services.

“Target Working Capital” means Six Hundred Thousand Dollars ($600,000).

“Tax” or “Taxes” (and with correlative meaning, “Taxable” and “Taxing”) means any United States federal, state or local, or non-United States, income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, natural resources, severance, stamp, withholding, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, net worth, intangibles, social security, unemployment, disability, payroll, license, employee or other tax or similar levy, of any kind whatsoever, including any interest, penalties or additions to tax in respect of the foregoing.

“Tax Claim” means any claim arising from a breach of a representation or covenant set forth in Sections 3.8 or 7.1 or any claim arising in connection with the Shareholder’s obligations under Section 7.2.

“Tax Period” means any period prescribed by any Tax authority for which a Tax Return is required to be filed and/or for which a Tax is required to be paid.

“TaxReturn” means any return, declaration, report, claim for refund, information return or other document (including any related or supporting estimates, elections, schedules, statements or information) filed or required to be filed 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.

“Technology” means any or all of the following: (A) works of authorship including, without limitation, computer programs, algorithms, routines, source code and executable code, whether embodied in Software or otherwise, documentation, designs, files, records and data; (B) inventions (whether or not patentable), improvements, and technology; (C) proprietary and confidential information, including technical data and customer and supplier lists, trade secrets, show how, know-how and techniques; (D) databases, data compilations and collections and technical data; (E) processes, devices, prototypes, schematics, bread boards, net lists, mask works, test methodologies and hardware development tools; and (F) all instantiations of the foregoing in any form and embodied in any media.

“Tier 1 Key Employees” means ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.

“Tier 2 Key Employees” means ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.

“Trademarks” means all trade names, logos, common law trademarks and service marks, trademark and service ▇▇▇▇ registrations and applications therefor and all goodwill associated therewith throughout the world.

“Transaction Documents” means, when used in reference to a particular Person, any agreement, document or instrument to be executed by such Person in connection with the transactions contemplated hereby.

“Transaction Expenses” means the amount required to pay all expenses of the Company (prior to the Closing) and the Shareholder incurred or to be incurred in connection with the preparation, execution and consummation of this Agreement and the Closing, including fees and disbursements of attorneys, accountants and other advisors and service providers payable by the Company (prior to the Closing) or the Shareholder pursuant to Section 12.7.

“Transfer Taxes” means all sales (including bulk sales), use, transfer, recording, value added, ad valorem, privilege, documentary, gross receipts, registration, conveyance, excise, license, stamp or similar Taxes and fees arising out of, in connection with or attributable to the transactions effectuated pursuant to this Agreement.

“Working Capital” means (a) the sum of the Company’s current assets including all cash and cash equivalents, accounts receivable (less an allowance for doubtful accounts) and prepaid expenses (excluding prepaid or deferred income Taxes, income Taxes receivable and other Tax assets and any receivables from the Shareholder, its Affiliates or other Affiliates of the Company), less the sum of (ii) the Company’s current liabilities including accounts payable, accrued expenses (including accrued corporate or sales taxes and accrued retirement plan contributions), cash overdrafts, payroll liabilities payable, customer deposits (excluding deferred or current income Taxes payable or any other Tax liability).

13.2 Index of Defined Terms. Solely for convenience purposes, the following is a list of terms that are defined in this Agreement and the Section number where such definition is contained:

TERM:		SECTION:

Accounting Arbitrator		Section 1.6(c)
Adjusted Target Working Capital		Section 1.6(d)
Agreement		Preamble
Basket Amount		Section 10.2(i)
Benefit Plan		Section 3.15(a)
Business Agreements		Section 3.14
Business Employees		Section 6.1
Buyer		Preamble
Buyer Earn-Out Statement		Section 1.7(b)(i)
Buyer Indemnitees		Section 10.2
Buyer SEC Documents		Section 4.7
Buyer Shares		Section 1.2(a)
Claim Notice		Section 10.4(a)
Closing		Section 1.3
Closing Balance Sheet		Section 1.6
Closing Cash Payment		Section 1.2(b)(iii)
Closing Date		Section 1.3
Closing Payment Certificate		Section 1.4(a)(ii)
Closing Working Capital		Section 1.6
Closing Working Capital Statement		Section 1.6
COBRA		Section 3.15(g)
Common Stock		Section 3.4
Company		Preamble
Controlling Party		Section 10.5(b)
Critical Representations and Covenants		Section 10.1
Delivered Tax Returns		Section 3.8(b)
Dispute Notice		Section 1.7(b)(ii)
Earn-Out Consideration		Section 1.7(a)
Earn-Out Period		Section 1.7(a)
Earn-Out Term		Section 1.7(a)
Employee Benefit Plan		Section 3.15(a)
ERISA		Section 3.15(a)
ERISA Affiliate		Section 3.15(b)

TERM:		SECTION:

Erroneous Party		Section 1.6(c)
Estimated Closing Balance Sheet		Section 1.5(a)
Estimated Closing Working Capital		Section 1.5(a)
Estimated Working Capital Deficiency		Section 1.5(b)
Estimated Working Capital Surplus		Section 1.5(b)
Expiration Date		Section 10.1
Facilities		Section 3.10(b)(i)
Final Allocation Schedule		Section 7.1(d)
Financial Statements		Section 3.5
Indemnification Cap		Section 10.2(i)
Indemnified Party		Section 10.4(a)
Indemnitor		Section 10.4(a)
Initial Dispute Resolution Period		Section 7.2(b)(iii)
Insurance Benefits		Section 10.6(a)
Insurance Policies		Section 3.19
IRS		Section 3.15(c)
Leases		Section 3.10(b)(i)
Material Customers		Section 3.20
Most Recent Balance Sheet Date		Section 3.5
Most Recent Financial Statements		Section 3.5
Non-Compete Payments		Section 6.2(b)
Objection Notice		Section 7.2(b)(ii)
Party		Preamble
Pension Plan		Section 3.15(a)
Per Diem Taxes		Section 7.2(b)(i)
Proposed Allocation Schedule		7.1(d)
Purchase Option Agreements		Section 3.10(b)(ii)
Purchase Price		Section 1.2(a)
Real Property Agreements		Section 3.10(b)(iii)
Required Consents		Section 9.6
Restricted Period		Section 7.3(b)
Review Period		Section 7.2(b)(ii)
Sale Option Agreements		Section 3.10(b)(iii)
Section 338(h)(10) Election		Section 7.1(c)
Section 338 Forms		Section 7.2(a)(i)
Shareholder		Preamble
Shares		Recital A
Status Quo Payments		Section 1.7(a)(i)
Terminated Employee Benefit Plans		Section 6.1(b)
Territory		Section 7.3(a)
Welfare Plan		Section 3.15(a)
Year-End Financial Statements		Section 3.5

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Parties have executed or caused this Stock Purchase Agreement to be executed and delivered as of the day and year first above written.

“BUYER”:

SM&A,

a Delaware corporation

By:

/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇

Name:

▇▇▇▇▇▇ ▇. ▇▇▇▇▇

Title:

Chairman & CEO

“COMPANY”:

PROJECT PLANNING, INCORPORATED,

a Massachusetts corporation

By:

/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇

Name:

▇▇▇▇▇▇▇ ▇. ▇▇▇▇

Title:

President

“SHAREHOLDER”:

/s/

▇▇▇▇▇▇▇ ▇▇▇▇

STOCK PURCHASE AGREEMENT by and among PROJECT PLANNING, INCORPORATED, RICHARD BOWE, ITS SHAREHOLDER, and SM&A

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