ASSET PURCHASE AGREEMENT

 

<PAGE>

 

                                                                    EXHIBIT 99.2

 

                            ASSET PURCHASE AGREEMENT

 

                             DATED NOVEMBER 10, 2005

 

                                  BY AND AMONG

 

                         ACS STATE & LOCAL SOLUTIONS, INC.

 

                                   AS SELLER,

 

                                       AND

 

                                 ARBOR E&T, LLC,

 

                                    AS BUYER

 

<PAGE>

 

                             ASSET PURCHASE AGREEMENT

 

      This Asset Purchase Agreement is made and entered into as of November 10,

2005 by and among (i) ACS State & Local Solutions, Inc., a New York corporation

("Seller"), (ii) Arbor E&T, LLC, a Kentucky limited liability company ("Buyer"),

(iii) solely for the purpose of guaranteeing the performance by Buyer of its

obligations in Section 3 and its indemnification obligations in Section 13 of

this Agreement, Res-Care, Inc., a Kentucky corporation ("Res-Care"), and (iv)

solely for the purpose of guaranteeing the performance by Seller of its

indemnification obligations in Section 13 of this Agreement, Affiliated Computer

Services, Inc., a Delaware corporation ("ACS").

 

                                    RECITAL:

 

       A. WHEREAS, Seller is the owner of the Acquired Assets, through which

Seller operates the Subject Business;

 

      B. WHEREAS, Seller is, directly or indirectly, a wholly-owned subsidiary

of ACS;

 

      C. WHEREAS, Buyer is a wholly-owned subsidiary of Res-Care; and

 

      D. WHEREAS, Seller desires to sell, convey, transfer and assign to Buyer,

and Buyer desires to purchase and acquire from Seller, all of the Acquired

Assets and Buyer has agreed to assume certain liabilities of Seller, upon the

terms and conditions set forth in this Agreement.

 

                                   AGREEMENT:

 

      NOW, THEREFORE, in consideration of the foregoing premises and the

warranties, representations, covenants and agreements contained herein, Seller

and Buyer agree as follows:

 

SECTION 1. CERTAIN DEFINITIONS:

 

      As used in this Agreement the following terms will have the indicated

meanings:

 

      "ACCOUNTS RECEIVABLE" shall mean all billed accounts receivable of the

Subject Business.

 

      "ACQUIRED ASSETS" shall mean, other than for assets and properties falling

within the definition of the Excluded Assets, the following assets and

properties (i) Assumed Contracts, (ii) Tangible Personal Property, (iii)

Business Records, (iv) Goodwill, (vi) Transferable Permits, (vi) Owned

Intellectual Property and (viii) all other assets and properties that are owned

by Seller or any of its Affiliates and exclusively used or held for exclusive

use in the Subject Business.

 

      "ACQUIRED BUSINESS" is defined in Section 8.5(b).

 

      "ACS" is defined in the preamble to this Agreement.

 

ASSET PURCHASE AGREEMENT                                                   PAGE 1

 

<PAGE>

 

      "ACS LOGOS" shall mean the name, logo and other identifying names, marks

and slogans of ACS and any of its Affiliates.

 

      "AFFILIATE" shall mean with respect to the indicated Person any other

Person who, directly or indirectly, controls, is controlled by, or is under

common control with, the indicated Person and also means any officer, director,

trustee, shareholder, manager, principal, partner or member of the indicated

Person or the other Person. For purposes of this definition, the terms

"control", "controlled by" and "under common control with" means the possession

directly or indirectly of the power to direct or cause the direction of the

management and policies of the indicated Person, whether through the ownership

of voting securities, by trust, management agreement, contract or otherwise.

 

      "AGREEMENT" shall mean this Asset Purchase Agreement, as it may be amended

from time to time by agreement of the parties, and all Exhibits and Schedules

attached hereto together with any permitted or agreed updates or amendments to

such Exhibits and/or Schedules.

 

      "APPLICABLE LAW" shall mean any applicable federal, state, local,

municipal, foreign or other law, statute, constitution, resolution, ordinance,

code, edict, decree, rule, regulation, ruling or requirement issued, enacted,

adopted, promulgated, implemented or otherwise put into effect by or under the

authority of any Governmental Entity on or prior to the Closing Date.

 

      "ASSUMED CONTRACTS" shall mean the Operating Contracts, the Customer

Contracts, the Intellectual Property Licenses, the Real Estate Leases and the

subleases set forth on Schedule 4.12.

 

      "ASSUMED LIABILITIES" is defined in Section 2.3.

 

      "BALANCE SHEETS" is defined in Section 4.5.

 

      "BASKET AMOUNT" is defined in Section 13.3(a).

 

      "BUSINESS DAY" shall mean any day other than Saturday, Sunday or a day on

which commercial banks in New York, New York are authorized or required to be

closed.

 

      "BUSINESS PROPRIETARY INFORMATION" shall mean any and all information

related to or concerning the Subject Business which has not been, or is not

made, generally available to the public by Seller prior to the Closing Date.

 

      "BUSINESS RECORDS" shall mean all business books, records, files and

papers, whether in hard copy or electronic format, of Seller used exclusively in

the Subject Business, including books of account, invoices, sales and

promotional literature, manuals and data, sales and purchase correspondence,

lists of present and former suppliers, lists of present and former customers,

documentation developed or used for accounting, marketing, or any other purpose

relating exclusively to the conduct of the Subject Business at any time prior to

the Closing except to the extent Seller or an Affiliate of Seller is required to

retain the originals pursuant to any Applicable Law and, in which case, Buyer

will be provided with a copy.

 

ASSET PURCHASE AGREEMENT                                                   PAGE 2

 

<PAGE>

 

      "BUYER" is defined in the preamble to this Agreement.

 

      "BUYER EXPENSE" is defined in Section 11.13(a).

 

      "BUYER PTO" shall mean all Paid Time Off of the Employees other than the

Seller PTO.

 

      "BUYER REVENUE" is defined in Section 11.13(a).

 

      "BUYER'S REP" is defined in Section 11.13(e).

 

      "CLAIM NOTICE" is defined in Section 13.1.

 

      "CLOSING" is defined in Section 3.1.

 

      "CLOSING DATE" is defined in Section 3.1.

 

      "CODE" shall mean the Internal Revenue Code of 1986, as amended.

 

      "COMPETING BUSINESS" is defined in Section 8.5(a).

 

      "CONFIDENTIALITY AGREEMENT" is defined in Section 6.1.

 

      "CONTRACT" shall mean any written, oral or other agreement, contract,

subcontract, equipment lease or other lease, license agreement, understanding,

instrument, note, bond, mortgage, indenture, warranty, insurance policy, or

legally binding commitment or undertaking of any nature to which a Person is a

party or by which the assets or properties of a Person are bound.

 

      "COPYRIGHTS" shall mean all domestic and foreign copyright interests in

any original work of authorship fixed in a tangible medium of expression,

whether registered or unregistered, including but not limited to all copyright

registrations or foreign equivalents, all applications for registration or

foreign equivalent, all moral rights, all common-law rights, and all rights to

register and obtain renewals and extensions of copyright registrations, together

with all other copyright interests accruing by reason of international copyright

convention, together with all income, royalties, damages and payments now or

hereafter due or payable with respect thereto and the right to sue for past,

present, or future infringement and to collect and retain all damages and

profits therefor.

 

      "CURRENT BALANCE SHEET" is defined in Section 4.5(a).

 

      "CUSTOMERS" shall mean the customers under the Customer Contracts.

 

      "CUSTOMER CONTRACTS" shall mean the contracts listed on Schedule 4.13 and

those Contracts for the Subject Business that are entered into during the

Pre-Closing Period in accordance with Section 6.2.

 

ASSET PURCHASE AGREEMENT                                                   PAGE 3

 

<PAGE>

 

      "DAMAGES" shall mean any loss, damage, injury, liability, claim, demand,

amounts paid in settlement, judgment, award, fine, penalty, tax, fee (including

reasonable attorneys' fees), charge, cost (including costs of investigation),

amount due or expense of any nature, except Damages does not include the types

of damages described in Section 14.3. Such Damage or Damages shall be calculated

to be net of any tax benefits received or realized by a party in connection with

the Damage or Damages.

 

      "DISPUTE" is defined in Sec. 14.16.

 

      "DISQUALIFYING ACQUISITION" is defined in Section 8.5(c).

 

      "DISQUALIFIED BUSINESS" is defined in Section 8.5(c).

 

      "DOCUMENTATION" shall mean those materials developed for use in connection

with particular software in order to explain, instruct or clarify the

construction, operation, function, programming or features of the particular

software. Without limiting the generality of the foregoing, Documentation also

includes user and programming manuals, programmer notes, flow charts,

schematics, illustrations, logic diagrams, descriptions of data flows, data

structures, operating instructions, input information, training documents and

format and technical and functional specifications.

 

      "DROP DEAD DATE" shall mean the date that is three months from the date of

the execution of this Agreement.

 

      "EMPLOYEE BENEFIT PLANS" means any of the following arrangements under

which Seller, or any of its Affiliates, has any liability to provide benefits or

compensation to or on behalf of any Employee, or the spouse or dependents of any

Employee: (a) any employee welfare benefit plan within the meaning of Section

3(1) of ERISA, (b) any employee benefit plan within the meaning of Section 3(3)

of ERISA, (c) any employee pension benefit plan within the meaning of Section

3(2) of ERISA, and (d) any other material profit-sharing, deferred compensation,

incentive compensation, bonus, commission, stock option, stock purchase,

severance pay, unemployment benefit, vacation pay, savings, dependent care,

scholarship, accident, disability, weekly income, salary continuation or other

compensation or fringe benefit plan or program.

 

      "EMPLOYEES" shall mean with respect to the Subject Business all full-time

and part-time employees, employees on workers' compensation, military leave,

maternity leave, leave under the Family and Medical Leave Act of 1993,

short-term disability, salary continuation, on layoff with recall rights, and

employees on other approved leaves of absence with a legal or contractual right

to reinstatement; provided that "Employees" shall not include Seasonal

Employees. A list of the Employees as of October 31, 2005 is set forth on

Schedule 4.17(a).

 

      "EMPLOYEE PROCEEDING" shall mean any pending or threatened Legal

Proceeding raised or made by or on behalf of an Employee or any Seasonal

Employee that is based on an employer-employee relationship including, but not

limited to, claims of sexual harassment,

 

ASSET PURCHASE AGREEMENT                                                   PAGE 4

 

<PAGE>

 

retaliation, wrongful termination, hostile work environment, employee benefits

and any similar claims.

 

      "ENCUMBRANCE" shall mean any charge, encumbrance, encroachment, option,

right of first refusal, preemptive right or other material restriction of any

kind that is not inherent in the nature of, or normally characteristic of, the

particular asset or property in question.

 

      "ENVIRONMENTAL LAWS" means all Applicable Laws pertaining to the

environment, natural resources, and public or employee health and safety as any

of same may be in effect on or prior to the Closing Date.

 

      "ENVIRONMENTAL LIABILITIES" shall mean those liabilities of Seller from

the operation of the Subject Business prior to the Closing Date that arise from

or under any Environmental Law, including those consisting of or relating to:

(a) any environmental, health or safety matter or condition (including on-site

contamination or occupational safety, health and regulation of any chemical

substance or product); (b) any Damages from Seller's operation of the Subject

Business prior to the Closing Date that arise under any Environmental Law; (c)

financial responsibility under any Environmental Law for cleanup costs or

corrective action, including any cleanup, removal, containment or other

remediation or response actions required by any Environmental Law and for any

natural resource damages; or (d) any other compliance, corrective or remedial

measure required under any Environmental Law, including any applicable

Environmental Law relating to the release of Hazardous Materials. The terms

"removal", "remedial", and "response action" include the types of activities

covered by the United States Comprehensive Environmental Response, Compensation

and Liability Act of 1980 (CERCLA).

 

      "ENVIRONMENTAL VIOLATION" is defined in Section 4.18.

 

      "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as

amended.

 

      "EXCLUDED ASSETS" is defined in Section 2.4.

 

      "EXPIRATION DATE" is defined in Section 13.1.

 

      "FINANCIAL STATEMENTS" is defined in Section 4.5(a).

 

      "FIRST CAP LIMITATION" shall mean $10,000,000.

 

      "GAAP" shall mean generally accepted accounting principles in the United

States of America as in effect from time to time through the Closing Date as

applied on a consistent basis from period to period by the Seller in the past as

set forth in the opinions and pronouncements of the Accounting Principles Board

and the American Institute of Certified Public Accountants and the statements

and pronouncements of the Financial Accounting Standards Board.

 

      "GOODWILL" shall mean the goodwill associated with the Subject Business.

 

ASSET PURCHASE AGREEMENT                                                   PAGE 5

 

<PAGE>

 

      "GOVERNMENTAL AUTHORIZATION" shall mean any permit, license, certificate,

franchise, permission, clearance, registration, qualification or authorization

issued, granted, given or otherwise made available by or under the authority of

any Governmental Entity or pursuant to any Applicable Law; provided that

"Governmental Authorization" does not include Government Contracts or consent by

a Governmental Entity to the assignment of a Governmental Contract.

 

      "GOVERNMENT CONTRACT" is defined in Section 4.23.

 

      "GOVERNMENTAL ENTITY" shall mean any: (i) nation, state, commonwealth,

province, territory, county, municipality, district or other jurisdiction of any

nature; (ii) federal, state, local, municipal, foreign or other government; or

(iii) governmental or quasi-governmental authority of any nature including any

governmental division, department, agency, commission, instrumentality,

official, organization, unit or body and any court or other tribunal.

 

      "HAZARDOUS MATERIALS" shall mean (i) any "hazardous substance" or

"pollutant" or "contaminant," as such terms are defined in the Comprehensive

Environmental Response, Compensation and Liability Act, (ii) any toxic or

hazardous substance, material or waste, (iii) "petroleum" as that term is

defined in the Resource Conservation and Recovery Act or (iv) any other

substance or waste which is regulated under any applicable Environmental Law

with respect to its discharge, release or disposal.

 

      "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of

1976, as amended.

 

      "INCOME STATEMENTS" is defined in Section 4.5(a).

 

      "INTELLECTUAL PROPERTY" shall mean Patent Rights, Trademark Rights,

Copyrights, Know-How, Software, Trade Secrets, Inventions and includes without

limitation, internet domain name registrations, designs, blueprints, drawings,

proprietary right or other intellectual property right or intangible asset or

right to use or exploit any of the foregoing.

 

      "INTELLECTUAL PROPERTY LICENSES" shall mean those written Contracts that

provide for the license by a third party to Seller of Intellectual Property that

is exclusively used in the Subject Business.

 

      "INVENTIONS" shall mean, whether or not patentable, novel devices,

processes, compositions of matter, methods, techniques, observations,

discoveries, apparatuses, formulas, machines, designs, expressions, theories and

ideas, and improvements thereto.

 

      "KNOW-HOW" shall mean scientific, engineering, mechanical, electrical,

financial, marketing or practical knowledge or experience useful in the

operation of the Subject Business.

 

      "KNOWLEDGE OF BUYER" shall mean the actual knowledge, after reasonable

inquiry, of any of Paul Dunn, Vince Doran, David Miles, John Dunkle and Ross

Davison.

 

ASSET PURCHASE AGREEMENT                                                   PAGE 6

 

<PAGE>

 

      "KNOWLEDGE OF SELLER" and "SELLER'S KNOWLEDGE" shall mean the actual

knowledge, after reasonable inquiry, of any of Gerald Miller, Ray Saulino, Pat

Mele, Tim Giannoni, John Rexford and Michael Natelli.

 

      "LEGAL PROCEEDING" shall mean any action, suit, litigation, arbitration,

proceeding (including any civil, criminal, administrative, investigative or

appellate proceeding), hearing, inquiry, audit, examination or investigation

commenced, brought, conducted or heard by or before any court or other

Governmental Entity or any arbitrator or arbitration panel.

 

      "LIABILITY" or "LIABILITIES" shall be broadly construed to mean all costs,

expenses, liabilities, duties, responsibilities, obligations, debts, claims,

loss, damages, demands, lawsuits, Taxes and all other forms and types of

liabilities and obligations of any nature whether fixed, contingent, liquidated,

unliquidated, and whether or not required by GAAP to be reflected on a financial

statement.

 

      "LIEN" shall mean any lien, pledge, mortgage, deed of trust, attachment or

other security interest in an asset for the payment or performance of some debt

or obligation.

 

      "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the

business, operations, assets or financial condition of the Subject Business

taken as a whole, but excluding however material adverse effects to the extent

related to (i) business or economic conditions generally or the industries in

which the Subject Business operates, (ii) national or international political or

social conditions, including the engagement by the United States in hostilities,

whether or not pursuant to the declaration of a national emergency or war, or

the occurrence of any military or terrorist attack upon the United States, or

any of its territories, possessions, or diplomatic or consular offices or upon

any military installation, equipment or personnel of the United States, (iii)

financial, banking or securities markets (including any disruption thereof and

any decline in the price of any security or any market index and including

changes in interest or exchange rates), (iv) changes in United States generally

accepted accounting principles, (v) changes in Applicable Laws other than those

which would preclude, disrupt or hinder the Subject Business from conducting its

business in the ordinary course, or (vi) the announcement of, or the taking of

any action contemplated by, this Agreement.

 

      "NECESSARY THIRD PARTY CONSENTS" is defined in Section 8.7.

 

      "NON-COMPETITION PERIOD" is defined in Section 8.5(a).

 

      "OPERATING CONTRACTS" shall mean all of the Contracts of Seller or its

Affiliates with vendors and suppliers pursuant to which all or substantially all

of the goods or services procured thereunder are used in the Subject Business,

including the Contracts listed on Schedule 4.14.

 

      "OWNED INTELLECTUAL PROPERTY" shall mean all items of Intellectual

Property owned by Seller that are used exclusively or held for exclusive use in

the Subject Business.

 

      "PAID TIME OFF" or "PTO" shall mean vacation, sick leave and other

personal leave time with respect to which an Employee is entitled to be paid

while off from work.

 

ASSET PURCHASE AGREEMENT                                                   PAGE 7

 

<PAGE>

 

      "PATENT RIGHTS" shall mean and include all domestic and foreign patents

(including without limitation certificates of invention and other patent

equivalents), provisional applications, patent applications and patents issuing

therefrom as well as any division, continuation or continuation in part,

reissue, extension, reexamination, certification, revival or renewal of any

patent, all Inventions and subject matter related to such patents, in any and

all forms, together with all income, royalties, damages and payments now or

hereafter due or payable with respect thereto and the right to sue for past,

present, or future infringement and to collect and retain all damages and

profits therefor.

 

      "PERSON" shall mean any individual, corporation, general partnership,

limited partnership, limited liability partnership, limited liability company,

joint venture, estate, trust, company, firm or other legal enterprise,

association, organization and any Governmental Entity.

 

      "PERMITTED EXCEPTIONS" shall mean (i) any Encumbrance or Lien that is not

material in amount or character, (ii) any Encumbrance or Lien that does not

singly or in the aggregate with other Encumbrances or Liens materially detract

from the value of the property to which it relates or materially detract from or

interfere with the use of property to which it relates in the ordinary conduct

of business as presently conducted, (iii) an Encumbrance or Lien arising in the

ordinary course of business that has not been filed of record and that relates

to an obligation as to which there is no material default on the part of Seller,

(iv) an Encumbrance or Lien for Taxes that are not yet due and payable or for

Taxes that are being contested in good faith by appropriate proceedings and as

to which adequate reserves have been established on the financial statements of

the Seller in accordance with GAAP, (v) Encumbrances against Contracts, leases,

subleases, equipment leases, licenses and similar agreements entered into in the

ordinary course of business, (vi) zoning, building, fire, health, environmental

and pollution control laws, ordinances, rules and safety regulations and other

similar restrictions, and (vii) Liens placed on the Acquired Assets by Buyer at

the time of Closing.

 

      "PRE-CLOSING PERIOD" shall mean the period between the date of this

Agreement and the Closing Date.

 

      "PUBLIC ELEMENTS" is defined in Section 4.10.

 

      "PURCHASE PRICE" is defined in Section 2.2.

 

      "REAL ESTATE LEASES" shall mean those real estate leases covering leased

premises that are used exclusively by the Subject Business.

 

      "RECONCILIATION SCHEDULE" is defined in Section 11.13(f).

 

      "REPRESENTATIVES" shall mean with respect to a particular Person, the

officers, directors, managers, members, employees, agents, attorneys,

accountants, advisors and other representatives of such Person.

 

      "RES-CARE" is defined in the preamble to this Agreement.

 

ASSET PURCHASE AGREEMENT                                                   PAGE 8

 

<PAGE>

 

      "RETAINED BUSINESS" shall mean all businesses and operations of any type

or character of the Seller and its Affiliates other than the Subject Business.

 

      "RETAINED LIABILITIES" is defined in Section 2.5.

 

      "SCHEDULES" or "SCHEDULE" shall mean a numbered Schedule attached to or

accompanying this Agreement.

 

      "SCHEDULE UPDATES" is defined in Section 6.4.

 

      "SEASONAL EMPLOYEES" shall mean those individuals who, under the terms of

applicable Customer Contracts, are placed on Seller's payroll system for a

limited duration and are engaged in the Subject Business. Such individuals are

not included within the definition of "Employees" but those Seasonal Employees

that are employed as of October 31, 2005 are set forth on Schedule 4.17(a).

 

      "SECOND CAP LIMITATION" shall mean an amount equal to the Purchase Price.

 

      "SELLER" is defined in the preamble to this Agreement.

 

      "SELLER EMPLOYEE BENEFIT PLANS" is defined in Section 4.17(b).

 

      "SELLER GUARANTEE OBLIGATIONS" is defined in Section 8.7(c).

 

      "SELLER EXPENSE" is defined in Section 11.13(a).

 

      "SELLER PTO" shall mean, without duplication (i) accrued and unused

vacation time as of the Closing Date of those Employees who were employed by

predecessors to Seller and that Seller has accrued and carried as a liability on

its balance sheet for the Subject Business and (ii) accrued and unused vacation

time as of the Closing Date of the Employees that is required by Applicable Law

to be paid to the Employees upon their termination of employment with Seller,

unless and to the extent that under Applicable Law such vacation time is carried

over by an Employee from Seller to Buyer.

 

      "SELLER REVENUE" is defined in Section 11.13(a).

 

      "SELLER'S FACILITIES" shall mean the leased premises covered by the Real

Estate Leases that are occupied by the Subject Business.

 

      "SELLER INFORMATION" is defined in Sec. 12.4.

 

      "SELLER'S MARKS" is defined in Section 8.6.

 

      "SELLER'S REP" is defined in Section 11.13(e).

 

      "SHARED SERVICES" is defined in Section 8.4.

 

ASSET PURCHASE AGREEMENT                                                   PAGE 9

 

<PAGE>

 

      "SOFTWARE" shall mean materials associated with software systems used

exclusively by the Subject Business consisting of: (i) any and all computer

software, including all Source Code and object code, (ii) machine readable

databases and compilations, including any and all data and collections of data,

(iii) Documentation and (iv) all content contained on the internet site of the

Subject Business.

 

      "SOURCE CODE" will be deemed to mean the instruction set for the

applicable Software, or portion thereof, including comments and procedural code,

such as compilation switches, job control language statements and a description

of the system/program generation procedure, in a form intelligible to human

programmers and capable of being readily translated into object code for

execution on computer equipment through assembly or compiling, together with the

documentation required to facilitate such translation, assembly and compiling;

including, without limitation, programmers' notes, technical and functional

specifications, flow charts, schematics, test programs, statements of principles

of operations, architectural and design standards and descriptions of data

flows, data structures and control logic.

 

      "STRADDLE PERIOD" is defined in Sec. 11.13(b).

 

      "SUBJECT BUSINESS" shall mean that sub-line business unit of Seller known

as the "Workforce and Community Solutions" that provides (i) job counseling, job

training, job placement, job retention and related employer services for

eligible program participants and other "One-Stop Constituents" in furtherance

of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act

(PRWORA) and the 1998 Workforce Investment Act (WIA) and (ii) alternative

education services that assist with youth in danger of being expelled from

school.

 

      "TANGIBLE PERSONAL PROPERTY" shall mean all equipment, office equipment,

furniture, furnishings, computer equipment, printers, servers, switches, spare

parts, materials, machinery, tools, vehicles and all other items of tangible

personal property exclusively used or held for exclusive use in the Subject

Business, including without limitation the tangible personal property listed on

Schedule 4.9(a).

 

      "TAX" or "TAXES" shall mean (i) any and all taxes, charges, fees, levies,

assessments, duties or other amounts payable to any Governmental Entity

including income, franchise, profits, gross receipts, unrelated business taxable

income, minimum, alternative or add-on minimum, estimated, ad valorem,

value-added, sales, use, service, real or personal property, payroll,

withholding, disability, employment, social security, workers compensation,

unemployment compensation, utility, severance, excise, stamp, transfer and gains

taxes, (ii) customs, duties, imposts, charges, levies or other similar

assessments of any kind, and (iii) interest, penalties and additions to tax.

 

      "TAX RETURN" shall mean any return (including any information return),

report, statement, declaration, estimate, schedule, notice, notification, form,

election, certificate or other document or information filed with or submitted

to, or required to be filed with or submitted to, any Governmental Entity in

connection with the determination, assessment, collection or

 

ASSET PURCHASE AGREEMENT                                                   PAGE 10

 

<PAGE>

 

payment of any Tax or in connection with the administration, implementation or

enforcement of or compliance with any Applicable Law relating to any Tax.

 

      "THIRD PARTY RIGHTS" is defined in Section 4.10.

 

      "TRADE SECRETS" shall mean any formula, design, device or compilation, or

other information which is used or held for use by a business, which gives the

holder thereof an advantage or opportunity for advantage over competitors which

do not have or use the same, and which is not generally known by the public.

Trade Secrets can include, by way of example, formulas, Source Code, market

surveys, market research studies, information contained on drawings and other

documents, and information relating to research, development or testing.

 

      "TRADEMARK RIGHTS" shall mean and includes all domestic and foreign

trademarks, trade dress, service marks, trade names, icons, logos, slogans, and

any other indicia of source or sponsorship of goods and services, designs and

logotypes related to the above, in any and all forms, whether registered or

unregistered, and all trademark registrations and applications for registration

related to such trademarks (including, but not limited to intent to use

applications), together with any and all accounts, contract rights, warranties,

litigation claims and rights, and the right to sue for past, present, or future

infringement and to collect and retain all damages and profits therefore and all

income, royalties, damages and payments now or hereafter due or payable with

respect thereto.

 

      "TRANSACTION" shall mean the transactions contemplated by the Transaction

Documents.

 

      "TRANSACTION DOCUMENTS" shall mean this Agreement, the Transition Services

Agreement, and the other agreements and instruments delivered at Closing

pursuant to this Agreement.

 

      "TRANSFERABLE PERMITS" shall mean all Governmental Authorizations held by

the Seller exclusively with respect to the Subject Business that can be

transferred by assignment to Buyer under Applicable Law without consent of the

applicable Governmental Entity.

 

      "TRANSFERRED EMPLOYEES" shall mean those of the Employees who accept

employment with the Buyer in connection with the Transaction.

 

      "TRANSFER TAXES" is defined in Section 11.9.

 

      "TRANSITION SERVICES AGREEMENT" is defined in Section 8.4.

 

      "TYPE A SPECIAL REPRESENTATIONS" shall mean the representations and

warranties contained in Sections 4.17 (Employees and Employee Benefit Plans),

4.18 (Environmental Matters) and 4.21 (Taxes).

 

      "TYPE B SPECIAL REPRESENTATIONS" shall mean the representations and

warranties contained in Sections 4.1 (Organization and Good Standing), 4.2

(Authorization, Execution and Validity) and 4.8 (Title to Acquired Assets).

 

ASSET PURCHASE AGREEMENT                                                  PAGE 11

 

<PAGE>

 

      "WARN ACT" means the Worker Adjustment and Retraining Notification Act of

1988.

 

SECTION 2. SALE AND PURCHASE, PURCHASE PRICE, ETC.

 

      2.1 Purchase and Sale of Acquired Assets. At the Closing, Seller shall

sell, transfer, assign, convey and deliver to Buyer, and Buyer shall acquire,

accept and purchase from Seller, the Acquired Assets, free and clear of all

Liens and Encumbrances other than Permitted Exceptions, all upon the terms and

subject to the conditions set forth in this Agreement.

 

      2.2 Purchase Price. At the Closing, Buyer shall pay to Seller Sixty-Nine

Million Dollars ($69,000,000) (the "Purchase Price"). In addition, Buyer shall

pay to Seller cash in the amount of any deposits that are transferred to Buyer

pursuant to Section 8.9. Such payments shall be made by wire transfer of

immediately available funds in U.S. Dollars at the Closing to an account

designated by Seller to Buyer at least one Business Day prior to the Closing

Date.

 

      2.3 Assumed Liabilities. As further consideration for the conveyance of

the Acquired Assets from Seller to Buyer, Buyer agrees to assume at the Closing

the following described liabilities of Seller and its Affiliates (referred to

herein as the "Assumed Liabilities"): (i) all Liabilities arising from and after

the Closing Date under the Assumed Contracts, (ii) all Liabilities arising out

of Buyer's operation of the Subject Business under the Transferable Permits,

(iii) all Liabilities arising out of Buyer's ownership and operation of the

Acquired Assets and the Subject Business from and after the Closing Date, (iv)

all Buyer PTO that arises prior to the Closing Date, (v) Buyer's severance and

termination obligations as provided in Section 8.1(a), and (vi) Buyer's

responsibility for any WARN Act liability or liability under any similar

Applicable Law as provided in Section 8.2.

 

      2.4 Excluded Assets. To avoid any confusion and to remove all doubt, it is

expressly agreed and understood that Seller is not selling, conveying or

assigning to Buyer (i) any cash, (ii) Accounts Receivable, (iii) any unbilled

accounts receivable or work in progress that has not yet been billed but relates

to work or services performed or accrued prior to the Closing Date and any other

revenues or fees that relate to work or services performed prior to the Closing

Date, (iv) working capital of the Subject Business (including deposits;

provided, however, that if Buyer purchases a deposit pursuant to Section 2.2,

such deposit will not be an Excluded Asset but will be an Acquired Asset), (v)

the bank accounts and lock boxes of the Subject Business, and (vi) any property

or asset of Seller or any of its Affiliates, whether real, personal or mixed, or

tangible or intangible, that is not expressly and specifically described within

the definition of the Acquired Assets (collectively, the "Excluded Assets").

 

      2.5 Retained Liabilities. The Retained Liabilities shall remain the sole

responsibility of and shall be retained, paid and performed solely by Seller.

"Retained Liabilities" shall mean all Liabilities of the Seller or its

Affiliates arising from their operation of the Subject Business prior to the

Closing Date except for those obligations of Buyer as set forth in Section

2.3(iv) through (vi). Except for those obligations of Buyer as set forth in

Section 2.3(iv) through (vi), the Retained Liabilities shall include (i)

Liabilities arising from the acts or omissions of Seller or its Affiliates in

the operation of the Subject Business prior to the Closing Date, (ii)

Liabilities arising prior to the Closing Date under the Assumed Contracts, and

(iii) Liabilities arising out of

 

ASSET PURCHASE AGREEMENT                                                   PAGE 12

 

<PAGE>

 

Seller's or its Affiliate's ownership and operation of the Acquired Assets prior

to the Closing Date.

 

      2.6 Software. Seller shall have no responsibility to Buyer or any other

Person to provide upgrades, updates, support or maintenance with respect to any

Software included within the Acquired Assets.

 

      2.7 Bulk Transfer Law. Buyer and Seller hereby waive compliance with the

requirements of any applicable bulk sales law provisions of the Uniform

Commercial Code of the jurisdictions in which the Acquired Assets are situated

or which may otherwise be applicable to the Transaction. This provision shall

not be deemed to limit the indemnity provided in Section 13 hereof.

 

SECTION 3. CLOSING

 

      3.1 Closing. The Closing of the transactions contemplated hereby (the

"Closing") shall occur on or before the fifth (5th) Business Day (the "Closing

Date") following satisfaction or waiver of all of the conditions to Closing of

Seller and Buyer set forth in Sections 9 and 10 and shall take place at the

offices of Seller's counsel at 10:00 a.m., local time at the place of Closing.

Notwithstanding the foregoing, the parties will endeavor in good faith to

effectuate the Closing simultaneously in different locations to avoid the travel

and additional expense of requiring all parties to be simultaneously located in

the same place. In connection therewith the parties will deliver, in escrow to

opposing counsel and other appropriate parties, all assignments, instructions,

documents, certificates, wire transfer instructions, escrow instructions and

other matters and things necessary to effect Closing in such manner. Upon

consummation, the Closing shall be effective as of 12:01 a.m. on the Closing

Date.

 

      3.2 Closing Deliveries By Seller. At the Closing, Seller shall make, or

cause to be made, the following deliveries to Buyer:

 

      (a) One or more Bills of Sale in the form of Exhibit A attached hereto

conveying the Acquired Assets to Buyer and those additional conveyance

instruments reasonably necessary to convey the Acquired Assets to Buyer;

 

      (b) A certificate of the secretary of Seller certifying (i) the

resolutions authorizing the Transaction and the execution and delivery of the

Transaction Documents and (ii) the incumbency of Seller's officers;

 

      (c) Seller's certificate as required by Section 9.3;

 

      (d) An appropriate Certificate issued by the Secretary of State of the

State of New York dated effective no earlier than ten (10) Business Days before

the Closing Date stating that Seller is in existence and is in good standing

under the laws of that state and a certificate of qualification of Seller as a

foreign entity authorized to do business in the states set forth on Schedule

3.2(d), each dated not more than thirty (30) calendar days prior to the Closing

Date;

 

      (e) The consents referred to in Section 9.4;

 

ASSET PURCHASE AGREEMENT                                                  PAGE 13

 

<PAGE>

 

      (f) The Transition Services Agreement described in Section 8.4 executed by

Seller;

 

      (g) The release of any recorded Lien (other than a Lien filed with respect

to equipment leases) encumbering the Acquired Assets; and

 

      (h) Any other items required by the Transaction Documents or as reasonably

requested by Buyer to fully consummate the transactions contemplated by this

Agreement.

 

      3.3 Closing Deliveries by Buyer. At the Closing, Buyer shall make the

following deliveries to Seller:

 

      (a) Payment of the Purchase Price to Seller and payment of any funds to

Seller for deposits, each as described in Section 2.2;

 

      (b) A certificate of the secretary of Buyer certifying (i) the resolutions

authorizing the Transaction and the execution and delivery of the Transaction

Documents and (ii) the incumbency of Buyer's officers;

 

      (c) Buyer's certificate as required by Section 10.3;

 

      (d) An Assumption Agreement in the form of Exhibit B, executed by Buyer,

pursuant to which Buyer assumes the Assumed Liabilities;

 

      (e) The Transition Services Agreement described in Section 8.4 executed by

Buyer;

 

      (f) An appropriate Certificate issued by the Secretary of State of the

Commonwealth of Kentucky dated effective no earlier than ten (10) Business Days

before the Closing Date stating that Buyer is in existence and is in good

standing under the laws of that state; and

 

      (g) Any other items required by the Transaction Documents or as reasonably

requested by Seller to fully consummate the transactions contemplated by this

Agreement.

 

      3.4 Closing Proceedings. All proceedings to be taken and all documents to

be executed and delivered by all parties at the Closing shall be deemed to have

been taken and executed simultaneously, and no proceedings shall be deemed taken

nor any documents executed or delivered until all have been taken, executed and

delivered.

 

SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER.

 

      Seller hereby represents and warrants to Buyer as follows:

 

      4.1 Organization and Good Standing. Seller is a corporation duly

incorporated and validly existing under the laws of New York and is qualified

and in good standing to transact business in each jurisdiction in which such

qualification is required by law. Schedule 4.1 sets forth a list of all states

in which the Seller is qualified to transact business with respect to the

Subject Business. Seller has all requisite corporate power and authority to

execute, deliver and perform its obligations under the Transaction Documents and

to consummate the Transaction.

 

ASSET PURCHASE AGREEMENT                                                  PAGE 14

 

<PAGE>

 

Seller has all corporate power needed to own or lease and operate its assets and

to carry on its business as it is now being conducted.

 

      4.2 Authorization, Execution and Validity. The execution, delivery and

performance of the Transaction Documents by Seller and the consummation by

Seller of the Transaction have been duly authorized by all necessary corporate

action. Each of the Transaction Documents to be executed and delivered by

Seller, when duly and validly executed and delivered by Seller, will constitute

the legal, valid and binding obligations of Seller, and will be enforceable

against Seller in accordance with their respective terms, except as such

enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,

reorganization and similar laws affecting creditors generally and by the

availability of equitable remedies.

 

      4.3 Non-Contravention. Except as set forth on Schedule 4.3, neither the

execution, delivery or performance by Seller of the Transaction Documents nor

the consummation by Seller of the Transaction will directly or indirectly, with

or without notice or lapse of time or both (i) contravene, conflict with or

result in a violation of any of the provisions of Seller's articles of

organization, by-laws or any resolution adopted by the directors of Seller, (ii)

give any Person the right to challenge the Transaction or to exercise any remedy

or obtain any relief under any Applicable Law or any order, writ, injunction,

judgment or decree to which Seller or any of the Acquired Assets is subject,

(iii) give any Governmental Entity the right to revoke, withdraw, suspend,

cancel, terminate or modify, any Transferable Permit, (iv) contravene, conflict

with or result in a violation or breach of, or result in a default under, any

provision of any Assumed Contract or give any Person the right to (a) declare a

default or exercise any remedy under any Assumed Contract, (b) accelerate the

maturity or performance of any Assumed Contract, or (c) cancel, terminate or

modify any Assumed Contract, (v) except for Permitted Exceptions, result in the

imposition or creation of any Lien or Encumbrance upon or with respect to any

Acquired Asset, or (vi) result in a violation or breach of, or result in a

default under a material Contract to which Seller is a party, except in the case

of clauses (iv), (v) and (vi) such contraventions, conflicts, violations,

breaches, defaults, Liens or Encumbrances which would not have individually or

in the aggregate a Material Adverse Effect.

 

      4.4 Legal Proceedings. Except as set forth on Schedule 4.4, there is no

pending Legal Proceeding and, to the Knowledge of Seller, no Person has

threatened to commence any Legal Proceeding against Seller with respect to the

Subject Business or any Acquired Asset or that challenges, or that may have the

effect of preventing, delaying, making illegal or otherwise interfering with,

the Transaction. Seller is not subject to any order, writ, injunction, judgment

or decree that relates in any material way to the Transaction or any of the

Acquired Assets.

 

      4.5 Financial Statements.

 

      (a) Attached hereto as Schedule 4.5 are true and complete copies of the

unaudited Statement of Net Assets before Intercompany Debt for the Subject

Business as of June 30, 2004, June 30, 2005 and September 30, 2005

(collectively, the "Balance Sheets" and the Statement of Net Assets before

Intercompany Debt for the Subject Business as of September 30, 2005, the

"Current Balance Sheet") and the related unaudited statements of income for each

of the years ended June 30, 2004 and June 30, 2005 and the related unaudited

statements of income for the three months ended September 30, 2005

(collectively, the "Income Statements") (the Balance

 

ASSET PURCHASE AGREEMENT                                                  PAGE 15

 

<PAGE>

 

Sheets and the Income Statements collectively referred to as the "Financial

Statements"). The Financial Statements (i) represent actual bona fide

transactions, (ii) have been prepared from the books and records of the Subject

Business, as applicable, in conformity with GAAP consistently applied, except as

set forth therein and except that the Balance Sheets do not contain information

regarding stockholders' equity or intercompany debt and (iii) fairly present in

all material respects the Subject Business' financial position as of the

respective dates thereof and its results of operations for the periods then

ended. The books and records of Seller have been kept on the accrual basis for

all accounting periods covered by the Financial Statements.

 

      (b) There are no liabilities of the Subject Business that are required to

be disclosed in the Current Balance Sheet in accordance with GAAP, other than

the liabilities (i) reflected on the Current Balance Sheet, (ii) incurred since

the date of the Current Balance Sheet in the ordinary course of business, (iii)

incurred with respect to intercompany activities or (iv) that would not result

in a Material Adverse Effect on the Subject Business.

 

      4.6 Accounts Receivable. All Accounts Receivable that are reflected on the

Balance Sheet are bona fide receivables for goods and/or services actually

delivered or rendered, subject to reserves for non-collection that have been

determined on a basis consistent with past practices.

 

      4.7 Absence of Changes. Except as set forth on Schedule 4.7, since

September 30, 2005: (a) there has not been any material adverse change in the

business, assets, operations, or financial condition of the Subject Business

taken as a whole; (b) there has not been any material loss, damage or

destruction to, or any material interruption in the use of, any of the Acquired

Assets (whether or not covered by insurance); (c) Seller has not made any pledge

of any of the Acquired Assets or otherwise permitted any of the Acquired Assets

to become subject to any Lien or Encumbrance other than the Permitted

Exceptions; (d) Seller has not made any change in the operation or manner of

conducting the Subject Business, other than changes in the ordinary and usual

course of business consistent with past practice, none of which, individually or

in the aggregate, has had or is anticipated to have a Material Adverse Effect;

(e) Seller has not implemented wage increases that are not fully allowable under

the Customer Contracts and which are not consistent with Seller's past

practices; (f) there has not been a cancellation or termination by a material

Customer of or material supplier to the Subject Business; (g) there has not been

a loss of Employees where such loss has had or will have a Material Adverse

Effect; and (h) Seller has not agreed or committed to take any of the actions

referred to in any of the clauses referred to in this Section 4.7.

 

      4.8 Title to Acquired Assets. At the Closing, Seller or one or more of its

Affiliates will have good and valid title to all of the Acquired Assets free and

clear of all Liens and Encumbrances other than the Permitted Exceptions.

 

      4.9 Tangible Personal Property and Sufficiency of Assets. Schedule 4.9(a)

contains a list of fixed assets that are exclusively used or held for exclusive

use by Seller in the Subject Business, including items of Tangible Personal

Property. Except as provided on Schedule 4.9(b), the Acquired Assets together

with the rights of Buyer under the Transition Services Agreement constitute the

assets and rights sufficient to conduct the Subject Business in the same manner

and condition as conducted on the date hereof and as of the Closing Date, except

for assets, properties and rights that are not, singly or in the aggregate,

material.

 

ASSET PURCHASE AGREEMENT                                                  PAGE 16

 

<PAGE>

 

      4.10 Seller Owned Intellectual Property. Schedule 4.10(a) contains a list

of all material items of Owned Intellectual Property. Seller is not obligated to

make any payment to any Person for the use of any Owned Intellectual Property.

Seller has not developed jointly with any other Person any Owned Intellectual

Property with respect to which such other Person has any rights. At the Closing,

Seller or one or more of its Affiliates will have good and valid title to the

Owned Intellectual Property, including those items of Owned Intellectual

Property that have been created or contributed to by an Employee or consultant,

free and clear of all Liens and Encumbrances other than the Permitted

Exceptions. Except as set forth on Schedule 4.10(b): (i) there are no pending,

or to the Knowledge of Seller, threatened written claims against Seller alleging

that use of the Owned Intellectual Property by Seller in connection with the

Subject Business infringes or conflicts with the Intellectual Property rights of

another Person ("Third Party Rights"); (ii) Seller has not received any written

communications alleging that Seller has violated or, by using the Owned

Intellectual Property in connection with the Subject Business as now conducted,

would violate any Third Party Rights or that any Owned Intellectual Property is

invalid or unenforceable; (iii) to the Knowledge of Seller, no consent judgment

or Legal Proceeding exists which would prevent Seller from using any of the

Owned Intellectual Property in the Subject Business as now conducted; and (iv)

to the Knowledge of Seller, no other Person is infringing, misappropriating or

making any unlawful use of any Owned Intellectual Property. Notwithstanding the

foregoing, the Owned Intellectual Property may contain immaterial components or

elements of content that are generally known to others or otherwise in the

public domain (such immaterial components or elements of content are

collectively referred to as "Public Elements"). To the extent the Intellectual

Property embodied in such Public Elements is not protectable by any party under

any Applicable Law, Seller does not warrant that Seller owns or has an exclusive

right to exploit the Intellectual Property embodied in the Public Elements, but

Seller does warrant that its use of the Public Elements is unrestricted and (a)

does not infringe on any Third Party Rights and (b) Seller may use the Public

Elements free of any claims of any third party, including claims for royalty or

other compensation.

 

      4.11 Assumed Contracts. Seller has delivered to Buyer accurate and

complete copies of the Assumed Contracts, including all amendments thereto, that

are listed on Schedules 4.12 (except for any oral Contracts noted therein), 4.13

and 4.14. Each Assumed Contract is valid and in full force and effect and is

enforceable by Seller in accordance with its terms, subject to laws of general

application relating to bankruptcy, fraudulent conveyance, insolvency and the

relief of debtors and rules of law governing specific performance, injunctive

relief and other equitable remedies. Seller is not in material breach or default

under any Assumed Contract, and, to the Knowledge of Seller, no other Person is

in breach or default under any Assumed Contract. Except as set forth on Schedule

4.11 or as would not be reasonably expected to have a Material Adverse Effect,

no event has occurred, and no circumstance or condition exists, that (with or

without notice or lapse of time or both) will or could reasonably be expected to

(i) result in a default or breach of any provision of any Assumed Contract, (ii)

give any Person the right to declare a breach or default or exercise any remedy

under any Assumed Contract, (iii) give any Person the right to accelerate the

maturity or performance of any Assumed Contract, or (iv) give any Person the

right to cancel, terminate or modify any Assumed Contract. Except as set forth

on Schedule 4.11, Seller has not received any written notice or other written

communication regarding any actual or possible breach or default under any

Assumed Contract. Seller has not

 

ASSET PURCHASE AGREEMENT                                                   PAGE 17

 

<PAGE>

 

waived any of its material rights under any Assumed Contract other than in the

ordinary course of business. Except as set forth on Schedule 4.11, the Assumed

Contracts represent all of the Contracts of Seller and/or its Affiliates

relating to the Subject Business.

 

      4.12 Additional Warranties Regarding Real Estate Leases. All of the Real

Estate Leases and the real property locations that are used by the Subject

Business are set forth on Schedule 4.12. Except as otherwise described in

Schedule 4.12, Seller is the owner and holder of all the leasehold interests and

estates purported to be granted by the Real Estate Leases and enjoys peaceful

possession thereof.

 

      4.13 Additional Warranties Regarding Customer Contracts. All of the

Customer Contracts as of the date hereof are listed or described on Schedule

4.13. Seller is in compliance in all material respects with the terms,

provisions and conditions of each Customer Contract that are binding upon

Seller. Except as would not result in a Material Adverse Effect, neither Seller

nor any other party has terminated, canceled or waived any term or condition of

any Customer Contract.

 

      4.14 Additional Warranties Regarding Operating Contracts. Except for any

Operating Contract that is administered at a facility that is being transferred

with the Subject Business, all of the Operating Contracts for which the amounts

paid by the Seller for goods and services in excess of $200,000 for the year

ended June 30, 2005 and which cannot be cancelled upon 30 days prior written

notice are listed or described on Schedule 4.14. All of the Operating Contracts

are sufficient for the normal and customary operation of the Subject Business

and none of the Operating Contracts requires Seller to purchase goods or

services in excess of the normal and customary operation of the Subject

Business.

 

      4.15 Licensed Intellectual Property. Schedule 4.15(a) sets forth a

complete list of all Intellectual Property Licenses other than licenses for

commercial "off the shelf" Software. Schedule 4.15(b) sets forth a complete list

of all written Contracts that provide for the license by a third party to Seller

of Intellectual Property that is used in both the Subject Business and the

Retained Business other than licenses for commercial "off the shelf" Software.

Neither the Seller nor, to the Seller's Knowledge, any other party, is in breach

of or default, in any material respect, under any Intellectual Property License.

To the Seller's Knowledge, each Intellectual Property License is valid and in

full force and effect. Except as set forth on Schedule 4.15(c), the Intellectual

Property Licenses, including licenses for commercial "off the shelf" Software

used exclusively in the Subject Business, are free and clear of Liens other than

Permitted Exceptions and will be assigned to Buyer at the Closing for no

additional fee; provided, however, there may be fees that Buyer will have to pay

for continued use of such Intellectual Property Licenses.

 

      4.16 Owned Real Estate. Seller does not own any fee real estate that is

used exclusively in the Subject Business.

 

      4.17 Employees and Employee Benefit Plans.

 

      (a) Except as stated on such schedule, Schedule 4.17(a) contains a list of

all Employees as of October 31, 2005 and correctly reflects, in all material

respects, the

 

ASSET PURCHASE AGREEMENT                                                  PAGE 18

 

<PAGE>

 

identification number assigned to each Employee by Seller, the position, the ACS

seniority date and the salary or hourly rate of each Employee. If there are any

changes to the information shown on Schedule 4.17(a) during the Pre-Closing

Period, then on a weekly basis Seller shall notify Buyer in writing of the

specific changes. No later than one (1) Business Day before Closing, Seller

shall deliver to Buyer an updated Schedule 4.17(a) which shall incorporate all

previous changes and which shall then become the final Schedule 4.17(a) for

purposes of this Agreement. Seller is not now, nor has it ever been, a party to

any collective bargaining agreement or similar labor contract with a labor union

involving any of the Employees of the Subject Business, and to Seller's

Knowledge, there is no pending application or petition for an election of or for

certification of a collective bargaining agent with respect to the Employees of

the Subject Business. With respect to the Employees of the Subject Business,

there is no presently pending or existing, or to Seller's Knowledge, threatened

labor strike, slowdown, picketing or work stoppage. Except as set forth on

Schedule 4.17(a), all of the Employees are "at will" employees and there is no

employment contract, severance agreement or similar agreement between Seller and

any current or former Employee. Seller is in compliance in all material respects

with all Applicable Laws and Contracts relating to employment, employment

practices, wages, bonuses and terms and conditions of employment with respect to

the Employees, including employee compensation matters.

 

      (b) Schedule 4.17(b) sets forth a complete and correct list of all

Employee Benefit Plans maintained or contributed to by the Seller in respect of

or for the benefit of the Employees (the "Seller Employee Benefit Plans"). With

respect to the Employees of the Subject Business, (i) Seller is not, and has not

been, a party to any "multiemployer plan" within the meaning of Section

4001(a)(3) of ERISA and (ii) Seller does not have, and has not had, any

obligation to contribute to any such multiemployer plan.

 

      (c) With respect to each Seller Employee Benefit Plan: (i) the Seller is

in compliance in all material respects with the applicable provisions of ERISA

and the Code and the regulations thereunder; (ii) to the Seller's Knowledge,

there has been no violation of ERISA's fiduciary obligations nor any prohibited

transaction (within the meaning of Section 406 of ERISA and Section 4975 of the

Code); (iii) no plan has any liability for any federal, state, local or foreign

taxes; and (iv) all reports required to be filed (if any) with all Governmental

Entities have been filed with respect to each such plan.

 

      (d) Except as set forth on Schedule 4.17(d), no Employee of the Subject

Business will be entitled to any additional monetary benefit (including, without

limitation, the acceleration of time of payment or vesting schedule) as a result

of the consummation of the Transaction.

 

      4.18 Environmental Matters. Seller, in conducting the Subject Business, is

in compliance with all applicable Environmental Laws, except for any

non-compliance as would not reasonably be expected to result, individually or in

the aggregate, in material liability under or relating to the Environmental

Laws. There is no material violation of any Environmental Laws (such violation

being referred to herein as an "Environmental Violation") by Seller with respect

to any of the Seller's Facilities which imposes any material liability on the

owner or operator of such property for any environmental condition or hazard,

including, but not limited to, any liability for cleanup or remediation of any

environmental condition or hazard or which would otherwise obligate the owner or

operator or, with the passage of time, could cause the

 

ASSET PURCHASE AGREEMENT                                                   PAGE 19

 

<PAGE>

 

owner or operator to be obligated to clean up, remedy or otherwise restore to a

former condition, by itself or jointly with others, any contaminated surface

water, ground water, soil or any natural resources associated therewith. Seller,

in conducting the Subject Business, has not received any written notice or other

written communication from any Person that alleges that Seller is not in

compliance with any Environmental Law except for any non-compliance as would not

reasonably be expected to result, individually or in the aggregate, in material

liability under or relating to the Environmental Laws. This Section 4.18

includes the sole and exclusive representations and warranties with respect to

matters relating to Environmental Laws under any and all Transaction Documents.

 

      4.19 Compliance with Applicable Law. Seller, in conducting the Subject

Business, has complied with all Applicable Laws, except where the failure to

comply with such Applicable Law has not had and will not have a Material Adverse

Effect and except as set forth on Schedule 4.4. Except as set forth on Schedule

4.4, Seller has not received any written notice or other written communication

from any Governmental Entity regarding any actual or possible violation of, or

failure to comply with, any Applicable Law, in conducting the Subject Business.

 

      4.20 Governmental Authorizations. The Governmental Authorizations held by

Seller with respect to the Subject Business, which are set forth on Schedule

4.1, are valid and in full force and effect, and collectively constitute all

Governmental Authorizations materially necessary to enable Seller to conduct the

Subject Business as now being conducted. Seller has complied in all material

respects with the terms and requirements of the Governmental Authorizations held

by Seller with respect to the Subject Business. Seller has not received any

notice or other communication from any Governmental Entity regarding (a) any

actual or possible violation of or failure to comply with any term or

requirement of any Governmental Authorization with respect to the Subject

Business, or (b) any actual or possible revocation, withdrawal, suspension,

cancellation, termination or modification of any Governmental Authorization with

respect to the Subject Business.

 

      4.21 Taxes. Except as set forth on Schedule 4.21, Seller has filed or

caused to be filed in a timely manner all Tax Returns affecting the Subject

Business or the Acquired Assets as have been required under Applicable Law and

has paid (except amounts for Taxes being diligently contested in good faith by

appropriate procedures and disclosed in Schedule 4.21) all required Taxes or

similar assessments affecting the Subject Business, including any interest,

penalties or additions attributable thereto shown as due on all such filings.

Taxes which Seller was required by law to withhold or collect in respect of the

Subject Business have been withheld or collected and have been paid over to the

proper Governmental Entity or are properly held by such entity for such payment

when due and payable.

 

      4.22 Affiliate Transactions. Except as set forth on Schedule 4.22 or as

contemplated in the Transition Services Agreement, neither the Seller nor any of

its Affiliates provides or causes to be provided to the Subject Business any

material assets, services or facilities. The Subject Business does not provide

or cause to be provided to the Seller or any of its Affiliates any material

assets, services or facilities.

 

       4.23 Government Contracts.

 

ASSET PURCHASE AGREEMENT                                                  PAGE 20

 

<PAGE>

 

      (a) Except as set forth on Schedule 4.23(a), no material Assumed Contract

between the Seller and any Governmental Entity that pertains to the Subject

Business (a "Government Contract") has a currently incurred or currently

projected, material cost overrun and, to Seller's Knowledge, the cost

accounting, estimating and property systems relating to the Government Contracts

are in compliance in all material respects with Applicable Laws and Contract

provisions, including applicable cost principles and applicable cost accounting

standards.

 

      (b) Except as set forth on Schedule 4.23(b), Seller, with respect to the

Subject Business, has not received any written notice from any Governmental

Entity regarding its actual or threatened disqualification, suspension, or

debarment from contracting with any Governmental Entity including without

limitation any show cause notice or cure notice, notice of termination for

default, or notice for deductive change or, in the case of any notification of

termination for convenience, any such notifications which in the aggregate or

individually could have a Material Adverse Effect.

 

      (c) Except as set forth on Schedule 4.23(c), in addition to the foregoing,

Seller has not received any written notice or other written communication from

any Governmental Entity, with respect to the Subject Business, with respect to

any claims or proceedings under the False Claims Act or other relevant statutes

on any Government Contract for the three years preceding the Closing.

 

      4.24 Bank Accounts; Lock Boxes. Set forth on Schedule 4.24 is a list of

all banks or other financial institutions with which the Seller has an account

or maintains a lock box or safe deposit box for the exclusive benefit of the

Subject Business, showing the type and account number of each such account, lock

box and safe deposit box and the names of the persons authorized as signatories

thereon or to act or deal in connection therewith.

 

      4.25 Brokerage Fees. Except as set forth on Schedule 4.25, no Person

acting on behalf of the Seller is entitled to any brokerage or finder's fee or

commission in connection with the Transaction.

 

SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER

 

      Buyer represents and warrants to Seller as of the Closing Date as follows:

 

      5.1 Organization and Good Standing Buyer is a limited liability company

duly organized and validly existing under the laws of the Commonwealth of

Kentucky, and is qualified and in good standing to transact business in each

jurisdiction in which such qualification is required by law. Buyer has all

requisite corporate power and authority to execute, deliver and perform its

obligations under the Transaction Documents and to consummate the Transaction.

 

      5.2 Authorization, Execution and Validity. The execution, delivery and

performance of the Transaction Documents by Buyer and the consummation by Buyer

of the Transaction have been duly authorized by all necessary corporate action

and no other action on the part of it is necessary with respect thereto. Each of

the Transaction Documents to be executed and delivered by Buyer, when duly and

validly executed and delivered by Buyer, will constitute the valid and

 

ASSET PURCHASE AGREEMENT                                                  PAGE 21

 

<PAGE>

 

binding obligations of Buyer, and will be enforceable against Buyer in

accordance with their respective terms, except as such enforceability may be

limited by bankruptcy, insolvency, fraudulent conveyance, reorganization and

similar laws affecting creditors generally and by the availability of equitable

remedies.

 

      5.3 Non-Contravention. Neither the execution, delivery or performance by

Buyer of the Transaction Documents nor the consummation by Buyer of the

Transaction will directly or indirectly, with or without notice or lapse of time

or both (i) contravene, conflict with or result in a violation of any of the

provisions of Buyer's organization or operating agreement or any resolution

adopted by Buyer's members or managers, (ii) give any Person the right to

challenge the Transaction or to exercise any remedy or obtain any relief under

any Applicable Law or any order, writ, injunction, judgment or decree to which

Buyer is subject, or (iii) contravene, conflict with or result in a violation or

breach of, or result in a default under, any material Contract to which Buyer is

a party except such contraventions, conflicts, breaches or defaults which would

not have individually or in the aggregate a material adverse effect on Buyer. To

the Knowledge of Buyer, Buyer is not aware of any dispute, claim, event,

condition, fact or circumstance whether existing or that may have existed in the

past involving Buyer or any of its Affiliates and any Customer or any of such

Customer's Affiliates that could result in such Customer refusing to consent to

the assignment to Buyer of the affected Customer Contract or that could result

in such Customer consenting to such assignment, but upon unreasonable terms and

conditions as compared to other consents to assignments of Customer Contracts.

 

      5.4 Legal Proceedings. There is no pending Legal Proceeding and, to the

Knowledge of Buyer, no Person has threatened to commence any Legal Proceeding

that involves or could result in a claim against Buyer or that challenges, or

that may have the effect of preventing, delaying, making illegal or otherwise

interfering with, the Transaction. Buyer is not subject to any order, writ,

injunction, judgment or decree that relates in any material way to the

Transaction or any of the Acquired Assets.

 

      5.5 Financial Resources. Buyer has presently, and at the time of Closing

will have, the financial resources necessary to pay the Purchase Price, to

conduct the Subject Business following Closing and to perform all of Buyer's

obligations to Seller under the Transaction Documents.

 

      5.6 Brokerage Fees. Except as set forth on Schedule 5.6, no Person acting

on behalf of the Buyer is entitled to any brokerage or finder's fee or

commission in connection with the Transaction.

 

SECTION 6. CERTAIN PRE-CLOSING COVENANTS OF SELLER

 

      6.1 Access and Investigation. Without limitation of Seller's

representations, warranties, covenants and agreements set forth in the

Transaction Documents or Buyer's rights and remedies arising in connection with

any breach thereof, Buyer acknowledges that Seller has provided to Buyer prior

to signing this Agreement reasonable access to Seller's Representatives and to

Seller's Business Records, Tax Returns and other documents and information

relating to the Subject Business as requested by Buyer. During the Pre-Closing

Period and subject to Section 7.2, the Non-Disclosure Agreement dated August 11,

2005, between Robert W. Baird &

 

ASSET PURCHASE AGREEMENT                                                  PAGE 22

 

<PAGE>

 

Co. Incorporated, as agent for ACS, and Buyer (the "Confidentiality Agreement"),

Applicable Laws and doctrines of attorney-client privilege, Seller shall (a)

provide Buyer and its Representatives with such additional reasonable access to

Seller's Business Records, Tax Returns and other documents and information

relating to the Subject Business and (b) provide Buyer and its Representatives

with such additional financial, operating and other data and information

regarding the Subject Business as Buyer may reasonably request. Buyer's access

shall not unreasonably interfere with Seller's continuing operation of the

Subject Business and shall in all cases be subject to Seller's reasonable

safety, security and privacy policies. Except for those Employees and Customers

listed on Schedule 6.1, without Seller's prior written consent, Buyer may not

contact any Employee, Seasonal Employee or Customer. To the extent Buyer does

contact any of the Employees or Customers listed on Schedule 6.1, Buyer agrees

that such contact (i) will be coordinated in advance with Seller and, if Seller

elects, shall include Seller, (ii) will be limited to only those purposes

reasonably necessary for Buyer to conduct its due diligence review in connection

with this Agreement, and (iii) shall not unreasonably interfere with Seller's

continuing operation of the Subject Business and shall in all cases be subject

to Seller's reasonable safety, security and privacy policies.

 

      6.2 Operation of the Subject Business. During the Pre-Closing Period:

 

      (a) Seller shall conduct the Subject Business in the ordinary course and

in substantially the same manner as such business has been conducted prior to

the date of this Agreement and, except as permitted in Section 6.2(c), with

respect to the Subject Business Seller shall not make any expenditures or

payments outside the ordinary course of business and Seller shall cause the

Subject Business to (x) collect all Accounts Receivable in accordance with past

practice and (y) pay all accounts payable in accordance with past practice;

 

      (b) Seller shall use commercially reasonable efforts to preserve intact

the current business organization of the Subject Business, keep available the

services of its Employees (other than Ray Saulino, Len Krugel and Terry Trimble)

and maintain its relations and goodwill with all suppliers, customers,

landlords, creditors and other Persons having business relationships with the

Subject Business;

 

      (c) Except as may be required under an Assumed Contract, Seller shall not

make any capital expenditure with respect to the Subject Business, except for

capital expenditures that, when added to all other capital expenditures made on

behalf of Seller during the Pre-Closing Period, do not exceed $100,000;

 

      (d) Other than in the ordinary course of business, Seller shall not (i)

sell or otherwise dispose of, or lease or license, any of the Acquired Assets,

(ii) abandon, waive or relinquish any of the Acquired Assets except