EXHIBIT 10.12 EXECUTION COPY ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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Vocus, Inc. | STEVEN ROBERT KANTOR

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Title: EXHIBIT 10.12 EXECUTION COPY ASSET PURCHASE AGREEMENT
Governing Law: Maryland Date: 6/15/2005
Law Firm: Greenberg Traurig, LLP; Venable LLP

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EXHIBIT 10.12

EXECUTION COPY

ASSET PURCHASE AGREEMENT

dated as of

November 8, 2004

among

VOCUS, INC.,

VOCUS GS HOLDINGS LLC,

GNOSSOS SOFTWARE, INC.

and

STEVEN ROBERT KANTOR

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TABLE OF CONTENTS

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PAGE

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ARTICLE 1

DEFINITIONS AND RULES OF CONSTRUCTION

Section 1.01. Rules of Construction............................................... 1

Section 1.02. Definitions......................................................... 3

ARTICLE 2

SALE AND PURCHASE OF ASSETS

Section 2.01. Purchase and Sale................................................... 8

Section 2.02. Excluded Assets..................................................... 10

Section 2.03. Assumed Liabilities................................................. 12

Section 2.04. Excluded Liabilities................................................ 12

Section 2.05. Assignment of Contracts and Rights; Purchase Price Adjustment....... 14

Section 2.06. Purchase Price...................................................... 16

Section 2.07. Closing............................................................. 16

Section 2.08. Payment of the Holdback Amount...................................... 17

Section 2.09. Repurchase of the Shares............................................ 18

Section 2.10. Reimbursement of Office Lease Deposit............................... 18

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND THE COMPANY

Section 3.01. Corporate Existence and Qualification............................... 18

Section 3.02. Authority, Approval and Enforceability.............................. 18

Section 3.03. Capitalization and Corporate Records................................ 19

Section 3.04. No Shareholder Defaults or Consents................................. 19

Section 3.05. No Company Defaults or Consents..................................... 19

Section 3.06. No Proceedings...................................................... 20

Section 3.07. Financial Statements................................................ 20

Section 3.08. Payables and Receivables............................................ 21

Section 3.09. No Undisclosed Liabilities.......................................... 21

Section 3.10. Absence of Certain Changes.......................................... 21

Section 3.11. Compliance with Laws................................................ 22

Section 3.12. Litigation.......................................................... 22

Section 3.13. Properties; Capital Leases.......................................... 23

Section 3.14. Contracts and Commitments........................................... 23

Section 3.15. Insurance........................................................... 24

Section 3.16. Sufficiency of and Title to the Purchased Assets.................... 24

Section 3.17. Intellectual Property............................................... 25

Section 3.18. Equipment and Other Tangible Property............................... 27

Section 3.19. Permits; Environmental Matters...................................... 27

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Section 3.20. Products, Services and Authorizations............................... 27

Section 3.21. Employee Matters.................................................... 28

Section 3.22. Assumptions Contained in the Letter of Intent....................... 28

Section 3.23. Finder's Fees....................................................... 28

Section 3.24. Investment Representations of the Company and the Shareholder....... 28

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE PARENT AND VGS

Section 4.01. Corporate Existence and Qualification............................... 31

Section 4.02. Authority, Approval and Enforceability.............................. 31

Section 4.03. No Default or Consents.............................................. 32

Section 4.04. No Proceedings...................................................... 32

Section 4.05. Capital Stock....................................................... 32

Section 4.06. Finder's Fees....................................................... 33

ARTICLE 5

CONDITIONS TO THE COMPANY'S AND VGS's OBLIGATIONS

Section 5.01. Conditions to Obligations of the Company and the Shareholder........ 33

Section 5.02. Conditions to Obligations of the Buyer.............................. 34

ARTICLE 6

COVENANTS OF THE COMPANY AND THE SHAREHOLDER

Section 6.01. Non-Competition, Non-Solicitation and Non-Disclosure................ 35

Section 6.02. Notification to Customers........................................... 39

Section 6.03. Publicity........................................................... 39

Section 6.04. Confidentiality..................................................... 39

Section 6.05. Access to Records................................................... 40

Section 6.06. Use of Corporate Name and Trademarks................................ 40

ARTICLE 7

COVENANTS OF PARENT, VGS, THE COMPANY AND THE SHAREHOLDER

Section 7.01. Further Assurances.................................................. 40

Section 7.02. Employee Matters.................................................... 41

Section 7.03. Delivery of Property Received by the Company after Closing.......... 41

Section 7.04. Collection of Accounts Receivable................................... 42

Section 7.05. Transition Services................................................. 42

Section 7.06. Presentation to Parent's Investors.................................. 42

Section 7.07. Shareholder's Use of Office Space................................... 42

ARTICLE 8

SURVIVAL; INDEMNIFICATION

Section 8.01. Survival............................................................ 43

Section 8.02. Indemnification..................................................... 43

Section 8.03. Procedures.......................................................... 44

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Section 8.04. Other Matters....................................................... 45

ARTICLE 9

MISCELLANEOUS

Section 9.01. Notices............................................................. 46

Section 9.02. Governing Law....................................................... 47

Section 9.03. WAIVER OF JURY TRIAL................................................ 47

Section 9.04. Entire Agreement; Amendments and Waivers............................ 47

Section 9.05. Binding Effect and Assignment....................................... 48

Section 9.06. Remedies............................................................ 48

Section 9.07. Multiple Counterparts............................................... 48

Section 9.08. Survival............................................................ 48

Section 9.09. Attorneys' Fees..................................................... 48

Section 9.10. Bulk Sales; Transfer Taxes.......................................... 49

Section 9.11. Interpretation...................................................... 49

Section 9.12. Risk of Loss........................................................ 49

Section 9.13. Severability........................................................ 49

Section 9.14. No Third Party Beneficiaries........................................ 49

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LIST OF EXHIBITS

Exhibit A Consulting Agreement

Exhibit B Assignment and Assumption Agreement

Exhibit C Bill of Sale

Exhibit D Trademark Assignment

Exhibit E Transferability Restriction Agreement

Exhibit F License Agreement

iii

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into

as of the 8th day of November, 2004, by and among (1) Vocus, Inc., a Delaware

corporation (the "PARENT"), (2) Vocus GS Holdings LLC, a Maryland limited

liability company and wholly-owned subsidiary of the Parent ("VGS"; together

with the Parent, the "BUYER"), (3) Gnossos Software, Inc., a Delaware close

corporation (the "COMPANY"), and (4) Steven Robert Kantor (the "SHAREHOLDER").

RECITALS

WHEREAS, the Company conducts a business which, among other things,

produces, sells and distributes government relations, government affairs and

political action committee software and services under the trade names "GNOSSOS"

and "KEEP IN TOUCH" to companies, associations and public affairs consulting

firms (the "BUSINESS");

WHEREAS, the Shareholder owns 100% of the Company's outstanding capital

stock;

WHEREAS, VGS desires to purchase and the Company desires to sell

substantially all of the Company's assets, including substantially all of the

assets of the Business, upon the terms and subject to the conditions set forth

herein;

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS AND RULES OF CONSTRUCTION

Section 1.01. Rules of Construction. (a) The terms defined below have the

meanings set forth below for all purposes of any agreement or instrument

governed by this Agreement, and such meanings shall apply equally to both the

singular and plural forms of the terms defined and to the correlative forms of

such terms.

(b) Whenever the context may require, any pronoun shall include the

corresponding masculine, feminine and neuter forms. References in an agreement

or instrument to Articles, Sections, Annexes, Exhibits and Schedules shall be

deemed to be references to Articles and Sections of, and Annexes, Exhibits and

Schedules to, such agreement or instrument unless the context shall otherwise

require.

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are followed by words which are particular examples of the acts.

(d) All Annexes and Schedules attached to an agreement or instrument

shall be deemed incorporated therein as if set forth in full therein. The words

"include," "INCLUDES" and "INCLUDING" shall be deemed to be followed by the

phrase "WITHOUT LIMITATION." The word "OR" is not exclusive. All references to

"$" or "DOLLARS" shall be to the lawful currency of the United States, all

references to "DAYS" shall be to calendar days and or all references to "MONTHS"

shall be to calendar months, unless otherwise specified.

(e) The headings of Articles, Sections, Subsections and paragraphs in

this Agreement are for descriptive purposes only and shall not control, alter,

or otherwise affect the meaning, scope or intent of any provisions of this

Agreement.

(f) All accounting terms not defined in any agreement or instrument

shall have the meanings determined by the generally accepted accounting

principles of the United States as in effect from time to time, consistently

applied. Any references to income or profits or gains earned, accrued or

received shall include income or profits or gains treated as earned, accrued or

received for the purposes of any applicable Legal Requirement.

(g) The words "HEREOF," "HEREIN" and "HEREUNDER" and words of similar

import when used in any agreement or instrument shall refer to such agreement or

instrument as a whole and not to any particular provision of such agreement or

instrument.

(h) Each of the representations and warranties in this Agreement shall

be separate and independent and, except as expressly provided, shall not be

limited by reference to any other representation or warranty or anything in this

Agreement.

(i) References to a Person are also to its permitted successors and

permitted assigns.

(j) Unless otherwise expressly provided in any agreement or instrument,

any agreement, instrument, statute, proclamation or decree defined or referred

to therein or in any agreement or instrument that is referred to therein means

such agreement, instrument, statute, proclamation or decree as from time to time

amended, modified, supplanted or supplemented, including (in the case of

agreements or instruments) by waiver or consent and (in the case of statutes,

proclamations or decrees) by succession of comparable successor statutes,

proclamations or decrees. References to all agreements or instruments include

attachments thereto and instruments incorporated therein and references to any

statute, proclamation or decree include all rules and regulations promulgated

thereunder.

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Section 1.02. Definitions. The following terms, as used herein, have the

following meanings:

"AFFILIATE" (whether or not capitalized) means, with respect to any

Person, any other Person directly or indirectly controlling, controlled by, or

under common control with such Person. For the purposes of this definition,

"CONTROL," "CONTROLLED BY," and "UNDER COMMON CONTROL WITH" means, with respect

to a corporation, the right to exercise, directly or indirectly, more than 50%

of the voting rights attributable to the shares of the controlled corporation

and, with respect to any Person other than a corporation, the possession,

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

management or policies of such Person.

"BALANCE SHEET" means the unaudited balance sheet of the Company as of

September 30, 2004.

"BALANCE SHEET DATE" means June 30, 2004.

"CERCLA" means the Comprehensive Environmental Response, Compensation and

Liability Act of 1980, as amended, and any rules or regulations promulgated

thereunder.

"CLOSING DATE" means the date of the Closing.

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

"COLLATERAL AGREEMENTS" means the Assignment and Assumption Agreement, the

Bill of Sale, the Consulting Agreement, the Trademark Assignment, the

Transferability Restriction Agreement, and any and all other agreements,

instruments or documents required or expressly provided under this Agreement to

be executed and delivered in connection with the transactions contemplated by

this Agreement.

"CONFIDENTIAL INFORMATION" means confidential data and confidential

information relating to the Business (which does not rise to the status of a

Trade Secret under applicable law).

"CONFLICTING SERVICES" means any product, service or process of any Person

other than the Parent or its Affiliates which competes with a product, service

or process performed, offered or owned by the Parent or its Affiliates in the

fields of public relations, investor relations, marketing automation, corporate

communications, government relations, political action committees and/or public

affairs.

"CONSULTING AGREEMENT" means the consulting agreement between the Parent

and the Company, a copy of which is attached hereto as Exhibit A.

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"CONTRACTS," when described as being those of or applicable to any Person,

means any and all contracts, agreements, franchises, understandings,

arrangements, leases, licenses, registrations, authorizations, easements,

servitudes, rights of way, mortgages, bonds, notes, guaranties, liens,

indebtedness, approvals or other instruments or undertakings to which such

Person is a party or to which or by which such Person or the property of such

Person is subject or bound, excluding any Permits. The term "CONTRACTS"

expressly includes the customer licenses described in Schedule 3.14(a).

"CONTROLLED GROUP" means the Parent and its Affiliates.

"CUSTOMER" means each and every Person who or which, at any time during

the three (3) years prior to termination of the Shareholder's employment with

any member of the Controlled Group: (1) contracted for, was billed for, or

received services from any member of the Controlled Group or the Company; or (2)

was in contact with the Shareholder concerning the Controlled Group's or the

Company's products or services.

"DAMAGES" means any and all actual damages, liabilities, obligations,

penalties, fines, judgments, claims, deficiencies, losses, costs, expenses and

assessments (including reasonable expenses of investigation, income and other

taxes, interest, penalties and attorneys' and accountants' fees and

disbursements in connection with any action, suit or proceeding whether

involving a third-party claim or a claim solely between the parties hereto).

"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law

(including common law), treaty, judicial decision, regulation, rule, judgment,

order, decree, injunction, permit or governmental restriction or any agreement

with any governmental authority or other third party, whether now or hereafter

in effect, relating to the environment, human health and safety or to

pollutants, contaminants, wastes or chemicals or any toxic, radioactive,

ignitable, corrosive, reactive or otherwise hazardous substances, wastes or

materials.

"ENVIRONMENTAL LIABILITIES" means any and all liabilities arising in

connection with or in any way relating to the Company (or any predecessor of the

Company or any prior owner of all or part of its business and assets), any

property now or previously owned, leased or operated by the Company, the

Business (as currently or previously conducted), the Purchased Assets or any

activities or operations occurring or conducted at the real property (including

offsite disposal), whether accrued, contingent, absolute, determined,

determinable or otherwise, which (1) arise under or relate to any Environmental

Law and (2) relate to actions occurring or conditions existing on or prior to

the Closing Date (including any matter disclosed or required to be disclosed in

Schedule 3.19).

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

amended.

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"ESCROW AGREEMENT" means the Deposit Letter Agreement dated as of August

19, 2004, among the Parent, the Company and Comerica Bank, as escrow agent.

"GOVERNMENTAL AUTHORITY" means any competent governmental, administrative,

supervisory, regulatory, judicial, determinative, disciplinary, enforcement or

tax raising body, authority, agency, board, department, court or tribunal of any

jurisdiction and whether supranational, national, regional or local.

"HAZARDOUS SUBSTANCES" means any pollutant, contaminant, waste or chemical

or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous

substance, waste or material or any substance, waste or material having any

constituent elements displaying any of the foregoing characteristics including

petroleum, its derivatives, by-products and other hydrocarbons, and any

substance, waste or material regulated under any Environmental Law.

"INTELLECTUAL PROPERTY RIGHT" means (1) inventions, whether or not

patentable, reduced to practice or made the subject of one or more pending

patent applications, (2) national and multinational statutory invention

registrations, patents and patent applications (including all reissues,

divisions, continuations, continuations-in-part, extensions and reexaminations

thereof) registered or applied for in the United States and all other nations

throughout the world, all improvements to the inventions disclosed in each such

registration, patent or patent application, (3) trademarks, service marks, trade

dress, logos, domain names, trade names and corporate names (whether or not

registered) in the United States and all other nations throughout the world,

including all variations, derivations, combinations, registrations and

applications for registration of the foregoing and all goodwill associated

therewith, (4) copyrights (whether or not registered) and registrations and

applications for registration thereof in the United States and all other nations

throughout the world, including all derivative works, moral rights, renewals,

extensions, reversions or restorations associated with such copyrights, now or

hereafter provided by law, regardless of the medium of fixation or means of

expression, (5) computer software, (including source code, object code,

firmware, operating systems and specifications), (6) trade secrets and, whether

or not confidential, business information (including pricing and cost

information, business and marketing plans and customer and supplier lists) and

know-how (including manufacturing and production processes and techniques and

research and development information), (7) industrial designs (whether or not

registered), (8) databases and data collections, (9) copies and tangible

embodiments of any of the foregoing, in whatever form or medium, (10) all rights

to obtain and rights to apply for patents, and to register trademarks and

copyrights, (11) all rights in all of the foregoing provided by treaties,

conventions and common law and (12) all rights to sue or recover and retain

damages and costs and reasonable attorneys' fees for past, present and future

infringement or misappropriation of any of the foregoing.

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"INVENTORY" means all goods, merchandise and other personal property owned

and held for sale, and all raw materials, works-in-process, materials and

supplies of every nature which contribute to the finished products of the

Company in the ordinary course of its business, specifically excluding, however,

damaged, defective or otherwise unsaleable items.

"KNOWLEDGE OF THE COMPANY" means the knowledge of the Shareholder or any

of the other directors, officers or managerial personnel of the Company with

respect to the matter in question that reasonably should have been obtained upon

diligent investigation and inquiry into the matter in question.

"LEGAL REQUIREMENTS," when described as being applicable to any Person,

means any and all laws (statutory, judicial or otherwise), ordinances,

regulations, judgments, orders, directives, injunctions, writs, decrees or

awards of, and any Contracts with, any Governmental Authority, in each case as

and to the extent applicable to such Person or such Person's business,

operations or properties.

"LETTER OF INTENT" means the letter agreement dated August 2, 2004 between

the Company and the Parent, as amended by the letter agreement dated October 4,

2004 between the Company and the Parent.

"LICENSED INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property

Rights owned by a third party and licensed or sublicensed to the Company or an

Affiliate of the Company and held for use or used in the conduct of the

Business.

"LIEN" means, with respect to any property or asset, any mortgage, lien,

pledge, charge, security interest, encumbrance or other adverse claim of any

kind in respect of such property or asset. For the purposes of this Agreement, a

Person shall be deemed to own subject to a Lien any property or asset which it

has acquired or holds subject to the interest of a vendor or lessor under any

conditional sale agreement, capital lease or other title retention agreement

relating to such property or asset.

"OFFICE LEASE" means the lease dated as of June 17, 2002 between the

Company and Intrepid Eye Street, L.L.C.

"OUTSOURCING CONTRACT" refers to a contract pursuant to which the Company

provides outsourcing, administrative, management, accounting and/or compliance

services.

"OWNED INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property

Rights owned by the Company or an Affiliate of the Company and held for use or

used in the conduct of the Business.

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"PERMITS" means any and all permits, rights, approvals, licenses,

authorizations, legal status, orders or Contracts under any Legal Requirement or

otherwise granted by any Governmental Authority.

"PERSON" (whether or not capitalized) means an individual, corporation,

partnership, limited liability company, association, trust or other entity or

organization, including a Governmental Authority.

"PRODUCT" (whether or not capitalized) means the "Gnossos" and "Keep in

Touch" family of government relations and government affairs products and

services, and each software product, or service under development, developed,

manufactured, licensed, distributed or sold by the Company and any other

products in which the Company has any proprietary rights or beneficial interest.

"PROPERTIES" (whether or not capitalized) means any and all properties and

assets (real, personal or mixed, tangible or intangible) owned or used by the

Company, including the Purchased Assets.

"TAX" (whether or not capitalized) means any Federal, state, local or

foreign income, gross receipts, license, payroll, employment, excise, severance,

stamp, occupation, premium, windfall profits, environmental (including taxes

under Section 59A of the Code), customs duties, capital stock, franchise,

profits, withholding, social security (or similar), unemployment, disability,

real property, personal property, sales, use, transfer, registration, value

added, alternative or add-on minimum, estimated or other tax of any kind

whatsoever, including any interest, penalty or addition thereto, whether

disputed or not, and "TAXES" means any or all of the foregoing collectively; and

"TAX RETURN" means any return, declaration, report, claim for refund or

information return or statement relating to Taxes, including any schedule or

attachment thereto and including any amendment thereof.

"TRADE SECRETS" means information of the Company including technical or

nontechnical data, formulas, patterns, compilations, programs, financial data,

financial plans, product or service plans or lists of actual or potential

customers or suppliers which (1) derives economic value, actual or potential,

from not being generally known to, and not being readily ascertainable by proper

means by, other Persons who can obtain economic value from its disclosure or

use, and (2) is the subject of efforts, whether reasonable or otherwise, to

maintain its secrecy.

"USED" (whether or not capitalized) means, with respect to the Properties,

Contracts or Permits of the Company, those owned, leased, licensed or otherwise

held by the Company which were acquired for use or held for use by the Company

in connection with the Company's business and operations, whether or not

reflected on the Company's books of account.

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(a) Each of the following terms is defined in the Section set forth

opposite such term:

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TERM SECTION

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Accredited Investor 3.24

Act 3.24

Assignment and Assumption Agreement 2.07

Assumed Liabilities 2.03

Bill of Sale 2.07

Buyer Indemnitees 8.02

Cash Payment 3.21

Closing 2.07

Closing Date 2.07

Consulting Agreement 2.07

Copier Lease 2.03

ERISA 3.21

Excluded Assets 2.02

Excluded Liabilities 2.04

Gnossos Marks 6.06

Indemnified Party 8.03

Intellectual Property Assignment 2.07

Leases 3.13

License Agreement 2.07

Non-Competition Period 6.01

Notice 9.01

Phone Lease 2.03

Post-Termination Period 6.01

Purchase Price 2.06

Purchased Assets 2.01

Seller Indemnitees 8.02

Shares 2.06

Transferability Restriction Agreement 2.07

Warranty Breach 8.02

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ARTICLE 2

SALE AND PURCHASE OF ASSETS

Section 2.01. Purchase and Sale. Except as otherwise provided below, upon

the terms and subject to the conditions of this Agreement, VGS agrees to

purchase from the Company and the Company agrees to sell, convey, transfer,

assign and deliver, or cause to be sold, conveyed, transferred, assigned and

delivered, to the VGS at the Closing, free and clear of all Liens, all of the

Company's right, title and interest in, to and under all of the assets,

properties and business, of every kind and description, wherever located, real,

personal or mixed,

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tangible or intangible, owned, held or used by the Company as the same shall

exist on the Closing Date, including all assets shown on the Balance Sheet and

not disposed of in the ordinary course of business as permitted by this

Agreement, and all assets of the Company thereafter acquired by the Company (the

"PURCHASED ASSETS"), and including all right, title and interest of the Company

in, to and under:

(1) all inventories, raw materials, works-in-process, and other

materials of the Company, wherever located and including all

Inventory in transit or on order and not yet delivered, and

all rights with respect to the processing and completion of

any works-in-process of the Company, including the right to

collect and receive charges for services performed by the

Company with respect thereto;

(2) all supplies, equipment, computers, machinery, furniture,

fixtures, and other tangible property held or used by the

Company in connection with its business, and the Company's

interest as lessee in any leases with respect to any of the

foregoing;

(3) all of the Company's rights under the Contracts listed on

Schedule 2.01 (the "ASSIGNED CONTRACTS");

(4) all proprietary knowledge, Trade Secrets, Confidential

Information, computer software and licenses, patents,

copyrights, formulae, designs and drawings, quality control

data, processes (whether secret or not), methods, inventions,

Product manuals and other similar know-how or rights used in

the conduct of the Company's business, including the areas of

software development, manufacturing, marketing, advertising

and personnel training and recruitment, together with all

other Intellectual Property Rights used in connection with the

Company's business, including all files, manuals,

documentation and source and object codes related thereto, in

particular its source code to all products and services sold

under the "GNOSSOS" and "KEEP IN TOUCH" trade names;

(5) all rights in and to the Gnossos web site and the content

therein including the domain name registration

http://www.gnossos.com/;

(6) all utility, security and other deposits and prepaid assets

and expenses other than the security deposits in connection

with the Office Lease;

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(7) the Company's franchises, Permits and other authorizations of

Governmental Authorities (to the extent such Permits and other

authorizations of Governmental Authorities are transferable)

and third parties, licenses, telephone numbers, customer and

prospective customer lists, vendor lists, referral lists and

contracts, advertising materials and data, restrictive

covenants, chooses in action and similar obligations owing to

the Company from its present and former Shareholders,

officers, employees, agents and others, together with all

books, operating data and records (including financial,

accounting and credit records), files, papers, records and

other data of the Company;

(8) all rights of the Company in and to the names "GNOSSOS" and

"KEEP IN TOUCH" and all trade names, trademarks and logos used

in the Company's business, all variants thereof and all

goodwill associated therewith; and

(9) all of the Company's rights, claims, credits, causes of action

or rights of set-off against third parties relating to the

Purchased Assets, including unliquidated rights under

manufacturers' and vendors' warranties.

Section 2.02. Excluded Assets. VGS expressly understands and agrees that

the following assets and properties of the Company (the "EXCLUDED ASSETS") shall

be excluded from the Purchased Assets:

(1) the Purchase Price and other rights of the Company under this

Agreement;

(2) the Company's corporate minute book and stock records;

(3) all accounts, notes and other receivables (or collections with

respect to such receivables) as of October 31, 2004, except to

the extent that any such accounts, notes or receivables (or

collections in respect of such receivables) are with respect

to a customer (A) whose monthly or annual services or fees

were scheduled to commence on or after November 1, 2004 (in

which case such accounts, notes or receivables (or collections

in respect of such receivables) shall be Purchased Assets) or

(B) which was invoiced, as applicable, for more than one year

of annual fees or services (in which case such accounts, notes

or receivables (or collections in respect of such receivables)

shall be apportioned on a straight-line basis, and any amounts

<PAGE>

attributable to the period greater than twelve (12) months

shall be Purchased Assets). For purposes of example:

(i) if, in December 2003, the Company collected or

invoiced $5,000 which related to the service period beginning

December 1, 2004 and ending on November 30, 2005, such amount

entirely would be a Purchased Asset because the payment or

invoice related to services which commenced after the Closing;

(ii) if, on October 1, 2004, the Company invoiced a

customer (x) $1,000 for the monthly service period beginning

on October 1, 2004 and ending on October 31, 2004, and (y)

$1,000 for the monthly service period beginning on November 1,

2004 and ending on November 31, 2004), such amount relating to

the first month of service would be an Excluded Asset because

the monthly services in question commenced on or prior to

October 31, 2004 and such amount relating to the second month

of service would be a Purchased Asset because the monthly

services in question commenced on or after November 1, 2004;

(iii) if, on November 1, 2004, the Company invoiced a

customer $5,000 for the service period beginning on November

1, 2004 and ending on October 31, 2005, such amount entirely

would be a Purchased Asset because the service period in

question commenced after October 31, 2004; and

(iv) if, on October 1, 2004, the Company invoiced a

customer $18,000 for the service period beginning on October

1, 2004 and ending on March 30, 2006, the amount would be

apportioned on the basis that $12,000 (or two-thirds) would be

an Excluded Asset (representing the first 12 months of

services) and $6,000 (or one third) would be a Purchased Asset

(representing the remaining 6 months of services); and

(v) if, on November 1, 2004, the Company invoiced a

customer $18,000 for the service period beginning on November

1, 2004 and ending on April 30, 2006, the entire amount would

be a Purchased Asset because the service in question commenced

after October 31, 2004.

(4) all Contracts other than the Assigned Contracts;

<PAGE>

(5) all insurance policies;

(6) all cash and cash equivalents on hand and in banks;

(7) any Real Property or leases for Real Property other than the

Office Lease;

(8) any Purchased Assets sold or otherwise disposed of in the

ordinary course of business and not in violation of any

provisions of this Agreement during the period from June 30,

2004 until the Closing Date; and

(9) the Gnossos Software Inc. Political Action Committee (GNOPAC).

Section 2.03. Assumed Liabilities. Upon the terms and subject to the

conditions of this Agreement, VGS agrees, effective at the time of the Closing,

to assume only the following liabilities (the "ASSUMED LIABILITIES"): (1) the

Office Lease; (2) the Lease Agreement between Court Square Leasing Corporation

and the Company, as executed by the Company on November 21, 2003 (the "PHONE

LEASE"); (3) the Lease Agreement between CitiCapital/CitiCorp Vendor Finance,

Inc. and the Company dated October 29, 2003 (the "COPIER LEASE"); and (4) the

customer contracts listed on Schedule 2.01.

Section 2.04. Excluded Liabilities. Notwithstanding any provision in this

Agreement or any other writing to the contrary, VGS is assuming only the Assumed

Liabilities and is not assuming any other liability or obligation of the Company

(or any predecessor of the Company or any prior owner of all or part of its

businesses and assets) of whatever nature, whether presently in existence or

arising hereafter. All such other liabilities and obligations shall be retained

by and remain obligations and liabilities of the Company (all such liabilities

and obligations not being assumed being herein referred to as the "EXCLUDED

LIABILITIES"). Without limiting the generality of the foregoing, the Company and

the Shareholder expressly acknowledge and agree that the Company shall retain,

and VGS shall not assume or otherwise be obligated to pay, perform, defend or

discharge:

(1) any liability or obligation of the Company and/or the

Shareholder for Taxes, whether measured by income or

otherwise;

(2) any liability or obligation for Taxes arising in connection

with any products or services sold, delivered or otherwise

provided by or on behalf of the Company prior to the Closing;

<PAGE>

(3) any liability or obligation relating to employee benefits or

compensation arrangements existing on or prior to the Closing

Date, including any liability or obligation of the Company

under or in connection with ERISA or any Plan or Benefit

Program or Agreement;

(4) any Environmental Liability;

(5) any product liability or warranty pertaining to products

and/or services sold, licensed, developed, manufactured or

delivered by the Company prior to the Closing Date;

(6) any liability or obligation to a third party with respect to

any Assumed Liability to the extent such liability or

obligation relates to or arises from any act or omission

taking place prior to the Closing Date;

(7) any liability or obligation of the Company to the Shareholder,

any Affiliate of the Company or the Shareholder, or any Person

claiming to have a right to acquire any capital stock or other

securities of the Company;

(8) any liability relating to leases for real or personal property

other than the Copier Lease, Office Lease and Phone Lease;

(9) any liability or obligation relating to an Excluded Asset;

(10) any liability or obligation to provide services or products to

any customer under or in connection with any Assigned Contract

from and after December 31, 2006 (it being understood that VGS

is responsible for providing such products or services prior

to December 31, 2006 in accordance with the terms of such

Assigned Contract); or

(11) any liability or obligation under any Assigned Contract to the

extent that such liability or obligation exceeds the lesser of

(A) the amount of monies collected with respect to such

Assigned Contract by and for the account of VGS or the Parent

after the Closing and (B) the contract counterparty's actual,

direct damages under such Assigned Contract, unless such

liability arises from non-performance under the Assigned

Contract as a result of the negligent act or omission of the

Buyer (other than any failure to provide services or products

from and after December 31, 2006).

<PAGE>

The Company further agrees to use its commercially reasonable efforts to satisfy

and discharge promptly after the Closing all debts, obligations and liabilities

of the Company not specifically assumed by VGS hereunder.

Section 2.05. Assignment of Contracts and Rights; Purchase Price

Adjustment.

(a) Anything in this Agreement to the contrary notwithstanding, this

Agreement shall not constitute an agreement to assign any Purchased Asset

or any claim or right or any benefit arising thereunder or resulting

therefrom if such assignment, without the consent of a third party

thereto, would constitute a breach or other contravention of such

Purchased Asset or in any way adversely affect the rights of the Buyer or

the Company thereunder. The Company will use its reasonable best efforts

(but without any payment of money by VGS or the Parent) to obtain the

consent of the other parties to any such Purchased Asset or any claim or

right or any benefit arising thereunder for the assignment thereof to VGS

as VGS may request. If such consent is not obtained, or if an attempted

assignment thereof would be ineffective or would adversely affect the

rights of the Company thereunder so that VGS would not in fact receive all

such rights, the Company and VGS will diligently cooperate in good faith

in the thirty-five (35) days after the Closing to arrive at a mutually

agreeable arrangement under which VGS would obtain the benefits and assume

the obligations thereunder in accordance with this Agreement, including

subcontracting, sub-licensing, or sub-leasing to VGS, or under which the

Company would enforce for the benefit of VGS, with VGS assuming the

Company's obligations, any and all rights of the Company against a third

party thereto; provided that the foregoing procedures shall not apply to

any Outsourcing Contracts. The Company will promptly pay to VGS when

received all monies received by the Company under any Purchased Asset or

any claim or right or any benefit arising thereunder, except to the extent

the same represents an Excluded Asset.

(b) At the Closing, the parties shall make the following downward

adjustment in the consideration paid by VGS for the Purchased Assets with

respect to the Contracts listed on Schedule 2.05(b): (1) with respect to

any Outsourcing Contract listed on Schedule 2.05(b), an amount equal to

220% of the product of (A) the most recent monthly fee paid by (or

invoiced to) such customer and (B) 12; and (2) with respect any other

Contract listed on Schedule 2.05(b), an amount equal to 220% of the most

recent annual maintenance or service fee paid by such customer (or, if

such customer is in the first year of service, the first annual

maintenance or service fee which would be charged such customer under such

Contract). The downward adjustment hereunder shall be offset at the

Closing against the Cash Payment, and shall be subject to repayment to the

Company in accordance with Section 2.05(f).

<PAGE>

obligations thereunder have not been provided pursuant to Section 2.05(a)

by alternate arrangements reasonably satisfactory to VGS, the parties

shall make a downward adjustment in the consideration paid by VGS for the

Purchased Assets as follows: (1) with respect to any Assigned Contract

which is an Outsourcing Contract, an amount equal to 220% of the product

of (A) the most recent monthly fee paid by (or invoiced to) such customer

and (B) 12; (2) with respect to any Assigned Contract which is not an

Outsourcing Contract, an amount equal to 220% of the most recent annual

maintenance or service fee paid by such customer (or, if such customer is

in the first year of service, the first annual maintenance or service fee

which would be charged such customer under such Contract); and (3) with

respect to any other Purchased Asset, an equitable adjustment to the

Purchase Price. The downward adjustment hereunder shall be paid to VGS by

the Company and/or the Shareholder on the date which is thirty-one (31)

days after the Closing.

(d) For purposes of illustration, (x) if the most recent annual

maintenance fee paid by a customer under a Contract which is not an

Outsourcing Contract were $4,000, then the Purchase Price would be reduced

by $8,800 with respect to such Assigned Contract; and (y) if the most

recent monthly fee payable by a customer under an Outsourcing Contract

were $500, then the Purchase Price would be reduced by $13,200 (i.e., $500

x 12 x 2.2) with respect to such Outsourcing Contract.

(e) VGS may set off any Purchase Price adjustments hereunder against

the Holdback Amount. To the extent that there remain unsatisfied any

Purchase Price adjustments described above, the Parent and VGS shall have

full recourse against the Shareholder and the Company (including their

assets of whatsoever kind or nature) for the payment to VGS of any

unsatisfied Purchase Price adjustment.

(f) To the extent that VGS receives a purchase price adjustment with

respect to a Contract listed on Schedule 2.05(b), and within thirty-five

(35) days of the Closing the Company and the applicable customer

thereunder enter into an amendment agreement in the form set forth on

Schedule 2.05(f), then such Contract will be deemed an Assigned Contract

for all purposes under this Agreement and VGS shall pay the Company the

amount of any adjustment made with respect to such Contract pursuant to

Section 2.05.

(g) If, prior to the first anniversary of the Closing, VGS or the

Parent enters into a contract for services similar to those provided to

the same customer pursuant to a Contract for which VGS has received a

purchase price adjustment pursuant to Sections 2.05(b) or 2.05(c), then

VGS promptly shall credit the applicable purchase price adjustment back to

the Holdback Amount (if such purchase price adjustment were set off

against the Holdback Amount) or pay the purchase price adjustment to the

Company (if such adjustment had

<PAGE>

not been set off against the Holdback Amount and instead had been paid

separately to VGS by the Company or the Shareholder).

Section 2.06. Purchase Price.

(a) The purchase price for the Purchased Assets (the "PURCHASE

PRICE") is (x) Two Million Nine Hundred Thousand Dollars ($2,900,000) in

cash, less any purchase price adjustment pursuant to Section 2.05 (the

"CASH PAYMENT"), of which $20,000 was paid to the Company prior to the

Closing as a deposit and $185,000 was delivered to an escrow account and

(y) 174,772 shares of Parent's Common Stock, par value $0.01 per share

(the "Shares"). Of the Cash Payment, Four Hundred Thousand Dollars

($400,000) (the "HOLDBACK AMOUNT") shall be payable after the Closing in

accordance with, and subject to, Section 2.08.

(b) The Purchase Price shall be allocated, apportioned and adjusted

among the Purchased Assets in the manner specified in IRS Form 8594

attached as Schedule 2.06 and the parties agree to abide by such

allocations for all tax reporting purposes. In addition, the Purchase

Price shall be adjusted in accordance with Section 2.05.

Section 2.07. Closing.

(a) Subject to the conditions stated in Article 5 of this Agreement,

the closing of the transactions contemplated hereby (the "CLOSING") shall

be held at the offices of Greenberg Traurig LLP at 1750 Tysons Boulevard,

McLean, VA 22102, simultaneously with the execution of this Agreement and

any and all Collateral Agreements and Exhibits thereto. At the Closing:

(1) VGS shall deliver to the Company $1,668,160 in immediately

available funds by wire transfer to an account of the

Company designated by the Company, by notice to VGS (or if

not so designated, then by certified or official bank

check payable in immediately available funds to the order

of the Company in such amount);

(2) VGS and Parent shall deliver instructions to Comerica

Bank, as escrow agent under the Escrow Agreement, to

transfer $185,000 to the Company.

(3) VGS shall deliver to the Company the Shares;

(4) VGS and the Company shall enter into an assignment and

assumption agreement substantially in the form attached

hereto as Exhibit B (the "ASSIGNMENT AND ASSUMPTION

AGREEMENT");

<PAGE>

(5) the Company shall deliver a bill of sale substantially in

the form attached hereto as Exhibit C (the "BILL OF

SALE");

(6) the Company shall deliver the a trademark assignment

substantially in the form attached hereto a Exhibit D (the

"TRADEMARK ASSIGNMENT");

(7) the Company shall deliver to VGS such other deeds, bills

of sale, endorsements, consents, assignments, and other

good and sufficient instruments of title as VGS reasonably

shall require to vest in VGS all right, title and interest

in, to and under the Purchased Assets;

(8) the Company and the Shareholder shall deliver the

transferability restriction agreement substantially in the

form attached hereto as Exhibit E (the "TRANSFERABILITY

RESTRICTION AGREEMENT");

(9) the Company and the Parent shall enter into the Consulting

Agreement;

(10) the Shareholder and the VGS shall enter into a license

agreement in the form attached hereto as Exhibit F (the

"LICENSE AGREEMENT");

(11) the Company shall deliver to VGS evidence satisfactory to

VGS that consents have been obtained with respect to the

items set forth in Schedule 2.07; and

(12) the Company shall deliver possession of (A) all of its

source codes relating to the Products; (B) all of its

customer and prospective customer lists; and (C) all

software used for billing and collections.

(b) At or promptly after the Closing, and except to the extent they

constitute Excluded Assets, the Company shall deliver possession of all of

originals and copies of agreements, instruments, documents, deeds, books,

records, files and other data and information within the possession of the

Company, any Shareholder or any Affiliate of the Company pertaining to the

Company, the Purchased Assets and the Business, including all original

customer license agreements, all other customer agreements, invoices and

correspondence.

Section 2.08. Payment of the Holdback Amount. The Holdback Amount shall

be payable as follows: (1) on January 1, 2006, VGS shall make a payment to

the Company equal to $150,000, together with interest on such amount computed

at the "mid-term applicable Federal rate" in effect on the Closing Date; (2)

<PAGE>

January 1, 2007, VGS shall make a payment to the Company equal to $100,000,

together with interest on such amount computed at the "mid-term applicable

Federal rate" in effect on the Closing Date; and (3) on July 1, 2007, VGS shall

make a payment to the Company equal to $ 150,000, together with interest on such

amount computed at the "mid-term applicable Federal rate" in effect on the

Closing Date; provided that VGS shall have the right to deduct as a setoff from

the Holdback Amount any amounts for which Buyer or its Affiliates are seeking

indemnification pursuant to Article 8 or for which VGS is entitled to a downward

adjustment in the Purchase Price pursuant to Section 2.05.

Section 2.09. Repurchase of the Shares. On the third anniversary of the

Closing Date (and only on such date), the Company (or the Shareholder, if the

Shares shall have been transferred to him) may elect to have the Parent

repurchase one half of the Shares (taking into account any stock splits or other

similar adjustments) for an amount equal to $200,000; provided that the Company

or the Shareholder, as may be applicable, shall have given the Parent written

notice to this effect not less than thirty (30) days prior to the third

anniversary of the Closing Date.

Section 2.10. Reimbursement of Office Lease Deposit. Promptly after the

Closing, VGS shall pay the Company $9,500, in payment for the Office Lease

deposit which will remain in place after the Closing.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER

AND THE COMPANY

The Shareholder and the Company hereby jointly and severally represent and

warrant to VGS and Parent that except as set forth in the Disclosure Schedules

attached to this Agreement:

Section 3.01. Corporate Existence and Qualification. The Company is a

corporation duly organized, validly existing and in good standing under the laws

of the State of Delaware and has the corporate powers and all material

governmental licenses, authorities, permits, consents and approvals required to

own, manage, lease and hold its Properties and to carry on its business as and

where such Properties are presently located and such business is presently

conducted.

Section 3.02. Authority, Approval and Enforceability. This Agreement has

been duly executed and delivered by the Company and the Shareholder, and each of

the Shareholder and the Company has all requisite power and legal

<PAGE>

capacity to execute and deliver this Agreement and all Collateral Agreements

executed and delivered or to be executed and delivered in connection with the

transactions provided for hereby, to consummate the transactions contemplated

hereby and by the Collateral Agreements, and to perform its obligations

hereunder and under the Collateral Agreements. This Agreement and each

Collateral Agreement to which any of the Shareholder and/or the Company is a

party constitutes, or upon execution and delivery will constitute, the legal,

valid and binding obligation of such party, enforceable in accordance with its

terms, except as such enforcement may be limited by general equitable principles

or by applicable bankruptcy, insolvency, moratorium, or similar laws and

judicial decisions from time to time in effect which affect creditors' rights

generally.

Section 3.03. Capitalization and Corporate Records.

(a) All issued and outstanding shares of the Company's capital stock

are owned beneficially and of record by the Shareholder.

(b) The copies of the Certificate of Incorporation and Bylaws of the

Company provided to VGS are true, accurate, and complete and reflect all

amendments made through the date of this Agreement. The Company's minute

books which were made available to VGS for review were correct as of the date

of such review, and such minute books contains all written shareholder and

corporate actions that materially affect the Assumed Liabilities or the

Purchased Assets. All corporate actions taken by the Company have been duly

authorized or ratified. All accounts, books, ledgers and official and other

records of the Company fairly and accurately reflect all of the Company's

transactions, properties, assets and liabilities.

voting securities of or other equity interests in any other Person.

Section 3.04. No Shareholder Defaults or Consents. The execution and

delivery of this Agreement by the Shareholder and the performance by the

Shareholder of their obligations hereunder will not violate any provision of law

or any judgment, award or decree or any indenture, agreement or other instrument

to which the Shareholder is a party, or by which the propert

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