MEMBERSHIP INTEREST PURCHASE AGREEMENT

Exhibit 10.3

MEMBERSHIP INTEREST PURCHASE AGREEMENT

dated as of May 30, 2006

by and among

Bruce White

“Seller”

and

Sterling Systems – Indiana L.L.C.

(the “Company”)

and

Avatech Solutions, Inc.,

“Purchaser”

MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into as of this 30th day of May, 2006 by and among Bruce White, (“Seller”), Sterling Systems — Indiana, L.L.C. Inc., a Michigan limited liability company (the “Company”), and Avatech Solutions, Inc., a Delaware corporation (“Purchaser”).

EXPLANATORY STATEMENT

A. Seller in the aggregate owns 100% of the issued and outstanding membership interests in the Company, and

B. Purchaser desires to acquire all of Seller’s membership interest in the Company pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the covenants, agreements, representations and warranties, the Explanatory Statement which is hereby incorporated herein by reference, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, the Company and Purchaser hereby agree as follows:

ARTICLE ONE

DEFINITIONS

As used in this Agreement, the following terms shall have the meaning set forth after each such term.

1.1 “1934 Act” means the Securities and Exchange Act of 1934, as amended.

1.2 “1933 Act” means the Securities Act of 1933, as amended.

1.13 “Agreement” is defined above.

1.14 “Avatech” is defined above.

1.15 “Avatech Common Stock” means shares of the common stock, par value $.01 per share, of Avatech.

1.16 “Balance Sheet” means the balance sheet of the Company dated as of December 31, 2005, which, in part, was used by Purchaser to calculate the value of the Company.

1.17 “Balance Sheet at Closing” means the unaudited balance sheet of the Company as of April 30, 2006.

1.8 “Closing” means the closing of the Purchase, to be held at a place, in a manner and, on a date mutually agreeable, but in no event later than fifteen (15) days following the date on which all conditions to the closing of the Purchase, as set forth herein, have been satisfied.

1.9 “Closing Date” means the date of the Closing.

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

1.11 “Controlling Person” means each person, if any, who controls Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act.

1.12 “Effective Date” means the date the Purchase becomes effective which shall be the Closing Date.

1.13 “Documents” means the LLC Purchase Agreements, the Stock Purchase Agreement, the Schedules referred to herein, and the Employment Agreements.

1.14 “Employment Agreements” means the employment agreements to be entered into between Purchaser and Bruce White, David Press, Kenneth Williams, Kevin Breslin, Marcy Nungesser, Mark Bonham, and Steve Wludyga.

1.15 “Environmental Laws” means all Federal, state and local laws relating to pollution, protection of the environment, and waste disposal.

1.16 “ERISA” means the Employees Retirement Income Security Act of 1974.

1.17 “Escrow Account” is defined in Section 2.3 herein.

1.18 “Financial Statements” means the following financial statements of the Company: the Balance Sheet as of December 31, 2005, the Balance Sheet at Closing, and the related unaudited consolidated statements of income and cash flow, including the notes, if any, thereto.

1.19 “Insiders” means the officers, directors, partners, employees, representatives or agents of the Company.

1.20 “Intangible Property” means licenses or other rights held or owned by the Company to use all software, patents, trademarks, trade names, trade secrets, copyrights, inventions, formulae, methods and processes.

1.21 “Lien” means any security interest, mortgage, pledge, claim, lien, or encumbrance on any of the assets of the Company.

1.22 “LLC Companies” means the Company and Sterling Systems–Ohio, LLC.

1.23 “LLC Purchase Agreements” means this membership interest purchase agreement, and the membership interest purchase Agreement dated as of even date herewith, between Purchaser and the members of Sterling Systems – Ohio L.L.C.

1.24 “Material Adverse Effect” means any event reasonably expected to (i) result in a material adverse effect on the properties, business, results of operations, condition (financial or otherwise), or affairs of the Company, or (ii) in any manner, draw into question the validity of any of the Documents.

1.25 “Membership Interests” means all of the membership interests of the Company, all of which are owned by the Seller.

1.26 “Plan” or “Plans” means any plan or arrangements of the Company which constitutes an “employee benefit plan,” as defined in Section 3 (3) of ERISA.

1.27 “Post Closing Price Adjustment Schedule” means Schedule 1.26, which contains the formula that will be used to add to or subtract from the Purchase Price (hereinafter defined) as a result of financial operations of the Company from the date of the Balance Sheet at Closing and the Closing Date.

1.28 “Shareholder” or “Shareholders” mean the holders of any shares of the capital membership interest or equity interests of the Company.

1.29 “State Acts” means any applicable state securities laws or Blue Sky laws.

1.30 “Stock Purchase Agreement” means the stock purchase agreement dated as of even date herewith by and among Purchaser, Sterling Systems & Consulting, Inc., Sterling Ohio Management, Inc., and Bruce and Shelly White.

1.31 “Membership Interest Consideration” is defined herein in Section 2.2.

ARTICLE II

PURCHASE OF THE MEMBERSHIP INTERESTS

SECTION 2.1. Purchase and Sale of the Membership Interests . At the Closing, the Seller will sell, convey, transfer and deliver to the Purchaser, and the Purchaser will purchase and receive from the Seller all Membership Interest in the Company owned by the Seller as of the Closing, which Membership Interests shall represent all of the issued and outstanding membership interests in the Company as of Closing.

SECTION 2.2. Purchase Price .

2.2.1 The purchase price to be paid by Purchaser to Seller for the Membership Interests (the “ Purchase Price ”) shall consist of 116,676 shares of Avatech Common Stock (the “Stock Consideration”) and one million ninety-two thousand ninety-one dollars and 25 cents($1,092,091.25) in cash (the “Cash Consideration”) which Cash Consideration, subject to the Escrow Amount (hereinafter

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defined), and subject to the adjustment provided for in Section 2.2.2, shall be wired to the account of the Seller upon Seller’s instructions, on the Closing Date, and which Stock Consideration shall be issued to the account of the Seller on the Closing Date.

2.2.2 The Cash Consideration shall be increased or decreased, as the case may be, as follows: Seller and Company shall prepare the Balance Sheet at Closing. The sum of accounts receivable and inventory of the Company and the limited liability companies that are parties to the LLC Purchase Agreements shall be totaled (such number, the “assets”) and the sum of the accounts payable, accrued compensation, and other current liabilities shall be totaled (such number, the “liabilities”). If the difference between the assets and liabilities on the Balance Sheet at Closing (the “Closing Number”) exceeds by more than $50,000 (in the aggregate among the LLC Companies and Sterling Systems & Consulting, Inc.), and the difference between such sums as shown on the Balance Sheet and the LLC Balance Sheets (the “Original Number”), then (i) if the Closing Number is smaller than the Original Number, the Cash Consideration shall be reduced by the difference between the Closing Number and Original Number, and (ii) if the Closing Number is larger than the Original Number, the Cash Consideration shall be increased by the difference between the Closing Number and the Original Number. The Cash Consideration shall in any event be reduced by $48,000 as a result of a “stocking order” placed by Seller with Autodesk, Inc. prior to the date of the Balance Sheet at Closing.

2.2.3 After the Closing, the Cash Consideration shall be further increased or decreased, as the case may be, as follows: As soon as possible prior to, or at, the Closing, the parties shall complete the Post Closing Price Adjustment Schedule. If, as a result of the formula set forth in the Post Closing Price Adjustment Schedule, Seller is due money, then Purchaser shall immediately pay to Seller the amount that is due to Seller. If, as a result of the formula set forth in the Post Closing Price Adjustment Schedule, Purchaser is due money, then the Escrow Agent (hereinafter defined) shall immediately disburse to Purchaser, from the Escrow Account (hereinafter defined) the amount that is due to Purchaser.

SECTION 2.3 Escrow.

2.3.1 Purchaser and Seller agree that $400,000, allocated among the two LLC Purchase Agreements and the Stock Purchase Agreement, of the Cash Consideration shall, on the Closing Date, be deposited in an interest-bearing escrow account (the “Escrow Account”) with The Huntington National Bank, a national banking corporation (the “Escrow Agent”), pursuant to an escrow agreement reasonably satisfactory to Purchaser and Seller, for the purpose of securing Seller’s and the Company’s representations and warranties made to the Purchaser in Article III hereof. The Escrow Agent shall maintain the Escrow Account for a period of nine months. During such period, if, as a direct result of a material misrepresentation or breach of warranty by Seller made to the Purchaser in Article III hereof, Purchaser becomes liable for and pays any monetary damages, awards, or settlements of claims, then the Escrow Agent shall, after satisfaction of the provision of paragraph 2.2.3 hereof, pay from the Escrow Account, to the Purchaser, the amount of any such damages, awards, or settlements (“Escrow Payment”). On the first day of the tenth month following the Closing Date, the Escrow Agent shall pay to the Seller the amount then on deposit in the Escrow Account, including any earnings thereon. Any dispute between the parties regarding the validity or amount of any damages, awards, or settlements of claims shall be submitted to a panel of arbitrators, one selected by Purchaser, one selected by Seller, and a third to be selected by the two arbitrators selected by Purchaser and Seller, the findings of a majority of which arbitrators shall be binding upon the parties.

2.3.2 In order for Purchaser to assert its right to an Escrow Payment, Purchaser shall have given Seller a written notice of any third party claim or demand which may result in liability to Purchaser pursuant to paragraph 2.2.2. hereof (“Escrow Notice”) subject to Seller’s right to defend in good faith third party claims as hereinafter provided. If after such Escrow Notice Seller has not within thirty (30) days thereof resolved such claim and payment of such claim is made by Purchaser, such sums paid shall qualify as an Escrow Payment and shall be paid by the Escrow Agent to Purchaser.

2.3.3 If the Purchaser notifies the Seller of any claim or demand pursuant to paragraph 2.3.2 above, and if such claim or demand relates to a claim or demand asserted by a third party against the Purchaser which is a claim or demand for which the Seller must indemnify or hold harmless the Purchaser under this Agreement, the Seller shall either (i) promptly pay or settle such claim or demand or (ii) employ counsel acceptable to Purchaser, at the Seller’s expense, to defend any such claim or demand asserted against the Purchaser, so long as the Purchaser is not jeopardized with respect to such defense. The Purchaser shall have the right to cooperate in the defense of any such claim or demand. The Seller shall notify the Purchaser in writing, within twenty (20) days after the date of the applicable Escrow Notice of the Seller’s decision to either pay such claim or demand or defend in good faith any such third party claim or demand. So long as the Seller is defending in good faith any such claim or demand asserted by a third party against the Purchaser, and the Purchaser is not jeopardized by such defense, the Purchaser shall not settle or compromise such claim or demand. The Purchaser and Company shall make available to the Seller or its agents all records and other materials in the Purchaser’s or Company’s possession reasonably required by it for its use in contesting any third party claim or demand. Whether or not the Seller elects to defend any such claim or demand, the Purchaser and Company shall have no obligation to do so. The Seller may not, without

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the prior written consent of the Purchaser, settle or compromise any claim or consent to the entry of any judgment unless such settlement, compromise or consent includes an unconditional release of the Purchaser from any and all liability arising out of such claim.

SECTION 2.4 Distribution of Cash. Seller, Company, and Purchaser agree that Company shall distribute to Seller or to employees, on or prior to the Closing Date, all cash of the Company, on deposit in the Company’s depositary accounts as of December 31, 2005, and all cash of the Company, on deposit in the Company’s depositary accounts, received by the Company from January 1, 2006 to, but not including, the Closing Date. It is the intention of the parties that the Company shall distribute to its membership interest holders, the Seller, all of its cash on hand up to, but not including, the Closing Date.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1.1 Representations and Warranties of the Company and the Seller . The Seller and the Company jointly and severally represent and warrant to the Purchaser that, except as set forth in the Schedules and/or a letter dated as of the Closing Date executed by the Company and Seller and containing information required by this Agreement and specifying the exceptions to the representations and warranties of the Company and the Seller under this Agreement (the “Disclosure Letter”):

3.1.2 Organization . The Company has been duly organized, is validly existing as a limited liability company in good standing under the laws of its state of organization, and each state in which, by the nature of its business or the ownership of property, it is required to be qualified to do business, and has the requisite power and authority to own, lease, and operate its properties, and to carry on its business as it is currently being conducted.

3.1.3 Power and Authority . The Company has all requisite power and authority to execute, deliver, and perform its obligations under this Agreement and the Documents and to consummate all transactions contemplated hereby, and each Seller has all requisite power and authority, to execute, deliver, and perform its obligations under this Agreement and the Documents and to consummate all transactions contemplated hereby.

3.1.4 Membership Interests . All of the membership interests in the Company are duly and validly authorized, and all such membership interests are fully paid and nonassessable, and are owned by Seller free and clear of any Lien. No such membership interest was issued in violation of any preemptive or similar rights.

3.1.5 Rights of Others . The Company has no direct or indirect subsidiaries, and there are no outstanding subscriptions, rights, options, calls, convertible securities, commitments of sale, or Liens related to or entitling any person to purchase or otherwise to acquire any ownership interest in, the Company.

3.1.6 Validity of Agreement . This Agreement has been duly and validly authorized, executed, and delivered by the Company and the Seller and constitutes a valid and legally binding agreement of the Company and the Seller, enforceable against it and them in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws relating to or affecting creditor’s rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, as to rights of indemnification, by principles of public policy or federal or state securities laws relating thereto.

3.1.7 Financial Statements . The Seller has delivered to the Purchaser, at or prior to the Closing Date, copies of the following financial statements of the Company: (a) a balance sheet of the Company for each of its three preceding fiscal years, (b) the Balance Sheet, and (c) any additional Financial Statements associated therewith. Such Financial Statements and notes thereto fairly present the financial condition and results of operations of the Company as at the dates thereof and for the periods therein referred to, subject, in the case of interim financial statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse) and the absence of notes (which, if presented, would not differ materially from those included in the Financial Statements); the Financial Statements reflect the consistent application of accounting principles throughout the periods involved, except as disclosed in the notes to such Financial Statements.

3.1.8 Liabilities . Except as set forth in Schedule 3.1.8 , or (i) in the Financial Statements, or (ii) liabilities for federal and state income taxes which may hereinafter be disclosed on tax audits, the Company had no obligations or liabilities, contingent or otherwise. Schedule 3.1.8 also sets forth any (a) amounts owed to Insiders and (b) accounts payable that have been outstanding for more than sixty (60) days.

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3.1.9 No Conflict . Except as set forth in Schedule 3.1.9 , the execution, delivery, and performance of this Agreement and the Documents by the Company and the Seller and the consummation of the transactions contemplated hereby will not violate, conflict with, or result in a breach or violation of the organizational documents or operating agreement (or similar organizational and governance documents) of the Company or any of the terms or provisions of, or constitute a default or cause an acceleration of any obligation under, or result in the imposition or creation of (or the obligation to create or impose) a Lien with respect to the organizational documents or operating agreement (or similar organizational and governance documents) of the Company, any bond, note, debenture, or other evidence of indebtedness or any indenture, mortgage, deed of trust, or other agreement or instrument to which the Company is a party or by which it is bound, or to which any properties of the Company are or may be subject, or contravene any order of any court or governmental agency or body having jurisdiction over the Company or any of its properties, or violate or conflict with any statute, rule or regulation, or administrative or court decree applicable to the Company or any of its properties, except for any such violations, conflicts, breaches, or defaults which, singularly or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

3.1.10 Tax Matters .

(a) Except as set forth in Schedule 3.1.10 , all federal, state, local and foreign returns, (including, without limitation, estimated tax returns, withholding tax returns with respect to employees, and FICA and FUTA returns) required to be filed by or on behalf of the Company have been timely filed or requests for extensions have been timely filed, granted and have not expired and all returns filed are complete and accurate. All taxes shown on filed returns have been paid. As of the date hereof, and as of the Effective Date, there is and shall be no audit examination, deficiency or refund litigation or matter in controversy with respect to any taxes that might result in a determination adverse to the Company, except as reserved against in the Financial Statements or disclosed in Schedule 3.1.10 . All taxes, interest, additions and penalties due with respect to completed and settled examinations or concluded litigation have been paid.

(b) Except as disclosed in Schedule 3.1.10 , the Company has not executed an extension or waiver of any statute of limitations on the assessment or collection of any tax due that is currently in effect.

(c) To the extent any federal, state, local or foreign taxes are due from the Company for the period or periods beginning on the date of commencement of its most recent fiscal year, or thereafter through and including the Effective Date, adequate provision on an estimated basis has been or will be made for the payment of such taxes by establishment of appropriate tax liability accounts on the Balance Sheet at Closing.

(d) Deferred taxes of the Company have been provided for.

3.1.11 Properties . Except as set forth in Schedule 3.1.11 , the Company has good and marketable title, free and clear of all Liens, encumbrances, charges, defaults or equities of whatever character, to all of its properties and assets, tangible or intangible, whether real, personal or mixed, reflected in its Financial Statements as being owned by it at the date of the most recent balance sheet or acquired by it thereafter. All buildings, and all fixtures, equipment and other property and assets which, in the opinion of the Company’s management are material to its business, held under leases or subleases by the Company are held under valid instruments enforceable in accordance with their terms (except as disclosed in Schedule 3.1.11 and except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceedings may be brought). The policies of fire, theft, liability and other insurance maintained with respect to the assets or business of the Company provide commercially reasonable, for businesses of its type, coverage against any loss reasonably foreseeable in the conduct of the Company’s business.

3.1.12 Compliance with Laws . Except as set forth in Schedule 3.1.12 , the Company:

(a) is in compliance with all laws, regulations, reporting and licensing requirements and orders applicable to its business or any of its employees (because of such employee’s activities on behalf of it), the breach or violation of which could have a Material Adverse Effect on its business; and

(b) has received no notification (not disclosed on Schedule 3.1.12 ), from any agency or department of federal, state or local government or regulatory authorities or the staff thereof asserting that it is not in compliance with any of the statutes, regulations, rules or ordinances which such governmental authority or regulatory authority enforces, or threatening to revoke any license, franchise, permit or governmental authorization, and is subject to no agreement with any regulatory authority with respect to its assets or business.

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