8-K

                             UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549

                               FORM 8-K

                            CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934


 Date of Report (Date of Earliest Event Reported): September 30, 2004


                          HALIFAX CORPORATION
        (Exact name of registrant as specified in its charter)


      Virginia             1-08964               54-0829246
  (State or other       (Commission File      (I.R.S. Employer
  jurisdiction of           Number)         Identification No.)
   incorporation)

           5250 Cherokee Avenue, Alexandria, Virginia 22312
           (Address of principal executive offices/Zip Code)


Registrant's telephone number, including area code:  (703) 658-2400

Former  name, former address, and former fiscal year, if changed  since
last report:  N/A


Check  the appropriate box below if the Form 8-K filing is intended  to
satisfy  the  filing  obligation of the registrant  under  any  of  the
following provisions:

[ ]  Written communications pursuant to Rule 425 under the Securities
     Act (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange
     Act (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under
     the Exchange Act(17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under
     the Exchange Act(17 CFR 240.13e-4(c))


FOREWARD-LOOKING STATEMENTS

     Certain statements in this document constitute "forward-looking
statements" within the meaning of the Federal Private Securities
Litigation Reform Act of 1995.  While forward-looking statements
sometimes are presented with numerical specificity, they are based on
various assumptions made by management regarding future circumstances
over many of which we have little or no control.  Forward-looking
statements may be identified by words including "anticipate,"
"believe," "estimate," "expect" and similar expressions.  Halifax
Corporation, a Virginia corporation ("Halifax" or the "Company"),
cautions readers that forward-looking statements, including without
limitation, those relating to future business prospects, revenues,
working capital, liquidity, and income, are subject to certain risks
and uncertainties that would cause actual results to differ materially
from those indicated in the forward-looking statements.  Factors that
could cause actual results to differ from forward-looking statements
include the concentration of the Company's revenues, risks related to
fluctuation in interest rates and exchange rates, risks involved in
contracting with its customers including incurrence of start-up costs
prior to receiving revenues and contracts with fixed price provisions,
government contracting risks, potential conflicts of interest,
difficulties in attracting and retaining management, professional and
administrative staff, fluctuation in quarterly results, risks related
to acquisitions, including the acquisition of AlphaNational Technology
Services, Inc., risks related to the Company's acquisition strategy,
continued favorable banking relationships, the availability of capital
to finance operations and planned growth and make payments on
outstanding indebtedness, ramifications of the embezzlement matter,
risks related to competition and the Company's ability to continue to
perform efficiently on contracts, absence of dividends on common stock
and liquidity of common stock, effects of provisions in the Company's
charter documents delaying or preventing a change of control and other
risks and factors identified from time to time in the Company's Annual
Report on Form 10-K.  Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated or projected.

     Forward-looking statements are intended to apply only at the time
they are made.  Moreover, whether or not stated in connection with a
forward-looking statement, the Company undertakes no obligation to
correct or update a forward-looking statement should we later become
aware that it is not likely to be achieved.  If the Company were to
update or correct a forward-looking statement, you should not conclude
that the Company will make additional updates or correction thereafter.

ITEM 1.01  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

     On September 30, 2004, Halifax Corporation and its wholly-owned
subsidiary, Halifax-AlphaNational Acquisition, Inc., a Delaware
corporation, entered into a definitive agreement with AlphaNational
Technology Services, Inc., a Texas corporation ("AlphaNational") and
nationwide hardware maintenance services company, and its stockholders
(the "Merger Agreement"), pursuant to which Halifax acquired all of the
outstanding capital stock of AlphaNational in a merger transaction, for
total consideration of approximately $1.9 million excluding the
contingent earnout payment described below.  Pursuant to the Merger
Agreement, the merger consideration was comprised of:

     (i) 235,294 shares of Halifax's common stock having an aggregate
value of $1,200,000; cash in an amount equal to $200,000; and notes in
an aggregate original principal amount of $500,000 with an interest
rate of 6% per annum of which $100,000 of the aggregate principal
amount has a term of 90 days and $400,000 has a term of 18 months, and

     (ii) a contingent earnout payment pursuant to which an additional
$150,000 in cash or Halifax common stock is payable over the next 12
months if certain agreed upon financial targets are met.

The purchase price is also subject to possible adjustment resulting
from AlphaNational financial information to become available 45 days
after closing.  Halifax expects to pay the principal and interest on
the notes with internally generated funds.  The Merger Agreement
included representations, warranties, covenants and indemnifications
typical for transactions of this type.

     In connection with the merger transactions, the AlphaNational
stockholders also received certain demand and piggyback registration
rights pursuant to a registration rights agreement and pursuant to a
restrictive covenants agreement, the AlphaNational stockholders agreed,
among other things, to keep proprietary information confidential and
not to compete with Halifax within a certain territory or solicit or
divert employees, consultants and customers from Halifax.

     Halifax and AlphaNational have conducted business transactions
together in the ordinary course since April 2002.  All terms of these
transactions were negotiated at arms-length.

     On September 30, 2004 in connection with the acquisition of
AlphaNational, L.L. Whiteside became Senior Vice President, Service and
Support of Halifax and Mr. Whiteside entered into an Employee Severance
and Restrictive Covenant Agreement.   The information contained in Item
5.02 below is hereby incorporated by reference into this item 1.01.

ITEM 2.01  COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

     Halifax completed the acquisition of AlphaNational described above
on September 30, 2004.  The information contained in Item 1.01 above is
hereby incorporated by reference into this Item 2.01.

ITEM 3.02  SALE OF UNREGISTERED SECURITIES

     In connection with the acquisition of AlphaNational described
above, Halifax issued 235,294 shares of its common stock on September
30, 2004.  Halifax also agreed to issue $150,000 in shares of common
stock pursuant to the earnout arrangement described above, provided
Halifax common stock is selected as the method of payment, as opposed
to cash.  These securities were issued in a private placement exempt
from registration pursuant to Rule 506 of Regulation D of the rules and
regulations of the Securities and Exchange Commission promulgated under
the Securities Act of 1933, as amended, to accredited investors.  The
private placement was completed without any general or public
solicitation.  The information contained in Item 1.01 above is hereby
incorporated by reference into this Item 3.02.

ITEM 5.02.  DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.

     On September 30, 2004 in connection with the acquisition of
AlphaNational described above, L.L. Whiteside became Senior Vice
President Service & Support of Halifax.  On such date Halifax entered
into an Employee Severance and Restrictive Covenant Agreement
("Severance Agreement") with Mr. Whiteside. The Severance Agreement
provides for benefits under certain circumstances described below and
remains in effect so long as Mr. Whiteside continues to be employed by
the Company.  The Severance Agreement provides for an annual base
salary of $193,000.  It confirms that employment is at will and
provides for termination without additional compensation in the event
of death, disability, resignation by Mr. Whiteside without "good
reason," as defined in the Severance Agreement, or termination by
Halifax "for cause," as defined in the Severance Agreement.
Termination for any other reason results in compensation equal to
twelve months salary if such termination occurs within three years of
the date the Severance Agreement was entered into.


     In connection with the AlphaNational acquisition, Mr. Whiteside
received, as consideration in exchange for all of his shares of
AlphaNational, 108,597 shares of Halifax common stock, $92,307.69 in
cash and a note in the principal amount of $230,769.23, subject to
adjustment as described above in Item 1.01 above, with an interest rate
of 6% per annum.  Mr. Whiteside has the opportunity to receive
additional consideration if the contingent earnout payment requirements
are met.  The information contained in Item 1.01 above is hereby
incorporated by reference into this Item 5.02.

     Mr. Whiteside, 64, served as Chief Executive Officer of
AlphaNational from 1992 until September 2004.  Halifax and
AlphaNational, of which Mr. Whiteside was Chief Executive Officer and a
greater than 10% stockholder, have conducted business transactions
together in the ordinary course since April 2002.  All terms of these
transactions were negotiated at arms-length.  Mr. Whiteside is not
related to any of the officers or directors of Halifax.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

     (a)  Financial Statements of Businesses Acquired

          Required financial statements will be filed as an amendment
          to this Form 8-K as soon as practicable, but not later than
          71 calendar days after the date this Form 8-K is required to
          be filed with the Securities and Exchange Commission.

     (b)  Pro-forma Financial Information

          Required pro forma financial statements will be filed as an
          amendment to this Form 8-K as soon as practicable, but not
          later than 71 calendar days after the date this Form 8-K is
          required to be filed with the Securities and Exchange
          Commission.

     (c)  Exhibits

          The following exhibit is filed herewith:

     Exhibit
     Number    Description

               2.1        Agreement and Plan of Merger dated  September
               30, 2004 by and among AlphaNational Technology Services,
               Inc.,    Halifax    Corporation,   Halifax-AlphaNational
               Acquisition,  Inc., et al. (Schedules and  exhibits  are
               omitted  pursuant  to  Regulation S-K,  Item  601(b)(2);
               Halifax agrees to furnish supplementally a copy of  such
               schedules and/or exhibits to the Securities and Exchange
               Commission upon request.)

     99.1      Press Release dated October 4, 2004.





                               SIGNATURE




Pursuant  to the requirements of the Securities Exchange Act  of  1934,
the  Registrant has duly caused this report to be signed on its  behalf
by the undersigned hereunto duly authorized.

                                   HALIFAX CORPORATION



Date:  October 6, 2004             By:  /s/Joseph Sciacca
                                        Joseph Sciacca
                                        Vice President, Finance & CFO













                             EXHIBIT INDEX




     Exhibit No.                        Description

               2.1        Agreement and Plan of Merger dated  September
               30, 2004 by and among AlphaNational Technology Services,
               Inc.,    Halifax    Corporation,   Halifax-AlphaNational
               Acquisition,  Inc., et al. (Schedules and  exhibits  are
               omitted  pursuant  to  Regulation S-K,  Item  601(b)(2);
               Halifax agrees to furnish supplementally a copy of  such
               schedules and/or exhibits to the Securities and Exchange
               Commission upon request.)

     99.1      Press Release dated October 4, 2004.

EX-21

                                                            Exhibit 2.1






                     AGREEMENT AND PLAN OF MERGER



                       dated September 30, 2004



                        FOR THE ACQUISITION OF


               ALPHA NATIONAL TECHNOLOGY SERVICES, INC.



                                  BY



                          HALIFAX CORPORATION










                     AGREEMENT AND PLAN OF MERGER


                           Table of Contents



Section 1: Defined Terms                                        1
Section 2: The Merger                                           1
     2.1 The Merger                                             1
     2.2 Effective Time                                         1
     2.3 Effect of the Merger                                   2
     2.4 Articles of Incorporation and Bylaws                   2
     2.5 Directors and Officers                                 2
     2.6 Merger Consideration; Conversion of Capital Stock      2
     2.7 Delivery of Merger Consideration and Surrender of Certificates
     3
     2.8 Merger Consideration Adjustment and Closing Balance Sheet    3
     2.9 Deferred Merger Consideration                          4
     2.10 Further Action                                        6
Section 3: Representations of the Company and the Shareholders  6
     3.1 Organization                                           6
     3.2 Authority; Non-Contravention                           7
     3.3 Capital Stock and Ownership                            8
     3.4 Financial and Corporate Records                        9
     3.5 Compliance with Law; Permits                          10
     3.6 Financial Statements                                  10
     3.7 Assets                                                10
     3.8 Obligations                                           11
     3.9 Operations Since the Latest Balance Sheet Date        11
     3.10 Accounts Receivable                                  12
     3.11 Tangible Property                                    12
     3.12 Real Property; Environmental Laws                    12
     3.13 Software and Intangibles                             13
     3.14 Contracts                                            14
     3.15 Employees and Independent Contractors                16
     3.16 Employee Benefit Plans                               17
     3.17 Customers and Suppliers                              19
     3.18 Taxes                                                19
     3.19 Proceedings and Judgments                            21
     3.20 Insurance                                            22
     3.21 Questionable Payments                                22
     3.22 Related Party Transactions                           22
     3.23 Brokerage Fees                                       22
     3.24 Investment Matters                                   22
     3.25 Full Disclosure                                      24
Section 4: Representations of Buyer and Merger Sub             24
     4.1 Organization                                          24
     4.2 Authority; Non-Contravention                          25
     4.3 Buyer's Stock                                         25
     4.4 Indebtedness                                          25
     4.5 Consents                                              26
     4.6 SEC Filings                                           26
     4.7 Questionable Payments                                 26
     4.8 Brokerage Fees                                        26
     4.9 Full Disclosure                                       27
Section 5: Closing Deliveries                                  28
     5.1 The Company's and the Shareholders' Obligations at Closing
     28
     5.2 Buyer's and Merger Sub's Obligations at Closing       29
Section 6: Certain Rights and Obligations of Buyer and the Shareholders
     after Closing                                             30
     6.1 Restrictions on Dispositions of Buyer Common Shares   30
     6.2 Cooperation with Buyer and the Surviving Corporation  30
     6.3 Taxes                                                 30
     6.4 Transfer Taxes                                        31
     6.5 Reportable Transactions                               31
     6.6 Cooperation on Tax Matters                            32
     6.7 Disposition of Company Employee Benefit Plans         32
Section 7: Indemnification                                     33
     7.1 The Company's and Shareholders' Indemnification       33
     7.2 Indemnification by Buyer                              33
     7.3 Indemnification Procedures                            34
     7.4 Limits on Indemnification                             34
     7.5 Setoff                                                35
Section 8: Other Provisions                                    37
     8.1 Publicity                                             37
     8.2 Fees and Expenses                                     37
     8.3 Notices                                               37
     8.4 Survival                                              37
     8.5 Reliance; Interpretation of Representations           38
     8.6 Entire Understanding                                  38
     8.7 Parties in Interest; Assignment                       38
     8.8 Waivers                                               38
     8.9 Severability                                          38
     8.10 Counterparts; Facsimile                              38
     8.11 Section Headings                                     39
     8.12 References                                           39
     8.13 Controlling Law                                      39
     8.14 Arbitration; Jurisdiction and Process                39
     8.15 No Third-Party Beneficiaries                         40
     8.16 Neutral Construction                                 40





                     AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger ("Agreement") is made and
entered into on September 30, 2004 by and among Alpha National
Technology Services, Inc., a Texas corporation (the "Company"), Halifax
Corporation, a Virginia corporation ("Buyer"), Halifax-AlphaNational
Acquisition, Inc., a Delaware corporation ("Merger Sub"), L.L.
Whiteside, Charles A. Harper, Morris Horn and Dan Lane (each, a
"Shareholder" and collectively the "Shareholders").

                              BACKGROUND

       The   Company   is   in   the  business  of   providing   onsite
computer/network  repairs,  help desk  support,  and  related  computer
services (the "Business").  The Shareholders own, collectively, 100% of
the issued and outstanding shares of capital stock of the Company.   At
Closing  (as  defined herein), the parties desire that the  Company  be
merged  with and into Merger Sub (with Merger Sub surviving the merger)
on  the terms and subject to the conditions set forth in this Agreement
(the  "Merger").  The Board of Directors of the Company has  determined
that   the   Merger   referenced  above  and  the  other   transactions
contemplated  by this Agreement (such Merger and other transactions  to
collectively be referred to herein as the "Transactions")  are  in  the
best interests of the Company and the shareholders of the Company.  The
respective  Boards of Directors of Buyer and Merger Sub have determined
that the Transactions are in the best interests of Buyer and Merger Sub
and their respective stockholders.

     INTENDING  TO  BE LEGALLY BOUND, in consideration  of  the  mutual
agreements  contained  herein and subject to the  satisfaction  of  the
terms  and  conditions set forth herein, the parties  hereto  agree  as
follows:

                     Section 1:     Defined Terms

     Certain  capitalized or defined terms used in this  Agreement  and
not  specifically  defined  in  context  shall  have  their  respective
meanings contained in Exhibit 1A attached hereto.

                       Section 2:     The Merger

     2.1  The Merger.  At the Effective Time, subject to and upon the terms
and  conditions of this Agreement and the applicable provisions of  the
Texas  Business  Corporation  Act ("TBCA")  and  the  Delaware  General
Corporation  Law ("DGCL"), the Company shall be merged  with  and  into
Merger Sub, the separate corporate existence of the Company shall cease
and  Merger  Sub  shall continue as the surviving corporation.   Merger
Sub,  as  the  surviving  corporation of  the  Merger,  is  hereinafter
sometimes referred to as the "Surviving Corporation".  It is the intent
of  the  parties for the Merger to qualify as a tax-free reorganization
under  the  Code,  and  each party will use its reasonable  efforts  to
accomplish  this objective which efforts shall be subject  to  and  not
inconsistent  with  each  parties rights  and  obligations  under  this
Agreement    and    such    other   ancillary    agreements    executed
contemporaneously with or in connection with this Agreement.

     2.2   Effective Time.  Subject to the provisions of this Agreement, the
parties  hereto  shall  cause the Merger to be  consummated  by  filing
Articles of Merger with the Secretary of State of the State of Texas in
accordance  with the relevant provisions of the TBCA (the "Articles  of
Merger")  and  by  filing a Certificate of Merger (the "Certificate  of
Merger")  with  the  Secretary of State of the  State  of  Delaware  in
accordance with the relevant provisions of the DGCL (the time  of  such
filing  with  the  Secretary of State of the State  of  Texas  and  the
Secretary of State of the State of Delaware, or such later time as  may
be  agreed  in  writing by the Company and Buyer and specified  in  the
Articles  of Merger and the Certificate of Merger, being the "Effective
Time") as soon as practicable on the Closing Date.  The closing of  the
Merger (the "Closing") is being held at the offices of Blank Rome  LLP,
One  Logan  Square,  Philadelphia, PA  19103,  and  the  date  of  this
Agreement is the "Closing Date".

     2.3  Effect of the Merger.  At the Effective Time, the effect of the
Merger  shall  be  as  provided in this Agreement  and  the  applicable
provisions of the TBCA and DGCL.   Subject to the foregoing,  from  and
after  the Effective Time, the Surviving Corporation shall possess  all
rights, privileges, immunities, powers and franchises and be subject to
all the obligations, restrictions, disabilities, liabilities, debts and
duties of the Company and Merger Sub.

2.4  Articles of Incorporation and Bylaws.  The certificate of
incorporation and bylaws of Merger Sub in effect immediately prior to
the Effective Time shall be the certificate of incorporation and bylaws
of the Surviving Corporation, until the same shall thereafter be
altered, amended or repealed in accordance with applicable Law.
2.5  Directors and Officers.  The directors and officers of Merger Sub
serving in those positions immediately prior to the Effective Time
shall become, as of the Effective Time, the directors and officers of
the Surviving Corporation and shall remain the directors and officers
of the Surviving Corporation after the Merger until their successors
are duly elected and qualified.
2.6  Merger Consideration; Conversion of Capital Stock.  The Merger
Consideration shall equal Two Million Two Hundred Thousand Dollars
($2,200,000) consisting of: (a) an aggregate number of Buyer Common
Shares equal to $1,200,000 divided by the Closing Shares Price; (b)
$500,000 in cash (the "Cash Payment"); (c) promissory notes in an
aggregate principal amount of $500,000 (each, a "Note", and
collectively, the "Notes") in the form attached hereto as Exhibit 2.6;
and (d) the right to receive the Deferred Merger Consideration,
computed as set forth in Section 2.9; provided, however, that the
Merger Consideration is subject to adjustment as provided in Section
2.8.  The items listed in this Section 2.6 (without adjustment as
provided in Section 2.8.7 and excluding the Deferred Merger
Consideration) are herein sometimes referred to as the Closing Date
Merger Consideration.  As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares
of Company Common Stock or capital stock of Merger Sub:
 2.6.1    Company Common Stock.  All of the Company Common Stock issued
and  outstanding  immediately  prior to the  Effective  Time  shall  be
cancelled  and extinguished and shall be converted into  the  right  to
receive, upon the surrender of certificates formerly representing  such
shares  of Company Common Stock (each a "Certificate" and collectively,
the  "Certificates"), without interest, the percentage of each  of  the
items  other  than the Deferred Merger Consideration that  collectively
constitute the Merger Consideration computed by multiplying  each  such
item  by  a  fraction the numerator of which is equal to the number  of
shares  of  Company Common Stock owned by such Shareholder  immediately
prior  to the Effective Time and the denominator of which is the  total
number  of  issued  and  outstanding shares  of  Company  Common  Stock
immediately prior to the Effective Time (with (a) the fraction for each
Shareholder  referred  to  herein  as  such  Shareholder's   "Ownership
Interest"  and  (b)  it  being the agreement of the  parties  that  the
Ownership  Interests of the Shareholders set forth  on  Schedule  2.6.1
attached hereto (the "Ownership Schedule") be final and binding on  the
parties   for  purposes  of  computing  the  portion  of   the   Merger
Consideration (including the actual number of Buyer Common  Shares  and
the dollar amount of cash and Notes to be received by each Shareholder,
all  of  which shall be set forth on the Ownership Schedule) for  which
each Shareholder is entitled pursuant to this Agreement;

          2.6.2     Stock of Merger Sub.  Each share of the common stock, $0.01
par value per share, of Merger Sub issued and outstanding at and as  of
the Effective Time will remain issued and outstanding.

     2.7  Delivery of Merger Consideration and Surrender of Certificates

          2.7.1     On the Closing Date, Buyer shall deliver the Closing Date
Merger  Consideration to the Shareholders against delivery to Buyer  by
such  Shareholders  of Certificates formerly representing  the  Company
Common Stock, free and clear of all liens, encumbrances and third party
interests of any nature, which shares of Company Common Stock delivered
to  Buyer shall constitute 100% of the outstanding capital stock of the
Company.  In the event any Certificates representing shares of  Company
Common  Stock shall have been lost, stolen or destroyed, the applicable
portion  of  the Closing Date Merger Consideration shall be deliverable
against  delivery of an affidavit of that fact, in customary  form  and
containing customary indemnities, executed by the holder thereof.   The
Deferred  Merger Consideration, if any, shall be payable to certain  of
the Shareholders in accordance with Section 2.9 hereof.

          2.7.2     Buyer shall be entitled to deduct and withhold from any cash
consideration deliverable pursuant to this Agreement to any Shareholder
such  amounts  as may be required to be deducted or withheld  therefrom
under  the Code or under any provision of state, local or foreign  Law,
but  Buyer  must notify each such Selling Shareholder as to the  amount
and timing of the deduction or withholding.  To the extent such amounts
are  so  deducted  or withheld and have been paid as  required  to  the
appropriate taxing authority, the amount of such consideration shall be
treated  for all purposes under this Agreement as having been delivered
to the Person entitled to such consideration hereunder.

     2.8  Merger Consideration Adjustment and Closing Balance Sheet.

          2.8.1     At or before Closing, the Company shall prepare and deliver
to  Buyer  (i)  a balance sheet of the Company, prepared in  accordance
with  the  Company's internal accounting procedures, as of the  Closing
Date  (the  "Closing Balance Sheet"), and (ii) an estimate of  the  Net
Assets (the "Estimated Closing Date Net Assets") of the Company on  the
Closing Date.

2.8.2     The Merger Consideration shall be reduced, dollar for dollar,
to the extent that the Estimated Closing Date Net Assets is less than
Zero Dollars ($0.00) (such deficiency to be referred to herein as the
"Deficiency").  The reduction in Merger Consideration in connection
with such Deficiency shall be accomplished first by a reduction of the
Cash Payment and second, to the extent necessary, by a reduction of the
principal amount of the Notes.  The Cash Payment at the closing shall
be increased, dollar for dollar, to the extent that the Estimated
Closing Date Net Assets is greater than zero.
2.8.3     Within forty-five (45) days after the Closing Date, Buyer
shall cause Buyer Accountant at its sole cost and expense to (i) review
and/or conduct certain procedures upon the components of the Estimated
Closing Date Net Assets and prepare detailed statements (the "Net
Assets Statements") of its calculation of the actual Net Assets of the
Company as of the Closing Date (the "Actual Closing Net Assets"), both
of which shall be appropriately adjusted for any audit adjustments for
the year ended December 31, 2003 and (ii) deliver the Net Assets
Statements to the Shareholders.  The Shareholders shall have a thirty
(30) day period to review the Net Assets Statements and during such
period Buyer shall cause the Buyer Accountant, if requested, to share
its work papers with the Shareholders and/or their professional
advisers and to make itself reasonably available to the Shareholders
and their professional advisers.
2.8.4     If the Shareholders dispute the Actual Closing Net Assets
stated in the Net Assets Statements, they shall deliver a notice to
Buyer no later than thirty (30) days after their receipt of the Net
Assets Statements (the "Calculation Dispute Notice").  The Shareholders
shall set forth in detail in the Calculation Dispute Notice the basis
for their disagreement with the calculation of the Actual Closing Net
Assets.  If the Shareholders fail to deliver the Calculation Dispute
Notice within the allotted time period, the Shareholders shall be
deemed to have agreed to the calculation of the Actual Closing Net
Assets prepared by the Buyer Accountant, which calculation shall be
final, conclusive and binding upon the parties.
2.8.5     If the Shareholders dispute the Actual Closing Net Assets as
determined by the Buyer Accountant within the allotted time period, the
parties in good faith will attempt to jointly resolve any dispute
during the thirty day period following the delivery of the Calculation
Dispute Notice.  If Buyer and the Shareholders can resolve their
dispute and agree upon the Actual Closing Net Assets balance, they
shall memorialize their agreement in writing and such mutually agreed
upon figure(s) shall be final, conclusive and binding upon all of the
parties.
2.8.6     If Buyer, on the one hand, and the Shareholders, on the other
hand, cannot resolve the dispute to their mutual satisfaction, Buyer
and the Shareholders shall engage the Independent Accountants to
determine the Actual Closing Net Assets balance.  The costs and
expenses of the Independent Accountants shall be borne fifty percent by
Buyer and fifty percent by the Shareholders; provided, however, the
Buyer will pay the Independent Accountant and the aggregate principal
amount of the Notes shall be reduced by the dollar value of the
Shareholders' portion of such costs and expenses.  To the extent that
the Independent Accountants desire the parties to this Agreement to
meet in person, the parties shall choose a mutually acceptable location
for such meeting.  Each of Buyer and the Shareholders shall cause their
accounting professional advisers to provide the Independent Accountants
such of their respective work papers as may be requested by the
Independent Accountants.  The Independent Accountants shall be
requested to complete their engagement within forty five days of being
retained by Buyer and the Shareholders.  The determination of the
Independent Accountants shall be final, conclusive and binding upon the
parties.
2.8.7     The final determination of the Actual Closing Net Assets of
the Company on the Closing Date pursuant to this Section 2.8 shall be
referred to herein as the "Final Closing Net Assets".  If the Final
Closing Net Assets is less than the Estimated Closing Date Net Assets
(a "Final Deficiency"), the Merger Consideration shall be reduced by
such difference; provided, however, that the reduction in Merger
Consideration in connection with such Final Deficiency shall be
accomplished first by a reduction of the aggregate principal amount of
the Notes and second, to the extent necessary, by wire transfer to
Buyer of cash in immediately available funds.  If the Final Closing Net
Assets is greater than the Estimated Closing Date Net Assets (a "Final
Excess"), the Merger Consideration shall be increased by such
difference; provided, however, that such increase in Merger
Consideration in connection with such Final Excess shall be
accomplished by an increase of the principal amount of the Notes.
     2.9  Deferred Merger Consideration.

          2.9.1     L.L. Whiteside, Charles A. Harper, and Morris Horn (the
"Deferred   Comp  Shareholders")  shall  be  entitled   to   additional
consideration (the "Deferred Merger Consideration") equal to  $150,000,
payable  in  cash or a combination of cash and Buyer Common Shares,  as
provided below, promptly upon determination thereof in accordance  with
this  Section 2.9, if the aggregate of the Net Revenues earned  by  the
Surviving Corporation in connection with the accounts listed on Exhibit
2.9  (collectively, the "Deferred Merger Consideration  Accounts")  for
the  twelve (12) month period beginning October 1, 2004 and ending  the
last day of September, 2005 (the "Earnout Net Revenues") is equal to or
greater than $5,600,000 as more fully described on Exhibit 2.9.  In the
discretion  of  each  of the Deferred Comp Shareholders,  the  Deferred
Merger Consideration, if earned, shall be paid in a combination of cash
and Buyer Common Shares (with the aggregate number of such Buyer Common
Shares  being equal to (i) the dollar value of the portion of  Deferred
Merger  Consideration  requested to be paid  in  Buyer  Common  Shares,
divided by the Deferred Merger Consideration Price), provided, however,
that  notwithstanding  anything  to  the  contrary  contained  in  this
Agreement,  the  aggregate  number of Buyer  Common  Shares  issued  in
connection  with the Deferred Merger Consideration shall not  exceed  a
number equal to (i) $200,000, divided by (ii) the Closing Shares Price.
If earned, the Deferred Merger Consideration will be paid 60.0% to L.L.
Whiteside, 27.5% to Charles A. Harper, and 10.5% to Morris Horn.   Each
of  the  Shareholders represents and warrants to  the  Buyer  that  the
payment  of  Deferred Merger Consideration to only  a  portion  of  the
Shareholders  contemplated by this Section does  not  violate  any  Law
prohibiting disparate treatment of holders of the same class  of  stock
in a merger transaction.

2.9.2     By October 25, 2005, Buyer shall (i) calculate the Earnout
Net Revenues and the amount of the Deferred Merger Consideration, if
any, and prepare detailed statements (the "Earnout Statements") of its
calculation of the Earnout Net Revenues and the Deferred Merger
Consideration and (ii) deliver the Earnout Statements to the Deferred
Comp Shareholders.  The Deferred Comp Shareholders shall have a twenty
(20) day period to review the Earnout Statements and during such period
Buyer shall, if requested, share its relevant supporting documentation
with the Deferred Comp Shareholders or his professional adviser, which
shall be at Deferred Comp Shareholders' sole expense.
2.9.3     If the Deferred Comp Shareholders dispute either the Earnout
Net Revenues or the Deferred Merger Consideration stated in the Earnout
Statements, they shall deliver a notice to Buyer no later than twenty
(20) days after delivery of the Earnout Statements (the "Earnout
Dispute Notice").  The Deferred Comp Shareholders shall set forth in
detail in the Earnout Dispute Notice the basis for their disagreement
with the calculations of the Earnout Net Revenues or Earnout
Consideration specified in the Earnout Statements.  If the Deferred
Comp Shareholders fail to deliver the Earnout Dispute Notice within the
allotted time period, they shall be deemed to have agreed to the
calculations of the Earnout Net Revenues and Earnout Consideration
specified in the Earnout Statements, which calculations shall be final,
conclusive and binding upon the parties, and the Deferred Merger
Consideration, if any, shall be paid within ten (10) days following
such calculation.
2.9.4     If the Deferred Comp Shareholders dispute the Earnout Net
Revenues or Deferred Merger Consideration as specified in the Earnout
Statements within the allotted time period, the parties in good faith
will attempt to jointly resolve any dispute during the thirty day
period following the delivery of the Earnout Dispute Notice.  If Buyer
and the Deferred Comp Shareholders can resolve their dispute and agree
upon the Earnout Net Revenues and Deferred Merger Consideration, they
shall memorialize their agreement in writing and such mutually agreed
upon figure(s) shall be final, conclusive and binding upon all the
parties hereto.
2.9.5     If Buyer and the Deferred Comp Shareholders cannot resolve
the dispute to their mutual satisfaction, Buyer and the Deferred Comp
Shareholders shall engage the Independent Accountants to determine the
Earnout Net Revenues and Deferred Merger Consideration.  The costs and
expenses of the Independent Accountants shall be borne fifty percent by
Buyer and fifty percent by the Deferred Comp Shareholders; provided,
however, that the Deferred Merger Consideration payable hereunder shall
be reduced by the Deferred Comp Shareholders' portion of such costs and
expenses; provided, further, that if the value of the Deferred Comp
Shareholders' portion of such costs and expenses is in excess of such
Deferred Merger Consideration payable hereunder, the aggregate
principal amount of their Notes shall be reduced by such excess.  To
the extent that the Independent Accountants desire the parties to this
Agreement to meet in person, the parties shall choose a mutually
acceptable location for such meeting.  Each of Buyer and the Deferred
Comp Shareholders shall provide or cause their accounting professional
advisers, as the case may be, to provide the Independent Accountants
such of their respective work papers or other relevant supporting
documentation as may be requested by the Independent Accountants.  The
Independent Accountants shall be requested to complete their engagement
within forty five days of being retained by Buyer and the Deferred Comp
Shareholders.  The determination of the Independent Accountants shall
be final, conclusive and binding upon the parties, and the Deferred
Merger Consideration, if any, shall be paid within ten (10) days
following such calculation.
2.9.6     Buyer and Merger Sub will use commercially reasonable efforts
to maximize the Earnout Net Revenues consistent with Buyer's past
practice.
     2.10 Further Action.  If, at any time after the Effective Time, any
further  action  is reasonably determined by Buyer to be  necessary  or
desirable  to carry out the purposes of this Agreement or to  vest  the
Surviving Corporation with full right, title and possession of  and  to
all rights and property of Merger Sub and the Company, the officers and
directors  of  the  Surviving Corporation  and  Buyer  shall  be  fully
authorized  (in the name of Merger Sub, in the name of the Company  and
otherwise) to take such action.

          Section 3:     Representations of the Shareholders

     Knowing that Buyer and Merger Sub are relying thereon, each of the
Shareholders,  jointly and severally (but with  respect  to  Dan  Lane,
severally,  but  not  jointly, and only to the  extent  of  his  actual
knowledge)  represents  and  warrants to  Buyer  and  Merger  Sub,  and
covenants with Buyer and Merger Sub, as follows:

     3.1  Organization.   The Company is a corporation, duly organized,
validly  existing and in good standing under the laws of the  State  of
Texas.   The  Company  possesses  the  necessary  corporate  power  and
corporate  authority  to enter into and perform its  obligations  under
this  Agreement.   The Company possesses the full corporate  power  and
authority:   (i) to own and use its Assets in the manner in which  such
Assets  are currently owned and used, and (ii) to conduct its  business
as  such  business is currently being conducted.  The Company  is  duly
qualified or registered to do business in each jurisdiction where  such
qualification  or  registration is required by applicable  Law,  except
where  the  failure to be so qualified, registered or in good  standing
would  not reasonably be expected to have a Material Adverse Effect  on
the Company.

          3.1.1     Except as set forth on Schedule 3.1, the Company does not
have  any  subsidiaries  and  does  not  own  any  securities  of   any
corporation or any other interest in any Person.  The Company has never
acquired  or  succeeded to all or substantially all of  the  Assets  or
businesses of any other Person, and there is no other Person  that  may
be deemed to be a predecessor of the Company.

3.1.2     Schedule 3.1 sets forth for the Company:  (i) its exact legal
name; (ii) its corporate business form and jurisdiction and date of
formation; (iii) its federal employer identification number; (iv) its
headquarters address; (v) its directors and officers, indicating all
current title(s) of each individual; (vi) its registered agent and/or
office in its jurisdiction of formation (if applicable); (vii) all
foreign jurisdictions in which it is qualified or registered to do
business, the date it so qualified or registered, and its registered
agent and/or office in each such jurisdiction (if applicable); (viii)
all fictitious, assumed or other names of any type that are registered
or used by it or under which it has done business at any time since its
date of incorporation; and (ix) any name changes, recapitalizations,
mergers, reorganizations or similar events since its date of formation.
3.1.3     Accurate and complete copies of the articles of incorporation
and bylaws, each as amended to date, and all Contracts related to the
acquisition or formation of the Company, have been delivered to Buyer.
     3.2  Authority; Non-Contravention.

          3.2.1     The Company has the absolute and unrestricted right, power
and  authority to enter into and to perform its obligations under  this
Agreement,  and  the  execution,  delivery  and  performance  of   this
Agreement and the consummation of the Transactions by the Company  have
been  duly authorized by all necessary corporate actions.  Each of  the
Shareholders  has  the  full  authority and  capacity  to  enter  into,
execute,  deliver  and  perform  all  of  his  obligations  under  this
Agreement  and  under  each  other agreement,  document  or  instrument
referred  to  in  or  contemplated by  this  Agreement  to  which  such
Shareholder  is  or  becomes a party.  This Agreement  constitutes  the
legal,  valid and binding agreement of the Company, enforceable against
the  Company  in  accordance  with its terms,  subject  to  bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter
in  effect  affecting creditor's rights generally.  This Agreement  (i)
has  been  duly  and  validly executed by each  Shareholder,  and  (ii)
constitutes  a  valid  and  binding  obligation  of  each  Shareholder,
enforceable  against  each Shareholder in accordance  with  its  terms,
subject  to  bankruptcy,  insolvency,  reorganization,  moratorium   or
similar  laws  now  or hereafter in effect affecting creditor's  rights
generally.

3.2.2     Neither the execution, delivery and performance of this
Agreement nor the consummation or performance of the Transactions by
the Company and/or any of the Shareholders, will directly or indirectly
(with or without notice or lapse of time):
               (a)  result in a material breach or a violation of (i) any of the
provisions  of the articles of incorporation or bylaws of the  Company;
or  (ii) any resolution adopted by the shareholders, board of directors
or  any  committee of the board of directors of the Company;  or  (iii)
result  in a breach or violation of, or give any Governmental  Body  or
other  Person the right to enjoin or invalidate any of the Transactions
or  to  exercise any remedy or obtain any relief under, any Law or  any
Judgment to which the Company or any of the Shareholders, or any of the
Assets owned or used by the Company, is subject;

(b)  result in a material breach or a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Permit that is held
by the Company or that otherwise relates to any of the businesses of
the Company or to any of the Assets owned or used by the Company;
(c)  result in a material breach or a violation, or a default under,
any provision of, any Specified Contract (other than a customer
Contract) to which the Company is a party or by which it is bound or
Contract to which any Shareholder is a party or by which he is a party;
or
(d)  result in the imposition or creation of any Encumbrance upon or
with respect to any Asset owned or used by the Company.
          3.2.3     Except as set forth on Schedule 3.2, neither the Company nor
any  of the Shareholders was, is or will be required to make any filing
with  or give any notice to, or to obtain any Consent from, any  Person
in  connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Transactions.

     3.3  Capital Stock and Ownership.

          3.3.1     Schedule 3.3 sets forth the authorized capital stock of the
Company,  including the type of shares authorized, the  par  value  per
share  and  the  number  of each type of shares  that  are  issued  and
outstanding.  Schedule 3.3 contains an accurate and complete  list  of:
(i)  the full legal names of all shareholders of the Company; (ii)  the
addresses   of   such   shareholders'  respective   current   principal
residences; and (iii) the numbers of shares and type of shares owned of
record  by  such shareholders and the certificate numbers of the  stock
certificates representing such shares.  For each of the shareholders of
the  Company, he is the sole record and beneficial owner of his  shares
of  capital stock of the Company as set forth on Schedule 3.3,  and  he
has  good  and marketable title to such shares, free and clear  of  any
Encumbrance.   With respect to each such shareholder:  (i)  he  is  the
holder  and beneficial owner of the shares of the capital stock of  the
Company set forth on Schedule 3.3 next to such shareholder's name  (the
"Shares") and has good and valid title to the Shares, free and clear of
any  Encumbrances;  (ii) the Shares are the only shares of the  capital
stock  of  the Company held by such shareholder; (iii) such shareholder
has  the  ability  to  vote all of the Shares at  any  meeting  of  the
shareholders of the Company, or by written consent in lieu of any  such
meeting; and (iv) other than in connection with the Transactions or  as
set  forth  on  Schedule 3.3, such shareholder  has  not  appointed  or
granted  any proxy or entered into any agreement, contract,  commitment
or  understanding  with respect to any of the Shares.   Except  as  set
forth on Schedule 3.3, the Company has never authorized, offered,  sold
or  issued  any  securities other than shares of Company Common  Stock.
Except  for  the  Selling Shareholders, there are no  other  record  or
beneficial owners of any shares of the capital stock of the Company  or
any  other securities of the Company.  Except for the Shares listed  on
Schedule 3.3, there currently are no other issued or outstanding shares
of  capital  stock of the Company.  All outstanding shares  of  capital
stock of the Company have been duly authorized and validly issued,  and
are fully paid and nonassessable.  Except as set forth on Schedule 3.3,
there  exists no right of first refusal or other preemptive right  with
respect to the Company or the capital stock, business or Assets of  the
Company.

3.3.2     All offerings, sales and issuances by the Company of any
shares of capital stock were conducted in compliance with all
applicable federal and state securities Laws and all other applicable
Laws.
3.3.3     Except as set forth on Schedule 3.3, there is no:
  (a)  outstanding subscription, option, call, warrant or right (whether
or  not  currently exercisable) to acquire any shares  of  the  capital
stock or other securities of the Company;

(b)  outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital
stock or other securities of the Company;
(c)  Contract under which the Company is or may become obligated to
sell or otherwise issue any shares of its capital stock or any other
securities;
(d)  pending or previously asserted or overtly threatened claim by any
Person to the effect that such Person is or was entitled to acquire or
receive any shares of capital stock or any other securities of the
Company; or
(e)  condition or circumstance that, to the knowledge of the Company
and the Shareholders, may directly or indirectly be reasonably expected
to give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is or may be entitled to acquire
or receive any shares of capital stock or other securities of the
Company.
  3.3.4     All securities repurchased, redeemed or otherwise reacquired
by  the  Company  were  reacquired  in  material  compliance  with  the
applicable  provisions of all applicable Contracts and  all  applicable
Laws.

3.3.5     As of Closing, each outstanding stock option, if any, issued
pursuant to any stock option plan or other agreements or arrangements
of the Company will be canceled and extinguished and the stock option
plans of the Company shall have been terminated.  All options required
to be accelerated under any option plan of the Company shall have been
accelerated in accordance with the terms of the plan.
3.3.6     As of Closing, each warrant and every other call,
subscription or right to acquire Company Common Stock or other
securities of the Company shall have been cancelled and extinguished.
     3.4  Financial and Corporate Records.

  3.4.1     Except as set forth in Schedule 3.4, the Company's books and
records are and have been properly prepared and maintained in form  and
substance  adequate  for  preparing  audited  financial  statements  in
accordance  with GAAP, and such books and records fairly and accurately
reflect  in  all material respects (i) all of the Company's Assets  and
Obligations  and  (ii) all of the Contracts and other  transactions  to
which  the  Company is or was a party or by which the  Company  or  the
business or Assets of the Company is or was affected.

3.4.2     Accurate and complete copies of the contents of the Company's
minute books and stock books have been delivered to Buyer.  Such minute
books and stock books include (i) minutes of all meetings of the
shareholders of the Company, board of directors and any committees of
the board of directors of the Company at which any material action was
taken, which minutes accurately record all material actions taken at
such meetings, (ii) accurate and complete written statements of all
actions taken by the shareholders, board of directors and any
committees of the board of directors without a meeting, and (iii)
accurate and complete records of the subscription, issuance, transfer
and cancellation of all shares of capital stock and all other
securities since the date of incorporation.  None of the shareholders,
board of directors or any committee of the board of directors has taken
any material action other than those actions reflected in the records
referenced in clauses (i) and (ii) of the preceding sentence.
3.4.3     Schedule 3.4 contains an accurate and complete list of all of
the Company's bank accounts, other accounts, certificates of deposit,
marketable securities, other investments, safe deposit boxes, lock
boxes and safes, and the names of all officers, employees or other
individuals who have access thereto or are authorized to make
withdrawals therefrom or dispositions thereof.
     3.5  Compliance with Law; Permits.

  3.5.1     Except as set forth on Schedule 3.5:  (i) the Company is in
material  compliance  with each Judgment and  with  each  Law  that  is
applicable  to  it  or to the conduct of any of its businesses  or  the
ownership  or  use of any of its Assets; (ii) the Company  has  at  all
times been in material compliance with each Judgment or Law that is  or
was  applicable to it or to the conduct of any of its businesses or the
ownership or use of any of its Assets; (iii) no event has occurred, and
no  condition  or  circumstance exists, that, to the knowledge  of  the
Company and the Shareholders, might (with or without notice or lapse of
time)  constitute or result in a material violation by the Company  of,
or  a  material failure on the part of the Company to comply with,  any
Judgment  or Law; and (iv) the Company has not received, at  any  time,
any  notice or other communication (in writing or otherwise)  from  any
Governmental  Body  or  any  other Person  regarding  (A)  any  actual,
alleged, possible or potential violation of, or failure to comply with,
any  Judgment or Law, or (B) any actual, alleged, possible or potential
obligation on the part of the Company to undertake, or to bear  all  or
any portion of the cost of, any cleanup or any remedial, corrective  or
response action of any nature.

3.5.2     Except as set forth on Schedule 3.5, the Company has obtained
and holds all Permits required for the lawful operation of its business
as and where such business is presently conducted.  All Permits held by
the Company are listed on Schedule 3.5, and accurate and complete
copies of such Permits have been delivered to Buyer.
     3.6  Financial Statements.

    3.6.1     The Company's fiscal year end is December 31.

3.6.2     The Company has delivered to Buyer the following financial
statements and related notes (the "Financial Statements"): the audited
balance sheet (the "Latest Balance Sheet") of the Company as of
December 31, 2003 (the "Latest Balance Sheet Date"), and the audited
statements of income and cash flows of the Company for the twelve (12)
month period then ended.
3.6.3     The Financial Statements present fairly the financial
position of the Company as of the respective dates thereof and the
results of operations, changes in shareholders' equity and cash flows
of the Company in accordance with GAAP for the periods covered thereby.
Except as disclosed on Schedule 3.6, the Financial Statements have been
prepared in accordance with GAAP.
     3.7  Assets.

       3.7.1   Schedule 3.7 accurately identifies all Assets that are being
leased or licensed to the Company.

3.7.2     The Company owns and has good, valid and marketable title to,
all of its respective Assets that are purported to be owned by it and
has the right to transfer all rights, title and interest in such
Assets, free and clear of any Encumbrance other than liens in
connection with the amounts owed to Liberty Bank under the Company's
line of credit with such institution, which liens shall be terminated
as of Closing.
3.7.3     Except for the Assets reflected on the Latest Balance Sheet
and exclusive of the real property reflected in same, no other Assets
are necessary to operate, or have been material to the operation of,
the business of the Company.
     3.8  Obligations.

       3.8.1    The Company has no Obligations other than (i) Obligations
identified  as  such in the "liabilities" column on the Latest  Balance
Sheet,  (ii)  Obligations set forth on Schedule 3.8, (iii)  Obligations
under  Contracts of the type listed on Schedule 3.14, provided that  no
such  Obligation  consists of or has resulted from a default  under  or
violation of any such Contract, and (iv) Obligations that were incurred
in  the ordinary course of business since the Latest Balance Sheet Date
and which were not incurred in breach of any of the representations and
warranties  made in Section 3.9.  Except as described on Schedule  3.8,
none of the Company's Obligations are guaranteed by any Person.

     3.9  Operations Since the Latest Balance Sheet Date.  Except as set
forth on Schedule 3.9, since the Latest Balance Sheet Date:

       3.9.1   except in the ordinary course of its business consistent with
its  past  practices, the Company has not:  (i) pledged or hypothecated
any  of  its Assets or otherwise permitted any of its Assets to  become
subject  to  any Encumbrance; (ii) incurred any Obligation; (iii)  made
any  loan  or  advance  to  any  Person; (iv)  assumed,  guaranteed  or
otherwise become liable for any Obligation of any Person; (v) committed
for  any capital expenditure; (vi) except as necessary to transfer  the
Excluded  Real  Property and related debt from the Company,  purchased,
leased,  sold,  abandoned  or otherwise acquired  or  disposed  of  any
business  or Assets; (vii) waived or released any right or canceled  or
forgiven  any  debt  or  claim; (viii) discharged  any  Encumbrance  or
discharged  or paid any indebtedness or other Obligation; (ix)  assumed
or  entered into any Contract other than this Agreement; (x) amended or
terminated  any  Specified Contract; (xi) increased, or  authorized  an
increase  in, the compensation or benefits paid or provided to  any  of
their    directors,   officers,   employees,   salesmen,   agents    or
representatives; (xii) established, adopted or amended  (including  any
amendment  with  a  future effective date) any Employee  Benefit  Plan;
(xiii)  except as necessary to transfer the Excluded Real Property  and
related  debt from the Company, declared, accrued, set aside,  or  paid
any dividend or made any other distribution in respect of any shares of
capital  stock,  other securities, Cash Assets or other  Assets;  (xiv)
repurchased,  redeemed or otherwise reacquired any  shares  of  capital
stock or other securities; (xv) sold or otherwise issued any shares  of
capital  stock or any other securities; (xvi) amended its  articles  or
certificate of incorporation, bylaws or other organizational documents;
(xvii)  been  a  party to any merger, consolidation,  recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;  (xviii) accrued any deferred bonuses or compensation  due
to  any shareholder, employee or agent of the Company, or paid any such
deferred  bonuses  or compensation except to the extent  such  deferred
bonuses or compensation was accrued on the Latest Balance Sheet;  (xix)
changed any of its methods of accounting or accounting practices in any
respect; or (xx) made any Tax Election;

3.9.2     even in the ordinary course of its businesses consistent with
its past practices, the Company has not incurred any Obligation, made
any loan to any Person, acquired or disposed of any business or Assets,
entered into any Contract (other than customer contracts) or other
transaction, or done any of the other things described in Section
3.9.1, involving an amount exceeding $20,000 in any single case or
$40,000 in the aggregate; and
3.9.3     there has been no material adverse change or material
casualty loss affecting the Company or the business, Assets or
financial condition of the Company; and there has been no adverse
change in the financial performance of the Company; and there has been
no loss, damage or destruction to, or any interruption in the use of,
any of the Software or other Assets (whether or not covered by
insurance) of the Company.
     3.10 Accounts Receivable.  All Accounts Receivable of the Company arose
in  the  ordinary course of business and are proper and valid  Accounts
Receivable,  and can be collected by the Company in full  (without  any
counterclaim  or  setoff)  using  commercially  reasonable  efforts  to
collect  said  Accounts Receivable consistent with the  Company's  past
practice, net of any reserves.  There are no refunds, discounts, rights
of  setoff  or  assignments  affecting any  such  Accounts  Receivable.
Proper  amounts of deferred revenues appear on the Company's books  and
records,  in  accordance  with  GAAP, with  respect  to  the  Company's
(a)  billed but unearned Accounts Receivable; (b) previously billed and
collected Accounts Receivable still unearned; and (c) unearned customer
deposits.

3.11 Tangible Property.  The Company has good and marketable title to
all of its Tangible Property free and clear of any Encumbrances, except
as set forth on Schedule 3.11.  Except as set forth on Schedule 3.11,
all of the Company's Tangible Property is located at the Company's
offices or facilities and the Company has the right to require the
immediate return of any of its Tangible Property which is not located
at its offices or facilities.  All Tangible Property of the Company,
wherever located, (i) is in good condition, ordinary wear and tear
excepted, (ii) complies with, and is being operated and otherwise used
in material compliance with, all applicable Laws, and (iii) is
sufficient for the operations and Business of the Company as presently
conducted.
3.12 Real Property; Environmental Laws.
   3.12.1    Except for the Excluded Real Property, the Company does not
own any Real Property.  Schedule 3.12 contains an accurate and complete
list  of  all  Real  Property leased by the Company, showing  location,
rental  cost and landlord.  All Real Property currently under lease  to
or  otherwise  used by the Company is in good condition, ordinary  wear
and  tear  excepted, and the Real Property that shall be  used  by  the
Company  on  the  Closing  Date shall be  sufficient  for  the  current
Business  operations  of  the  Company and  all  currently  owned  Real
Property (including the Excluded Real Property) is, to the knowledge of
the   Company  and  the  Shareholders,  in  material  compliance   with
applicable Environmental Laws.  To the knowledge of the Company and the
Shareholders, the Company's occupancy, maintenance or use of its leased
Real  Property, is not in material violation of, or material breach  or
default  under, any Contract or Law, and no notice or, to the knowledge
of   the   Company  and  the  Shareholders  threat,  from  any  lessor,
Governmental  Body  or other Person has been received  by  the  Company
claiming  any violation of, or breach, default or liability under,  any
Contract or Law, or requiring the Company to perform any work, repairs,
construction,  alteration, installations or environmental  remediation.
To the Knowledge of the Company or the Shareholders, no Proceedings are
pending,  or threatened, which would have a Material Adverse Effect  on
the zoning or use of the Company's Real Property.  All of the Company's
Real  Property has direct access to, abuts, and is served by  a  public
road, which road does provide a means of ingress and egress thereto and
therefrom.    All   utilities,   including   water,   gas,   telephone,
electricity, sanitary and storm sewers, are currently available to  all
of the Company's Real Property, and are adequate to serve the Company's
Real Property for the Company's current use thereof.

3.12.2    To the Knowledge of the Company or the Shareholders, the
Company is and has been in material compliance with all applicable
Environmental Laws, which compliance includes the possession by the
Company of all permits and other Governmental Authorizations required
under applicable Environmental Laws, and compliance with the terms and
conditions thereof.  Except as set forth on schedule 3.12, neither the
Company nor any of the Shareholders has placed or caused to be placed,
and neither the Company nor any of the Shareholders has any knowledge
that there were or are, any Hazardous Substances in, on, under or
migrating from any Real Property currently or formerly owned, currently
or formerly leased, or used by the Company (including the Excluded Real
Property).
3.12.3    The Excluded Real Property shall be transferred by the
Company pursuant to a "special warranty" deed in the form attached
hereto as Exhibit 3.12.3.
     3.13 Software and Intangibles.

   3.13.1    Set forth on Schedule 3.13 is an accurate and complete list
and  description  of all Company Intangibles (other  than  commercially
available,  off  the shelf, software programs).  No other  Software  or
Intangible is used to operate the Business of the Company.

3.13.2    Except as set forth on Schedule 3.13, the Company has good
and marketable title to, and has the right to use, all of the Company
Intangibles owned by Company (the "Company Owned Intangibles"), free
and clear of any Encumbrance.
3.13.3    Except as set forth on Schedule 3.13, all of the Company
Owned Intangibles were created as a work for hire (as defined under
U.S. copyright law) by regular full time employees of the Company.  To
the extent that any author or developer of any Company Owned Intangible
was not a regular full-time salaried employee of the Company at the
time such person contributed to such Company Owned Intangible, such
author or developer has irrevocably assigned to the Company in writing
all copyrights and other proprietary rights in such person's work with
respect to such Company Owned Intangibles.
3.13.4    None of the Company Intangibles, or their respective past or
current uses, including the preparation, distribution, marketing or
licensing thereof is violating or infringing upon, any Software,
technology, patent, copyright, trade secret or other Intangible of any
Person.  None of the Company Intangibles is subject to any Judgment to
which the Company is a party.  No Proceeding is pending or, to the
knowledge of the Company or the Shareholders, is threatened against the
Company, nor has any claim or demand been made against the Company,
which challenges the legality, validity, enforceability, use or
exclusive ownership by the Company of any of the Company Owned
Intangibles.  To the knowledge of the Company and the Shareholders, no
Person is violating or infringing upon, or has violated or infringed
upon at any time, any of the Company Owned Intangibles.
3.13.5    The Company has used reasonable efforts to maintain the
confidentiality of all trade secrets with respect to the Company Owned
Intangibles.
3.13.6    Any license, sublicense or other Contract covering or
relating to any Company Intangible is legal, valid, binding,
enforceable and in full force and effect, and upon consummation of the
transactions contemplated hereby, will continue to be legal, valid,
binding, enforceable and in full force and effect on terms identical to
those in effect immediately prior to the consummation of the
transactions contemplated hereby.  The Company is not in material
breach of or default under any license, sublicense or other Contract
covering or relating to any Company Intangible or has performed any act
or omitted to perform any act which, with notice or lapse of time or
both, will become or result in a material violation, breach or default
thereunder.  No Proceeding is pending or is being or has been
threatened, nor, to the knowledge of the Company and the Shareholders,
has any claim or demand been made, which challenges the legality,
validity, enforceability or ownership of any license, sublicense or
other Contract covering or relating to any Company Intangible.
3.13.7    None of the Company Owned Intangibles is owned by or
registered in the name of any current or former owner, shareholder,
partner, director, executive, officer, employee, salesman, agent,
customer, representative or contractor or any of the Shareholders nor
does any such Person have any interest therein or right thereto,
including the right to royalty payments.
3.13.8    Except with respect to demonstration or trial copies, no
portion of any Company Intangible contains any "back door," "time
bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
software routines or hardware components designed to permit
unauthorized access or to disable or erase software, hardware, or data
without the consent of the user.
3.13.9    Set forth in Schedule 3.13 are all Internet domain names
related to the Company's Business ("Domain Names").  The Company is the
registrant of all Domain Names and all the registrations of Domain
Names are currently in good standing.  The Company has not received any
notice that any action has been taken or is pending to challenge rights
to, suspend, cancel or disable any Domain Name, registration therefor
or the right of the Company to use a Domain Name.  The Company has all
right, title and interest in and to, and rights to use on the Internet
and common law rights as a trade-mark and trade name, the Domain Names.
3.13.10   There is no governmental prohibition or restriction on the
use of any of the Company Intangibles (i) in any jurisdiction in which
the Company currently does business or on the export or import of any
of the Company Intangibles from or to any such jurisdiction where the
Company currently does business, and (ii) to the knowledge of Company
and the Shareholders, in any other jurisdiction.
3.13.11   Except as disclosed in Schedule 3.13, the Company is the sole
owner of, and has good and marketable title to, and all right, title
and interest in and to all databases related to the Company's Business.
Except as specified in Schedule 3.13, no Person other than the Company
has any right or interest of any kind or nature in or to such
databases.  To the knowledge of the Company and the Shareholders, no
person (i) is violating or infringing upon, or has violated or
infringed upon at any time, any right of the Company in or to such
databases; or (ii) is breaching or has breached at any time any duty or
obligation owed to the Company in respect of such databases.  All
licenses referred to in Schedule 3.13 are in full force and effect and
neither the Company nor the other party thereto is in material default
of its obligations thereunder.  To the knowledge of Company and the
Shareholders, neither the past nor current use of any such database or
the information contained therein in the Company's Business (i) has
violated or infringed upon, or is violating or infringing upon, the
rights of any Person; or (ii) breaches any duty or obligation owed to
any Person; or (iii) violates the privacy or any Law relating to the
privacy of any Person.
3.13.12   The Company has not experienced any Year 2000-related
problems with respect to such Software or received any notices from any
Person relating to any Year 2000-related problems.
     3.14 Contracts.

    3.14.1    Schedule 3.14 contains an accurate and complete list of all
of  the following types of Contracts to which the Company is a party or
by   which   the   Company  is  bound  (collectively,  the   "Specified
Contracts"),   grouped  into  the  following  categories   and,   where
applicable,  subdivided  by  product line or  division:   (i)  Software
license  and Software maintenance Contracts under which the Company  is
the  licensor  or  provider of services, and other customer  Contracts;
(ii)  Contracts  for the purchase, sale or lease of  Real  Property  or
otherwise concerning Real Property (including service Contracts)  owned
or  used  by  the  Company;  (iii) loan agreements,  mortgages,  notes,
guarantees  and  other  financing Contracts;  (iv)  Contracts  for  the
purchase, lease and/or maintenance of computer equipment, hardware,  or
peripherals  and  other  equipment; (v)  Contracts  for  the  purchase,
license,  lease and/or maintenance of Software under which the  Company
is  the  purchaser,  licensee,  lessee  or  user;  and  other  supplier
Contracts;   (vi)  employment,  consulting  and  sales   representative
Contracts (excluding Contracts which constitute Employee Benefit  Plans
listed  on  Schedule 3.16, and excluding oral Contracts with  employees
for  "at  will" employment); (vii) Contracts under which any rights  in
and/or   ownership  of  any  Software  product,  technology  or   other
Intangible of the Company, or any prior version thereof, or any part of
the customer base, business or Assets of the Company, or any shares  or
other  ownership interests in the Company (or any of its  predecessors)
was  acquired;  (viii) Contracts containing clauses  that  prohibit  or
restrict  the Company from soliciting any employee or customer  of  any
other  Person or otherwise prohibiting or restricting the Company  from
engaging  in  any  business and (ix) other Contracts  material  to  the
Company's  Business  (excluding Contracts  which  constitute  Insurance
Policies  listed  on  Schedule  3.20).   A  description  of  each  oral
Specified  Contract is included on Schedule 3.14, and true and  correct
copies  of  each  written  Specified Contract (including  documentation
related  to  the transfer or sale by the Company of the  Excluded  Real
Property) have been delivered to Buyer.

3.14.2    Reserved.
3.14.3    Each Specified Contract is valid and in full force and
effect, and is enforceable by the Company in accordance with its terms
subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect affecting creditor's rights
generally.
3.14.4    Except as set forth on Schedule 3.14: (i) the Company has not
and, to the knowledge of the Company and Shareholders, no other Person
has violated, breached, or declared or committed any default under, any
Specified Contract; (ii) to the knowledge of the Company and
Shareholders, no event has occurred, and, to the knowledge of the
Company and the Shareholders, no circumstance or condition exists, that
would reasonably be expected to (with or without notice or lapse of
time) (A) result in a violation or breach of any of the provisions of
any Specified Contract, (B) give any Person the right to declare a
default or exercise any remedy under any Specified Contract, (C) give
any Person the right to accelerate the maturity or performance of any
Specified Contract, or (D) give the Company or, to the best of the
Company's and the Shareholders' knowledge, any other Person, the right
to cancel, terminate or modify any Specified Contract; (iii) the
Company has not received any notice or other communication (in writing
or otherwise) regarding any actual, alleged, possible or potential
violation or breach of, or default under, any Specified Contract; and
(iv) the Company has not waived any of its rights under any Specified
Contract.
3.14.5    The performance of the Specified Contracts in accordance with
their respective terms will not result in any violation of or failure
to comply with any Judgment or Law applicable to the Company on or
prior to the Closing Date.
3.14.6    Except as set forth on Schedule 3.14, no Person is
renegotiating, or, to the knowledge of the Company and the
Shareholders, has the right to renegotiate, any amount paid or payable
to the Company under any Specified Contract or any other term or
provision of any Specified Contract.
  3.14.7    The Specified Contracts are all the Contracts necessary and
sufficient to operate the Company's Business.  Except as set  forth  on
Schedule  3.14, there are no currently outstanding proposals or  offers
submitted by the Company to any customer, prospect, supplier  or  other
Person  which, if accepted, would result in a legally binding  Contract
of  the Company involving an amount or commitment exceeding $10,000  in
any  single case or an aggregate amount or commitment exceeding $20,000
in the aggregate.

     3.15 Employees and Independent Contractors.

  3.15.1    Schedule 3.15 contains an accurate and complete list of all
of  the employees of the Company (including any employee of the Company
who  is on a leave of absence or on layoff status) and (i) their titles
or  responsibilities;  (ii) their dates of hire;  (iii)  their  current
salaries or wages (including bonuses); (iv) any Permit that is held  by
them  and  that relates to or is useful in connection with the Business
of  the Company; and (v) any outstanding loans or advances made to them
by the Company.

3.15.2    Schedule 3.15 also contains an accurate and complete list of
(i) all sales representatives and independent contractors engaged by
the Company and (ii) their payment arrangements (if not set forth in a
Specified Contract listed or described on Schedule 3.14 and previously
delivered to Buyer).
3.15.3    Except as limited by the specific and express terms of any
employment Contracts listed on Schedule 3.14, the Company has the right
to terminate the employment of each of its employees at will and to
terminate the engagement of any of its independent contractors without
payment to such employee or independent contractor other than for
services rendered through termination and without incurring any penalty
or liability.
3.15.4      The Company is in material compliance with all Laws
relating to employment practices. The Company has delivered to Buyer
accurate and complete copies of all employee manuals and handbooks,
disclosure materials, policy statements and other materials relating to
the employment of the current and former employees of the Company.
3.15.5    The Company has never been a party to or bound by any union
or collective bargaining Contract, nor is any such Contract currently
in effect or being negotiated by or on behalf of the Company.
3.15.6    Since January 1, 2001, the Company has not experienced any
labor problem that was or is material to it.  To the knowledge of the
Company and the Shareholders, the Company's relations with its
employees are currently on a good and normal basis.
3.15.7    To the best of the Company's and the Shareholders' knowledge:
(i) no employee of the Company has received an offer to join a business
that may be competitive with the Company's Business; and (ii) no
employee of the Company is a party to or is bound by any
confidentiality agreement, noncompetition agreement or other Contract
(with any Person) that may have an adverse effect on (A) the
performance by such employee of any of his duties or responsibilities
as an employee of the Company, or (B) any of the businesses or
operations of the Company.
3.15.8    Except as set forth on Schedule 3.15 or to the extent that
the absence of such agreement would not have a Material Adverse Effect
on the Company's business, the Company's current and past employees,
consultants and contractors have signed agreements with the Company
containing restrictions that adequately protect the proprietary and
confidential information of the Company and vest in the Company the
full ownership of items developed by such Person.
3.15.9    Except as set forth on Schedule 3.15, since June 30, 2003, no
employee of the Company having an annual salary of $50,000 or more has
indicated an intention to terminate or has terminated his or her
employment with the Company.  To the best of the Company's and the
Shareholders' knowledge, the transactions contemplated by this
Agreement will not adversely affect relations with any employees of the
Company.
     3.16 Employee Benefit Plans.

    3.16.1    Schedule 3.16 contains an accurate and complete list and
description  of all of the (i) Employee Benefit Plans of  the  Company,
including those to which the Company, or any ERISA Affiliate, sponsors,
maintains  or contributes to, is required to contribute to, or  has  or
could  reasonably be expected to have any liability of any nature  with
respect  to,  whether known or unknown, direct or  indirect,  fixed  or
contingent,  for  the  benefit of present or former  employees  of  the
Company  and/or its ERISA Affiliates (referred to collectively  as  the
"Company's  Employee Benefit Plans" and individually as the  "Company's
Employee  Benefit Plan"), (ii) all employees employed  by  the  Company
affected  or covered by an Employee Benefit Plan, (iii) all Obligations
thereunder  as  of  the  Closing Date, and (iv) all  ERISA  Affiliates.
Accurate  and complete copies of all of the Company's Employee  Benefit
Plans  have  been  provided  to  Buyer  as  well  as  the  most  recent
determination  letter  issued, if any, or  if  none,  Internal  Revenue
Service  ("IRS") opinion or advisory letter issued with respect to  the
Company's Employee Benefit Plan that is intended to be a qualified plan
within  the  meaning  of  Section  401(a)  of  the  Code,  all  pending
applications  for rulings, determination letters, opinions,  no  action
letters  and  similar  documents filed  with  any  governmental  agency
(including  the  Department  of  Labor  and  the  IRS),  summary   plan
descriptions, service agreements, stop loss insurance policies, and all
related  contracts  and  documents  (including,  but  not  limited  to,
employee  summaries and material employee communications), all  closing
letters,  audit  finding letters, revenue agent  findings  and  similar
documents.  No Company Employee Benefit Plan is subject to Title IV  of
ERISA  or  Code  Section 412.  No Company Employee Benefit  Plan  is  a
Multiple Employer Plan or Multiemployer Plan under Code Section  413(c)
or  414(f).  No employer, other than the Company or an ERISA Affiliate,
is  permitted to participate or participates in the Company's  Employee
Benefit Plans and no leased employees (as defined in Section 414(n)  of
the  Code)  or independent contractors are eligible for, or participate
in,  the Company's Employee Benefit Plans.  No Company Employee Benefit
Plan  promises  or provides health, life or other welfare  benefits  to
retirees or former employees, or severance benefits, except as required
by Code Section 4980B, Sections 601 through 609 of ERISA, or comparable
state statutes which provide for continuing health care coverage.

3.16.2    Except as set forth on Schedule 3.16, neither the Company nor
any ERISA Affiliate has (i) established, sponsored, maintained or
contributed to (or has or had the obligation to contribute to) any
Employee Benefit Plan, (ii) proposed any Employee Benefit Plan which it
plans to establish, sponsor, maintain or to which it will be required
to contribute, or (iii) proposed any changes to any of the Company's
Employee Benefit Plans now in effect.  Except as set forth on Schedule
3.16, each of the Company's Employee Benefit Plans that provides a self-
insured health benefit is subject to a stop-loss insurance policy in
which the Company is an insured party and no facts to the knowledge of
the Company and the Shareholders exist which could form the basis for
any denial of coverage under such policy.
3.16.3    With respect to the Company's Employee Benefit Plans, the
Company and each ERISA Affiliate will have made, on or before the
Closing Date, all payments required to be made by them on or before the
Closing Date and will have accrued (in accordance with GAAP) as of the
Closing Date all payments due but not yet payable as of the Closing
Date.  There has not been, nor will there be, any Accumulated Funding
Deficiencies (as defined in ERISA or the Code) or waivers of such
deficiencies.
3.16.4    The Company has delivered to Buyer an accurate and complete
copy of the most current Form 5500 and any other form or filing
required to be submitted to any governmental agency with regard to each
of the Company's Employee Benefit Plans and the most current actuarial
report, if any, with regard to each of the Company's Employee Benefit
Plans and such forms are attached as Schedule 3.16.
3.16.5    All of the Company's Employee Benefit Plans are, and have
been, operated in full compliance with their provisions and with all
applicable Laws including ERISA and the Code and the regulations and
rulings thereunder.  With respect to each of the Company's Employee
Benefit Plans that is intended to be qualified under Section 401(a),
each such plan has been determined by the IRS to be so qualified as to
form, and each trust forming a part thereof has been determined by the
IRS to be exempt from tax pursuant to Section 501(a) of the Code, and
with respect to each of the Company's Employee Benefit Plans that is
intended to be a "voluntary employees' beneficiary association" within
the meaning of Section 501(c)(9) of the Code, each such association has
been determined by the IRS to have such status.  No reason exists that
would cause such qualified or Section 501(c)(9) status to be revoked
for any period.  The Company, its ERISA Affiliates, and all fiduciaries
of the Company's Employee Benefit Plans have complied with the
provisions of the Company's Employee Benefit Plans and with all
applicable Laws including ERISA and the Code and the regulations and
rulings thereunder.  There have been no Reportable Events (as defined
in ERISA), no events described in Sections 4062, 4063 or 4064 of ERISA,
and no termination or partial termination (including any termination or
partial termination attributable to the Transactions) of any of the
Company's Employee Benefit Plans.  There would be no Obligation of the
Company or any ERISA Affiliate under Title IV of ERISA if any of the
Company's Employee Benefit Plans were terminated as of the Closing
Date.  Neither the Company nor any ERISA Affiliate has incurred, nor
will incur, any withdrawal liability, nor does the Company nor any
ERISA Affiliate have any contingent withdrawal liability, under ERISA,
to any Multiemployer Plan (as defined in ERISA).  Neither the Company
nor any ERISA Affiliate has incurred, or will incur, any Obligation to
the Pension Benefit Guaranty Corporation (or any successor thereto).
None of the Company's Employee Benefit Plans is a "MEWA" as defined in
Section 3(40)(A) of ERISA.  No non-exempt prohibited transaction under
Section 406 or 407 of ERISA or Section 4975 of the Code has occurred
with respect to any of the Company's Employee Benefit Plans.  Neither
the Company nor any ERISA Affiliate has incurred, nor will incur, any
tax liability or civil penalty, damages, or other liabilities arising
under Section 502 of ERISA, resulting from any of the Company's
Employee Benefit Plans, with respect to any matter arising on or before
the Closing Date.
3.16.6    Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in
any payment (including any severance, unemployment compensation or
golden parachute payment) becoming due from the Company or any ERISA
Affiliate under any of the Company's Employee Benefit Plans, (ii)
increase any benefits otherwise payable under any of the Company's
Employee Benefit Plans, or (iii) result in the acceleration of the time
of payment or vesting of any such benefits to any extent.
3.16.7    There are no pending actions, claims or lawsuits that have
been asserted or instituted against any of the Company's Employee
Benefit Plans, the assets of any of the trusts under such plans, the
plan sponsor, the plan administrator or any fiduciary of any such plan
(other than routine benefit claims), and, to the knowledge of the
Company, there are no facts which could form the basis for any such
action, claim or lawsuit.  There are no investigations or audits by any
government agency of any of the Company's Employee Benefit Plans, any
trusts under such plans, the plan sponsor, the plan administrator or
any fiduciary of any such plan that have been instituted or threatened
and, to the knowledge of the Company and the Shareholders, there are no
facts which could form the basis for any such investigation or audit.
3.16.8    The Company and/or its ERISA Affiliates can terminate each of
the Company's Employee Benefit Plans without further liability to the
Company and/or its ERISA Affiliates.  No action or omission of the
Company, or any ERISA Affiliate, or any director, officer, or agent
thereof in any way restricts, impairs or prohibits the Company or any
ERISA Affiliate, or any successor, from amending, merging, or
terminating any of the Company's Employee Benefit Plans in accordance
with the express terms of any such plan and applicable law.
  3.17 Customers and Suppliers.  Schedule 3.17 contains an accurate and
complete  list of (a) all customers generating greater than 5%  of  the
Company's  revenues for the 18 month period ending on the  date  hereof
and (b) all current prospects and suppliers of the Company.  Except  as
set  forth  on  Schedule  3.17, since January  1,  2004,  none  of  the
customers  or  suppliers of the Company has given notice  or  otherwise
indicated  to  the Company that (i) it will or intends to terminate  or
not renew its Contract with the Company before the scheduled expiration
date,  (ii)  it  will  otherwise terminate its  relationship  with  the
Company,  or  (iii)  it  may otherwise reduce the  volume  of  business
transacted  with the Company below historical levels.  The relationship
of  the  Company with its customers is currently on a good  and  normal
basis,  and the Company has not experienced any problems with customers
or  suppliers since January 1, 2004.  To the best of the Company's  and
the Shareholders' knowledge, the Transactions will not adversely affect
the  Company's relations with any of the customers or suppliers of  the
Company.

3.18 Taxes.
  3.18.1    Schedule 3.18 contains an accurate and complete list of all
Tax Returns with respect to the Company's last five fiscal years.  "Tax
Returns" means all federal, state, local, foreign and other Tax returns
and  reports, information returns, statements, declarations, estimates,
schedules,  notices, notifications, forms, elections,  certificates  or
other  documents  the Company is required to file or submit  (including
any  amended Tax Returns) to any Governmental Body with respect to  the
determination,  assessment, collection or payment  of  any  Tax  or  in
connection with the administration, implementation or enforcement of or
compliance  with  any Law relating to any Tax.  Accurate  and  complete
copies  of all federal, state, local and foreign income, sales and  use
Tax  Returns filed by the Company with respect to its last five  fiscal
years  are attached to Schedule 3.18, and accurate and complete  copies
of all other Tax Returns listed thereon have been delivered to Buyer.

3.18.2    Except as set forth on Schedule 3.18:  (i) the Company has
properly and timely filed all Tax Returns required to be filed by it,
all of which were accurately prepared and completed in full compliance
with all Laws; (ii) the Company has paid all Taxes required to be paid
by it (whether or not such Taxes were shown as due on a Tax Return);
(iii) no audit of the Company by any governmental taxing authority has
ever been conducted, is currently pending or, to the best of the
Company's and Shareholders' knowledge, is threatened; (iv) no notice of
any proposed Tax audit, or of any Tax deficiency or adjustment, has
been received by the Company, and there is no reasonable basis for any
Tax deficiency or adjustment to be assessed against the Company;
(v) there are no agreements or waivers currently in effect that provide
for an extension of time for the assessment of any Tax against the
Company; (vi) the Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through
the dates thereof in accordance with GAAP; (vii) since the Latest
Balance Sheet Date, the Company has not incurred any liabilities for
Taxes except in the ordinary course of business consistent with past
practices and except in connection with a sale of real property closed
by the Company in September 2004; and (ix) no Proceeding is pending or
has been threatened, and no claim has been or is likely to be asserted,
against or with respect to the Company in respect of any Tax.
3.18.3    There are no Encumbrances on any of the Assets of the Company
that arose in connection with any failure (or alleged failure) to pay
any Tax.
3.18.4    The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder, or other third
party and all IRS Forms W-2 and 1099 required with respect thereto have
been properly completed and timely filed.
3.18.5    The Company is not a party to any agreement, contract,
arrangement or plan that has resulted or could result, separately or in
the aggregate, in the payment of (i) any "excess parachute payment"
within the meaning of Section 280G of the Code (or any corresponding
provision of state, local or foreign tax law) and (ii) any amount that
would not be fully deductible as a result of Section 162(m) of the Code
(or any corresponding provision of state, local or foreign tax law).
3.18.6    The Company (a) has not been a member of an affiliated group
filing a consolidated federal income tax return and (b) does not have
any liability for the Taxes of any Person (other than the Company under
Reg. 1.1502-6 (or any similar provision of state, local, or foreign
law)), as a transferee or successor, by contract, or otherwise.
3.18.7    The unpaid Taxes of the Company (i) did not, as of the date
of the Latest Balance Sheet, exceed the reserve for Tax liability
(rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face
of the Latest Balance Sheet of the Company included in the Financial
Statements and (ii) do not and will not exceed the reserve as adjusted
for the passage of time through the Closing Date in accordance with the
past customs and practice of the Company in filing its Tax Returns.
Since the date of the Latest Balance Sheet and exclusive of gain on the
sale of Excluded Real Property, closed prior to September 30, 2004, the
Company has not incurred any liability for Taxes arising from
extraordinary gains or losses, as the term is used in GAAP, outside the
Ordinary Course of Business consistent with past custom and practice.
3.18.8    The Company has disclosed on its federal income Tax Returns
all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662
of the Code.
3.18.9    None of the Shareholders are foreign persons within the
meaning of Section 1445 of the Code.
3.18.10   The Company has not been the "distributing corporation"
(within the meaning of Section 355(a)(1) of the Code) nor the
"controlled corporation" (within the meaning of Section 355(a)(1) of
the Code) within the two-year period ending as of the date of this
Agreement.
3.18.11   The Company will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date
as a result of any: [i] change in method of accounting for a taxable
period ending prior to the Closing Date; [ii] "closing agreement" as
defined in Section 7121 of the Code (or any corresponding or similar
provision of state, local or foreign income Tax law) executed on or
prior to the Closing Date; [iii] intercompany transactions or excess
loss account described in Treasury Regulations under Section 1502 of
the Code (or any corresponding or similar provision of state, local or
foreign income Tax law); [iv] installment sale or open transaction
disposition made on or prior to the Closing Date; or [v] prepaid amount
received after the Closing Date.
3.18.12   The Company has disclosed to the Internal Revenue Service on
the appropriate Tax Returns any Reportable Transaction in which the
Company has participated.  The Company has retained all documents and
other records pertaining to any Reportable Transaction in which the
Company has participated, including documents and other records listed
in Treasury Regulation Section 1.6011-4(g) and any other documents or
other records which are related to any Reportable Transaction in which
the Company has participated but not listed in Treasury Regulation
Section 1.6011-4(g).
     3.19 Proceedings and Judgments.

  3.19.1    Except as set forth on Schedule 3.19:  (i) no Proceeding is
currently  pending  or,  to  the  knowledge  of  the  Company  and  the
Shareholders, threatened, nor has any Proceeding occurred at  any  time
since  January 1, 2002, to which the Company is or was a party,  or  by
which  the Company or any Assets or business of the Company is  or  was
affected;  (ii)  no  Judgment is currently  outstanding,  nor  has  any
Judgment  been  outstanding at any time since January 1, 2002,  against
the  Company, or by which the Company or any Assets or Business of  the
Company is or was affected; and (iii) no breach of contract, breach  of
warranty,    tort,   negligence,   infringement,   product   liability,
discrimination,  wrongful discharge or other claim of  any  nature  has
been asserted or, to the knowledge of the Company and the Shareholders,
threatened by or against the Company at any time since January 1, 2002,
and, to the knowledge of the Company and the Shareholders, there is  no
basis  for  any such claim.  Except as set forth on Schedule  3.19,  no
event  has occurred, and no claim, dispute or, to the knowledge of  the
Company  and the Shareholders, other condition or circumstance  exists,
that would reasonably be expected to, directly or indirectly, give rise
to or serve as a basis for the commencement of any Proceeding described
in this Section 3.19.1.

3.19.2    As to each matter described on Schedule 3.19, accurate and
complete copies of all pertinent pleadings, judgments, orders,
correspondence and other legal documents have been delivered to Buyer.
3.19.3    To the best of the Company's and the Shareholders' knowledge,
no officer or employee of the Company is subject to any Judgment that
prohibits such officer or employee from engaging in or continuing any
conduct, activity or practice relating to the Business of the Company.
3.19.4    There is no proposed Judgment that, if issued or otherwise
put into effect, (i) would reasonably be expected to have an adverse
effect on the Business, condition, Assets, technology, liabilities,
operations, employees, financial performance, revenues, net income,
political environment, economic environment or prospects of or with
respect to the Company (or on any aspect or portion thereof) or on the
ability of the Company or the Shareholders to comply with or perform
any covenant or obligation under this Agreement, or (ii) would
reasonably be expected to have the effect of preventing, delaying,
making illegal or otherwise interfering with any of the transactions
contemplated by this Agreement or making it more difficult for Buyer to
realize any anticipated benefit of any of the transactions contemplated
by this Agreement.
     3.20 Insurance.  Schedule 3.20 contains an accurate and complete list
and description of all Insurance Policies (excluding Insurance Policies
that  constitute the Employee Benefit Plans described on Schedule 3.16)
currently owned or maintained by the Company.  Except as set  forth  on
Schedule  3.20, accurate and complete copies of all Insurance  Policies
described  or  required  to be described on  Schedule  3.20  have  been
delivered  to Buyer.  Each such Insurance Policy is in full  force  and
effect;  the  Company  has  not received notice  of  cancellation  with
respect  to any such Insurance Policy; and the Company has no knowledge
of any basis for the insurer thereunder to terminate any such Insurance
Policy.  Except as set forth on Schedule 3.20, there are no claims that
are  pending under any of the Insurance Policies described on  Schedule
3.20.

3.21 Questionable Payments.  Neither the Company, the Shareholders, nor
any of the current or former shareholders, directors, executives,
officers, representatives, agents or employees of the Company (when
acting in such capacity or otherwise on behalf of the Company or any of
its predecessors):  (a) has used or is using any corporate funds for
any illegal contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (b) has used or is using any
corporate funds for any direct or indirect unlawful payments to any
foreign or domestic government officials or employees; (c) has violated
or is violating any provision of the Foreign Corrupt Practices Act of
1977; (d) has established or maintained, or is maintaining, any
unlawful or unrecorded fund of corporate monies or other properties;
(e) has made at any time since January 1, 2002, any false or fictitious
entries on the books and records of the Company; (f) has made any
bribe, rebate, payoff, influence payment, kickback or other unlawful
payment of any nature using corporate funds or otherwise on behalf of
the Company; or (g) has made any material favor or gift that is not
deductible for federal income tax purposes using corporate funds or
otherwise on behalf of the Company.
3.22 Related Party Transactions.  Except as described on Schedule 3.22
and except for any employment Contracts listed on Schedule 3.14, there
are no real estate leases, personal property leases, loans, guarantees,
Contracts, transactions, understandings or other arrangements of any
nature between or among the Company and any current or former
shareholder, director, employee, officer or controlling Person of the
Company (or any of its respective predecessors) or any other Person
affiliated with the Company (or any of its respective predecessors).
3.23 Brokerage Fees.  Except as set forth on Schedule 3.23, no Person
acting on behalf of the Company or any of the Shareholders is or shall
be entitled to any brokerage or finder's fee in connection with the
Transactions.
3.24 Investment Matters.
          3.24.1    Each of the Shareholders (i) has carefully read and
understands  (a)  the  Buyer SEC Documents and  (b)  the  risk  factors
related  to  Buyer as set forth on Exhibit 3.24.1 attached hereto,  and
(ii)  is acquiring the Buyer Common Shares and the Notes (collectively,
the  "Halifax  Securities")  for  his  own  account  as  principal  for
investment and not with a view toward resale or distribution thereof in
violation of the securities laws.

3.24.2    Each of the Shareholders represents and warrants that he has
knowledge and experience in financial and business matters and that he
is capable of evaluating the merits and risks of the investment in the
Halifax Securities to reach an informed and knowledgeable decision to
acquire the Halifax Securities or that he has relied on advisers with
such knowledge and experience.
3.24.3    Each of the Shareholders or his advisor has had an
opportunity to ask questions and receive answers from Buyer concerning
Buyer, and has been furnished with all information about Buyer that he
has requested.  Each Shareholder is an "accredited investor" as defined
in Rule 501(a) of the Securities Act of 1933, as amended, and such
shareholder alone has such knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of
the investment in the Halifax Securities being issued hereunder.
3.24.4    Reserved.
3.24.5    Each of the Shareholders represents and warrants that (i) he
maintains his domicile at the address shown in Section 13.3 hereof,
(ii) he has no need for liquidity in the investment in the Halifax
Securities, (iii) all of his investments in and commitments to non-
liquid investments are, and after a purchase of the Halifax Securities
will be, reasonable in relation to his net worth and current needs,
(iv) he is able to bear the economic risk of losing the entire
investment in the Halifax Securities, and (v) the financial information
provided by him accurately reflects his financial condition, with
respect to which he does not anticipate any material adverse changes.
3.24.6    Each of the Shareholders understands that the Halifax
Securities to be issued hereunder have not been registered under either
the Securities Act of 1933 or the securities laws of any state and, as
a result thereof, are subject to substantial restrictions on transfer
and shall bear a legend restricting the transfer of such securities.
3.24.7    Each of the Shareholders understands that (i) except as may
be provided in the Registration Rights Agreement, Buyer has no
obligation or intention to register the Halifax Securities issued
hereunder under any federal or state securities laws, or to take any
action which would make available any exemption from the registration
requirements of such laws, and (ii) therefore, each Shareholder may be
precluded from selling or otherwise transferring or disposing of any of
such Halifax Securities or any portion thereof and may have to bear the
economic risk of its investment therein for an indefinite period of
time.
3.24.8    Each of the Shareholders or his advisor, if any, understands
that an investment in the Halifax Securities issued hereunder involves
certain risks and has taken full cognizance of and understands all of
the risk factors relating to the purchase of such Halifax Securities,
including those set forth under the caption "Risk Factors" in any Form
10-K included as part of the Buyer SEC Documents and such risk factors
set forth on Exhibit 3.24.1 attached hereto.
3.24.9    Intentionally Omitted.
3.24.10   Each of the Shareholders understands that any information
furnished by Buyer to the Shareholders or the Company does not
constitute investment, accounting, legal or tax advice.  Each
Shareholder, in making the investment in the Halifax Securities
contemplated hereunder, is relying, if at all, solely upon the advice
of such Shareholder's tax advisers with respect to the federal and/or
state tax aspects of an investment in the Halifax Securities and,
except as expressly provided otherwise in this Agreement, Buyer has not
made any representation regarding the tax consequences of such
investment in the Halifax Securities.
3.24.11   Each of the Shareholders or his advisor, if any, understands
that the Halifax Securities are being offered and sold in reliance on
specific exemptions from the registration requirements of federal and
state securities laws and that Buyer and controlling persons thereof
are relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings related to
the Shareholders set forth herein and in the Questionnaires, attached
hereto as Exhibit 3.24.11, in order to determine the applicability of
such exemptions and the suitability of him to acquire the Halifax
Securities being issued hereunder.
3.24.12   Each of the Shareholders represents and warrants that he is
unaware of, is in no way relying on, and did not become aware of the
offering of the Halifax Securities through or as a result of, any form
of general solicitation or general advertising including, without
limitation, any article, notice, advertisement or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, in connection with the offering and sale of the
Halifax Securities and is not subscribing for such Halifax Securities
and did not become aware of the offering of the Halifax Securities
through or as a result of any seminar or meeting to which such
Shareholder was invited by, or any solicitation of a subscription by, a
person not previously known to such Shareholder in connection with
investments in securities generally.
3.24.13   Each of the Shareholders acknowledges that he has been
provided confidential information regarding Buyer and agrees not to
(and agrees to cause his consultants and representatives not to)
distribute or disclose such information to any other party without the
prior written consent of Buyer.  Each of the Shareholders agrees not to
(and agrees to cause his consultants and representatives not to) engage
in any purchase or sale transaction in Buyer's securities following
receipt of this non-public information until such time as this non-
public information is disclosed to the public generally or such
Shareholder is advised by Buyer that it is acceptable to do so.
     3.25  Full Disclosure.  No representation or warranty made by  the
Company  or  the Shareholders in this Agreement or pursuant hereto  (a)
contains  any untrue statement of any fact; or (b) omits to  state  any
fact  that is necessary to make the statements made, in the context  in
which  made,  not false or misleading in any respect.   The  copies  of
documents   attached  as  Schedules  to  this  Agreement  or  otherwise
delivered  to  Buyer  in connection with the transactions  contemplated
hereby,  are accurate and complete, and are not missing any amendments,
modifications,  correspondence or other related papers which  would  be
pertinent to Buyer's understanding thereof in any respect.  To the best
of  the  Company's  and the Shareholders' knowledge  (except  that  Dan
Lane's  knowledge  shall be limited to his actual  knowledge  thereof),
there  is no fact that has not been disclosed to Buyer in the Schedules
to this Agreement or otherwise in writing, that was or is or, so far as
either  the  Company or the Shareholders can reasonably  foresee,  will
have a Material Adverse Effect.

        Section 4:     Representations of Buyer and Merger Sub

     Knowing  that  the  Shareholders are relying  thereon,  Buyer  and
Merger  Sub,  jointly  and  severally, represent  and  warrant  to  the
Shareholders  as of the date of this Agreement, and covenant  with  the
Shareholders, as follows:

     4.1  Organization.  Buyer is a corporation duly organized, validly
existing  and in good standing under the Laws of the State of Virginia.
Merger  Sub  is a corporation duly organized, validly existing  and  in
good  standing under the Laws of the State of Delaware.  Each of  Buyer
and  Merger  Sub  possesses the full power and  authority  to  own  its
Assets,  conduct its business as and where such business  is  presently
conducted,  and enter into, deliver and perform this Agreement  and  to
consummate  the  Transactions,  except  where  the  failure  to  be  so
qualified,  registered  or in good standing  would  not  reasonably  be
expected  to have a material adverse effect on the Buyer.  All  of  the
issued and outstanding shares of capital stock of Merger Sub are owned,
beneficially and of record, by Buyer.

4.2  Authority; Non-Contravention.  Each of Buyer's and Merger Sub's
execution, delivery and performance of this Agreement, the Notes, and
each other agreement to which Buyer or Merger Sub is or becomes a party
pursuant to this Agreement, and its consummation of the Transactions
(a) have been duly authorized by all necessary actions by their
respective boards of directors and; (b) do not require any approval or
actions by the stockholders of Buyer; (c) do not constitute a violation
of or default under their respective charters or bylaws; (d)  do not
constitute a default or breach (immediately or after the giving of
notice, passage of time or both) under any Contract to which Buyer or
Merger Sub is a party or by which they are bound; (e) do not constitute
a violation of any Law or Judgment that is applicable to them or to
their respective businesses or Assets, or to the Transactions; and
(f) except as stated on Schedule 4.2, do not require the Consent of any
Person.  This Agreement, the Notes, and each other agreement to which
Buyer or Merger Sub is or becomes a party pursuant to this Agreement
constitutes the valid and legally binding agreement of each of Buyer
and Merger Sub, enforceable against each of them in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect affecting creditor's rights
generally.
4.3  Buyer's Stock.  The total authorized shares of capital stock of
Buyer is 7,500,000, consisting of 6,000,000 Buyer Common Shares, of
which 2,920,412 shares are issued and outstanding as of the date
hereof, and 1,500,000 shares of preferred stock, $0.24 par value per
share, none of which are issued or outstanding.  Buyer has issued (i)
warrants granting the holders thereof the right to purchase, on or
before July 22, 2008, an aggregate of 58,393 Buyer Common Shares at an
exercise price per share of $4.93 and (ii) warrants to one or more of
its investment advisors granting the holders thereof the right to
purchase, on or before March 4, 2008, an aggregate of 50,000 Buyer
Common Shares at an exercise price per share of $3.19.  Buyer has (i)
500,000 shares of Common Stock authorized for issuance under its stock
incentive plans (with (a) 400,000 authorized under Buyer's incentive
plan for employees and (b) 100,000 authorized under Buyer's plan for
directors), and (ii) outstanding under such plans options to purchase
472,450 shares as of the date hereof (with (a) 372,450 outstanding
under Buyer's plan for employees and (b) 100,000 outstanding under
Buyer's plan for directors).  Except for the Deferred Merger
Consideration under this Agreement and under that certain Agreement and
Plan of Merger dated August 29, 2003 related to Buyer's acquisition of
Microserv, Inc. (the "Microserv Merger Agreement") and except as
described above or on Schedule 4.3, Buyer has not issued any securities
exercisable to purchase or convertible into capital stock of Buyer or
any subsidiary of Buyer nor is Buyer or any subsidiary otherwise bound
by any agreement, whether absolute or contingent, to issue any such
securities.  Each issued and outstanding share of capital stock of
Buyer has been duly authorized and is validly issued and outstanding
and their issuance and sale have not violated any preemptive rights.
The Buyer Common Shares to be issued hereunder, when so issued, shall
be duly authorized and validly issued, fully paid and nonassessable and
shall not have been issued in violation of any preemptive right.
4.4  Indebtedness.  Buyer does not have any secured debt, except as set
forth on Schedule 4.4, which describes the name of any lender, the
maximum amount Buyer can borrow under the loan facility, and the amount
actually borrowed as of a recent date.  Buyer has outstanding
subordinated promissory notes to Research Industries Incorporated
("RII") in the aggregate principal amount of $2,000,000, and a
convertible subordinated debenture to RII with a balance at Closing of
$400,000.  Except for the foregoing and except for the notes issued to
the former shareholders of Microserv, Inc. in the aggregate principal
amount of $493,934 (pursuant to the Microserv Merger Agreement), Buyer
does not have any secured debt, any outstanding indebtedness for
borrowed money, or any agreement pursuant to which Buyer can borrow
money from any Person.  Accurate and complete copies of all agreements,
notes, amendments or other documents relating to all of the foregoing
have been delivered or are available to the Company and the
Shareholders.  Subject to receiving consents from applicable lenders,
which consents are listed on Schedule 4.5, Buyer has, or by Closing
shall have the right to pay the obligations of Buyer under the Notes to
the Shareholders as and when such obligations become due unless a
default is declared under Buyer's senior and subordinated loan
documents.
4.5  Consents.  Except as set forth on Schedule 4.5 attached hereto, no
consent, approval, authorization, order, license, permit, filing or
registration with any governmental entity or other regulatory body is
required of Buyer or Merger Sub as a condition of their execution,
delivery or performance of this Agreement, the Notes, or any other
agreements to which Buyer or Merger Sub are or become a party pursuant
to this Agreement or their respective consummations of the
Transactions.
4.6  SEC Filings.  Buyer has timely filed with the SEC all of the
reports that it has been required to file pursuant to Section 13 or 14
of the Securities Exchange Act of 1934, as amended (the "1934 Act") in
respect of all periods, events or stockholder actions since April 1,
2002 ("Buyer SEC Documents").  As of the time it was filed with the SEC
(or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Buyer SEC
Documents complied in all material respects with the applicable
requirements of the 1934 Act; and (ii) none of the Buyer SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
4.7  Questionable Payments.  Neither Buyer and Merger Sub, nor any of
the current or former shareholders, directors, executives, officers,
representatives, agents or employees of Buyer and Merger Sub (when
acting in such capacity or otherwise on behalf of Buyer and Merger Sub
or any of its predecessors):  (a) has used or is using any corporate
funds for any illegal contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (b) has used or is
using any corporate funds for any direct or indirect unlawful payments
to any foreign or domestic government officials or employees; (c) has
violated or is violating any provision of the Foreign Corrupt Practices
Act of 1977; (d) has established or maintained, or is maintaining, any
unlawful or unrecorded fund of corporate monies or other properties;
(e) has made at any time since January 1, 2002, any false or fictitious
entries on the books and records of Buyer and Merger Sub; (f) has made
any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment of any nature using corporate funds or otherwise on
behalf of Buyer and Merger Sub; or (g) has made any material favor or
gift that is not deductible for federal income tax purposes using
corporate funds or otherwise on behalf of Buyer and Merger Sub.
4.8  Brokerage Fees.  Except for Fairmount Partners LP, no Person
acting on behalf of Buyer and Merger Sub is or shall be entitled to any
brokerage or finder's fee in connection with the Transactions.
     4.9  Proceedings and Judgments.

   4.9.1     Except as set forth on Schedule 4.9 and except for matters
that would not reasonably be expected to have a material adverse effect
on the business of Buyer and Merger Sub:  (i) no material Proceeding is
currently pending or, to the knowledge of Buyer, threatened,  to  which
either Buyer or Merger Sub is or was a party, or by which either  Buyer
or  Merger Sub or any Assets or business of the either Buyer or  Merger
Sub  is  or  was  affected;  (ii)  no material  Judgment  is  currently
outstanding  against  Buyer or Merger Sub, or by  which  the  Buyer  or
Merger  Sub  or any of their respective Assets or business  is  or  was
affected; and (iii) no material breach of contract, breach of warranty,
tort,  negligence,  infringement,  product  liability,  discrimination,
wrongful  discharge or other claim of any nature is being  asserted  or
threatened  by  or  against either Buyer or Merger  Sub,  and,  to  the
knowledge  of Buyer, there is no basis for any such claim.   Except  as
set forth on Schedule 4.9, no event has occurred, and no claim, dispute
or,  to  the  knowledge  of Buyer and Merger Sub,  other  condition  or
circumstance exists, that would reasonably be expected to  directly  or
indirectly give rise to or serve as a basis for the commencement of any
material Proceeding described in this Section 4.9.1.

4.9.2     There is no proposed Judgment that, if issued or otherwise
put into effect, (i) would reasonably be expected to have a material
adverse effect on the business, condition, Assets, technology,
liabilities, operations, employees, financial performance, revenues,
net income, political environment, economic environment or prospects of
or with respect to the Company (or on any aspect or portion thereof) or
on the ability of Buyer or Merger Sub to comply with or perform any
covenant or obligation under this Agreement, or (ii) would reasonably
be expected to have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the transactions contemplated by
this Agreement.
     4.10 Compliance with Laws; Permits.  Except as otherwise provided in
the  Schedules  hereto, each of Buyer and Merger Sub  are  in  material
compliance with each Judgment and with each Law that is applicable  it,
including  Laws relating to Employee Benefit Plans.  Each of Buyer  and
Merger Sub have obtained and hold all material Permits required for the
lawful  operation  of  its  business as  and  where  such  business  is
presently conducted.

4.11 Tangible Property.  Each of Buyer and Merger Sub has good and
marketable title to all of its Tangible Property free and clear of any
Encumbrances, except for liens in connection with Indebtedness
referenced in Section 4.4 hereof or on Schedule 4.4 attached hereto.
All of Buyer's and Merger Sub's Tangible Property is located at such
entities' respective offices or facilities and each such entity has the
right to require the immediate return of any of its Tangible Property
which is not located at its offices or facilities.  All Tangible
Property of the Company, wherever located, (i) is in good condition,
ordinary wear and tear excepted, and (ii) materially complies with, and
is being operated and otherwise used in material compliance with, all
applicable Laws.
4.12 Employees and Independent Contractors.
 4.12.1    Buyer and Merger Sub are in material compliance with all Laws
relating to employment practices.

4.12.2    Buyer and Merger Sub are not a party to or bound by any union
or collective bargaining Contract.
4.12.3    Since January 1, 2001, Buyer and Merger Sub have not
experienced any labor problem that was or is material to it.
     4.13  Contracts.   With the exception of matters  that  would  not
reasonably  be  expected  to  have a material  adverse  effect  on  the
business  operations and financial condition of Buyer and  Merger  Sub:
(i) each contract with Buyer's and Merger Sub's customers are valid and
in  full force and effect, and are enforceable by Buyer and Merger  Sub
in  accordance with its terms, (ii) neither Buyer nor Merger Sub, or to
their  knowledge, any other Person has violated, breached, or  declared
or  committed any default under, any Contract to which either Buyer  or
Merger Sub is a party.

4.14 Full Disclosure.  No representation or warranty made by Buyer and
Merger Sub in this Agreement or pursuant hereto (a) contains any untrue
statement of any fact; or (b) omits to state any fact that is necessary
to make the statements made, in the context in which made, not false or
misleading in any respect.  The copies of documents attached as
Schedules to this Agreement or otherwise delivered to the Company in
connection with the transactions contemplated hereby, are accurate and
complete, and are not missing any amendments, modifications,
correspondence or other related papers which would be pertinent to the
Company's understanding thereof in any respect.  To the best of Buyer
and Merger Sub's knowledge, there is no fact that has not been
disclosed to the Company in the Schedules to this Agreement or
otherwise in writing, that was or is or, so far as either Buyer and
Merger Sub can reasonably foresee, will have a Material Adverse Effect.
                   Section 5:     Closing Deliveries

   5.1   The Company's and the Shareholders' Obligations at Closing.  At
the Closing (or in the case of item 5.1.1 within a reasonable period of
time after Closing), the Company and the Shareholders shall deliver the
following to Buyer and Merger Sub:

  5.1.1     Certificates representing all issued and outstanding shares
of Company Common Stock.

5.1.2     All instruments or documents necessary to change the names of
the individuals who have access to or are authorized to make
withdrawals from or dispositions of all bank accounts, other accounts,
certificates of deposits, marketable securities, other investments,
safe deposit boxes, lock boxes and safes of the Company described on
Schedule 3.4 and all keys and combinations to all safe deposit boxes,
lock boxes and safes of the Company and other depositories described on
Schedule 3.4.
  5.1.3     The Articles of Merger and, if applicable, the Certificate of
Merger,  each  in  form and substance acceptable to the  parties,  duly
executed by the Company.

5.1.4     The original (or facsimile) signed copies of all Consents
listed on Schedule 3.2.
5.1.5     The Registration Rights Agreement duly executed by the each
of the Shareholders.
5.1.6     All of the existing original minute books, stock and share
books and similar records of the Company and duly executed
resignations, dated the Closing Date, of all directors and officers of
the Company other than as specified by Buyer.
5.1.7     Good standing certificate of the Company dated no earlier
than ten (10) days before the Closing Date, from its jurisdiction of
incorporation.
5.1.8     A certificate of the Secretary of the Company as to the
incumbency and signatures of the officers of the Company executing this
Agreement.
5.1.9     Copies of the resolutions duly adopted by the board of
directors and shareholders of the Company authorizing the Company to
execute, deliver and perform this Agreement and the other agreements
and documents contemplated hereby and to consummate the Transactions
contemplated hereby and thereby, certified by an officer of the Company
as in full force and effect, without modification or rescission, on and
as of the Closing Date.
5.1.10    The General Release in the form attached hereto as Exhibit
5.1.10 (the "General Release") duly executed by each of the
Shareholders.
5.1.11    Receipts acknowledging payment to Shareholders of the Closing
Date Merger Consideration.
5.1.12    The Key Employee Agreement(s) in the form attached hereto as
Exhibit 5.1.12 (the Key Employee Agreements") duly executed by each Key
Employee.
5.1.13    Payoff statements or termination statements and any other
termination documents terminating all Encumbrances and claims in and to
the Assets of the Company and the shares of capital stock of the
Company (including, without limitation, liens recorded by Liberty
Bank), except those Encumbrances which Buyer agrees in writing to
assume.
5.1.14    The Restrictive Covenant Agreement in the form attached
hereto as Exhibit 5.1.14 (the "Restrictive Covenant Agreement") duly
executed by each of the Shareholders.
5.1.15    An Investor Suitability Questionnaire (to be attached as
Exhibit 3.24.11 hereof) delivered by each Shareholder.
5.1.16    All documents pertaining to the transfer of the Excluded Real
Property and related debt from the Company.
5.1.17    All other agreements, certificates, instruments, financial
statement certifications and documents reasonably requested by Buyer in
order to fully consummate the Transactions and carry out the purposes
and intent of this Agreement.
   5.2  Buyer's and Merger Sub's Obligations at Closing.  At the Closing,
Buyer and Merger Sub shall deliver the following to the Shareholders:

    5.2.1     Certificates representing the Buyer Common Shares issued to
the Shareholders as contemplated by the Ownership Schedule.

5.2.2     The Notes duly executed by Buyer, in amounts set forth on the
Ownership Schedule.
5.2.3     With respect to the Cash Payment, checks or wire transfers
delivered to each Shareholder in amounts consistent with the Ownership
Schedule.
5.2.4     The Certificate of Merger and, If required to be executed by
Merger Sub in accordance with applicable Law, the Articles of Merger,
each duly executed by Merger Sub.
5.2.5     The Registration Rights Agreement in the form attached hereto
as Exhibit 5.2.5 (the "Registration Rights Agreement") duly executed by
Buyer.
5.2.6     The Key Employee Agreements duly executed by Buyer.
5.2.7     Good standing certificates or certificates of existence or
subsistence, as the case may be, for each of Buyer and Merger Sub,
dated no earlier than ten (10) days before the Closing Date, from the
Commonwealth of Virginia and State of Delaware, as the case may be.
5.2.8     Copies of the resolutions duly adopted by the respective
boards of directors of each of Buyer and Merger Sub authorizing Buyer
and Merger Sub, respectively, to execute, deliver and perform this
Agreement and the documents contemplated hereby, and to consummate the
Transactions contemplated hereby and thereby, certified by an officer
of Buyer and Merger Sub, respectively, as in full force and effect,
without modification or rescission, on and as of the Closing Date.
5.2.9     A certificate of an appropriate officer of each of Buyer and
Merger Sub as to the incumbency and signatures of the officers of Buyer
and Merger Sub, respectively, executing this Agreement.
5.2.10    All other agreements, certificates, instruments and documents
reasonably requested by the Company or the Shareholders in order to
fully consummate the Transactions and carry out the purposes and intent
of this Agreement.
    Section 6:     Certain Rights and Obligations of Buyer and the
                      Shareholders after Closing

   6.1  Restrictions on Dispositions of Buyer Common Shares.  From and
after  the  Closing Date, none of the Shareholders shall sell,  assign,
give,  pledge or otherwise transfer, dispose of or reduce  his  or  its
risk relating to  any of his Buyer Common Shares until the twelve month
anniversary  of the Closing Date has expired and, thereafter,  only  in
compliance with applicable federal and state securities Laws.

   6.2  Cooperation with Buyer and the Surviving Corporation.  From and
after  the  Closing  Date,  (a) each of the  Shareholders  shall  fully
cooperate to transfer to Buyer and the Surviving Corporation  the  full
control  of  the Business and Assets of the Company, (b)  none  of  the
Shareholders  shall take any action, directly or indirectly,  alone  or
together  with  others, which obstructs or impairs  the  assumption  by
Buyer  and  the  Surviving Corporation of control of the  Business  and
Assets  of the Company; and (c) the Shareholders shall promptly deliver
to  Buyer  and  the  Surviving Corporation all correspondence,  papers,
documents and other items and materials received by them or found to be
in  their possession which pertain to the Business or the Assets of the
Company  and  (d)  the  Shareholders shall use  their  reasonable  best
efforts  to  cooperate  with  Buyer and the  Surviving  Corporation  in
connection  with the preparation and audit of any financial  statements
of  the Company, including, without limitation, where appropriate,  the
signing  of such reasonable accurate management representation  letters
as  are  required in connection with such audit.  At any time and  from
time  to  time after the Closing Date, at Buyer's request  and  without
further  consideration, each of the Shareholders shall promptly execute
and  deliver all such further agreements, certificates, instruments and
documents  and  perform such further actions as  Buyer  may  reasonably
request,  in  order  to  fully consummate  the  Merger  and  the  other
Transactions contemplated hereunder and to fully carry out the purposes
and  intent  of  this Agreement, including, but not  limited  to,  such
documents  and  actions  as  may be required  in  connection  with  the
continuation  or  termination  of the Employee  Benefit  Plans  of  the
Company,  the adoption by the Surviving Corporation of Buyer's Employee
Benefit  Plans,  and the filing of tax returns of the Company  for  all
periods ending on, before or including the Closing Date.

6.3  Taxes.
6.3.1     Tax Periods Through the Closing Date.  The Shareholders shall
prepare or cause to be prepared all Tax Returns for the Company for all
Tax  periods  ending prior to the Closing Date which are  to  be  filed
prior  to  the Closing Date.  The Buyer shall prepare or  cause  to  be
prepared and file or cause to be filed all Tax Returns for the  Company
for  all  Tax  periods  ending on or prior to the Closing  Date  ("Pre-
Closing  Tax Periods") which are required to be filed after the Closing
Date.  The Buyer shall provide the Shareholders with copies of such Tax
Returns  at  least  ten  days  prior  to  the  filing  date  (including
applicable  extension  periods)  and the  Shareholders  shall  have  an
opportunity  to  review such Tax Returns.  The Buyer shall  accept  any
reasonable  comments of Shareholders regarding such Tax  Returns.   The
Shareholders shall be responsible for all Taxes of the Company for  all
Pre-Closing  Tax  Periods  and shall pay to (or  as  directed  by)  the
Company any Taxes of the Company for all Pre-Closing Tax Periods to the
extent  such Taxes (x) have not already been paid by the Company  prior
to  the  Closing  or  (y) are not reflected in the  accrual  for  Taxes
(rather  than  any  reserve for deferred Taxes established  to  reflect
timing  differences between book and Tax income) on  the  Closing  Date
Balance  Sheet  or  the Actual Closing Net Assets statement,  and  such
payments shall be made in each applicable case within fifteen (15) days
after  the date when the Company notifies the Shareholders of an amount
of such Taxes that is payable to the relevant Government Body.

6.3.2     Tax Periods Straddling the Closing Date.  The Buyer shall
prepare or cause to be prepared and file or cause to be filed any Tax
Returns of the Surviving Corporation for Tax periods which begin before
the Closing Date and end after the Closing Date ("Straddle Tax
Periods").   The Shareholders shall pay to the Buyer an amount equal to
the portion of such Taxes which relates to the portion of such Straddle
Tax Period ending on the Closing Date to the extent such Taxes are not
reflected in the accrual for Taxes (rather than any reserve for
deferred Taxes established to reflect timing differences between book
and Tax income) shown on the Closing Date Balance Sheet or the Actual
Closing Net Assets statement.  Any such payment for Taxes for any
Straddle Tax Period shall be made by the Shareholders to the Buyer
within fifteen (15) days of the date when the Surviving Corporation
notifies the Shareholders of an amount of such Taxes that is payable to
the relevant Government Body.    For purposes of this Section 6.3.2, in
the case of any Taxes that are imposed on a periodic basis and are
payable for a Straddle Tax Period, the portion of such Tax which
relates to the portion of such Tax period ending on the Closing Date
shall (x) in the case of any Tax other than Taxes based upon or related
to income or receipts, be deemed to be the amount of such Tax for the
entire Tax period multiplied by a fraction the numerator of which is
the number of days in the Tax period ending on the Closing Date and the
denominator of which is the number of days in the entire Tax period,
and (y) in the case of any Tax based upon or related to income or
receipts be deemed equal to the amount which would be payable if the
relevant Tax period ended on the Closing Date.  Any credits relating to
a Straddle Tax Period shall be taken into account as though the
relevant Tax period ended on the Closing Date.  All determinations
necessary to give effect to the foregoing allocations shall be made in
a manner consistent with prior practice (to the extent permitted by
law) of the Company.
6.3.3     Tax Periods After the Closing Date.  Buyer shall timely
prepare and file or cause to be timely prepared and filed all Tax
Returns for the Surviving Corporation required to be filed for taxable
periods beginning after the Closing Date.  Buyer shall timely pay or
cause to be paid the amount of Taxes due shown on such Returns.
     6.4  Transfer Taxes.  Notwithstanding any other provisions of this
Agreement  to the contrary, the Shareholders shall pay all sales,  use,
stock  transfer, stamp, recording, real property transfer  and  similar
taxes,  if  any,  required  to be paid in connection  with  the  Merger
contemplated in this Agreement.

6.5  Reportable Transactions.  The Shareholders and the Surviving
Corporation agree to retain all documents and other records for the
appropriate period of time as set forth in Treasury Regulation Section
1.6011-4(g) which relate to any Reportable Transaction in which the
Company has participated.
6.6  Cooperation on Tax Matters.
 6.6.1     Buyer, the Surviving Corporation, and the Shareholders shall
cooperate fully, as and to the extent reasonably requested by the other
party,  in connection with the filing of Tax Returns pursuant  to  this
Section  and  any  Proceeding.   Such  cooperation  shall  include  the
retention and (upon the other party's request) the provision of records
and  information  which  are reasonably relevant  to  any  such  audit,
litigation  or  other Proceeding and making employees  available  on  a
mutually  convenient  basis  to  provide  additional  information   and
explanation   of  any  material  provided  hereunder.   The   Surviving
Corporation  and  the Shareholders agree (A) to retain  all  books  and
records  with respect to Tax matters pertinent to the Company  relating
to  any  taxable  period beginning before the Closing  Date  until  the
expiration  of the statute of limitations (and, to the extent  notified
by  Buyer  or  Shareholders, any extensions thereof) of the  respective
taxable  periods,  and  to  abide by all  record  retention  agreements
entered  into  with any Governmental Body, and (B) to  give  the  other
party  reasonable written notice prior to transferring,  destroying  or
discarding  any  such  books and records and, if  the  other  party  so
requests, the Surviving Corporation and the Shareholders, as  the  case
may  be,  shall allow the other party to take possession of such  books
and records.

6.6.2     Buyer shall provide Shareholders with notice of any written
inquiries, audits, examinations or proposed adjustments by the Internal
Revenue Service or any other Governmental Body, which relate to any Pre-
Closing Tax Periods within thirty days of receipt of such notice.  The
Shareholders shall have the sole right to represent the interests of
the Company in any Tax audit or other Proceeding relating to any Pre-
Closing Tax Periods, to employ counsel of their choice at their
expense, and to settle any issues and to take any other actions in
connection with such Proceedings relating to such taxable periods;
provided, however, that the Shareholders shall use reasonable efforts
to inform Buyer of the status of any such Proceedings, shall provide
Buyer (at Buyer's cost and expense) with copies of any pleadings,
correspondence, and other documents as Buyer may reasonably request,
shall consult with Buyer prior to the settlement of any such
Proceedings and shall obtain the prior written consent of Buyer prior
to the settlement of any such Proceedings that would affect Buyer in
any taxable period ending after the Closing Date, which consent shall
not be unreasonably withheld.  Buyer shall have the right to control
all other Tax audits or Proceedings of the Surviving Corporation;
provided, however, that Buyer shall not settle any such Proceedings
without the consent of the Shareholders, which consent shall not be
unreasonably withheld, if the Shareholders would incur any additional
Taxes for (i) Pre-Closing Tax Periods or (ii) the portion of the
Straddle Tax Period ending on the Closing Date.  Buyer and the
Surviving Corporation shall execute and deliver to the Shareholders
such powers of attorney and other documents as may be necessary or
appropriate to give effect to the foregoing.
6.6.3     Buyer and the Shareholders agree, upon request, to use their
best reasonable efforts to obtain any ruling, certificate or other
document from any Governmental Body or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
     6.7  Disposition of Company Employee Benefit Plans.  As soon as is
practicable  after the Effective Time, Buyer shall review  the  Company
Employee  Benefit Plans to determine which such plans should remain  in
effect  as  plans  of  the Surviving Corporation and  which  should  be
replaced  with  Buyer's  Employee Benefit Plans,  with  a  view  toward
replacing  all  of  the  Company Employee Benefit  Plans  with  Buyer's
Employee   Benefit   Plans  except  where  cost  factors   or   unusual
circumstances dictate otherwise.

6.8  Termination of Certain Insurance Policies.  As soon as is
practicable after the Effective Time, Buyer and the Shareholders, if
applicable, shall terminate each of the term life (applicable to the
Shareholders) and key man (applicable to L.L. Whiteside) insurance
policies set forth on Schedule 3.16 (the "Policies").
                    Section 7:     Indemnification

     7.1  The Company's and Shareholders' Indemnification.  Subject  to
Sections  7.4  and 7.5 hereof, the Shareholders, with such indemnifying
parties  being  collectively referred to herein as the "Seller  Group",
jointly and severally (but with respect to Dan Lane, severally, but not
jointly), shall indemnify and hold harmless Buyer, Merger Sub  and  the
Surviving Corporation, and their respective successors and assigns, and
their    respective    directors,    officers,    employees,    agents,
representatives,   subsidiaries  and   affiliates   (each,   a   "Buyer
Indemnified  Party" and collectively, the "Buyer Indemnified  Parties")
from  and  against any and all actions, suits, claims, demands,  debts,
liabilities, obligations, losses, damages, costs and expenses including
reasonable  attorney's  fees  and  court  costs  (each  a  "Loss"   and
collectively,  "Losses"),  arising out of or  caused  by,  directly  or
indirectly, any of the following:

  7.1.1     Any breach of any warranty or representation made by any of
the Seller Group in or pursuant to this Agreement.

7.1.2     Any failure or refusal by any of the Seller Group to satisfy
or perform any covenant in this Agreement or any agreement or document
contemplated hereby required to be satisfied or performed by it.
7.1.3     Any Obligations (i) in respect of Taxes of the Company (or
any of its predecessors or successors) for any Pre-Closing Tax Periods
and the portion through the end of the Closing Date for any Straddle
Tax Period and (ii) for the unpaid Taxes of any Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local,
or foreign law) as a transferee or successor, by contract or otherwise;
provided, however, in the case of (i) and (ii), Shareholders shall only
be liable to the extent such Taxes exceed the amount, if any, reserved
for such Taxes on the Closing Balance Sheet or the Actual Closing Net
Assets statement.
   7.1.4     The Excluded Real Property or the transfer thereof from the
Company  (including any Tax related thereto to the  extent  such  Taxes
exceed  the  amount,  if any, reserved for such Taxes  on  the  Closing
Balance Sheet or the Actual Closing Net Assets Statement).

7.1.5     Any claims filed against the Company/Surviving Corporation by
or on behalf of former shareholders of the Company.
7.1.6     The Policies (as defined in Section 6.8 hereof).
 7.2  Indemnification by Buyer.  Subject to Sections 7.4 and 7.5 hereof,
Buyer  shall  indemnify, defend and hold harmless the Shareholders  and
their respective officers, managers, employees, agents, representatives
and  successors  and  assigns (each a "Seller Indemnified  Party"  and,
collectively, the "Seller Indemnified Parties"), from and  against  any
and  all  Losses, arising out of or caused by, directly or  indirectly,
any or all of the following:

7.2.1     Any breach of any warranty or representation made by Buyer or
Merger Sub in or pursuant to this Agreement.

7.2.2     Any failure or refusal by Buyer or Merger Sub to satisfy or
perform any covenant in this Agreement or any agreement to be executed
and delivered pursuant to this Agreement that is required to be
satisfied or performed by them.
     7.3   Indemnification  Procedures.  With respect  to  each  event,
occurrence  or  matter (an "Indemnification Matter") as  to  which  any
member  of  the  Buyer  Indemnified Parties or the  Seller  Indemnified
Parties,  as  the  case  may  be  (the  "Indemnitee")  is  entitled  to
indemnification from Buyer or the Seller Group, as the case may be (the
"Indemnitor") under Section 7.1 or 7.2:

 7.3.1     Within ten (10) days after the Indemnitee receives written
documents   underlying   the  Indemnification   Matter   or,   if   the
Indemnification  Matter does not involve a third  party  action,  suit,
claim  or  demand,  promptly  after the  Indemnitee  first  has  actual
knowledge  of  the  Indemnification Matter, the Indemnitee  shall  give
notice  to  the Indemnitor ("Indemnification Notice") of the nature  of
the  Indemnification  Matter  and the amount  demanded  or  claimed  in
connection  therewith,  together  with  copies  of  any  such   written
documents;  provided,  however, that failure  to  timely  provide  such
notice  shall not be a defense to the underlying indemnity claim except
to  the  extent  that delay in providing such notice  has  damaged  the
Indemnitor.

7.3.2     If a third party action, suit, claim or demand is involved,
then, upon receipt of the Indemnification Notice, the Indemnitor shall,
at its expense and through counsel of its choice, promptly assume and
have sole control over the litigation, defense or settlement (the
"Defense") of the Indemnification Matter, except that (i) the
Indemnitee may, at its option and expense and through counsel of its
choice, participate in (but not control) the Defense; (ii) if the
Indemnitee reasonably believes that the handling of the Defense by the
Indemnitor may have a material adverse effect on the Indemnitee, its
business or financial condition, or its relationship with any customer,
prospect, supplier, employee, salesman, consultant, agent or
representative, then the Indemnitee may, at its option and expense and
through counsel of its choice, assume control of the Defense, provided
that the Indemnitor shall be entitled to participate in the Defense at
its expense and through counsel of its choice; (iii) the Indemnitor
shall not consent to any Judgment, or agree to any settlement, without
the Indemnitee's prior written consent (which consent shall not be
unreasonably withheld) unless the result of such settlement is the
complete and final release of Indemnitee with respect to the matter in
dispute; and (iv) if the Indemnitor does not promptly assume control
over the Defense or, after doing so, does not continue to prosecute the
Defense in good faith, the Indemnitee may, at its option and through
counsel of its choice, but at the Indemnitor's expense, assume control
over the Defense.  In any event, the Indemnitor and the Indemnitee
shall fully cooperate with each other in connection with the Defense,
including by furnishing all available documentary or other evidence as
is reasonably requested by the other.
7.3.3     All amounts owed by the Indemnitor to the Indemnitee (if any)
shall be paid in full within ten (10) business days after a final
Judgment (without further right of appeal) determining the amount owed
is rendered, or after a final settlement or agreement as to the amount
owed is executed (the "Indemnification Amount").  If the
Indemnification Amount  owed by the Indemnitor to the Indemnitee is not
paid when due, interest shall accrue on such amount at the rate of ten
percent (10%) per annum compounded until paid in full.
     7.4  Limits on Indemnification.  Indemnitor's liability under this
Section 7 shall be limited as follows:

   7.4.1     Except with respect to Carve-Outs (as defined below), the
Buyer  Indemnified Parties, on the one hand, and the Seller Indemnified
Parties, on the other hand, shall not be entitled to be indemnified for
Losses under this Section 7 unless the aggregate of such Losses arising
hereunder  for  which  indemnification liability would,  but  for  this
proviso,  exist equals or exceeds $50,000; provided, however,  that  at
such  time  as the aggregate of such Losses equals or exceeds  $50,000,
the  Buyer  Indemnified Parties or Seller Indemnified Parties,  as  the
case  may  be,  shall be entitled to be indemnified  against  the  full
amount  of  such  Losses that have been incurred or  suffered  by  such
parties  (and  not  merely  the portion in  excess  of  $50,000).   For
purposes of this Agreement, a "Carve-Out" shall mean an Indemnification
Matter involving (a) recklessness, intentional misrepresentation, fraud
or  a  criminal matter, (b) title to the Assets of the Company  or  the
capital  stock  of the Company; (c) the failure of the Shareholders  to
deliver to Buyer at Closing shares of Company Common Stock representing
100%  of  the  issued  and outstanding capital stock  of  the  Company,
(d)  Taxes, (e) environmental matters and other Losses with respect  to
the  Excluded Real Property, (f) covenants or other obligations  to  be
performed  after  Closing (including losses related  to  the  insurance
policies listed on Schedule 3.16); or (g) the Policies.

7.4.2     Except with respect to Carve-Outs, (i) the maximum aggregate
liability that the Buyer Indemnified Parties or the Seller Indemnified
Parties, as applicable, may have with respect to claims for
indemnification under this Agreement will be an amount equal to the
Merger Consideration, as adjusted pursuant to Section 2.8 hereof, and
(ii) the maximum liability that Dan Lane shall have with respect to
claims for indemnification under this Agreement shall be equal to his
portion of Merger Consideration received pursuant to this Agreement, as
adjusted pursuant to Section 2.8 hereof.
7.4.3
  (a)  Subject to Section 7.4.3(b), Dan Lane shall be responsible for a
portion of each indemnification claim made by a Buyer Indemnified Party
equal to his Ownership Interest multiplied by the dollar amount of  the
applicable claim.

  (b)              Notwithstanding anything contained in this Section 7
to  the  contrary, with respect to a claim that (i) certain  shares  of
Company  Common  Stock  were  delivered  to  Buyer  without  good   and
marketable  title,  free  and  clear  of  any  Encumbrance  or  (ii)  a
Shareholder  has  breached a representation or warranty  made  by  such
Shareholder   pursuant   to  Section  3.24   hereof,   the   applicable
Shareholder(s) whose shares of Company Common Stock are the subject  of
the  claim or who breached the representation or warranty, as the  case
may  be,  shall be solely liable as an indemnitor with respect to  such
claim  (and  shall be responsible for the entire amount of such  claim)
and no other Shareholder shall have any obligation as an indemnitor  in
respect thereof.

     7.5  Setoff.

 7.5.1   Buyer's rights to indemnification (with respect to undisputed
Indemnification  Matters  or, if disputed  by  the  Shareholders,  such
Indemnification Matters resolved or settled (per the dispute resolution
provisions set forth in this Agreement) in favor of Buyer) pursuant  to
this Section 7 shall be satisfied by (i) first, its right to setoff any
sums for which a Buyer Indemnified Party is entitled to indemnification
under  this Section 7 against either (with such decision as to  (x)  or
(y)  below  being  in  the  discretion of the  applicable  Shareholder,
subject  to  the  last sentence of this Section 7.5.1) (x)  (a)  first,
amounts due under the Notes, and (b) next, payments of Deferred  Merger
Consideration contemplated by Section 2.9 hereof, or (y) in  connection
with   claims  made  by  a  Buyer  Indemnified  Party  for   which   an
Indemnification  Notice  is delivered on or  before  the  first  annual
anniversary  of  the Closing Date, the delivery by the Shareholders  to
Buyer  of a number of Closing Shares equal to the dollar value  of  the
unsatisfied  claim(s) or portion thereof divided by the Closing  Shares
Price;  and  (ii)  second, to the extent the rights contemplated  above
with  respect  to  the Notes, Deferred Merger Consideration  and  Buyer
Common  Shares are not sufficient or available to satisfy one  or  more
claims,  by  the  Shareholders making payment in immediately  available
funds.   Each Shareholder shall deliver a written notice (the "Election
Notice")  to Buyer specifying its election with respect to  (i)(x)  and
(i)(y)  above within five days of the date of the determination of  the
amount of Losses related thereto (either by reason of the Losses  being
undisputed  by  the passage of time contemplated herein or  the  Losses
being  resolved  by  the  parties).  If  the  Election  Notice  is  not
delivered  within  the time period specified in the previous  sentence,
the  Losses  related to such Indemnification Matter shall be  satisfied
first  as  contemplated in (i)(x) above and second as  contemplated  by
item (i)(y) above.

7.5.2     If any Indemnification Matters for which a Buyer Indemnified
Party is the Indemnitee are pending at a time when Buyer is required to
pay or deliver any such amounts due under the Notes or Deferred Merger
Consideration to the Indemnitor, then Buyer shall have the right, upon
notice to the Indemnitor, to withhold from such payment or delivery,
until final determination of such pending Indemnification Matters, the
total amount for which the Indemnitor may become liable as a result
thereof, as determined by Buyer reasonably and in good faith; provided,
however, that such disputed and withheld amounts shall be paid to a
mutually agreed upon escrow agent to be subject to an escrow agreement
acceptable to the Shareholders and Buyer.
7.5.3     The twelve (12) month prohibition on transfer of the Closing
Shares as contained in the Registration Rights Agreement is
incorporated herein by reference and shall be deemed extended hereunder
if any Indemnification Matters for which a Buyer Indemnified Party is
the Indemnittee are pending at the end of such twelve month period
until final determination of such pending Indemnification Matters, and
if applicable, satisfaction thereof; provided, however, that the
extension of the prohibition on transfer shall only apply to that
number of Closing Shares which the Indemnitor may become liable to
deliver as a result of such Indemnification Matters, as determined by
Buyer reasonably and in good faith.  Any transfer, sale, assignment,
pledge, encumbrance or other disposition of Closing Shares in violation
of the restriction contemplated in this Section 7.5.3 or in the
Registration Rights Agreement shall be null and void.
7.5.4     If it is necessary for the Shareholders to deliver Closing
Shares to Buyer pursuant to Section 7.5.1, each Shareholder shall,
within ten days of the Losses being undisputed by the passage of time
contemplated herein or the Losses being resolved by the parties, return
to Buyer any certificate representing such Closing Shares for
cancellation and Buyer, in exchange, will issue or cause to be issued
to such Shareholder a new certificate reflecting the appropriate number
of Closing Shares held by such Shareholder after the reduction
contemplated in Section 7.5.1 herein.  If any Shareholder does not
deliver to Buyer its certificate as contemplated in the preceding
sentence, (i) such certificate shall immediately be deemed cancelled
and Buyer shall mark its records to indicate that such certificate has
been cancelled and (ii) Buyer shall issue a new certificate to such
Shareholder in accordance with the previous sentence.  Each Shareholder
hereby gives the Secretary of Buyer an irrevocable power of attorney to
make such cancellations on Buyer's books on behalf of Buyer in
accordance with the foregoing.
 .6  Commercially Reasonable Efforts.  The Buyer shall use commercially
reasonable efforts (including exercising setoff rights contemplated  by
Section 7.5 hereof, if available) to obtain payments severally from the
Shareholders  based  on their respective Ownership  Interests  for  any
Indemnification Matter hereunder for a period of thirty (30) days prior
to  seeking payment with respect to such Indemnification Matter against
any  one  or more Shareholders on a joint and several basis;  provided,
however,   that  "commercially  reasonable  efforts"  (as  contemplated
hereby)  shall  not  require Buyer to exhaust all  of  its  rights  and
remedies  against  the  Shareholders  on  a  several  basis;  provided,
further,  that  nothing  in this Section 7.6 shall  be  interpreted  to
modify  or change the joint and several obligations of the Shareholders
under Section 7.

     Section 8:     Other Provisions

     8.1  Intentionally Omitted.

 8.2  Fees and Expenses.  Except with respect to indemnification claims
which  shall be governed by Section 7, Buyer and Merger Sub  shall  pay
all  of the fees and expenses incurred by them, and the Company and the
Shareholders  shall pay all of the fees and expenses  incurred  by  the
them,  in  negotiating  and  preparing this Agreement  (and  all  other
Contracts  and documents executed in connection herewith or  therewith)
and in consummating the transactions contemplated hereby.

  8.3  Notices.  Any notices, requests, demands or other communications
required   or  permitted  to  be  sent  hereunder  shall  be  delivered
personally or by facsimile, sent by overnight or international  courier
or mailed by registered or certified mail, return receipt requested, to
the  following addresses, and shall be deemed to have been received  on
the day of personal delivery or delivery by facsimile, one business day
after deposit with an overnight domestic courier or three business days
after deposit in the mail:

     If to Buyer or Merger Sub /       c/o Halifax Corporation
     Surviving Corporation:            5250 Cherokee Avenue
                                       Alexandria, Virginia 22312
                                       Attn: Joseph Sciacca, Chief
                                       Financial Officer
                                       Telefax:  (703) 658-2426

          With a copy to:              Blank Rome LLP
                                       One Logan Square
                                       Philadelphia, PA 19103
                                       Attn:  Barry H. Genkin, Esq.
                                       Telefax: (215) 832-5514

If to the Company or any Shareholder:  L.L. Whiteside
                                       2501 East Loop 820 N.
                                       Fort Worth, Texas 76118
                                       Telefax:  817-284-7216
                                       Charles A. Harper
                                       Dan Lane

          With a copy to:          Holland, Johns, Schwartz & Penny LLP
                                   306 West Seventh Street
                                   Suite 500
                                   Fort Worth, TX 76102-4982
                                   Attn:  Margaret E. Holland
                                   Telefax:  817-332-3140

 8.4  Survival.  All representations and warranties (and related rights
to  indemnification contained herein) made by any party hereto pursuant
to  this  Agreement or any Ancillary Document (as defined below)  shall
survive  the  date  of  this  Agreement,  the  Closing  Date  and   the
consummation  of  the Transactions for a period of twelve  (12)  months
from  the  Closing  Date  and in order to obtain  indemnification  with
respect  to  such  representations and warranties,  an  Indemnification
Notice  must  be  delivered  within  such  twelve  (12)  month  period;
provided, however, that there shall be no limitation on the survival of
the  representations  and warranties  (and the related  indemnification
obligations) that relate to Carve-Outs and indemnification rights shall
be   available   notwithstanding  the   date   of   delivery   of   any
Indemnification  Notice.   All statements of  fact  contained  in  this
Agreement  or  in  any  certificate, document or statement  (including,
without limitation, the Financial Statements) delivered pursuant hereto
or   in   connection   with  the  consummation  of   the   Transactions
(collectively,   the   "Ancillary   Documents")   shall    be    deemed
representations and warranties.

8.5  Reliance; Interpretation of Representations.  Notwithstanding any
right of Buyer and Merger Sub to fully investigate the affairs of the
Company and the Shareholders (and vice versa) and notwithstanding any
knowledge of facts determined or determinable by Buyer or Merger Sub
pursuant to such investigation or right of investigation (and vice
versa), Buyer and Merger Sub, on the one hand, and the Company and the
Shareholders, on the other hand, have the right to rely fully upon, and
have relied upon, the representations, warranties, covenants and
agreements contained in this Agreement or in any document delivered to
them or any representatives in connection with the transactions
contemplated by this Agreement, which representations and warranties
are bargained for assurances.  Each warranty, representation and
covenant contained in this Agreement is independent of all other
warranties, representations and covenants contained herein (whether or
not covering identical or related subject matter) and must be
independently and separately complied with and satisfied.
8.6  Entire Understanding.  This Agreement, together with the Exhibits
and Schedules hereto, state the entire understanding among the parties
with respect to the subject matter hereof, and supersede all prior oral
and written communications and agreements, and all contemporaneous oral
communications and agreements, with respect to the subject matter
hereof, including all confidentiality agreements and letters of intent
previously entered into among some or all of the parties hereto.  No
amendment or modification of this Agreement shall be effective unless
in writing and signed by the party against whom enforcement is sought.
8.7  Parties in Interest; Assignment.  This Agreement shall bind,
benefit, and be enforceable by and against Buyer, Merger Sub and the
Company and their respective successors and assigns, and the
Shareholders and their respective heirs, estates and personal
representatives.  No party shall in any manner assign any of its or his
rights or obligations under this Agreement without the express prior
written consent of the other parties.
8.8  Waivers.  Except as otherwise expressly provided herein, no waiver
with respect to this Agreement shall be enforceable unless in writing
and signed by the party against whom enforcement is sought.  Except as
otherwise expressly provided herein, no failure to exercise, delay in
exercising, or single or partial exercise of any right, power or remedy
by any party, and no course of dealing between or among any of the
parties, shall constitute a waiver of, or shall preclude any other or
further exercise of, any right, power or remedy.
8.9  Severability.  If any provision of this Agreement is construed to
be invalid, illegal or unenforceable, then the remaining provisions
hereof shall not be affected thereby and shall be enforceable without
regard thereto.
8.10 Counterparts; Facsimile.  This Agreement may be executed in any
number of counterparts, including by facsimile, each of which when so
executed and delivered shall be an original hereof, and it shall not be
necessary in making proof of this Agreement to produce or account for
more than one counterpart hereof.
8.11 Section Headings.  Section and subsection headings in this
Agreement are for convenience of reference only, do not constitute a
part of this Agreement, and shall not affect its interpretation.
8.12 References.  All words used in this Agreement shall be construed
to be of such number and gender as the context requires or permits.
8.13 Controlling Law.  THIS AGREEMENT IS MADE UNDER, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY
THEREIN, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
8.14 Arbitration; Jurisdiction and Process.
 8.14.1    The parties shall use their best efforts to amicably resolve
any  disputes, controversies or misunderstandings concerning the  terms
and provisions contained in this Agreement prior to seeking arbitration
pursuant  to  this  Section  8.14.  Should the  parties  be  unable  to
amicably   resolve   disputes,  controversies   and   misunderstandings
concerning this Agreement, other than claims for equitable remedies and
except as otherwise provided herein (including disputes concerning  the
Merger  Consideration  adjustment  and  Deferred  Merger  Consideration
contemplated by Sections 2.8 and 2.9 hereof, respectively), all claims,
demands,  disputes,  controversies,  differences  or  misunderstandings
between  the  parties arising out of, or by virtue of,  this  Agreement
shall be submitted to and determined by arbitration in accordance  with
this  Section  8.14.   With  respect to  any  matter  being  arbitrated
hereunder, an arbitrator shall be mutually agreed upon by Buyer and the
Shareholders.  If Buyer and the Shareholders are unable to  agree  upon
such  arbitrator, such arbitrator shall be selected by the  Independent
Accountants.   The matter shall be arbitrated in Wilmington,  Delaware,
in  accordance  with the rules of the American Arbitration  Association
applying  the laws of Delaware.  At any time before a decision  of  the
arbitrator  has been rendered, the parties may resolve the  dispute  by
settlement.  If the arbitrator resolves all disputes presented to it in
the manner proposed by one of the parties, the fees and expenses of the
arbitrator shall be paid for by the other party.  In all other  events,
the  fees and expenses of the arbitrator relating to the dispute  shall
be  shared in the same proportion that a given party's position, on the
one  hand, and the other disputing party's position, on the other hand,
initially presented to the arbitrator bears to the arbitrator's  award.
The  decision of the arbitrator shall (a) be binding and conclusive  on
all  parties and (b) not be appealable and shall include a finding  for
payment  of  the costs of such arbitration.  Judgment  of  a  court  of
competent  jurisdiction  may be entered  upon  the  award  and  may  be
enforced  as such in accordance with the provisions of the award.   The
parties  may obtain discovery in aid of the arbitration to the  fullest
extent  permitted under law.  All discovery disputes shall be  resolved
by  the  arbitrator.   This  agreement  to  arbitrate  is  specifically
enforceable by the parties to this Agreement.

8.14.2    Subject to Section 8.14.1 hereof and except as provided
otherwise herein (including disputes concerning the Merger
Consideration adjustment and Deferred Merger Consideration contemplated
by Sections 2.8 and 2.9 hereof, respectively), in any action between or
among any of the parties, whether arising out of this Agreement or
otherwise, (a) each of the parties irrevocably consents to the
exclusive jurisdiction and venue of the federal and state courts
located in the state of Delaware, (b) if any such action is commenced
in a state court, then, subject to applicable law, no party shall
object to the removal of such action to any federal court located in
the State of Delaware, (c) each of the parties irrevocably waives the
right to trial by jury, (d) each of the parties irrevocably consents to
service of process by first class certified mail, return receipt
requested, postage prepaid, to the address at which such party is to
receive notice in accordance with Section 8.3, and (e) the prevailing
parties shall be entitled to recover their reasonable attorneys' fees
and court costs from the other parties.
 8.15 No Third-Party Beneficiaries.  No provision of this Agreement is
intended  to  or  shall be construed to grant or confer  any  right  to
enforce this Agreement, or any remedy for breach of this Agreement,  to
or  upon  any  Person  other  than the parties  hereto,  including  any
customer, prospect, supplier, employee, contractor, salesman, agent  or
representative of the Company.

Neutral Construction.  In view of the fact that each of the parties
hereto have been represented by their own counsel and this Agreement
has been fully negotiated by all parties, the legal principle that
ambiguities in a documents are construed against the draftsperson of
that document shall not apply to this Agreement.       
     IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement effective as of the day and year first above
written.

                         HALIFAX CORPORATION



                         By: /s/ Charels L. McNew
                         Name: Charles L. McNew
                         Title: President & CEO


                         HALIFAX-ALPHANATIONAL ACQUISITION INC.



                         By: /s/ Charels L. McNew
                         Name: Charles L. McNew
                         Title: President


                         ALPHA NATIONAL TECHNOLOGY SERVICES, INC.


                         By:    /s/ Larry L. Whiteside
                         Name: L.L. Whiteside
                         Title: Chief Executive Officer


                         THE SHAREHOLDERS:


                         /s/  Larry L. Whiteside
                         L.L. Whiteside


                             /s/ Charles A. Harper
                         Charles A. Harper


                            /s/ Morris Horn
                         Morris Horn


                            /s/ Dan Lane
                         Daniel Lane


[Signature page to Agreement and Plan of Merger]
                             EXHIBIT "1A"

                             Defined Terms
"Accounts Receivable" means (a) any right to payment for goods sold,
leased or licensed or for services rendered, whether or not it has been
earned by performance, whether billed or unbilled, and whether or not
it is evidenced by any Contract; (b) any note receivable; or (c) any
other receivable or right to payment of any nature.

"Actual Closing Net Assets" shall have the meaning specified in Section
2.8.3 of the Agreement.

"Articles of Merger" shall have the meaning specified in Section 2.2 of
the Agreement.

"Asset" means any real, personal, mixed, tangible or intangible
property of any nature, including Cash Assets, prepayments, deposits,
escrows, Accounts Receivable, Tangible Property, Real Property,
Software, Contract Rights, Intangibles and goodwill, and claims, causes
of action and other legal rights and remedies.

"Buyer Accountant" means Grant Thornton, LLP, or such other independent
accounting firm of internationally recognized standing selected by
Buyer for purposes of Section 2.8 of the Agreement.

"Buyer Common Shares" means shares of common stock, $0.24 par value, of
Buyer.

"Buyer SEC Documents" shall have the meaning specified in Section 4.6
of the Agreement.

"Calculation Dispute Notice" shall have the meaning specified in
Section 2.8.4 of the Agreement.

"Cash Asset" means any cash on hand, cash in bank or other accounts,
readily marketable securities, and other cash-equivalent liquid assets
of any nature.

"Cash Payment" shall have the meaning specified in Section 2.6 of the
Agreement.

"Closing" shall have the meaning specified in Section 2.2 of the
Agreement.

"Closing Balance Sheet" shall have the meaning specified in Section
2.8.1 of the Agreement.

"Closing Date" shall have the meaning specified in Section 2.2 of the
Agreement.

"Closing Shares" means solely the Buyer Common Shares delivered to the
Shareholders at Closing as part of the Closing Date Merger
Consideration.

"Closing Shares Price" means the greater of (i) the market price of a
Buyer Common Share on the Closing Date, or (ii) the average market
price of a Buyer Common Share over the fifteen (15) trading days
immediately prior to the Closing Date.

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

"Company Common Stock" means shares of the common stock, $1.00 par
value, of the Company.

"Company Employee Benefit Plans" shall have the meaning specified in
Section 3.16.1 of the Agreement.

"Company Intangible" means all Software and other Intangibles owned,
marketed, licensed, supported, maintained,  used or under development
by the Company.

"Company Owned Intangible" shall have the meaning specified in Section
3.13.2.

"Consent" means any consent, approval, order or authorization of, or
any declaration, filing or registration with, or any application,
notice or report to, or any waiver by, or any other action (whether
similar or dissimilar to any of the foregoing) of, by or with, any
Person, which is necessary in order to take a specified action or
actions in a specified manner and/or to achieve a specified result.

"Contract" means any written or oral contract, agreement, instrument,
order, arrangement, commitment or understanding of any nature,
including sales orders, purchase orders, leases, subleases, data
processing agreements, maintenance agreements, license agreements,
sublicense agreements, loan agreements, promissory notes, security
agreements, pledge agreements, deeds, mortgages, guaranties,
indemnities, warranties, employment agreements, consulting agreements,
sales representative agreements, joint venture agreements, buy-sell
agreements, options or warrants.

"Contract Right" means any right, power or remedy of any nature under
any Contract, including rights to receive property or services or
otherwise derive benefits from the payment, satisfaction or performance
of another party's Obligations, rights to demand that another party
accept property or services or take any other actions, and rights to
pursue or exercise remedies or options.

"Deferred Comp Shareholders" shall have the meaning specified in
Section 2.9.1 of the Agreement.

"Deferred Merger Consideration" shall have the meaning specified in
Section 2.9 of the Agreement.

"Deferred Merger Consideration Accounts" shall have the meaning
specified in Section 2.9.1 of the Agreement.

"Deferred Merger Consideration Price" means the greater of (i) the
market price of a Buyer Common Share on the date of payment of the
Deferred Merger Consideration, or (ii) the average market price of a
Buyer Common Share over the fifteen (15) trading days immediately prior
to such date of payment.

"Earnout Dispute Notice" shall have the meaning specified in Section
2.9.3 of the Agreement.

"Earnout Net Revenues" shall have the meaning specified in Section
2.9.1 of the Agreement.

"Earnout Statements" shall have the meaning specified in Section 2.9.2
of the Agreement.

"Effective Time" shall have the meaning specified in Section 2.2 of the
Agreement.

"Employee Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), any "voluntary employees' beneficiary association"
within the meaning of Section 501(c)(9) of the Code, "welfare benefit
fund" within the meaning of Section 419 of the Code, or "qualified
asset account" within the meaning of Section 419A of the Code, and any
other plan, program, policy or arrangement for or regarding bonuses,
commissions, incentive compensation, severance, vacation, deferred
compensation, pensions, profit sharing, retirement, payroll savings,
stock options, stock purchases, stock awards, stock ownership, phantom
stock, stock appreciation rights, equity compensation, medical/dental
expense payment or reimbursement, disability income or protection, sick
pay, group insurance, self insurance, death benefits, employee welfare
or fringe benefits of any nature, including those benefiting retirees
or former employees.

"Encumbrance" means any lien, superlien, security interest, pledge,
right of first refusal, mortgage, easement, covenant, restriction,
reservation, conditional sale, prior assignment, or other encumbrance,
claim, burden or charge of any nature.

"Entity" means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any
company limited by shares, limited liability company or joint stock
company), firm, society or other enterprise, association, organization
or entity.

"Environmental Laws" means all applicable Laws (including consent
decrees and administrative orders) relating to the public health and
safety and protection of the environment, including those governing the
use, generation, handling, storage and disposal or cleanup of Hazardous
Substances, all as amended.

"ERISA Affiliate" means any entity, trade or business (whether or not
incorporated) that is part of the same controlled group under, common
control with, part of an affiliated service group, or part of another
arrangement that includes the Company or any ERISA Affiliate within the
meaning of Code Section 414(b), (c), (m) or (o).

"Estimated Closing Date Net Assets" shall have the meaning specified in
Section 2.8.1 of the Agreement.

"Excluded Real Property" means that certain Real Property of the
Company described as Lots 1R1, 2R, 5R1, and 6R, Block 6, Midway Place
Addition, City of Richland Hills, Tarrant County, Texas [note:  delete
lot sold], which shall be transferred (by dividend or otherwise out of
the Company) on or before Closing together with related debt or other
Obligations.

"Final Closing Net Assets" shall have the meaning specified in Section
2.8.7 of the Agreement.

 "Financial Statements" shall have the meaning specified in Section
3.6.2 of the Agreement.

"GAAP" means generally accepted accounting principles under current
United States accounting rules and regulations, consistently applied.

"General Release" shall have the meaning specified in Section 5.1.10 of
the Agreement.

"Governmental Body" means any (a) nation, principality, republic,
state, commonwealth, province, territory, county, municipality,
district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental
division, subdivision, department, agency, bureau, branch, office,
commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or
other tribunal); (d) multi-national organization or body; or (e)
individual, Entity or body exercising, or entitled to exercise, any
executive, legislative, judicial, administrative, regulatory, police,
military or taxing authority or power of any nature.

"Hazardous Substances" means any substance, waste, contaminant,
pollutant or material that has been determined by any United States
federal government authority, or any state or local government
authority having jurisdiction over any Real Property, to be capable of
posing a risk of injury or damage to health, safety, property or the
environment, including (a) all substances, wastes, contaminants,
pollutants and materials defined, designated or regulated as hazardous,
dangerous or toxic pursuant to any Law of any state in which any Real
Property is located or any United States Law, and (b) asbestos,
polychlorinated biphenyls ("PCB's"), petroleum, petroleum products and
urea formaldehyde.

"Halifax Securities" shall have the meaning specified in Section 3.24.1
of the Agreement.

"including" means including but not limited to.

"Independent Accountants" means a Neutral Accounting Firm other than
the Buyer Accountant.

"Indemnification Price" means the greater of (i) the market price of
the Buyer Common Shares on the date of payment of the applicable
indemnification claim, or (ii) the average market price of the Buyer
Common Shares over the fifteen (15) trading days immediately preceding
such date of payment.

"Insurance Policy" means any public liability, product liability,
general liability, comprehensive, property damage, vehicle, life,
hospital, medical, dental, disability, worker's compensation, key man,
fidelity bond, theft, forgery, errors and omissions, directors' and
officers' liability, or other insurance policy of any nature.

"Intangible" means any name, corporate name, fictitious name,
trademark, trademark application, service mark, service mark
application, trade name, brand name, product name, slogan, trade
secret, know-how, patent, patent application, copyright, copyright
application, design, logo, formula, invention, product right,
technology or other intangible asset of any nature, whether in use,
under development or design, or inactive.

"Judgment" means any order, writ, injunction, citation, award, decree
or other judgment of any nature of any foreign, federal, state or local
court, governmental body, administrative agency, regulatory authority
or arbitration tribunal.

"Key Employee(s)" shall mean Charles Harper, Morris Horn and L.L.
Whiteside.

"Key Employee Agreement(s)" shall have the meaning specified in Section
5.1.12 of the Agreement.

"to the knowledge of the Company and the Shareholders'" and similar
phrases means that none of the Company or the Shareholders has any
actual knowledge, implied knowledge or belief that the statement made
is incorrect.  For this purpose, "implied knowledge" means all
information available in the books, records and files of the Company
and all information that any of such persons should have known in the
course of operating and managing the business and affairs of the
Company.

"Latest Balance Sheet" shall have the meaning specified in Section
3.6.2 of the Agreement.

"Latest Balance Sheet Date" shall have the meaning specified in Section
3.6.2 of the Agreement.

"Law" means any provision of any foreign, federal, state or local law,
statute, ordinance, charter, constitution, treaty, code, rule,
regulation or guidelines, including common law (including those of self-
regulatory organizations such as the American Stock Exchange).

"Loss" or "Losses" shall have the meanings specified in Section 7.1 of
the Agreement.

"Material Adverse Effect" means any state of facts, change, event,
effect or occurrence that is or may be reasonably likely to be
materially adverse to the financial condition, results of operations,
prospects, properties, Assets or liabilities (including contingent
liabilities) of the Company.

 "Net Assets" means (a) the value of all assets on the Company's
balance sheet less (b) the value of all liabilities on the Company's
balance sheet, with such values in (a) and (b) to be determined in
accordance with GAAP.

"Net Revenues" shall mean revenues net of sales returns and allowances,
as determined in accordance with GAAP.

"Neutral Accounting Firm" means the Dallas, Texas office of BDO
Seidman, LLP, or if BDO Seidman, LLP is unwilling to perform as the
Neutral Accounting Firm, or at the relevant time does not qualify as an
independent accounting firm of nationally recognized standing that has
not rendered services to the Company or Buyer or any affiliate thereof
or the Shareholders, within 12 months prior to the date of the
Agreement, then the Neutral Accounting firm shall be an accounting firm
meeting the foregoing qualifications selected by an arbitrator selected
in accordance with the rules of the American Arbitration Association.

"Notes" shall have the meaning specified in Section 2.6 of the
Agreement.

"Obligation" means any debt, liability or obligation of any nature,
whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained,
unascertained, known, unknown or otherwise.

"Ownership Schedule" shall have the meaning specified in Section 2.6.1
of the Agreement.

"Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature, granted, issued,
approved or allowed by any foreign, federal, state or local
governmental body, administrative agency or regulatory authority.

"Person" means any individual, Entity or Governmental Body.

"Proceeding" means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing or other proceeding
of any nature.

"Real Property" means any real estate, land, building, condominium,
town house, structure or other real property of any nature, all shares
of stock or other ownership interests in cooperative or condominium
associations or other forms of ownership interest through which
interests in real estate may be held, all leasehold estates with
respect to any of the foregoing, and all appurtenant and ancillary
rights thereto, including easements, covenants, water rights, sewer
rights and utility rights.

"Registration Rights Agreement" shall have the meaning specified in
Section 5.2.5 of the Agreement.

"Reportable Transaction" shall mean any transaction listed in Treasury
Regulation Section 1.6011-4(b).

"Restrictive Covenant Agreement" shall have the meaning specified in
Section 5.1.14 of the Agreement.

"RII" shall have the meaning specified in Section 4.4 of the Agreement.

"SEC" means the United States Securities and Exchange Commission.

"Software" means any computer program, operating system, applications
system, firmware or software of any nature, whether operational, under
development or inactive including all object code, source code, comment
code, algorithms, menu structures or arrangements, icons, operational
instructions, scripts, commands, syntax, screen designs, reports,
designs, concepts, technical manuals, test scripts, user manuals and
other documentation therefore, whether in machine-readable form,
programming language or any other language or symbols, and whether
stored, encoded, recorded or written on disk, tape, film, memory
device, paper or other media of any nature and all data bases necessary
or appropriate to operate any such computer program, operating system,
applications system, firmware or software.

"Specified Contract" shall have the meaning specified in Section 3.14.1
of the Agreement.

"Tangible Property" means any furniture, fixtures, leasehold
improvements, vehicles, office equipment, computer equipment, other
equipment, machinery, tools, forms, supplies or other tangible personal
property of any nature.

"Tax" means (a) any foreign, federal, state or local income, earnings,
profits, gross receipts, franchise, capital stock, net worth, sales,
use, value added, bank, bank shares, mutual thrift, occupancy, general
property, real property, personal property, intangible property,
transfer, fuel, excise, payroll, withholding, unemployment
compensation, social security, retirement or other tax of any nature;
(b) any foreign, federal, state or local organization fee,
qualification fee, annual report fee, filing fee, occupation fee,
assessment, sewer rent or other fee or charge of any nature by a
Governmental Body; or (c) any deficiency, interest or penalty imposed
with respect to any of the foregoing.

"Tax Returns" shall have the meaning specified in Section 3.18.1 of the
Agreement.

"Transactions" shall have the meaning specified in the Preamble to the
Agreement.

"Transfer Tax Returns" means Tax Returns filed with respect to Transfer
Taxes.

"Transfer Taxes" means any transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest).

"Net Assets Statements" shall have the meaning specified in Section
2.8.3 of the Agreement.

EX-99.1

                                                           Exhibit 99.1


                   HALIFAX ANNOUNCES ACQUISITION OF
                      ENTERPRISE MAINTENANCE FIRM

        Acquisition of AlphaNational Expected to be Accretive;
           Will Strengthen Nationwide Service Delivery Base

ALEXANDRIA, VA - October 4, 2004 - Halifax Corporation (AMEX:HX) today
announced that it has acquired AlphaNational Technology Services, Inc.,
a nationwide hardware maintenance services company located in Fort
Worth, Texas.  Founded in 1992 and privately held, AlphaNational
provides high-availability maintenance services to a prestigious roster
of nationwide customers.

Halifax acquired all of the outstanding stock of AlphaNational for
approximately $1.9 million, excluding earnout arrangements, in which an
additional $150,000 in cash or Halifax common stock could be earned
over the next twelve months if certain agreed upon financial targets
are met.  The purchase price is comprised of 235,294 shares of Halifax
common stock, $200,000 cash, and $500,000 of notes payable, of which
$100,000 has a term of 90 days and $400,000 has a term of 18 months.
The interest rate on the notes is 6% per annum.  The purchase price is
also subject to possible adjustment resulting from AlphaNational
financial information to become available 45 days after closing.

Charles McNew, president and chief executive officer, of Halifax
stated, "We expect this acquisition to be immediately accretive to
earnings and expect that revenues for the second half of fiscal 2005
will increase by 10 to 12%.  The acquisition adds several new important
AlphaNational customers, expands our geographic base and increases the
breadth of our product serviceability."

He added, "We are pleased to welcome AlphaNational to the Halifax
family.  This represents another important step in positioning our
Company as a recognized leader in the enterprise maintenance solutions
marketplace.

"We are particularly pleased to add Larry Whiteside, president of
AlphaNational, to our executive management team.  A respected industry
veteran, Larry will have responsibility for certain key customer
relationships and major support functions."

McNew noted, "Halifax plans to continue on our recent path of growth,
both internally and externally.  We have recently announced major new
contracts and extensions, and we will continue to pursue meaningful new
opportunities, with the goal of enhancing long-term shareholder value."

Founded in 1967, Halifax Corporation is an enterprise maintenance
solutions company providing a wide range of technology services to
commercial and government customers throughout the United States.  The
Company's principal products are high availability hardware maintenance
services, technology deployment and integration services, and secure
network program services.  More information on Halifax can be found at
www.hxcorp.com.

Certain statements made by the Company which are not historical facts
may be considered forward-looking statements, including, without
limitation, statements as to trends, management's beliefs, views,
expectations and opinions, which are based upon a number of assumptions
concerning future conditions that ultimately may prove to be
inaccurate.  Such forward-looking statements are subject to risks and
uncertainties and may be affected by various factors that may cause
actual results to differ materially from those in the forward-looking
statements.  For further information that could affect the Company's
financial statements, please refer to the Company's reports filed with
the Securities and Exchange Commission.