DUNN COMPUTER CORP, SB-2/A, 1997-04-16

DUNN COMPUTER CORP
SB-2/A, 1997-04-16

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 1997
REGISTRATION STATEMENT NO. 333-19635

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

--------------------------

DUNN COMPUTER CORPORATION
(Name of small business issuer as specified in its charter)
--------------------------

<TABLE>
<S> <C> <C>
DELAWARE 54-1424654 5060
(State of Incorporation) (IRS Employer I.D. No.) (Primary Standard Industrial
Classification Code No.)
</TABLE>

1306 SQUIRE COURT
STERLING, VIRGINIA 20166
(703) 450-0400
(Address and Telephone Number of Principal Executive Offices
and Principal Place of Business)
------------------------------

THOMAS P. DUNNE, PRESIDENT
DUNN COMPUTER CORPORATION
1306 SQUIRE COURT
STERLING, VIRGINIA 20166
(703) 450-0400
(Name, address and telephone number of agent for service)
------------------------------

COPIES TO:

<TABLE>
<S> <C>
JAY M. KAPLOWITZ, ESQ. MICHAEL P. WEINER, ESQ.
ARTHUR S. MARCUS, ESQ. STARK & STARK, P.C.
GERSTEN SAVAGE KAPLOWITZ, 993 Lenox Drive
FREDERICKS & CURTIN, LLP Lawrenceville, New Jersey 08648
101 East 52nd Street (609) 896-9060
New York, New York 10022
(212) 752-9700
</TABLE>

--------------------------

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
--------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT BEING OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES BEING REGISTERED REGISTERED PER SECURITY OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock(2)............................. 1,150,000 $5.00 $5,750,000 $1,742.42
Underwriter's Warrants...................... 1 $.001 $10 $ (4)
Common Stock(3)............................. 100,000 $6.50 $650,000 $196.97
Total Registration Fee...................... $1,939.39
</TABLE>

(1) Pursuant to Rule 457, estimated solely for the purpose of calculating the
registration fee.

(2) Includes shares issuable upon exercise of the Underwriter's over-allotment
option being sold by certain Stockholders of the Company.

(3) Consists of Common Stock issuable upon the exercise of the Underwriter's
Warrants.

(4) Pursuant to Rule 457(g), no fee is paid for the registration of such
securities.
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law, among other things, and
subject to certain conditions, authorizes the Company to indemnify its officers
and directors against certain liabilities and expenses incurred by such persons
in connection with claims made by reason of their being such an officer or
director. The restated Certificate of Incorporation and By-laws of the Company
provide for indemnification of its officers and directors to the full extent
authorized by law.

Reference is made to the Underwriting Agreement, the proposed form of which
is filed as Exhibit 1.1, pursuant to which the Underwriter agrees to indemnify
the directors and certain officers of the Registrant and certain other persons
against certain civil liabilities.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is a statement of the estimated expenses to be paid by the
Company in connection with the issuance and distribution of the securities being
registered:

<TABLE>
<S> <C>
SEC Registration Fee........................................... $ 1,939.39
NASD Filing Fee................................................ 1,140.00
NASDAQ Filing Fee.............................................. 25,000.00
Printing Engraving Expenses.................................... 75,000.00
Legal Fees and Expenses........................................ 125,000.00
Accounting Fees and Expenses................................... 60,000.00
Blue Sky Fees and Expenses..................................... 17,500.00
Transfer Agent and Registrar Fees and Expenses................. 3,500.00
Non-accountable expense allowance.............................. 150,000.00
Miscellaneous.................................................. 15,920.61
----------
Total.................................................... $475,000.00
----------
----------
</TABLE>

- ------------------------

* estimate

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

During the past three years, the Company has sold securities to one person,
as described below. There was no underwriters involved in the transaction and
there was no underwriting discounts or commissions paid in connection therewith,
except as disclosed below. The issuances of these securities were considered to
be exempt from registration under Section 4(2) of the Act, as amended, and the
regulations promulgated thereunder. The purchaser of the securities in such
transaction represented his intention to acquire the securities for investment
only and not with a view to or for sale in connection with any distribution
thereof and appropriate legends were affixed to the certificates for the
securities issued in such transaction. The purchaser of the securities in such
transaction had adequate access to information about the Registrant.

In July, 1994, John Vazzana, an officer of the Company, acquired an
aggregate of 428.7 shares of the Virginia corporation's Common Stock for an
aggregate consideration of $100,000. These shares were exchanged for 1,200,000
shares of the Company's Common Stock pursuant to the Share Exchange Agreement.

II-1
<PAGE>
ITEM 27. EXHIBITS

<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement.

1.2* Form of Selected Dealers Agreement.

3.1* Articles of Incorporation of the Registrant.

3.2* Articles of Incorporation and amendments thereto of Dunn Computer
Corporation, a Virginia Corporation.

3.3* By-laws, as amended, of Dunn Computer Corporation, a Virginia Corporation.

4.1* Form of Financial Advisory and Investment Banking Agreement with
Underwriter.

4.2* Form of Underwriter's Warrants.

4.3* Form of Common Stock Certificate.

4.4 Form of Agreement Among Underwriters.

5.1* Opinion of Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP.

10.1* 1997 Stock Option Plan.
10.2* GSA Schedule.

10.3* Share Exchange Agreement dated January 6, 1997 by and between the Company
and Thomas P. Dunne, John Vazzana, and Claudia Dunne.

10.4* Agreement dated November 21, 1995 by and between GCH Systems, Inc. and the
Company regarding Lockheed.

10.5* Agreement dated March 25, 1997 by and between the Company and the Social
Security Administration.

10.6* Agreement dated June 12, 1995 by and between the Company and the Office of
the U.S. Courts.

10.7* Agreement dated September 29, 1994 by and between the Company and the
Health Care Finance Administration.

11.1* Statement Regarding Computation of Earnings Per Share.

21.1* List of Subsidiaries of Registrant.

23.1* Consent of Ernst & Young LLP, independent auditors.

23.2* Consent of Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP.
(incorporated into Exhibit 5.1)

23.3* Consent of Federal Computer Week.

27.0* Financial Data Schedule.

99.1 Employment Agreement by and between the Company and John D. Vazzana.

99.2 Employment Agreement by and between the Company and Thomas P. Dunne.
</TABLE>

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* Previously Filed.

II-2
<PAGE>
ITEM 28. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to any charter provision, by-law contract arrangements statute,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned small business issuer hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any Prospectus required by section 10(a)(3) of the
Act;

(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to suit information in the registration statement.

(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the Offering of
such securities at that time shall be deemed to be the initial bona fide
Offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the Offering.

(4) For determining any liability under the Act, treat the information
omitted from the form of Prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of Prospectus
filed by the small business issuer under Rule 424(b)(1), or (4) or 497(h),
under the Act as part of this registration statement as of the time the
Commission declared it effective.

(5) For determining any liability under the Act, treat each
post-effective amendment that contains a form of Prospectus as a new
registration statement at that time as the initial bona fide Offering of
those securities.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Act, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirement for
filing on Form SB-2 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York on April 16, 1997.

DUNN COMPUTER CORPORATION

<TABLE>
<S> <C> <C> <C> <C>
By: /s/ THOMAS P. DUNNE By: /s/ JOHN D. VAZZANA
-------------------------------------- --------------------------------------
Thomas P. Dunne John D. Vazzana
Chief Financial Officer/Principal
Accounting Officer
</TABLE>

Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------

/s/ THOMAS P. DUNNE Chairman, Chief Executive
- ------------------------------ Officer and President April 16, 1997
Thomas P. Dunne

/s/ JOHN D. VAZZANA Executive Vice President,
- ------------------------------ Chief Financial Officer, April 16, 1997
John D. Vazzana and Director

* Vice President and Director
- ------------------------------ April 16, 1997
Claudia N. Dunne

* Director
- ------------------------------
VADM E. A. Burkhalter, Jr., April 16, 1997
USN

Director
- ------------------------------ April , 1997
Daniel Sinnot

<TABLE>
<S> <C> <C>
*By: /s/ THOMAS P. DUNNE
--------------------------------------
Thomas P. Dunne
Attorney-in-Fact
</TABLE>

II-4
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS PAGE NO.
- ------ -----------
<C> <S> <C>
1.1* Form of Underwriting Agreement............................................

1.2* Form of Selected Dealers Agreement........................................

3.1* Articles of Incorporation of the Registrant...............................

3.2* Articles of Incorporation and amendments thereto of Dunn Computer
Corporation, a Virginia Corporation.....................................

3.3* By-laws, as amended, of Dunn Computer Corporation, a Virginia
Corporation.............................................................

4.1* Form of Financial Advisory and Investment Banking Agreement with
Underwriter.............................................................

4.2* Form of Underwriter's Warrants............................................

4.3* Form of Common Stock Certificate..........................................

4.4 Form of Agreement Among Underwriters......................................

5.1* Opinion of Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP...........

10.1* 1997 Stock Option Plan....................................................
10.2* GSA Schedule..............................................................

10.3* Share Exchange Agreement dated January 6, 1997 by and between the Company
and Thomas P. Dunne, John Vazzana, and Claudia Dunne....................

10.4* Agreement dated November 21, 1995 by and between GCH Systems, Inc. and the
Company regarding Lockheed..............................................

10.5* Agreement dated March 25, 1997 by and between the Company and the Social
Security Administration.................................................

10.6* Agreement dated June 12, 1995 by and between the Company and the Office of
the U.S. Courts.........................................................

10.7* Agreement dated September 29, 1994 by and between the Company and the
Health Care Finance Administration......................................

11.1* Statement Regarding Computation of Earnings Per Share.....................

21.1* List of Subsidiaries of Registrant........................................

23.1* Consent of Ernst & Young LLP, independent auditors........................

23.2* Consent of Gersten, Savage, Kaplowitz, Fredericks & Curtin, LLP.
(incorporated into Exhibit 5.1).........................................

23.3* Consent of Federal Computer Week..........................................

27.0* Financial Data Schedule...................................................

99.1 Employment Agreement by and between the Company and John D. Vazzana.......

99.2 Employment Agreement by and between the Company and Thomas P. Dunne.......
</TABLE>

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* Previously Filed.

<PAGE>

Exhibit 4.1

1,150,000 Shares
DUNN COMPUTER CORPORATION
Common Stock

AGREEMENT AMONG UNDERWRITERS

April __, 1997

Network 1 Financial Securities, Inc.
The Galleria
Building 2
2 Bridge Avenue
Red Bank, New Jersey 07701-1106

Dear Sirs:

1. UNDERWRITING AGREEMENT. Dunn Computer Corporation (the "Company")
proposes to enter into an underwriting agreement substantially in the form
attached hereto as Exhibit A (the "Underwriting Agreement"), with you as
representative (the "Representative") of the several Underwriters (collectively,
the "Underwriters") providing for the purchase by the Underwriters from the
Company of an aggregate of 1,000,000 shares (such shares being referred to
collectively as the "Firm Shares") of the Company's Common Stock, $0.001 par
value per share (the "Common Stock").

The Underwriting Agreement also provides for the granting of an option by
the Selling Stockholders to the Underwriters, on the terms and conditions set
forth therein, to purchase up to an aggregate of 150,000 additional shares of
the Common Stock (the "Option Shares") from them for the purpose of covering
over-allotments in connection with the sale of the Firm Shares. The Firm Shares
and any Option Shares purchased pursuant to the Underwriting Agreement are
herein collectively referred to as the "Shares."

This is to confirm that we agree to purchase, in accordance with the terms
of the Underwriting Agreement, the amount of the Firm Shares set forth opposite
our name in Schedule I, plus such amount of Shares, if any, that we may become
obligated to purchase pursuant to Section 4 hereof, as well as such amount of
the Option Shares, if any, which we may become obligated to purchase by reason
of the notice referred to in Section 1.2.2 of the Underwriting Agreement
(collectively, "our Shares").

Our commitment to purchase our Shares will not result in a violation of the
financial responsibility requirements of Rule 15c3-1 under the Securities
Exchange Act of 1934 (the "Exchange Act"), the rules of the National Association
of Securities Dealers, Inc. (the "NASD"), if we are a member, or the rules of
any securities exchange to which we belong.

<PAGE>

2. REGISTRATION STATEMENT AND PROSPECTUS. We have heretofore received
and examined a copy of the registration statement on Form SB-2, as amended to
the date hereof (exclusive of exhibits) (the "Registration Statement"), and the
related prospectus in respect of the Shares, as filed with the Securities and
Exchange Commission (the "Commission"). The information therein is correct and
complete and is not misleading insofar as it relates to us, and we consent to
being named as an Underwriter therein. We confirm that, to the extent requested
by the Representative, we have furnished a copy of any previous preliminary
prospectus, and we confirm that we have delivered, and we agree that we shall
deliver, all preliminary and final prospectuses required for compliance with the
provisions of Rule 15c2-8 under the Exchange Act.

We authorize you in your discretion and on our behalf, with the advice of
counsel to the Underwriters, to approve any proposed amendment to the
Registration Statement and the prospectus in respect of the Shares to be filed
pursuant to Rule 424(b) of the Commission's General Rules and Regulations and to
approve or object to any further amendments to the Registration Statement or
amendments or supplements to the prospectus.

3. AUTHORITY OF THE REPRESENTATIVE GENERALLY. We authorize you, acting
as our representative, to execute and deliver on our behalf the Underwriting
Agreement and to agree to any variation of its terms (except as to the amount of
our Shares) which, in your judgment, is not a material variation and to
determine the initial public offering price and the Underwriters' gross spread
for the Shares. We also authorize you to exercise all the authority and
discretion vested in the Underwriters or in you by the provisions of the
Underwriting Agreement, including the determination of whether and to what
extent to purchase the Option Shares on behalf of the Underwriters, and to take
all such action as you may believe desirable to carry out the provisions of the
Underwriting Agreement and of this Agreement; PROVIDED, HOWEVER, that, except
with the consent of Underwriters who shall have agreed to purchase in the
aggregate 50% or more of the Shares, no extension of the time by which the
Registration Statement is to become effective as provided in Section 4.1.1 of
the Underwriting Agreement shall be for a period in excess of three business
days. We authorize you to take such action as you, in your discretion, may deem
necessary or desirable to effect the sale and distribution of the Shares,
including the right to determine the terms of any proposed offering, the
concession to Selected Dealers (as hereinafter defined) and the reallowance, if
any, to other dealers and the right to make the judgment provided for in Section
10.2 of the Underwriting Agreement.

We agree that public advertisement of the offering shall be made by you on
behalf of the Underwriters on such date as you

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<PAGE>

shall determine. We have not advertised the offering and will not do so until
after such date. We understand that any advertisement we may then make will be
on our own responsibility and at our own expense.

We agree that we shall not, without your consent, sell any Shares to an
account over which we exercise discretionary authority.

4. AUTHORITY OF THE REPRESENTATIVE AS TO DEFAULTING UNDERWRITERS. Until
the termination of this Agreement, we authorize the Representative to arrange
for the purchase by other persons, who may include any of the Underwriters, of
any Shares not taken up by any defaulting Underwriter. In the event that such
arrangements are made, the respective amounts of the Shares to be purchased by
the nondefaulting Underwriters and by such other person or persons, if any,
shall be taken as the basis for all rights and obligations hereunder, but this
shall not in any way affect the liability of any defaulting Underwriter to the
other Underwriters for damages resulting from its default, nor shall any such
default relieve any other Underwriter of any of its obligations hereunder or
under the Underwriting Agreement to purchase the Shares agreed to be purchased
by it or them (a) thereunder or (b) under this Agreement.

In the event of default by one or more Underwriters in respect of their
obligations (a) under the Underwriting Agreement to purchase the Shares agreed
to be purchased by it or them thereunder or (b) under this Agreement to take up
and pay for any Shares purchased, or to deliver any Shares sold or overalloted,
by you for the respective accounts of the Underwriters pursuant to Section 9
hereof, or to bear their proportion of underwriting expenses or liabilities
pursuant to Sections 11, 13 and 14 hereof, and to the extent that arrangements
shall not have been made by you for any persons to assume the obligations of
such defaulting Underwriter or Underwriters, we agree to assume our
proportionate share of the obligations of each defaulting Underwriter (subject
in the case of clause (a) above to the limitations contained in Section 5 of the
Underwriting Agreement) without relieving any such defaulting Underwriter of its
liability therefor.

5. OFFERING OF SHARES. We understand that you will notify us when the
initial public offering of the Shares is to be made and of the initial public
offering price. We hereby authorize you in your discretion after the initial
public offering to change the public offering price, the concession to Selected
Dealers and the reallowance to other dealers (the offering price at any time in
effect being hereinafter referred to as the "public offering price"). We agree
that any of the Shares released to us for public offering and not reserved by
you for sale to dealers to be selected by you (including any Underwriter)

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<PAGE>

(the "Selected Dealers") and retail purchasers shall be promptly reoffered at
the public offering price, and that we shall not allow any discount therefrom,
except as otherwise provided herein.

We authorize you to reserve and offer for sale to retail purchasers and to
Selected Dealers such of our Shares as you may determine. Any such offering to
Selected Dealers may be made pursuant to a Selected Dealer Agreement
substantially in the form attached hereto as Exhibit B, or otherwise as you may
determine.

We authorize you to make purchases and sales of the Shares from or to any
Selected Dealers or Underwriters at the public offering price, less all or any
part of the concession. With your consent, any Underwriter may make purchases
or sales of the Shares from or to any Selected Dealers or Underwriter at the
public offering price, less all or any part of the concession to Selected
Dealers. The concession to Selected Dealers and reallowance to other dealers
may be allowed only as consideration for services rendered in distribution to
dealers who are actually engaged in the investment banking or securities
business, who execute the written agreement prescribed by Rule 2740(c) of the
NASD Conduct Rules and if any such dealer is a foreign dealer and not a member
of NASD, such Selected Dealer also has agreed to comply with the NASD's
interpretation with respect to free-riding and withholding, to comply with the
provisions of Rules 2730, 2740, 2420 and 2750 of the NASD Conduct Rules.

We understand that you shall notify each Underwriter promptly upon the
release of the Shares for public offering as to the amount of Shares reserved
for sale to Selected Dealers and retail purchasers. Shares not so reserved may
be sold by each Underwriter for its own account, except that from time to time
you may, in your discretion, add to the Shares reserved for sale to Selected
Dealers and retail purchasers any Shares retained by an Underwriter remaining
unsold. We agree, upon request, to notify you from time to time of the amount
of Shares retained by us remaining unsold. If all the Shares reserved for
offering to Selected Dealers and retail purchasers are not promptly sold by you,
any Underwriter may from time to time, with your consent, obtain a release of
all or any Shares of such Underwriter then remaining unsold, and Shares so
released shall thereafter be deemed not to have been reserved. Shares of any
Underwriter so reserved that remain unsold or, if sold, have not been paid for
at any time prior to the termination of this Agreement may, in your discretion
or upon the request of such Underwriter, be delivered to such Underwriter for
carrying purposes only, but such Shares shall remain subject to disposition by
you until this Agreement is terminated and except that, if the aggregate amount
of Shares so reserved upon termination of this Agreement does not exceed 10% of
the aggregate amount of Shares, you may, in your discretion, sell for the
accounts of the several Underwriters any

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<PAGE>

such Shares so reserved, at such prices, on such terms and in such manner as you
may determine.

We represent that in connection with the offering we have complied, and
agree that we will comply, with the provisions of Rule 10b-6 under the Exchange
Act with regard, among other things, to trading by Underwriters.

6. COMPENSATION TO REPRESENTATIVES. As compensation for your service as
Representatives, we agree to pay to you, and authorize you to charge our account
with, an amount equal to $_______ per Share for each of our Shares.

7. PAYMENT AND DELIVERY. At or before _____ A.M. New York City time, on
the Closing Date (as defined in the Underwriting Agreement), we agree to deliver
to you, at Network 1 Financial Securities, Inc., The Galleria, Building 2, 2
Bridge Avenue, Red Bank, New Jersey 07701-1106, a certified or official bank
check payable in New York Clearing House (next day) funds to the order of
Network 1 Financial Securities, Inc., in an amount equal to the initial public
offering price, less the concession to Selected Dealers, in respect of either
(i) that portion of our Shares which has been retained by or released to us for
direct sale or (ii) the Shares to be purchased by us, as you shall advise. We
authorize you to make payment for our Shares against delivery to you for our
account.

We authorize you to change the Closing Date (as defined in the Underwriting
Agreement) or any other date provided for in the Underwriting Agreement, except
as provided above with respect to the effective date of the Registration
Statement; and we authorize you to exercise on our behalf any right of
cancellation or termination of the Underwriting Agreement, as you in your
discretion may determine.

We authorize you to hold and deliver against payment any of our Shares that
have been sold or reserved for sale to Selected Dealers or retail purchasers.
Any of our Shares not sold or reserved by you as aforesaid shall be available
for delivery to us at your office as soon as practicable after such Shares have
been delivered to you.

Upon the termination of this Agreement, or prior thereto at your
discretion, you shall deliver to us any of our Shares reserved by you for sale
to Selected Dealers or retail purchasers but not sold and paid for, against
payment by us of an amount equal to the initial public offering price of such
Shares, less the concession to Selected Dealers in respect thereof.

Notwithstanding the foregoing provisions of this Section 7, if transactions
in the Shares can be settled through facilities of The Depository Trust Company,
payment for and delivery of our

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<PAGE>

Shares shall be made through such facilities, if we are a member, unless we have
otherwise notified you within two days after the date hereof, or, if we are not
a member, settlement may be made through a correspondent who is a member
pursuant to instructions we may send to you on or before the second business day
preceding the Closing Date.

8. AUTHORITY TO BORROW. We authorize you (to the extent permitted by
law) to arrange loans for our account and to execute and deliver any notes or
other instruments in connection therewith, and to pledge as security therefor
all or any part of our Shares or of any Shares purchased for the accounts of the
several Underwriters pursuant to Section 9 hereof, as you may deem necessary or
advisable to carry out the purchase, carrying and distribution of the Shares,
and to advance your own funds, charging current interest rates.

9. OVER-ALLOTMENT; STABILIZATION. We authorize you, for the account of
each Underwriter, prior to the termination of this Agreement, and for such
longer period as may be necessary to cover any short position incurred for the
accounts of the several Underwriters pursuant to this Agreement, (a) to
overallot in arranging for sales of Shares to Selected Dealers and others and,
if necessary, to purchase Shares at such prices as you may determine for the
purpose of covering such over-allotments, and (b) for the purpose of stabilizing
the market in the Shares, to make purchases and sales of Shares, on the open
market or otherwise, for long or short account, on a when-issued basis or
otherwise, at such prices, in such amounts and in such manner as you may
determine; PROVIDED, HOWEVER, that at no time shall our net commitment, either
for long or short account, under this Section 9 exceed 15% of the aggregate
amount of our Shares (our net commitment in the case of short account being
computed on the assumption that all of the Option Shares are acquired). Such
purchases, sales and over-allotments shall be made for the respective accounts
of the several Underwriters as nearly as practicable in proportion to their
respective underwriting obligations. We agree to take upon demand at cost any
Shares so purchased for our account and deliver on demand any Shares so sold or
over-allotted for our account. We authorize you to sell for the account of the
Underwriters any Shares purchased pursuant to this Section 9, upon such terms as
you may deem advisable, and any Underwriter, including yourself, may purchase
such Shares. You are authorized to charge the respective accounts of the
Underwriters with broker's commissions or dealer's markups on purchases and
sales effected by you. We agree to transmit to you for filing with the
Commission any reports required to be made by us pursuant to the Exchange Act as
a result of any transactions in connection with the offering of the Shares.

If pursuant to the provisions of the preceding paragraph and prior to the
termination of this Agreement (or prior to such

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<PAGE>

earlier date as you may have determined) you purchase or contract to purchase
for the account of any Underwriter in the open market or otherwise any Shares
that were retained by, or released to, us for direct sale, or any Shares that
may have been issued in exchange for such Shares, we authorize you either to
charge our account with an amount equal to the concession to Selected Dealers
with respect thereto, which amount shall be credited against the cost of such
Shares, or to require us to repurchase such Shares at a price equal to the total
cost of such purchase, including accrued interest, transfer taxes and broker's
commissions or dealer's mark-up, if any. In lieu of such action you may, in
your discretion, sell for our account the Shares so purchased and debit or
credit our account for the loss or profit resulting from such sale.

We authorize you, in your discretion, to exercise (wholly or partially) or
terminate the option to purchase the Option Shares referred to in Section 1.2 of
the Underwriting Agreement and to take all other action you deem necessary or
desirable with respect thereto.

10. OPEN-MARKET TRANSACTIONS. We agree that, except as otherwise provided
in the Underwriting Agreement or the Selected Dealer Agreement or herein, until
the termination of this Agreement or until you notify us that we are released
from this restriction, we will not without your consent buy, sell, deal or trade
in the Shares (or, if requested by you by telex or otherwise, any other
securities of the Company) for our own account or for the accounts of customers
except on unsolicited brokerage orders therefor.

11. ALLOCATION AND PAYMENT OF EXPENSES. We understand that all expenses
of a general nature incurred by you in connection with the purchase, carrying,
marketing and sale of the Shares shall be borne by the Underwriters in
proportion to their respective underwriting obligations. We authorize you to
charge our account with our share of the aforesaid expenses, based on our
proportionate underwriting obligation (the ratio which the amount of Firm Shares
set forth opposite our name in Schedule I to the Underwriting Agreement bears to
the aggregate amount of Firm Shares referred to in Section 1 hereof being herein
called "our proportionate underwriting obligation"). All determinations
hereunder of our proportionate underwriting obligation shall be made by
reference to the respective underwriting obligations set forth in said Schedule
I, unless the context indicates otherwise.

As promptly as possible after the termination of this Agreement, the
accounts arising pursuant hereto shall be settled and paid. Your ascertainment
of all expenses and the apportionment thereof shall be conclusive. You may at
any time make distribution of any part or all of credit balances or call for
payment of any part or all of debit balances and call or

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<PAGE>

advance deposits of funds with which to satisfy our obligations hereunder. Any
of our funds in your hands may be commingled with your general funds and shall
not bear interest for the period held by you. Notwithstanding any settlement or
settlements hereunder, we will remain liable, in proportion to our underwriting
obligation, for all expenses and liabilities which may be incurred by or for the
accounts of the Underwriters, including any of the expenses and liabilities
referred to in Section 13 or Section 14 hereof, which shall be determined as
provided in this Section 11.

12. TERMINATION. Unless this Agreement or any provision hereof is earlier
terminated by you and except for provisions herein that contemplate obligations
surviving the termination hereof, this Agreement shall terminate at the close of
business on the 30th day after the date hereof, but in your discretion may be
extended by you for a further period or periods not exceeding 30 days in the
aggregate; PROVIDED, HOWEVER, that the provisions of Sections 11, 13, 14, 17 and
18 hereof shall survive the termination of this Agreement.

13. LIABILITIES OF REPRESENTATIVES AND UNDERWRITERS. You shall not be
under any liability whatsoever to any other Underwriter nor under any liability
in respect of any matters connected herewith or action taken by you pursuant
hereto, except for the obligations expressly assumed by you in this Agreement.
Nothing herein contained shall constitute the several Underwriters an
association or partners with you or with each other, or, except as herein
expressly provided, render any Underwriter liable for the obligations of any
other Underwriter. The rights, obligations and liabilities of each of the
Underwriters are several, in accordance with their respective obligations, and
not joint. Notwithstanding any settlement of accounts under this Agreement, we
agree to pay our share, in accordance with our proportionate underwriting
obligation, of the amount of any claim, demand or liability which may be
asserted against and discharged by the Underwriters, or any of them, based on
the claim that the Underwriters constitute an association, unincorporated
business or other entity, and also to pay, in such proportion, our expenses
approved by you incurred by the Underwriters, or any of them, in contesting any
such claim, demand or liability.

14. INDEMNIFICATION AND FUTURE CLAIMS.

(a) We agree to indemnify and hold harmless you and each other
Underwriter, and each person who controls you and any such other Underwriter
within the meaning of Section 15 of the Securities Act of 1933, as amended, and
to reimburse your and their expenses, to the extent and upon the terms that you
agree to indemnify and hold harmless the Company and the Selling

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<PAGE>

Shareholders and to reimburse their expenses as set forth in Section 4.10.2 of
the Underwriting Agreement.

(b) In the event that at any time any claim or claims is or are
asserted against you involving the Underwriters generally, relating to the
Registration Statement or any preliminary prospectus or the final prospectus, as
from time to time amended or supplemented, the public offering of the Shares or
any of the transactions contemplated by this Agreement, we authorize you to make
such investigation, to retain such counsel and to take such other action as you
deem necessary or desirable under the circumstances, including settlement of any
such claim or claims if such course of action is recommended by counsel retained
by you. We agree to pay to you, on request, based upon our proportionate
underwriting obligation, all expenses incurred by you (including, but not
limited to, disbursements and fees of counsel so retained) in investigating and
defending against such claim or claims and, in such proportion, any liability
incurred by you in respect of such claim or claims, whether such liability is
the result of a judgment or any such settlement.

15. TITLE TO SHARES. The Shares respectively purchased by, or on behalf
of, the Underwriters shall remain the respective property of such Underwriters
until sold, and title to any such Shares shall not in any event pass to you by
virtue of any of the provisions of this Agreement.

16. BLUE SKY MATTERS. It is understood that you assume no responsibility
with respect to the right of any Underwriter or other person to offer or sell
any of the Shares in any jurisdiction under the securities laws of which it is
believed the Shares may be sold. We authorize you to file a Further State
Notice with the Department of State of the State of New York, if required.

17. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except that body of law
relating to choice of laws.

18. MISCELLANEOUS. Any notice from you to us shall be deemed to have been
duly given if mailed, telephoned or telegraphed to us at the address set forth
below. Any notice from us to you shall be deemed to have been duly given if
mailed, telephoned or telegraphed to you, at The Galleria, Building 2,
2 Bridge Avenue, Red Bank, New Jersey 07701-1106, Attention:
_______________________.

We represent that we are actually engaged in the investment banking or
securities business and that we are a member in good standing of the NASD.

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<PAGE>

In connection with any purchase or sale of any of the Shares wherein a
selling concession, discount or other allowance is received or granted, each
Underwriter (including the Representatives) agrees to comply with the provisions
of Rule 2740 of the NASD Conduct Rules.

Please confirm that the foregoing correctly states the understanding
between us by signing and returning to us a counterpart hereof.

Very truly yours,

By:
___________________________________
(Title)

___________________________________
(Address)

Attn:______________________________

Confirmed as of the date first above written:

NETWORK 1 FINANCIAL SECURITIES, INC.

By: __________________________________
(Title)

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<PAGE>

EXHIBIT A

UNDERWRITING AGREEMENT

-11-

<PAGE>

EXHIBIT B

SELECTED DEALER AGREEMENT

-12-

<PAGE>

SCHEDULE I

SHARES TO BE PURCHASED

-13-

<PAGE>

Exhibit 99.1

DUNN COMPUTER CORPORATION

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT made as of this ___ day of _______, 1997 by and
between DUNN COMPUTER CORPORATION, a Delaware corporation, having an office at
1306 Squire Court, Sterling, Virginia 20166 (hereinafter referred to as
"Employer") and JOHN D. VAZZANA, an individual residing at 39470 Charlestown
Pike, Hamilton, Virginia 20158 (hereinafter referred to as "Employee");

W I T N E S S E T H:

WHEREAS, Employer employs, and desires to continue to employ, Employee
as Executive Vice President and Chief Financial Officer of Employer; and

WHEREAS, Employee is willing to continue to be employed as the
Executive Vice President and Chief Executive Officer in the manner provided for
herein, and to perform the duties of the Executive Vice President and Chief
Financial Officer of Employer upon the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:

1. EMPLOYMENT OF EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER. Employer hereby employs Employee as Executive Vice President and Chief
Financial Officer.

2. TERM.

a. Subject to Section 10 below and further to Section 2(b)
below, the term of this Agreement shall commence on the effective date of the
Company's Registration Statement (the "Commencement Date") and expire three
years from such date. Each 12 month period from the Commencement Date forward
during the term hereof shall be referred to as an "Annual Period." During the
term hereof, Employee shall devote substantially all of his business time and
efforts to Employer and its subsidiaries and affiliates.

b. Subject to Section 10 below, unless the Board of Directors
of the Company (the "Board") of Employer shall determine to the contrary and
shall so notify Employee in writing on or before the end of any Annual Period or
unless the Employee notifies Employer in writing on or before the end of any
Annual Period of his desire not to renew this Agreement, then at the end of each
Annual Period, the term of this Agreement shall be automatically extended for
one (1) additional Annual Period to be added at the end of the then current term
of this Agreement.

<PAGE>

3. DUTIES. The Employee shall perform those functions generally
performed by persons of such title and position, shall attend all meetings of
the stockholders and the Board, shall perform any and all related duties and
shall have any and all powers as may be prescribed by resolution of the Board,
and shall be available to confer and consult with and advise the officers and
directors of Employer at such times that may be required by Employer. Employee
shall report directly and solely to the Board.

4. COMPENSATION.

a. (i) Employee shall be paid a minimum of $240,000 for each
Annual Period thereafter. Employee shall be paid periodically in accordance
with the policies of the Employer during the term of this Agreement, but not
less than monthly.

(ii) Employee is eligible for an annual bonus, if any, which
will be determined and paid in accordance with policies set from time to time by
the Board. The annual bonus which the Employee is eligible for may not exceed
(a) five percent of the Employer's pre-tax income for the Company's preceding
fiscal year; or (b) $250,000.

b. Employer shall include Employee in its health insurance
program available to Employer's executive officers and shall pay 100% of the
premiums for such program.

c. Employee shall have the right to participate in any other
employee benefit plans established by Employer.

d. Employee shall be entitled to a car allowance whereby the
Employer will pay the Employee $1,000 per month to offset Employee's related
costs, which sums shall be payable quarterly.

5. BOARD OF DIRECTORS. Employer agrees that so long as this
Agreement is in effect, Employee will be nominated to the Board as part of
management's slate of Directors.

6. EXPENSES. Employee shall be reimbursed for all of his actual
out-of-pocket expenses incurred in the performance of his duties hereunder,
provided such expenses are acceptable to Employer, which approval shall not be
unreasonably withheld, for business related travel and entertainment expenses,
and that Employee shall submit to Employer reasonably detailed receipts with
respect thereto.

7. VACATION. Employee shall be entitled to receive [four (4) weeks]
paid vacation time after each year of employment upon dates agreed upon by
Employer. Upon separation of employment,

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<PAGE>

for any reason, vacation time accrued and not used shall be paid at the salary
rate of Employee in effect at the time of employment separation.

8. SECRECY. At no time shall Employee disclose to anyone any
confidential or secret information (not already constituting information
available to the public) concerning (a) internal affairs or proprietary business
operations of Employer or (b) any trade secrets, new product developments,
patents, programs or programming, especially unique processes or methods.

9. COVENANT NOT TO COMPETE. Subject to, and limited by, Section
11(b), Employee will not, at any time, anywhere in the world, during the term of
this Agreement, and for one (1) year thereafter, either directly or indirectly,
engage in, with or for any enterprise, institution, whether or not for profit,
business, or company, competitive with the business (as identified herein) of
Employer as such business may be conducted on the date thereof, as a creditor,
guarantor, or financial backer, stockholder, director, officer, consultant,
advisor, employee, member, inventor, producer, director, or otherwise of or
through any corporation, partnership, association, sole proprietorship or other
entity; provided, that an investment by Employee, his spouse or his children is
permitted if such investment is not more than four percent (4%) of the total
debt or equity capital of any such competitive enterprise or business and
further provided that said competitive enterprise or business is a publicly held
entity whose stock is listed and traded on a national stock exchange or through
the NASDAQ Stock Market. As used in this Agreement, the business of Employer
shall be deemed to include the manufacturing and marketing of computer systems.

10. TERMINATION.

a. TERMINATION BY EMPLOYER

(i) Employer may terminate this Agreement upon written
notice for Cause. For purposes hereof, "Cause" shall mean (A) engaging by the
Employee in conduct that constitutes activity in competition with Employer; (B)
the conviction of Employee for the commission of a felony; and/or (C) the
habitual abuse of alcohol or controlled substances. Notwithstanding anything to
the contrary in this Section 10(a)(i), Employer may not terminate Employee's
employment under this Agreement for Cause unless Employee shall have first
received notice from the Board advising Employee of the specific acts or
omissions alleged to constitute Cause, and such acts or omissions continue after
Employee shall have had a reasonable opportunity (at least 10 days from the date
Employee receives the notice from the Board) to correct the acts or omissions so
complained of. In no event shall

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<PAGE>

alleged incompetence of Employee in the performance of Employee's duties be
deemed grounds for termination for Cause.

(ii) This agreement automatically shall terminate upon the
death of Employee, except that Employee's estate shall be entitled to receive
any amount accrued under Section 4(a) and the pro-rata amount payable under
Section 4(e) for the period prior to Employee's death and any other amount to
which Employee was entitled of the time of his death.

b. TERMINATION BY EMPLOYEE

(i) Employee shall have the right to terminate his
employment under this Agreement upon 30 days' notice to Employer given within 90
days following the occurrence of any of the following events (A) through (F) or
within three years following the occurrence of event (G):

(A) Employee is not elected or retained as Executive
Vice President and Chief Financial Officer.

(B) Employer acts to materially reduce Employee's
duties and responsibilities hereunder. Employee's duties and responsibilities
shall not be deemed materially reduced for purposes hereof solely by virtue of
the fact that Employer is (or substantially all of its assets are) sold to, or
is combined with, another entity, provided that Employee shall continue to have
the same duties and responsibilities with respect to Employer's business, and
Employee shall report directly to the chief executive officer and/or board of
directors of the entity (or individual) that acquires Employer or its assets.

(C) Employer acts to change the geographic location of
the performance of Employee's duties from the Washington, D.C. Metropolitan
area. For purposes of this Agreement, the Washington D.C. Metropolitan area
shall be deemed to be the area within 60 miles of Washington, D.C.

(D) A Material Reduction (as hereinafter defined) in
Employee's rate of base compensation, or Employee's other benefits. "Material
Reduction" shall mean a ten percent (10%) differential;

(E) A failure by Employer to obtain the assumption of
this Agreement by any successor;

(F) A material breach of this Agreement by Employer,
which is not cured within thirty (30) days of written notice of such breach by
Employer;

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<PAGE>

(G) A Change of Control.

(ii) Anything herein to the contrary notwithstanding,
Employee may terminate this Agreement upon thirty (30) days written notice.

c. If Employer shall terminate Employee's employment other than
due to his death or disability or for Cause (as defined in Section 10(a)(i) of
this Agreement), or if Employee shall terminate this Agreement under Section
10(b)(i), Employer's obligations under Section 4 shall be absolute and
unconditional and not subject to any offset or counterclaim and Employee shall
continue to be entitled to receive all amounts provided for by Section 4 and all
additional employee benefits under Section 4 regardless of the amount of
compensation he may earn with respect to any other employment he may obtain.

11. CONSEQUENCES OF BREACH BY EMPLOYER;
EMPLOYMENT TERMINATION

a. If this Agreement is terminated pursuant to Section 10(b)(i)
hereof, or if Employer shall terminate Employee's employment under this
Agreement in any way that is a breach of this Agreement by Employer, the
following shall apply:

(i) Employee shall be entitled to payment of any previously
declared bonus and additional compensation as provided in Section 4(a) and (b)
above.

b. In the event of termination of Employee's employment
pursuant to Section 10(b)(i) of this Agreement, the provisions of Section 9
shall not apply to Employee.

12. REMEDIES

Employer recognizes that because of Employee's special talents,
stature and opportunities in the computer industry, and because of the special
creative nature of and compensation practices of said industry and the material
impact that individual projects can have on company's results of operations, in
the event of termination by Employer hereunder (except under Section 10(a)(i) or
(iii), or in the event of termination by Employee under Section 10(b)(i) before
the end of the agreed term, the Employer acknowledges and agrees that the
provisions of this Agreement regarding further payments of base salary, bonuses
and the exercisability of Rights constitute fair and reasonable provisions for
the consequences of such termination, do not constitute a penalty, and such
payments and benefits shall not be limited or reduced by amounts' Employee might
earn or be

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<PAGE>

able to earn from any other employment or ventures during the remainder of the
agreed term of this Agreement.

13. EXCISE TAX. In the event that any payment or benefit received
or to be received by Employee in connection with a termination of his employment
with Employer would constitute a "parachute payment" within the meaning of Code
Section 280G or any similar or successor provision to 280G and/or would be
subject to any excise tax imposed by Code Section 4999 or any similar or
successor provision then Employer shall assume all liability for the payment of
any such tax and Employer shall immediately reimburse Employee on a "grossed-up"
basis for any income taxes attributable to Employee by reason of such Employer
payment and reimbursements.

14. ARBITRATION. Any controversies between Employer and Employee
involving the construction or application of any of the terms, provisions or
conditions of this Agreement, save and except for any breaches arising out of
Sections 8 and 9 hereof, shall on the written request of either party served on
the other be submitted to arbitration. Such arbitration shall comply with and
be governed by the rules of the American Arbitration Association. An
arbitration demand must be made within one (1) year of the date on which the
party demanding arbitration first had notice of the existence of the claim to be
arbitrated, or the right to arbitration along with such claim shall be
considered to have been waived. An arbitrator shall be selected according to
the procedures of the American Arbitration Association. The cost of arbitration
shall be born by the losing party or in such proportions as the arbitrator shall
decide. The arbitrator shall have no authority to add to, subtract from or
otherwise modify the provisions of this Agreement, or to award punitive damages
to either party.

15. ATTORNEYS' FEES AND COSTS. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which he may be entitled.

16. ENTIRE AGREEMENT; SURVIVAL. This Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
herein and supersedes, effective as of the date hereof any prior agreement or
understanding between Employer and Employee with respect to Employee's
employment by Employer. The unenforceability of any provision of this Agreement
shall not effect the enforceability of any other provision. This Agreement may
not be amended except by an agreement in writing signed by the Employee and the
Employer, or any waiver, change, discharge or modification as sought. Waiver of
or failure to

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<PAGE>

exercise any rights provided by this Agreement and in any respect shall not be
deemed a waiver of any further or future rights.

b. The provisions of Sections 4, 8, 9, 10(a)(ii), 10(c), 11,
12, 13, 14, 15, 18, 19 and 20 shall survive the termination of this Agreement.

17. ASSIGNMENT. This Agreement shall not be assigned to other
parties.

18. GOVERNING LAW. This Agreement and all the amendments hereof, and
waivers and consents with respect thereto shall be governed by the internal laws
of the State of Virginia, without regard to the conflicts of laws principles
thereof.

19. NOTICES. All notices, responses, demands or other communications
under this Agreement shall be in writing and shall be deemed to have been given
when

a. delivered by hand;

b. sent be telex or telefax, (with receipt confirmed), provided
that a copy is mailed by registered or certified mail, return receipt requested;
or

c. received by the addressee as sent be express delivery service
(receipt requested) in each case to the appropriate addresses, telex numbers and
telefax numbers as the party may designate to itself by notice to the other
parties:

(i) if to the Employer:

Dunn Computer Corporation
1306 Squire Court
Sterling, Virginia 20166

Attention: Thomas P. Dunne

Telefax: (703) 450-0406
Telephone: (703) 450-0400

Gersten, Savage, Kaplowitz, Fredericks &
Curtin
101 East 52nd Street
9th Floor
New York, New York 10022

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<PAGE>

Attention: Jay M. Kaplowitz, Esq.

Telefax: (212) 980-5192
Telephone: (212) 752-9700

(ii) if to the Employee:

John D. Vazzana
39470 Charlestown Pike
Hamilton, Virginia 20158

20. SEVERABILITY OF AGREEMENT. Should any part of this Agreement for
any reason be declared invalid by a court of competent jurisdiction, such
decision shall not affect the validity of any remaining portion, which remaining
provisions shall remain in full force and effect as if this Agreement had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties that they would have executed the remaining
portions of this Agreement without including any such part, parts or portions
which may, for any reason, be hereafter declared invalid.

IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.

DUNN COMPUTER CORPORATION

By: /s/ Thomas P. Dunne
--------------------------------
Thomas P. Dunne
President

/s/ John D. Vazzana
--------------------------------
John D. Vazzana

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<PAGE>

Exibit 99.2

DUNN COMPUTER CORPORATION

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT made as of this ___ day of _______, 1997 by and
between DUNN COMPUTER CORPORATION, a Delaware corporation, having an office at
1306 Squire Court, Sterling, Virginia 20166 (hereinafter referred to as
"Employer") and THOMAS P. DUNNE, an individual residing at 10856 Patowmack
Drive, Great Falls, Virginia 22066 (hereinafter referred to as "Employee");

W I T N E S S E T H:

WHEREAS, Employer employs, and desires to continue to employ, Employee
as Chief Executive Officer, Chairman and President of Employer; and

WHEREAS, Employee is willing to continue to be employed as the Chief
Executive Officer, Chairman and President in the manner provided for herein, and
to perform the duties of the Chief Executive Officer, Chairman and President of
Employer upon the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:

1. EMPLOYMENT OF EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER. Employer hereby employs Employee as Chief Executive Officer, Chairman
and President.

2. TERM.

a. Subject to Section 10 below and further subject to Section
2(b) below, the term of this Agreement shall commence on the effective date of
the Company's Registration Statement (the "Commencement Date") and expire three
years from such date. Each 12 month period from the Commencement Date forward
during the term hereof shall be referred to as an "Annual Period." During the
term hereof, Employee shall devote substantially all of his business time and
efforts to Employer and its subsidiaries and affiliates.

<PAGE>

4. COMPENSATION.

b. Employer shall include Employee in its health insurance
program available to Employer's executive officers and shall pay 100% of the
premiums for such program.

c. Employee shall have the right to participate in any other
employee benefit plans established by Employer.

d. Employee shall be entitled to a car provided to him by the
Company and the Company will pay all insurance and maintenance and expenses in
connection therewith.

e. The Company shall be responsible for and pay all costs
associated with Employer's country club membership.

5. BOARD OF DIRECTORS. Employer agrees that so long as this
Agreement is in effect, Employee will be nominated to the Board as part of
management's slate of Directors.

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<PAGE>

7. VACATION. Employee shall be entitled to receive four (4) weeks
paid vacation time after each year of employment upon dates agreed upon by
Employer. Upon separation of employment, for any reason, vacation time accrued
and not used shall be paid at the salary rate of Employee in effect at the time
of employment separation.

10. TERMINATION.

a. TERMINATION BY EMPLOYER

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<PAGE>

from the date Employee receives the notice from the Board) to correct the acts
or omissions so complained of. In no event shall alleged incompetence of
Employee in the performance of Employee's duties be deemed grounds for
termination for Cause.

b. TERMINATION BY EMPLOYEE

(A) Employee is not elected or retained as Chief
Executive Officer, Chairman and President.

(D) A Material Reduction (as hereinafter defined) in
Employee's rate of base compensation, or Employee's other benefits. "Material
Reduction" shall mean a ten percent (10%) differential;

(E) A failure by Employer to obtain the assumption of
this Agreement by any successor;

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<PAGE>

(F) A material breach of this Agreement by Employer,
which is not cured within thirty (30) days of written notice of such breach by
Employer;

(G) A Change of Control.

(ii) Anything herein to the contrary notwithstanding,
Employee may terminate this Agreement upon thirty (30) days written notice.

11. CONSEQUENCES OF BREACH BY EMPLOYER;
EMPLOYMENT TERMINATION

(i) Employee shall be entitled to payment of any previously
declared bonus and additional compensation as provided in Section 4(a) and (b)
above.

b. In the event of termination of Employee's employment
pursuant to Section 10(b)(i) of this Agreement, the provisions of Section 9
shall not apply to Employee.

12. REMEDIES

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<PAGE>

and reasonable provisions for the consequences of such termination, do not
constitute a penalty, and such payments and benefits shall not be limited or
reduced by amounts' Employee might earn or be able to earn from any other
employment or ventures during the remainder of the agreed term of this
Agreement.

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<PAGE>

Agreement may not be amended except by an agreement in writing signed by the
Employee and the Employer, or any waiver, change, discharge or modification as
sought. Waiver of or failure to exercise any rights provided by this Agreement
and in any respect shall not be deemed a waiver of any further or future rights.

b. The provisions of Sections 4, 8, 9, 10(a)(ii), 10(c), 11,
12, 13, 14, 15, 18, 19 and 20 shall survive the termination of this Agreement.

17. ASSIGNMENT. This Agreement shall not be assigned to other
parties.

19. NOTICES. All notices, responses, demands or other communications
under this Agreement shall be in writing and shall be deemed to have been given
when

a. delivered by hand;

b. sent be telex or telefax, (with receipt confirmed), provided
that a copy is mailed by registered or certified mail, return receipt requested;
or

(i) if to the Employer:

Dunn Computer Corporation
1306 Squire Court
Sterling, Virginia 20166

Attention: John D. Vazzana

Telefax: (703) 450-0406
Telephone: (703) 450-0400

Gersten, Savage, Kaplowitz, Fredericks &
Curtin
101 East 52nd Street
9th Floor
New York, New York 10022

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<PAGE>

Attention: Jay M. Kaplowitz, Esq.

Telefax: (212) 980-5192
Telephone: (212) 752-9700

(ii) if to the Employee:

Thomas P. Dunne
10856 Patowmack Drive
Great Falls, Virginia 22066

IN WITNESS WHEREOF, the undersigned have executed this
agreement as of the day and year first above written.

DUNN COMPUTER CORPORATION

By: /s/ John D. Vazzana
----------------------------
John D. Vazzana
Executive Vice President

/s/ Thomas P. Dunne
----------------------------
Thomas P. Dunne

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