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

EXHIBIT 10.29

ASSET PURCHASE AND REORGANIZATION AGREEEMENT

between
 
COGNIGEN NETWORKS, INC.
 
and
 
COMMISSION RIVER INC.
 

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

TABLE OF CONTENTS

 
1.            Assets to be Contributed to the Purchaser by the
Company                                                                                        1
 
 
1.1.
Sale of Assets 
1

 
1.2
Excluded Assets 
1

 
1.3
Liabilities of the Company to be Assumed by the Purchaser 
3

 
1.4
Retained Liabilities 
3

 
1.5
Purchase Price 
3

 
1.6
Closing; Delivery 
4

 
1.7
Tax-Free Reorganization 
4

 
1.8
Defined Terms Used in this Agreement 
4

 
2.            Representations and Warranties of the
Company                                                                                                6
 
 
2.1
Organization, Good Standing, Corporate Power and Qualification 
6

 
2.2
Sufficiency of Assets; Title 
7

 
2.3
Material Contracts 
7

 
2.4
Capitalization 
9

 
2.5
Subsidiaries 
9

 
2.6
Authorization 
9

 
2.7
Governmental Consents and Filings 
10

 
2.8
Litigation 
10

 
2.9
Intellectual Property 
10

 
2.10
Compliance with Other Instruments 
11

 
2.11
Agreements; Actions      
11

 
2.12
Conflicts of Interest 
12

 
2.13
Voting Rights 
12

 
2.14
Absence of Liens 
12

 
2.15
Financial Statements 
13

 
2.16
Changes 
13

 
2.17
Employee Matters 
14

 
2.18
Tax Returns and Payments 
15

 
2.19
Insurance 
16

 
2.20
Confidential Information and Invention Assignment Agreements 
16

 
2.21
Permits 
16

 
2.22
Corporate Documents 
16

 
2.23
Environmental and Safety Laws 
16

 
2.24
Restricted Securities 
17

 
2.25
Limited Market 
17

 
2.26
Legends 
17

 
2.27
Adequate Knowledge; No Reliance Upon
Representations                                                                              17

 
2.28
Agent Relations 
18

 
3.            Representations and Warranties of the
Purchaser                                                                                               19
 
 
3.1
Organization, Good Standing, Corporate Power and Qualification 
19

 
3.2
Authorization 
19

 
3.3
SEC Filings 
19

 
i

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

 
 
3.4
Governmental Consents and Filings 
19

 
3.5
Litigation 
20

 
3.6
Capitalization 
20

 
3.7
Issuance of Shares 
21

 
3.8
Changes 
21

 
3.9
Compliance with Laws 
21

 
3.10
Tax-Deferred Reorganization 
21

 
3.11
Tax Returns and Payments 
22

 
4.            Conditions to the Purchaser’ Obligations at
Closing                                                                                             22
 
 
4.1
Representations and Warranties 
22

 
4.2
Performance 
22

 
4.3
Compliance Certificate 
22

 
4.4
Qualifications 
22

 
4.5
RESERVED 
22

 
4.6
Secretary’s Certificate 
22

 
4.7
Employment Agreements 
23

 
4.8
Proceedings and Documents 
23

 
4.9
No Proceedings 
23

 
5.            Conditions of the Company’s Obligations at
Closing                                                                                             23
 
 
5.1
Representations and Warranties 
23

 
5.2
Performance 
23

 
5.3
Qualifications 
23

 
5.4
Purchase Price 
23

 
5.5
Compliance Certificate 
23

 
5.6
Secretary’s Certificate 
23

 
5.7
Consents 
24

 
5.8
Transaction Agreements 
24

 
5.9
Proceedings and Documents 
24

 
5.10
Stock Restriction Agreement 
24

 
6.            Remedies for Breach of Transaction
Documents                                                                                                 24
 
 
6.1
Survival of Representations and Warranties 
24

 
6.2
Indemnification 
24

 
6.3
Matters Involving Third Parties 
25

 
6.4
Limitation on Claims 
26

 
6.5
Sole Remedy 
26

 
7.           
Termination                                                                                                                              26
 
 
7.1
Mutual Agreement 
26

 
7.2
Due Diligence Termination 
26

 
7.3
Purchaser Termination for Breach 
27

 
7.4
Company Termination for Breach 
27

 
7.5
Effect of Termination 
27

ii

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

 
8.            Miscellaneous   27
 
 
8.1
Transfer; Successors and Assigns 
27

 
8.2
Governing Law 
27

 
8.3
Counterparts 
28

 
8.4
Titles and Subtitles 
28

 
8.5
Notices 
28

 
8.6
No Finder’s Fees 
28

 
8.7
Attorney’s Fees 
28

 
8.8
Amendments and Waivers 
29

 
8.9
Severability 
29

 
8.10
Delays or Omissions 
29

 
8.11
Entire Agreement 
29

 

iii

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

ASSET PURCHASE AND REORGANIZATION AGREEMENT
 
THIS ASSET PURCHASE AND REORGANIZATION AGREEMENT (this “Agreement”) is made as
of the 30th day of November, 2007 by and among COGNIGEN NETWORKS, INC., a
Colorado corporation (the “Purchaser”), and COMMISSION RIVER INC., a Utah
corporation (the “Company”).
 
WHEREAS, the Company operates an online affiliate marketing business that
provides technology, tools, and products to affiliate marketers and creates and
manages affiliate programs for select product vendors (the “Business”); and
 
WHEREAS, the Company and the Purchaser desire to effectuate a “type C
reorganization” under Section 368(a)(1) of the Code, by selling substantially
all of the Company’s assets and property to Purchaser solely in exchange for
16,000,000 shares of voting common stock of the Purchaser (the “Shares”).
 
NOW THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, and intending to be legally bound, the parties hereto agree as
follows:
 
1. Assets to be Contributed to the Purchaser by the Company.
 
1.1. Sale of Assets.  On the terms and subject to the conditions set forth in
this Agreement, at the Closing and in consideration of the contribution of the
Shares to the Company, the Company shall contribute, assign, transfer and convey
to the Purchaser, free and clear of all Liens, and the Purchaser shall accept
and acquire from the Company, all of the right, title and interest of the
Company in, to and under the assets, properties, rights and privileges of every
kind and nature of the Company used in connection with the Business, as the same
shall exist at the Closing, including the inventory, tangible personal property,
personal property leases, real property leases, business contracts, accounts
receivable, intellectual property, permits, vehicles, business record, rights
under warranties, real property improvements, goodwill and insurance proceeds of
the Company, but specifically excluding the Excluded Assets (such assets and
properties being contributed, assigned, transferred and conveyed are referred to
herein as the “Assets”).
 
1.2. Excluded Assets.  Notwithstanding anything in this Agreement to the
contrary, the Assets to be contributed and transferred to the Purchaser by the
Company hereunder shall not include any of the following assets and properties
of the Company (collectively, the “Excluded Assets”):
 
(a) Except as otherwise subject to this Section 1.2, the rights of the Company
pertaining to any property or asset used in or necessary to the Assets, which
have accrued or will accrue to the Company, as the case may be, where the
consent of another Person would be invalid or constitute a breach of any
agreement or commitment to which the Company is a party or by which the Company
may be bound, if the consent of such Person to such assignment or attempted
assignment shall not have been obtained; provided, however, that in such event,
such property or asset or the proceeds thereof shall be held and/or received by
the Company, for the benefit of the Purchaser and the Purchaser may act as agent
therefor in order to
 

1

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

obtain for the Purchaser the benefits that would flow from ownership of such
property or asset; and provided further that for so long as any Material
Contract for which a consent to assignment is legally required but such consent
to assignment or the like has not been obtained, the Purchaser shall be
obligated to promptly pay to the Company any payment, royalty, fee, or other
form of compensation which would be payable to a third party under such Material
Contract by the Company, as the case may be, but for the fact that the Purchaser
has acquired the Assets as of the Closing (the “Third Party Payments”), and the
Company agrees to defend, indemnify, release and hold harmless the Purchaser for
any additional payment, royalty, fee or other form of compensation which would
be payable to a third party under such Material Contract, except to the extent
any such additional payment, royalty, fee or other form of compensation relates
to any action or omission of the Purchaser occurring after the Closing that
would not be permitted under the applicable Material Contract.
 
(b) Books and Records.  The Company’s historical financial statements and tax
records, minutes of the meetings of the Company’s board of directors and
Shareholders, the minute book of the Company, records of the Shareholders, and
the share ledger; provided that the Purchaser and its attorneys, accountants and
other representatives may, upon reasonable notice, inspect and copy all of the
Company’s financial statements, records, minutes and ledgers not being turned
over to the Purchaser which relate to the Business prior to the Closing.
 
(c) Other Excluded Assets.  Those assets and properties of the Company set forth
on Schedule 1.2(c); and
 
(d) Rights Under this Agreement.  The Company’s rights under or pursuant to this
Agreement or the other Transaction Agreements.
 
1.3. Liabilities of the Company to be Assumed by the Purchaser.  Subject to the
terms and conditions set forth in this Agreement, immediately prior to the
contribution of the Shares from the Purchaser to the Company as provided in
Section 1.6, the Purchaser shall assume and agree to pay, perform and discharge
only the Liabilities of the Company arising in connection with the operation of
the Business as the same shall exist at the Closing as set forth on Schedule 1.3
attached hereto (the “Assumed Liabilities”).
 
1.4. Retained Liabilities.  Except for the Assumed Liabilities, the Purchaser
shall not assume pursuant to this Agreement or the transactions contemplated
hereby, and shall have no liability for, any Liabilities of the Company
(including those related to the Business) of any kind, character or description
whatsoever (collectively, the “Retained Liabilities”) or any other Liabilities
relating to the Business of any kind, character or description
whatsoever.  Without limiting the foregoing, the Retained Liabilities shall be
as set forth on Schedule 1.4 attached hereto.
 
1.5.  Purchase Price.  The purchase price of the Assets shall be the Shares,
which are valued by the parties at $400,000 (the “Purchase Price”) and shall be
deemed paid upon the issuance and delivery of all of the Shares by the Purchaser
to the Company at the Closing as contemplated hereby.  The Purchaser agrees that
the Company may assign, transfer or convey all or any portion of the Shares to
its Shareholders in complete liquidation of the
 
 
2

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

 
Company in proportion to the number of common shares of the Company owned by
each Shareholder, all without the Purchaser’s written consent; provided that a
Shareholder will receive such Shares subject to the restrictions described in
Section 2.24 hereof.
 
1.6. Closing; Delivery.
 
(a) Closing.  The purchase and sale of the Assets shall take place at the
offices of Parr Waddoups Brown Gee & Loveless, 185 South State Street, Suite
1300, Salt Lake City, Utah, on or before November 30, 2007, or at such other
time and place as the Company and Purchaser mutually agree upon, orally or in
writing (which time and place are designated as the “Closing”).
 
(b) Company Deliverables.  At Closing, the Company shall deliver, or cause to be
delivered, to the Purchaser: (i) a Bill of Sale and Assignment Agreement,
substantially in the form attached hereto as Exhibit A; (ii) an Assignment and
Assumption Agreement, substantially in the form attached hereto as Exhibit B
(the “Assignment Agreement”); (iii) an Intellectual Property Assignment
Agreement, substantially in the form attached hereto as Exhibit C (the “IP
Assignment Agreement”); (iv) Employment Agreements with Edwards and Oborn
substantially in the form attached hereto as Exhibit D (the “Employment
Agreement”); and (v) a Stock Restriction Agreement substantially in the form
attached hereto as Exhibit E (the “Stock Restriction Agreement”).
 
(c) Purchaser Deliverables.  At Closing, the Purchaser shall deliver to the
Company (i) one or more stock certificates representing the Shares as payment in
full of the Purchase Price, (ii) the Employment Agreements, and (iii) the Stock
Restriction Agreement.
 
1.7. Tax-Free Reorganization.  The transactions contemplated by this Agreement
are intended to be a “reorganization” within the meaning of Section 368(a)(1)(C)
of the Code, all of the Shares are intended to constitute consideration issued
in connection with the reorganization, and this Agreement is intended to
constitute a “plan of reorganization” within the meaning of the regulations
promulgated under Section 368 of the Code.  The parties hereto agree to prepare
and file tax returns that are consistent with the intention of having the
transactions contemplated by this Agreement constitute a reorganization within
the meaning of Section 368 of the Code.
 
1.8. Defined Terms Used in this Agreement.  In addition to the terms defined
above, the following terms used in this Agreement shall be construed to have the
meanings set forth or referenced below.
 
“Affiliate” any Person which, directly or indirectly, controls, is controlled
by, or is under common control with such Person, including, without limitation,
any partner, officer, director, shareholder or member of such Person.
 
 
3

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

“Agent” means any consultant, advisor, marketing representative, independent
agent or other Person who is not an employee of the Company but is engaged by or
on behalf of the Company for the purpose of marketing, distributing, promoting
or selling the Company’s products and services, whether or not pursuant to a
written agreement.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Contracts” means all written or oral contracts, agreements, leases, license
agreements, sublicenses, assignments, purchase agreements, indentures,
mortgages, deeds of trust, instruments of Indebtedness, security agreements,
guaranties, purchase orders, sales orders, offers to sell, options, rights of
first refusal, distribution agreements, rights to discounts, maintenance
agreements and rights under any of the foregoing.
 
“Edwards” means Adam Edwards, an individual.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Governmental Authority” means any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States or
any domestic state, county, city or other political subdivision.
 
“Key Employee” means any of Edwards or Oborn.
 
“Knowledge” or “knowledge” means, with respect to any individual, the actual
knowledge of such individual, after reasonable investigation, of a particular
fact or other matter.
 
“Laws” means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of any Governmental Authority.
 
“Liabilities” means all indebtedness, obligations (contractual, legal or
otherwise) and other liabilities of a Person, whether absolute, accrued,
unaccrued, contingent, fixed or otherwise, whether known or unknown, and whether
due or to become due.
 
“Liens” means any mortgage, deed of trust, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge, community or other marital
property interest, governmental charge or other encumbrance of any kind, or any
conditional sale contract, title retention contract, option to lease or
purchase, right of first refusal or other contract to give any of the foregoing
 
“Material Adverse Effect” means, with respect to any Person, any event, change
or effect that is materially adverse to the financial condition, properties,
assets, liabilities, business, operations, results of operations or prospects of
such entity and its subsidiaries, taken as a whole.
 
“Oborn” means Patrick Oborn, an individual.
 
                “Ordinary Course of Business” means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
 
4

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

“Permitted Liens” means statutory Liens for the payment of current taxes that
are not yet delinquent and encumbrances and Liens that arise in the Ordinary
Course of Business and do not materially impair the Company’s ownership or use
of such property or assets.
 
“Person” means any natural person, corporation, general partnership, limited
partnership, proprietorship, limited liability company, joint venture, other
business organization, trust, union, association or Governmental Authority.
 
“SEC” means the United States Securities and Exchange Commission.
 
“SEC Filings” means each statement, report, registration statement, definitive
proxy statement and other filings required to be filed with the SEC by Purchaser
between June 30, 2006 and the date hereof, including without limitation
Purchaser’s Annual Report on Form 10-KSB for the Fiscal Year Ended June 30,
2007, as filed with the SEC on October 15, 2007 and amended on Forms 10-KSB/A
filed on October 18, 2007 and October 29, 2007; Purchaser’s Quarterly Report on
Form 10-QSB for the Quarterly Period Ended September 30, 2007, as filed with the
SEC on November 19, 2007 and Form 12b-25 related thereto, as filed with the SEC
on November 14, 2007; Purchaser’s Definitive Proxy Statement on Form DEF 14A, as
filed with the SEC on November 19, 2007, and Purchaser’s Current Reports on Form
8-K, as filed with the SEC on October 23, 2007, November 1, 2007, and November
8, 2007.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Shareholder” means Edwards, Oborn and Aaron J. Lieberman, who are all of the
shareholders of the Company.
 
“Transaction Agreements” means this Agreement, the Assignment Agreement, the IP
Assignment Agreement and the Stock Restriction Agreement, and each of the
documents, agreements, instruments and transactions contemplated thereby.
 
2. Representations and Warranties of the Company.  The Company hereby represents
and warrants to Purchaser that, except as set forth on the Disclosure Schedule
delivered by the Company to Purchaser at the Closing, the following
representations are true and complete as of the date of Closing.  The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 2. For purposes of these
representations and warranties, the phrase “to the Company’s knowledge” shall
mean the Knowledge of Edwards or Oborn.
 
2.1. Organization, Good Standing, Corporate Power and Qualification.  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Utah and has all requisite corporate power and
authority to carry on its business as presently conducted and as proposed to be
conducted.  The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have a
Material Adverse Effect on the Company.
 

5

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

2.2. Sufficiency of Assets; Title.
 
(a)            Except for the Excluded Assets, the Assets constitute all of the
assets, properties, rights and interests, tangible and intangible, of any nature
whatsoever, necessary to conduct the Business as conducted immediately prior to
the Closing by the Company. As of the date hereof, the Company has the right to
use all of the Assets in the manner that such Assets are presently used in the
Business. Assuming no limitations exist to which the Purchaser is subject and
for which the Company has no knowledge and except as set forth on Schedule 2.2,
upon the consummation of the transactions contemplated by this Agreement, the
Purchaser will have the right to use all of the Assets in the manner that such
Assets are presently used in the Business by the Company.

(b)            As of the date hereof,except as set forth on Schedule 2.2, the
Company owns good and valid title to all of the Assets, free and clear of all
Liens (other than Permitted Liens).  Assuming no limitations exist to which the
Purchaser is subject and for which the Company has no knowledge, upon the
consummation of the transaction contemplated by this Agreement or except as set
forth on Schedule 2.2, the Purchaser will own good and valid title to all of the
Assets, free and clear of all Liens.  With respect to the Assets it leases, the
Company is in compliance with such leases and holds a valid leasehold interest
free of any Liens, claims or encumbrances other than Liens, claims or
encumbrances of the lessors of such property or assets.
 
2.3. Material Contracts.
 
(a)            Description of Material Contracts.  Schedule 2.3(a) contains a
true and complete list of the following Contracts (collectively, the “Material
Contracts”), other than Excluded Contracts, to which the Company is a party as
of the date hereof or by which any of the Assets is bound:
 
(i)            all Contracts (including Contracts with customers, suppliers,
distributors, dealers, manufacturer’s representatives, or sales agencies) that
involve the sale or lease of goods or materials or the performance of services
(in each case, to or by the Company) of an amount of more than $5,000 annually;
 
(ii)                       all Contracts that were not entered into in the
Ordinary Course of Business of the Company;
 
(iii)                       all Contracts of the Company with officers,
directors, shareholders or Affiliates of the Company;
 
(iv)                       all Contracts providing for a commitment of
employment or personal services to the Company, and all Contracts with any labor
union or other employee representative of a group of employees relating to
wages, hours or other conditions of employment;
 
(v)            all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of the Company to engage in any
business
 

6

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

        activity or compete with any Person, or prohibiting or limiting the
ability of any Person to compete with the Company;
 
(vi)                       all partnership, joint venture, shareholders’ or
other similar Contracts, including those involving a sharing of profits, losses,
costs or liabilities by the Company with any other Person;
 
(vii)                       all Contracts relating to the ownership, the right
to use, or the disposition or acquisition of any of the Assets other than
dispositions or acquisitions of inventory in the Ordinary Course of Business of
the Company;
 
(viii)                     all Contracts relating to an interest in the real
property or tangible personal property, including but not limited to lease hold
interests;
 
(ix)                       all Contracts under which the Company has created,
incurred, assumed or guaranteed (or may create, incur, assume or guarantee)
indebtedness or under which the Company has granted (or may grant) a Lien on any
of the Assets;
 
(x)                  all Contracts providing for payments to or by the Company
based on sales, purchases or profits, other than direct payments for goods in an
aggregate amount not in excess of $5,000 annually;
 
(xi)                       all Contracts under which the Company is a prime
contractor or a subcontractor under or with respect to any Contract with the
United States government or any state government or any body, subdivision,
department, bureau, agency, commission, board, instrumentality or authority
thereof;
 
(xii)                       all Contracts (other than those identified above)
that (A) are material to the Business or (B) cannot be terminated by the Company
on sixty (60) days’ notice or less without resulting in any cost or penalty to
the Company in excess of $5,000; and
 
(xiii)                       each amendment, supplement and modification in
respect of any of the foregoing.
 
        (b)            Status of Material Contracts.  As of the date hereof,
except as disclosed in Schedule 2.3(b), the Company is not in violation or
breach of or default under any Material Contract.  As of the date hereof, except
as disclosed in Schedule 2.3(b), to the Company’s knowledge, no other party to
any Material Contract is in violation or breach of or default under such
Material Contract, except where such violation, breach or default would not have
a Material Adverse Effect on the Company.  As of the date hereof, to the
Company’s knowledge, no facts or circumstances exist that with notice or lapse
of time or both would constitute any violation or breach of, or constitute any
event of default or permit termination, modification or acceleration under, any
such Material Contract.  As of the date hereof, each Material Contract is in
full force and effect and constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms, and,
to the Company’s knowledge, enforceable by the Company against the other party
or parties to such Material Contract in accordance with its terms, subject, as
to enforcement against or by the Company, to (i)
 
 
7

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

 
 
bankruptcy, insolvency, reorganization and other Laws of general applicability
now or hereafter in effect relating to rights of creditors and (ii) rules of
equity governing specific performance, injunctive relief or other equitable
remedies.  Schedule 2.3(b) lists all authorizations, consents and other
approvals required under any Material Contract to effect Purchaser’s assumption
of any Material Contract (the “Consents”).  Except for the Consents and other
approvals, consents and authorizations disclosed on Schedule 2.3(b), the Company
is not required to make any filing with or obtain any permit, authorization,
consents or other approvals of any Person, including, but not limited to, any
lender, customer, vendor, service provider, or lessor under any Material
Contract in order to effect the transaction contemplated hereby.
 
2.4. Capitalization.  The authorized capital of the Company consists,
immediately prior to Closing, solely of:
 
(a) 2,000 common shares (the “Common Stock”), 220 shares of which are issued and
outstanding immediately prior to Closing.  All of the outstanding shares of
Common Stock have been duly authorized, are fully paid and nonassessable and
were issued in compliance with all applicable federal and state securities
laws.  The Company holds no treasury stock and no shares of its capital stock in
its treasury.
 
(b) Schedule 2.4(b) sets forth the true and accurate capitalization of the
Company immediately prior to Closing including the number of shares of the
issued and outstanding shares of capital stock.  There are no outstanding
options, warrants, rights (including conversion or preemptive rights and rights
of first refusal or similar rights) or agreements, orally or in writing, to
purchase or acquire from the Company any shares of capital stock, or any
securities convertible into or exchangeable for shares of capital stock.
 
(c) None of the outstanding shares of Common Stock are, or will, following the
consummations of the transactions contemplated hereby, be, subject to (i) any
right of first refusal in favor of the Company upon any proposed transfer, (ii)
any pre-emptive right, or (iii) to the Company’s knowledge, any other right or
limitation affecting the transfer of such shares.  None of the Company’s stock
purchase agreements contains a provision for acceleration of vesting (or lapse
of a repurchase right) upon the occurrence of any event or combination of
events.
 
2.5. No Subsidiaries.  The Company does not have any subsidiaries, and does not
own, beneficially or otherwise, any shares or other securities of, or any direct
or indirect interest of any nature in, any other Person.
 
2.6. Authorization.  All corporate action required to be taken by the Company’s
Board of Directors and shareholders in order to authorize the Company to enter
into the Transaction Agreements, and to sell the Assets at the Closing, and to
consummate the transactions contemplated by this Agreement and the other
Transaction Agreements, has been taken or will be taken prior to the
Closing.  All action on the part of the officers of the Company necessary for
the execution and delivery of the Transaction Agreements, the performance of all
obligations of the Company under the Transaction Agreements to be performed as
of the Closing, and the delivery of the Assets has been taken or will be taken
prior to the Closing.  The Transaction Agreements, when executed and delivered
by the Company, constitute valid and
 
 
8

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

 
 
legally binding obligations of the Company, enforceable against the Company in
accordance with their respective terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies, or (iii) to the extent the indemnification provisions contained in
this Agreement may be limited by applicable federal or state securities laws.
 
2.7. Governmental Consents and Filings.  No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of the Company in connection with the consummation of the transactions
contemplated by this Agreement.
 
2.8. Litigation.  There is no claim, action, suit, proceeding, arbitration,
complaint, charge or investigation pending or to the Company’s knowledge,
currently threatened (i) against the Company or any officer, director or Key
Employee of the Company; (ii) that questions the validity of the Transaction
Agreements or the right of the Company to enter into them, or to consummate the
transactions contemplated by the Transaction Agreements; or (iii) to the
Company’s knowledge that would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the
Company.  Neither the Company nor, to the Company’s knowledge, any of its
officers or directors, is a party or is named as subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality.  There is no action, suit, proceeding or
investigation by the Company pending or which the Company intends to
initiate.  The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened in writing (or any basis
therefor known to the Company) involving the prior employment of any of the
Company’s employees, their services provided in connection with the Company’s
business, or any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior
employers.
 
2.9. Intellectual Property.  Except as set forth in Schedule 2.9, the Company
owns or possesses all legal rights to use (i) all trademarks, service marks,
tradenames, domain names, copyrights, trade secrets, licenses, information and
proprietary rights and processes and (ii) to the Company’s knowledge, all
patents and patent rights, (such rights are collectively referred to herein as
the “Company Intellectual Property”) as are necessary to the conduct of the
Business as now conducted and as presently proposed to be conducted, without any
known conflict with, or infringement of, the rights of others.  To the Company’s
knowledge, no product or service marketed or sold (or proposed to be marketed or
sold) by the Company violates or will violate any license or infringes any
intellectual property rights of any other party.  Other than with respect to
commercially available software products under standard end-user object code
license agreements, there are no outstanding options, licenses, agreements,
claims, encumbrances or shared ownership interests of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information, proprietary
rights and processes of any other person or entity.  The Company has not
received any communications alleging that the Company has violated or, by
conducting its business, would violate any of the patents, trademarks, service
marks, tradenames, copyrights, trade
 
 
9

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

 
 
secrets or other proprietary rights or processes of any other person or
entity.  The Company has obtained and possesses valid licenses to use all of the
software programs present on the computers and other software-enabled electronic
devices that it owns or leases or that it has otherwise provided to its
employees for their use in connection with the Company’s business.  It will not
be necessary for the Company to use any inventions of any of its employees (or
persons it currently intends to hire).  Each Key Employee has assigned to the
Company all intellectual property rights he owns that are related to the
Business as now conducted.  Schedule 2.9 lists all software, patents, patent
applications, registered trademarks, trademark applications, registered service
marks, service mark applications, registered copyrights and domain names of the
Company.  The Company has not embedded any open source, copyleft or community
source code in any of its products generally available or in development,
including but not limited to any libraries or code licensed under any General
Public License, Lesser General Public License or similar license arrangement.
 
2.10. Compliance with Other Instruments.  The Company is not in violation or
default (i) of any provisions of its Articles of Incorporation or By-laws, (ii)
of any instrument, judgment, order, writ or decree, (iii) under any note,
indenture or mortgage, or (iv) under any lease, agreement, Contract or purchase
order to which it is a party or by which it is bound that is required to be
listed on the Disclosure Schedule, or to its knowledge, of any provision of
federal or state statute, rule or regulation applicable to the Company, the
violation of which would have a Material Adverse Effect on the Company.  The
execution, delivery and performance of the Transaction Agreements and the
consummation of the transactions contemplated by the Transaction Agreements will
not result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either (i) a default under any
such provision, instrument, judgment, order, writ, decree, contract or agreement
or (ii) an event which results in the creation of any lien, charge or
encumbrance upon any assets of the Company or the suspension, revocation,
forfeiture, or nonrenewal of any material permit or license applicable to the
Company.
 
2.11. Agreements; Actions.
 
(a) Except for the Transaction Agreements or as set forth on Schedule 2.11,
there are no agreements, understandings, instruments, Contracts or proposed
transactions to which the Company is a party or by which it is bound that
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $5,000, (ii) the license of any patent, copyright, trade
secret or other proprietary right to or from the Company, (iii) the grant of
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person or affect the Company’s exclusive right to develop,
manufacture, assemble, distribute, market or sell its products, or (iv)
indemnification by the Company with respect to infringements of proprietary
rights.
 
(b) The Company has not (i) declared or paid any dividends, or authorized or
made any distribution upon or with respect to any class or series of its capital
stock, (ii) except as disclosed on Schedule 2.11, incurred any indebtedness for
money borrowed or incurred any other liabilities individually in excess of
$5,000 or in excess of $25,000 in the aggregate, (iii) made any loans or
advances to any person, other than ordinary advances for travel expenses, or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights, other
 
 
10

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

 
 
than the sale of its inventory in the ordinary course of business. For the
purposes of subsections (b) and (c) of this Section 2.11, all indebtedness,
liabilities, agreements, understandings, instruments, contracts and proposed
transactions involving the same person or entity (including persons or entities
the Company has reason to believe are affiliated with each other) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsection.
 
(c) The Company is not a guarantor or indemnitor of any indebtedness of any
other person, firm or corporation.
 
2.12. Conflicts of Interest.
 
(a) Except as set forth on Schedule 2.12(a) and other than standard employee
benefits generally made available to all employees, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, or Key Employees, or any Affiliate thereof.
 
(b) Except as set forth in Schedule 2.12(b), the Company is not indebted,
directly or indirectly, to any of its directors, officers or employees or to
their respective spouses or members of their immediate family or to any
Affiliate of any of the foregoing, other than in connection with expenses or
advances of expenses incurred in the Ordinary Course of Business or employee
relocation expenses.  Except as set forth in Schedule 2.12(b), none of the
Company’s directors, officers or employees, or any members of their immediate
families, or any Affiliate of the foregoing (i) are, directly or indirectly,
indebted to the Company or, (ii) to the Company’s knowledge, have any direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation which competes with the Company except that directors, officers or
employees or shareholders of the Company may own stock in (but not exceeding two
percent of the outstanding capital stock of) publicly traded companies that may
compete with the Company.   Except as set forth in Schedule 2.12(b), to the
Company’s knowledge: (x) none of the Company’s directors, officers or employees
or any members of their immediate families or any Affiliate of any of the
foregoing are, directly or indirectly, interested in any material contract with
the Company; and (y) none of the directors or officers, or any members of their
immediate families, has any material commercial, industrial, banking,
consulting, legal, accounting, charitable or familial relationship with any of
the Company’s major business relationship partners, service providers, joint
venture partners, licensees and competitors.
 
2.13. Voting Rights.  To the Company’s knowledge, no shareholder of the Company
has entered into any agreements with respect to the voting of capital shares of
the Company.
 
2.14. Absence of Liens.  Except as set forth on Schedule 2.14, the Assets are
free and clear of all Liens, except for Permitted Liens.  With respect to the
Assets it leases, the Company is in compliance with such leases and holds a
valid leasehold interest free of any Liens, claims or encumbrances other than
those of the lessors of such property or assets.
 
 
11

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

 
2.15. Financial Statements. The Company has delivered to Purchaser its
un-audited financial statements (including balance sheets and income statements)
as of October 31, 2007 and for the ten-month period then ended (collectively,
the “Financial Statements”).  Except as set forth in the Financial Statements,
the Company has no material Liabilities or obligations, contingent or otherwise,
other than (i) Liabilities incurred in the Ordinary Course of Business
subsequent to October 31, 2007 and (ii) obligations under contracts and
commitments incurred in the Ordinary Course of Business, which, in both cases,
individually and in the aggregate would not have a Material Adverse Effect on
the Company.
 
2.16. Changes.  Except as set forth on Schedule 2.16, since December 31, 2006
there has not been:
 
(a) any change in the Assets, Liabilities, financial condition or operating
results of the Company from that reflected in the Financial Statements, except
changes in the Ordinary Course of Business that have not caused, and are not
reasonably likely to result in, a Material Adverse Effect on the Company;
 
(b) any damage, destruction or loss, whether or not covered by insurance, that
would have a Material Adverse Effect on the Company;
 
(c) any waiver or compromise by the Company of a valuable right or of a material
debt owed to it involving more than $5,000;
 
(d) any satisfaction or discharge of any Lien, claim, or encumbrance or payment
of any obligation by the Company with respect to any Person, except in the
Ordinary Course of Business of the Company and the satisfaction or discharge of
which would not have a Material Adverse Effect on the Company;
 
(e) any change to a material contract or agreement by which the Company or any
of its assets is bound or subject, except for a change that would not have a
Material Adverse Effect on the Company;
 
(f) any material change in any compensation arrangement or agreement with any
employee, officer, director or shareholder;
 
(g) any resignation or termination of employment of any officer or Key Employee
of the Company;
 
(h) any mortgage, pledge, transfer of a security interest in, or Lien, created
by the Company, with respect to any of the Assets, except for Permitted Liens;
 
(i) any loans or guarantees made by the Company to or for the benefit of its
employees, officers or directors, or any members of their immediate families,
other than travel advances and other advances made in the Ordinary Course of
Business of the Company;
 
(j) any declaration, setting aside or payment or other distribution in respect
of any of the Company’s shares of capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Company;
 
 
12

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

 
(k) any sale, assignment or transfer of any Company Intellectual Property that
could reasonably be expected to result in a Material Adverse Effect on the
Company;
 
(l) receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of the Company;
 
(m) to the Company’s knowledge, any other event or condition of any character,
other than events affecting the economy or the Company’s industry generally, 
that could reasonably be expected to result in a Material Adverse Effect on the
Company; or
 
(n) any arrangement or commitment by the Company to do any of the things
described in this Section 2.16.
 
2.17. Employee Matters.
 
(a) As of the date hereof, the Company employs two (2) full-time
employees.  Schedule 2.17 sets forth a description of all compensation,
including salary, bonus, and deferred compensation paid or payable for each
officer or employee of the Company who is anticipated to receive compensation in
excess of $25,000 for the fiscal year ending December 31, 2007, or is
anticipated to receive compensation in excess of $25,000 for the fiscal year
ending December 31, 2008.
 
(b) To the Company’s knowledge, none of its employees is obligated under any
Contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would materially interfere with such employee’s
ability to promote the interest of the Company or that would conflict with the
Business, except as set forth in the Employment Agreements or on Schedule
2.17.  Except as set forth on Schedule 2.17, neither the execution or delivery
of the Transaction Agreements, nor the carrying on of the Business by the
employees of the Company, nor the conduct of the Business as now conducted will,
to the Company’s knowledge, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract,
covenant or instrument under which any such employee is now obligated.
 
(c) Except as set forth on Schedule 2.17, the Company is not delinquent in
payments to any of its employees, consultants or independent contractors for any
wages, salaries, commissions, bonuses, or other direct compensation for any
service performed for it to the date hereof or amounts required to be reimbursed
to such employees, consultants, or independent contractors. To the Company’s
knowledge, the Company has complied with all applicable state and federal equal
employment opportunity Laws and with other Laws related to employment, including
those related to wages, hours, worker classification, collective bargaining, and
the payment and withholding of taxes and other sums as required by law except
where noncompliance with any applicable law would not result in a Material
Adverse Effect.  The Company has withheld and paid to the appropriate
governmental entity or is holding for payment not yet due to such Governmental
Authority all amounts required to be withheld from
 
 
13

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

 
 
employees of the Company and, to the Company’s knowledge, is not liable for any
arrears of wages, taxes, penalties, or other sums for failure to comply with any
of the foregoing.
 
(d) To the Company’s knowledge, no Key Employee intends to terminate employment
with the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing; provided, however, that the Company has
informed Purchaser of its intention to liquidate and dissolve the Company
subsequent to the Closing Date, and the Company makes no representation or
warranty regarding the effect of such liquidation and dissolution on the
continued employment of any Key Employee of the Company.  The employment of each
employee of the Company is terminable at the will of the Company.  Except as set
forth in Schedule 2.17 or as required by law, upon termination of the employment
of any such employees, no severance or other payments will become due.  Except
as set forth in Schedule 2.17, the Company has no policy, practice, plan, or
program of paying severance pay or any form of severance compensation in
connection with the termination of employment services.
 
(e) The Company has not made any representations regarding equity incentives to
any officer, employees, director or consultant that are inconsistent with the
share amounts and terms set forth in the minutes of the meetings of the
Company’s board of directors.
 
(f) The Company has not terminated any Key Employee’s employment with the
Company.
 
(g) Schedule 2.17 sets forth each employee benefit plan maintained, established
or sponsored by the Company, or which the Company participates in or contributes
to, which is subject to the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).  The Company has made all required contributions and has no
liability to any such employee benefit plan, other than liability for health
plan continuation coverage described in Part 6 of Title I(B) of ERISA, and has
complied in all material respects with all applicable laws for any such employee
benefit plan.
 
(h)            To the Company’s knowledge, none of the officers or directors of
the Company during the previous five (5) years has been (a) subject to voluntary
or involuntary petition under the federal bankruptcy laws or any state
insolvency law or the appointment of a receiver, fiscal agent or similar officer
by a court for his business or property; (b) convicted in a criminal proceeding
or named as a subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses); (c) subject to any order, judgment, or
decree (not subsequently reversed, suspended, or vacated) of any court of
competent jurisdiction permanently or temporarily enjoining him from engaging,
or otherwise imposing limits or conditions on his engagement in any securities,
investment advisory, banking, insurance, or other type of business or acting as
an officer or director of a public company; or (d) found by a court of competent
jurisdiction in a civil action or by the SEC or the Commodity Futures Trading
Commission to have violated any federal or state securities, commodities, or
unfair trade practices law, which such judgment or finding has not been
subsequently reversed, suspended, or vacated.
 
2.18. Tax Returns and Payments.  There are no federal, state, county, local or
foreign taxes dues and payable by the Company which have not been timely paid,
except where
 
 
14

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

 
 
the failure to pay could not be reasonably expected to result in a Material
Adverse Effect on the Company.  To the Company’s knowledge, there are no accrued
and unpaid federal, state, country, local or foreign taxes of the Company which
are due, whether or not assessed or disputed.  There have been no examinations
or audits of any tax returns or reports by any applicable federal, state, local
or foreign governmental agency.
 
2.19. Insurance.  Schedule 2.19 provides a complete list of the Company’s fire
and casualty insurance policies currently in effect.
 
2.20. Confidential Information and Invention Assignment Agreements.  Each
current and former Key Employee and officer of the Company has executed an
agreement with the Company regarding confidentiality and proprietary information
substantially in the form or forms delivered to the counsel for the Purchaser
(the “Confidential Information Agreements”).  No current or former Key Employee
or officer of the Company has excluded works or inventions from his or her
assignment of inventions pursuant to such Key Employee’s or officer’s
Confidential Information Agreements.  The Company is not aware that any of its
Key Employees or officers is in violation thereof.
 
2.21. Permits.  The Company and each of its subsidiaries has all permits,
licenses and any similar authority necessary for the conduct of the Business,
the lack of which could reasonably be expected to have a Material Adverse Effect
on the Company.  To the Company’s knowledge, the Company is not in default in
any material respect under any of such permits, licenses or other similar
authority.
 
2.22. Corporate Documents.  The Articles of Incorporation and Bylaws of the
Company are in the form provided to the Purchaser.
 
2.23. Environmental and Safety Laws. Except as could not reasonably be expected
to have a Material Adverse Effect on the Company (a) the Company is and has been
in compliance with all Environmental Laws; (b) there has been no release or, to
the Company’s knowledge, threatened release of any pollutant, contaminant or
toxic or hazardous material, substance or waste, or petroleum or any fraction
thereof, (each a “Hazardous Substance”) on, upon, into or from any site
currently or heretofore owned, leased or otherwise used by the Company;
(c) there have been no Hazardous Substances generated by the Company that have
been disposed of or come to rest at any site that has been included in any
published U.S. federal, state or local “superfund” site list or any other
similar list of hazardous or toxic waste sites published by any governmental
authority in the United States; and (d) there are no underground storage tanks
located on, no polychlorinated biphenyls (“PCBs”) or PCB-containing equipment
used or stored on, and no hazardous waste as defined by the Resource
Conservation and Recovery Act, as amended, stored on, any site owned or operated
by the Company, except for the storage of hazardous waste in compliance with
Environmental Laws.  The Company has made available to the Purchaser true and
complete copies of all material environmental records, reports, notifications,
certificates of need, permits, pending permit applications, correspondence,
engineering studies, and environmental studies or assessments.
 
For purposes of this Section 2.23, “Environmental Laws” means any law,
regulation, or other applicable requirement relating to (a) releases or
threatened release of
 
 
15

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

 
 
Hazardous Substance; (b) pollution or protection of employee health or safety,
public health or the environment; or (c) the manufacture, handling, transport,
use, treatment, storage, or disposal of Hazardous Substances.

2.24. Restricted Securities.  The Company understands that the Shares have not
been, and will not be, registered under the Securities Act, by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Company’s representations as expressed herein.  The
Company understands that the Shares are “restricted securities” under applicable
U.S. federal and state securities laws and that, pursuant to these laws, the
Company must hold the Shares indefinitely unless they are registered with the
SEC and qualified by state authorities, or an exemption from such registration
and qualification requirements is available.  The Company acknowledges that the
Purchaser has no obligation to register or qualify the Shares for resale. The
Company further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Shares, and on requirements relating to the Purchaser which are outside
of the Company’s control, and which the Purchaser is under no obligation and may
not be able to satisfy.
 
2.25. Limited Market.  The Company understands that the Shares are quoted on the
Over-the-Counter Bulletin Board and that a limited public market exists for the
Shares.  The Purchaser has made no assurances that an active public market will
ever exist for the Shares.
 
2.26. Legends.  The Company understands that the Shares and any securities
issued in respect of or exchange for the Shares, may bear one or all of the
following legends:
 
(a)            “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF.  NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.”
 
(b)            Any legend set forth in, or required by, the other Transaction
Agreements.
 
(c)            Any legend required by the securities laws of any state to the
extent such laws are applicable to the Shares represented by the certificate
with such legend.
 
2.27. Adequate Knowledge; No Reliance Upon Representations.
 
(a)            The Company acknowledges and confirms that it has been given a
reasonable
 
 
16

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

 
 
opportunity to review all documents, books, records and materials of the
Purchaser pertaining to contribution of the Shares, has been supplied with all
additional information concerning the Purchaser and the Shares that has been
requested, has had a reasonable opportunity to ask questions of and receive
answers from the Purchaser or its authorized representatives concerning the
Shares and that all questions have been answered to the full satisfaction of the
undersigned.
 
(b)            The Company has received no representations, written or oral,
from the Purchaser or its officers, directors, employees, attorneys or agents
other than those contained in this Agreement. In making the decision to sell the
Assets in exchange for the Shares, the Company has relied solely upon its review
of the Purchaser’s books and records, the SEC Filings and this Agreement and
independent investigations made by it
 
2.28. Agent Relations.
 
(a)            As of the date hereof, the Company maintains a network of not
less than 200 Persons registered as independent agents selling products and
services through the Company’s affiliated self-replicating websites.  Schedule
2.28 sets forth a detailed description of all compensation, including bonus, and
deferred compensation paid or payable for each Agent, including independent
agents, who received remuneration (in any for whatsoever) in excess of $5,000
for the fiscal year ended December 31, 2006 or is anticipated to receive
remuneration (in any form whatsoever) in excess of $10,000 for the fiscal year
ending December 31, 2007.
 
(b)            To the Company’s knowledge, none of the Agents is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would materially interfere with such Agent’s ability
to promote the interests of the Company or that would conflict with the
Company’s business.  Neither the execution or delivery of the Transaction
Agreements, nor the conduct of the Company’s business as now conducted, will, to
the Company’s knowledge, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract,
covenant, arrangement (whether or not in writing) or instrument under which any
Agent is now engaged.
 
(c)            Except as described in Schedule 2.28(c), the Company is not
delinquent in payments to any of the Agents for any commissions, bonuses, or
other compensation or remuneration for any service performed for it to the date
hereof or amounts required to be reimbursed to such Agent.  The Company has
complied with all applicable state and federal laws and regulations related to
the Agents, including the development and operation of the Company’s
self-replicating websites, except limited individual circumstances in which
noncompliance with a particular law or regulation (individually or in the
aggregate) would not result in a Material Adverse Effect on the Company.  The
Company has withheld and paid to the appropriate governmental entity or is
holding for payment not yet due to such governmental entity all amounts required
to be withheld from any Agents, and is not liable for any arrears of taxes,
penalties, or other sums for failure to comply with any of the foregoing.

(d)            To the Company’s knowledge, no Agent intends to terminate his,
her or its engagement with the Company or is otherwise likely to become
unavailable to continue to provide services to or for the benefit of the
Company, nor does the Company have a present intention to terminate the
engagement of any Agent.  The employment of each employee of the Company is
terminable at the will of the Company.  Except as set forth in Schedule 2.28,
the
 
 
17

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

 
 
Company has no policy, practice, plan, or program of paying any form of
compensation in connection with the termination of any Agent.
 
3. Representations and Warranties of the Purchaser.  As of the Closing Date, the
Purchaser hereby represents and warrants to the Company that except as set forth
on the Purchaser Disclosure Schedule delivered by Purchaser to the Company at
the Closing, the following representations and warranties are true and
complete.  For purposes of these representations and warranties, the phrase “to
the Purchaser’s Knowledge” shall mean the Knowledge of Robert K. Bench,
Purchaser’s Chief Executive Officer, or Gary L. Cook, Purchaser’s Chief
Financial Officer.
 
3.1. Organization, Good Standing, Corporate Power and Qualification.  The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado and has all requisite corporate power
and authority to carry on its business as presently conducted and as proposed to
be conducted.  Purchaser is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have a
Material Adverse Effect on the Purchaser.
 
3.2. Authorization.  The Purchaser has full power and authority to enter into
the Transaction Agreements.  The Transaction Agreements to which the Purchaser
is a party, when executed and delivered by the Purchaser, will constitute valid
and legally binding obligations of the Purchaser, enforceable in accordance with
their terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and any other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of a specific performance, injunctive
relief, or other equitable remedies, or (b) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable federal or
state securities laws.
 
3.3.  SEC Filings.  Purchaser has filed with the SEC each SEC Filing.  Each SEC
Filing, when filed, complied with all applicable requirements of the Securities
Act, the Exchange Act and other requirements of law.  Prior to the Closing,
Purchaser will file any additional documents required to be filed with the SEC
by Purchaser prior to the Closing (collectively with the SEC Filings, the
“Purchaser SEC Documents”).  None of the SEC Filings, at the time of filing,
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 not misleading in light of the circumstances under which they were
made.  The Company has taken all necessary actions to ensure its continued
inclusion in, and the continued eligibility of the Common Stock for trading on
the over-the-counter market (the “OTC”) under all currently effective and
currently proposed inclusion requirements.  Purchaser has made available to the
Company all exhibits to the SEC Filings filed prior to the date hereof that are
(a) requested by the Company, and (b) not available in complete form through
EDGAR (“Requested Confidential Exhibits”) and will promptly make available to
the Company all Requested Confidential Exhibits to any additional Purchaser SEC
Documents filed prior to the Closing.
 
3.4. Governmental Consents and Filings.  Assuming the accuracy of the
representations made by the Company in Section 2 of this Agreement, no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with,
 
 
18

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

 
 
any federal, state or local governmental authority is required on the part of
the Purchaser in connection with the consummation of the transactions
contemplated by this Agreement.
 
3.5. Litigation.  There is no claim, action, suit, proceeding, arbitration,
complaint, charge or investigation pending or to the Purchaser’s Knowledge,
currently threatened (i) against the Purchaser or any officer, director or Key
Employee of the Purchaser; (ii) that questions the validity of the Transaction
Agreements or the right of the Purchaser to enter into them, or to consummate
the transactions contemplated by the Transaction Agreements; or (iii) to the
Purchaser’s Knowledge that would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect on the
Purchaser.  Neither the Purchaser nor, to the Purchaser’s Knowledge, any of its
officers or directors, is a party or is named as subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality.  There is no action, suit, proceeding or
investigation by the Purchaser pending or which the Purchaser intends to
initiate.  The foregoing includes, without limitation, actions, suits,
proceedings or investigations pending or threatened in writing (or any basis
therefor known to the Purchaser) involving the prior employment of any of the
Purchaser’s employees, their services provided in connection with the
Purchaser’s business, or any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers.
 
3.6. Capitalization.  The authorized capital of the Purchaser consists,
immediately prior to Closing, solely of:
 
(a) (i) 300,000,000 shares of common stock, par value $0.001 (“Purchaser Common
Stock”), 22,265,726 shares of which are issued and outstanding immediately prior
to Closing, and (ii) 20,000,000 shares of preferred stock, no par value
(“Purchaser Preferred Stock,” and together with Purchaser Common Stock, the
“Purchaser Stock”), of which no shares are issued and outstanding immediately
prior to Closing.  There are no other shares of capital stock or voting
securities of Purchaser other than shares of Purchaser Common Stock issued after
that same date upon the exercise of options issued under the 2001 Incentive and
Nonstatutory Stock Option Plan (“Purchaser Option Plan”).  All of the
outstanding shares of Purchaser Stock have been duly authorized, are fully paid
and nonassessable and, except as set forth on Schedule 3.6 of the Purchaser
Disclosure Schedule, to the Purchaser’s knowledge all such shares of Purchaser
Stock issued by the Company since July 1, 2003 were issued in compliance with
all applicable federal and state securities laws.  The Company holds no treasury
stock and no shares of its capital stock in its treasury.
 
(b) As of immediately prior to Closing, there were outstanding options to
purchase 902,000 shares of Purchaser Common Stock at prices ranging from $0.09
to $0.71 per share and warrants to purchase 275,000 shares of Purchaser Common
Stock at prices ranging from $0.12 to $0.3015 per share, all with terms that
expire no later than June 27, 2013.
 
(c) As of immediately prior to Closing, Purchaser has reserved 625,000 shares of
Purchaser Common Stock for issuance to employees, directors and independent
contractors pursuant to the Purchaser Option Plan, of which 467,000 shares are
subject to outstanding, unexercised options.  Other than as described in this
Agreement (including this Section 3.6) and the Purchaser Option Plan, there are
there are no outstanding
 
 
19

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

 
 
options, warrants, rights (including conversion or preemptive rights and rights
of first refusal or similar rights) or agreements, orally or in writing, to
purchase or acquire from the Company any shares of capital stock, or any
securities convertible into or exchangeable for shares of capital stock.
 
3.7. Issuance of Shares.  The issuance and delivery of the Shares, as the
Purchaser Price in accordance with this Agreement, shall be, at or prior to the
Closing, duly authorized by all necessary corporate action on the part of
Purchaser, and, when issued at the Closing as contemplated by this Agreement,
such Shares will be duly and validly issued, fully paid and nonassessable.  Such
Shares, when so issued and delivered in accordance with the provisions of this
Agreement, shall be free and clear of all Liens (other than restrictions created
by the Stock Restriction Agreement or by applicable securities laws) and will
not have been issued in violation of any preemptive rights or rights of first
refusal or similar rights.  The Shares shall be issued in compliance with all
applicable state and federal securities laws.
 
3.8. Changes.  Except as disclosed on Schedule 3.8, since September 30, 2007,
there has not been:
 
(a) any change in the assets, liabilities, financial condition or operating
results of the Purchaser from that reflected in the SEC Filings, except changes
in the Ordinary Course of Business that have not caused, and are not reasonably
likely to result in, a Material Adverse Effect on the Purchaser;
 
(b) any damage, destruction or loss, whether or not covered by insurance, that
would have a Material Adverse Effect on the Purchaser;
 
(c) any change to a material contract or agreement (or amendments) by which the
Purchaser or any of its assets is bound or subject, except for a change that
would not have a Material Adverse Effect on the Purchaser;
 
(d) any material change in any compensation arrangement or agreement with any
employee, officer, director or shareholder, other than in the Ordinary Course of
Business consistent with past practice;
 
(d) any amendment or change to the Articles of Incorporation or the Bylaws of
the Purchaser; or
 
(e) to the Purchaser’s Knowledge, any other event or condition of any character,
other than events affecting the economy or the Purchaser’s industry generally,
that could reasonably be expected to result in a Material Adverse Effect on the
Purchaser.
 
3.9. Compliance with Laws.  Except as disclosed on Schedule 3.9, the Purchaser
has operated its business in compliance with all applicable Laws having
jurisdiction over its assets, its facilities or its operations, in all material
respects, and the Purchaser has not been notified in writing of any
noncompliance therewith, except circumstances in which noncompliance would not
result in a Material Adverse Effect on the Purchaser.
 
3.10. Tax-Deferred Reorganization.
 
 
 
20

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

 
(a) The Purchaser has no plan or intention to reacquire any Shares pursuant to
Section 1.5 hereof.
 
(b) It is the present intention of the Purchaser to continue at least one
significant historic business line of the Company, or to use at least a
significant portion of the Company’s historic business assets in a business, in
each case within the meaning of Treasury Regulations Section 1.368-1(d).
 
3.11. Tax Returns and Payments.  Except as set forth on Schedule 3.11, there are
no federal, state, county, local or foreign taxes dues and payable by the
Purchaser which have not been timely paid.  Except as set forth on Schedule
3.11, to the Purchaser’s Knowledge, there are no accrued and unpaid federal,
state, country, local or foreign taxes of the Purchaser which are due, whether
or not assessed or disputed.  There have been no examinations or audits of any
tax returns or reports by any applicable federal, state, local or foreign
governmental agency.  Except as set forth on Schedule 3.11, the Purchaser has
duly and timely filed all federal, state, county, local and foreign tax returns
required to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any year.
 
4. Conditions to the Purchaser’ Obligations at Closing.  The obligations of the
Purchaser to purchase the Assets at Closing are subject to the fulfillment, on
or before the Closing, of each of the following conditions, unless otherwise
waived:
 
4.1. Representations and Warranties.  The representations and warranties of the
Company contained in Section 2 shall be true and correct in all material
respects as of such Closing, except that any such representations and warranties
shall be true and correct in all respects where such representation and warranty
is qualified with respect to materiality in Section 2, as the case may be.
 
4.2. Performance.  All actions to be taken by the Company in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby shall be satisfactory in form and substance to the
Purchaser.
 
4.3. Compliance Certificate.  The President of the Company shall deliver to the
Purchaser at the Closing a certificate certifying that the conditions specified
in Sections 4.1 and 4.2 have been fulfilled.
 
4.4. Qualifications.  All authorizations, approvals or permits, if any, of any
Governmental Authority or regulatory body of the United States or of any state
that are required in connection with the lawful sale of the Assets pursuant to
this Agreement shall be obtained and effective as of the Closing.
 
4.5. [RESERVED].
 
4.6. Secretary’s Certificate.  The Secretary of the Company shall have delivered
to the Purchaser at the Closing a certificate certifying (i) the Bylaws of the
Company, and (ii) resolutions of the Board of Directors of the Company approving
the Transaction Agreements and the transactions contemplated under the
Transaction Agreements.
 
 
21

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

 
4.7. Employment Agreements.  The Purchaser shall have received executed the
Employment Agreements, in form satisfactory to the Purchaser, dated as of the
date of Closing, from Edwards and Oborn.
 
4.8. Proceedings and Documents.  All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Purchaser, and the Purchaser (or its counsel) shall have received all such
counterpart original and certified or other copies of such documents as
reasonably requested.  Such documents may include good standing certificates.
 
4.9. No Proceedings.  No action, suit, or proceeding shall be pending or
threatened before (or that could come before) any Governmental Authority or
before (or that could come before) any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or any
other Transaction Document, (B) cause any of the transactions contemplated by
this Agreement or any other Transaction Document to be rescinded following
consummation, or (C) adversely affect the right of the Purchaser to own the
Assets and to operate the Business (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect).
 
5. Conditions of the Company’s Obligations at Closing.  The obligations of the
Company to sell the Assets to the Purchaser at Closing or any subsequent Closing
are subject to the fulfillment, on or before the Closing, of each of the
following conditions, unless otherwise waived:
 
5.1. Representations and Warranties.  The representations and warranties of the
Purchaser contained in Section 3 shall be true and correct in all material
respects as of such Closing.
 
5.2. Performance.  The Purchaser shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by them on or before such
Closing.
 
5.3. Qualifications.  All authorizations, approvals or permits, if any, of any
Governmental Authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and contribution of the
Shares pursuant to this Agreement shall be obtained and effective as of the
Closing.
 
5.4. Purchase Price.  The Purchaser shall have paid the full amount of the
Purchase Price as set forth in Section 1.5 herein.
 
5.5. Compliance Certificate.  The Chief Executive Officer of the Purchaser shall
deliver to the Purchaser at the Closing a certificate certifying that the
conditions specified in Sections 5.1 and 5.2 have been fulfilled.
 
5.6. Secretary’s Certificate.  The Secretary of the Purchaser shall have
delivered to the Company at the Closing a certificate certifying (i) the Bylaws
of the Purchaser, and (ii) resolutions of the Board of Directors of the
Purchaser approving the Transaction
 
 
22

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

 
 
Agreements to which the Purchaser is a party, and the transactions contemplated
by the Transaction Agreements.
 
5.7. Consents.  All government filings, licenses, consents, authorizations,
waivers and approvals that are required to be made or obtained for the
consummation of the transactions contemplated by this Agreement will have been
duly made and obtained.
 
5.8. Transaction Agreements.  The Purchaser shall have executed and delivered a
counterpart signature to (a) each of the Employment Agreements, (b) the
Assignment Agreement, and (c) the Stock Restriction Agreement.
 
5.9. Proceedings and Documents.  All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Company, and the Company (or its counsel) shall have received all such
counterpart original and certified or other copies of such documents as
reasonably requested.  Such documents may include good standing certificates for
Purchaser.
 
5.10. Stock Restriction Agreement.  The Company shall have received from each of
BayHill Capital, LC, BayHill Group, LC and Robert K. Bench a counterpart to the
Stock Restriction Agreement.
 
6. Remedies for Breach of Transaction Documents.
 
6.1 Survival of Representations and Warranties..  All of the representations and
warranties of the Company contained in Section 2 of this Agreement shall survive
the Closing and continue in full force and effect for a period of one year
thereafter; except that (i) the representations and warranties of the Company
contained in Sections 2.1 of this Agreement shall survive the Closing and
continue in full force and effect indefinitely, and (ii) and the representations
and warranties of the Company contained in Section 2.18 of this Agreement shall
survive the Closing and continue in full force and effect until all applicable
statute of limitations has run.  All of the representations and warranties of
the Purchaser contained in Section 3 of this Agreement shall survive the Closing
and continue in full force and effect for a period of one year thereafter,
except that the representations and warranties of the Purchaser contained in
Section 3.11 of this Agreement shall survive the Closing and continue in full
force and effect until all applicable statute of limitations has run.
 
6.2 Indemnification.
 
(a) Indemnification of Purchaser.  The Company shall indemnify, defend and hold
harmless the Purchaser, and each of its officers, directors, employees, agents,
successors and assigns (collectively the “Purchaser Group”) from and against any
and all actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders, decrees, rulings,
damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees, including court costs and
attorneys’ fees and expenses (together, “Adverse Consequences”) incurred in
connection with, arising out of, resulting from or incident to any breach or
alleged breach of any covenant, representation, warranty or agreement or the
inaccuracy or alleged inaccuracy of any
 
 
23

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

 
 
representation made by the Company pursuant to this Agreement; provided that in
the event of any payment of the indemnity obligations of the Company set forth
in this Section 6.2(a) is required to be made, the Company may satisfy such
payment by delivery to Purchaser of any portion of the Shares acquired by the
Company pursuant to this Agreement, which Shares, for such purpose, shall be
valued at $0.05 per share.
 
(b) Indemnification of the Company.  The Purchaser shall indemnify, defend and
hold harmless the Company, and each of its officers, directors, employees,
agents, successors and assigns (collectively the “Company Group”) from and
against any and all Adverse Consequences incurred in connection with, arising
out of, resulting from or incident to any breach or alleged breach of any
covenant, representation, warranty or agreement or the inaccuracy or alleged
inaccuracy of any representation made by the Purchaser pursuant to this
Agreement.
 
6.3 Matters Involving Third Parties.
 
(a)            If any third party shall notify a party to be indemnified under
Section 6.2 (the “Indemnified Party”) with respect to any matter (a “Third Party
Claim”) which may give rise to a claim for indemnification against the other
party under this Section 6 (the “Indemnifying Party”), then the Indemnified
Party shall promptly notify the Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party thereby
is prejudiced.
 
(b)            The Indemnifying Party shall have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, or caused by the Third Party Claim, (B) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Company will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder (including the payment in cash of all fees
and costs associated with such defense), (C) the Third Party Claim involves only
money damages and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing business
interests of the Indemnified Party, and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
 
(c)            So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 6(b) above, (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), unless the following shall
apply (in which
 
 
24

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

 
 
case the Indemnifying Party may settle and compromise such Third Party Claim
without the prior written consent of the Indemnified Party):  (x) there is no
finding or admission of any violation of law or any violation of the rights of
any person and no affect on any other claims that may be made against the
Indemnified Party; and (y) the sole relief provided is monetary damages that are
paid in full by the Indemnifying Party; provided that in the event the Company
is the Indemnifying Party, such amount may be paid by delivery of a portion of
Shares to the Company in accordance with Section 6.2(a).
 
(d)            In the event any of the conditions in Section 6.2(b) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner they reasonably may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent from,
the Indemnifying Party in connection therewith), (B) theIndemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys’ fees
and expenses), and (C) the Indemnifying Party will remain responsible for any
Adverse Consequences the Purchaser may suffer resulting from, arising out of,
relating to, or caused by the Third Party Claim to the fullest extent provided
in this Section 6.  The parties agree that the Company, as a Indemnifying Party,
may reimburse the Purchaser, as the Indemnified Party, by delivery of a portion
of the Shares to Purchaser, which Shares, for such purpose, shall be valued in
accordance with Section 6.2(a) hereof.
 
6.4 Limitation on Claims.  In case any event shall occur which would otherwise
entitle either party to assert a claim for indemnification under Section 6.2, no
Adverse Consequences shall be deemed to have been sustained by such party to the
extent of (a) any tax savings realized by such party with respect thereto, or
(b) any proceeds received by such party from any insurance policies with respect
thereto.  No Person shall be entitled to recover under Section 6.2 or Section
6.3 until the total amount which such Person would recover under Section 6.2 or
Section 6.3, but for this Section 6.4, equals Twenty Thousand and No/100 Dollars
($20,000.00) (the “Deductible”), and then such Person shall be entitled to
recover only for the excess over the Deductible.  No Person shall be entitled to
recover under Section 6.2 or Section 6.3 to the extent (but only to the extent
that) the aggregate Adverse Consequences actually paid to such Person would
exceed Two Hundred Thousand Dollars ($200,000.00).
 
6.5 Sole Remedy.  The sole remedy of Purchaser for any and all claims of the
nature described in Section 6.2 shall be the indemnity set forth in Section 6.2,
as limited by the provisions of this Section 6.
 
7. Termination.  Certain of the parties to this Agreement may terminate this
Agreement as provided below.
 
7.1. Mutual Agreement.  The Company and the Purchaser may terminate this
Agreement by mutual written consent at any time prior to the Closing.
 
7.2. Due Diligence and Termination.  Prior to the Closing, the Company and its
directors, managers, officers, employees, attorneys, accountants, consultants,
advisors and other agents (collectively, “Representatives”) will have reasonable
access during normal
 
 
25

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

 
 
business hours and upon reasonable advance notice to the Purchaser to all
properties, books, accounts, records, contracts, and documents of or relating to
the Purchaser’s business so that the Company may have full opportunity to make
such investigation as it shall desire to make of the affairs of the Purchaser’s
business.   Either Party may terminate this Agreement by giving written notice
to the other Party on or before the Closing if such Party is not satisfied with
the results of its business, legal and accounting due diligence regarding the
other Party.
 
7.3            Purchaser Termination for Breach.  The Purchaser may terminate
this Agreement by giving written notice to the Company at any time prior to the
Closing (a) in the event the Company has breached any representation, warranty,
or covenant contained in this Agreement in any material respect, the Purchaser
has notified the Company of the breach, and the breach has continued without
cure for a period of ten (10) days after the notice of breach or (b) if the
Closing shall not have occurred on or before November 30, 2007, by reason of the
failure of any condition precedent under Section 4 hereof (unless the failure
results primarily from the Purchaser breaching any representation, warranty, or
covenant contained in this Agreement).
 
7.4            Company Termination for Breach.  The Company may terminate this
Agreement by giving written notice to the Purchaser at any time prior to the
Closing (a) in the event the Purchaser has breached any representation,
warranty, or covenant contained in this Agreement in any material respect, the
Company has notified the Company of the breach, and the breach has continued
without cure for a period of ten (10) days after the notice of breach or (b) if
the Closing shall not have occurred on or before November 30, 2007, by reason of
the failure of any condition precedent under Section 5 hereof (unless the
failure results primarily from the Company breaching any representation,
warranty, or covenant contained in this Agreement).
 
7.5            Effect of Termination.  If any party terminates this Agreement
pursuant to Sections 7.1, 7.2, 7.3 or 7.4 above, all rights and obligations of
the parties hereunder shall terminate without any liability of any party to any
other party (except for any liability of any party then in breach).
 
8. Miscellaneous.
 
8.1. Transfer; Successors and Assigns.  The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.  The parties agree that the Company may be
liquidated following the Closing at the direction of the Shareholders.
 
8.2. Governing Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Utah, without regard to its
principles of conflicts of laws.   EACH OF THE PARTIES HERETO HEREBY
UNCONDITIONALLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS OF SALT LAKE COUNTY, UTAH, IN CONNECTION WITH
 
 
26

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

 
 
ANY DISPUTE ARISING OUT OF THIS AGREEMENT, AND HEREBY WAIVES ANY OBJECTION TO
SUCH JURISDICTION INCLUDING WITHOUT LIMITATION OBJECTIONS BY REASON OF LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE, OR INCONVENIENT FORUM.  EACH OF THE
PARTIES HERETO HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY
WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER
BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG SUCH PARTIES ARISING
OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTION
AGREEMENTS.  THIS PROVISION IS A MATERIAL INDUCEMENT TO THE PARTIES ENTERING
INTO THIS AGREEMENT.
 
8.3. Counterparts.  This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.  This Agreement may also be executed and
delivered by facsimile signature and in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
 
8.4. Titles and Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
8.5. Notices.  All notices and other communications given or made pursuant to
this Agreement shall be in writing and shall be deemed effectively given:  (a)
upon personal delivery to the party to be notified, (b) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient, and if not so confirmed, then on the next business day, (c) five (5)
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.  All communications shall be sent to the respective
parties at their address as set forth on the signature page, or to such e-mail
address, facsimile number or address as subsequently modified by written notice
given in accordance with this Section 7.6.  If notice is given to the Company, a
copy shall also be sent to John G. Weston, Snell & Wilmer L.L.P., 15 West South
Temple, Suite 1200, Salt Lake City, Utah 84101 and if notice is given to the
Purchaser, a copy shall also be given to Brian G. Lloyd, Parr Waddoups Brown Gee
& Loveless, 185 South State Street, Suite 1300, Salt Lake City, Utah 84111.
 
8.6. No Finder’s Fees.  Each party represents that it neither is nor will be
obligated for any finder’s fee or commission in connection with this
transaction.  Each party agrees to indemnify and hold harmless the other party
from any liability for any commission or compensation in the nature of a
finder’s or broker’s fee arising out of this transaction (and the costs and
expenses of defending against such liability or asserted liability) for which
such party or any of its officers, employees or representatives is responsible.
 
8.7. Attorney’s Fees.  If any action at law or in equity (including arbitration)
is necessary to enforce or interpret the terms of any of the Transaction
Agreements, the prevailing party shall be entitled to reasonable attorney’s
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
 
 
27

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

 
8.8. Amendments and Waivers.  Any term of this Agreement may be amended,
terminated or waived only with the written consent of the Company and the
Purchaser.  Any amendment or waiver effected in accordance with this Section 8.8
shall be binding upon the Purchaser, the Company and their respective successors
and assigns.
 
8.9. Severability.  The invalidity of unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
 
8.10. Delays or Omissions.  No delay or omission to exercise any right, power or
remedy accruing to any party under this Agreement, upon any breach or default of
any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring.  Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing.  All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
 
8.11. Entire Agreement.  This Agreement (including the Exhibits hereto, if any),
and the other Transaction Agreements (as defined in this Agreement) constitute
the full and entire understanding and agreement between the parties with respect
to the subject matter hereof, and any other written or oral agreement relating
to the subject matter hereof existing between the parties are expressly
cancelled.
 
8.12. Other Agreements of the Purchaser. The Purchaser hereby covenants and
agrees that from the date of Closing and at all times thereafter:
 
(a)  Continuity of Business Enterprise.  The Purchaser will continue at least
one significant historic business line of the Company, or use at least a
significant portion of the Company’s historic business assets in a business, in
each case within the meaning of Treasury Regulations Section 1.368-1(d); and
 
(b) Acquisition of Common Stock.  There will be no plan or intention by the
Purchaser or any person “related” to the Purchaser (as defined in Treasury
Regulations Section 1.368-1(e)(3) to acquire or redeem any of the Purchaser
Common Stock issued in the transaction contemplated by this Agreement either
directly or through any transaction, agreement, or other arrangement with any
other person.
 

28

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

IN WITNESS WHEREOF, the parties have executed this Asset Purchase and
Reorganization Agreement as of the date first written above.
 
COGNIGEN NETWORKS, INC.,
a Colorado corporation:
 
By:   _______________________________                                                              
                                                
Name:  _____________________________                                                              
(print)
Title: ______________________________                                                               
 
 
Address: 10757 South Riverfront Parkway

 Suite 125
 South Jordan, Utah 84095

 

COMMISSION RIVER INC.,
a Utah corporation
 
By: ______________________________                                                               
 
Name: ____________________________                                                               
(print)
Title: _____________________________                                                               
 
 
Address: 12401 South 450 East

 
Suite D-1

Draper, Utah 84062

Signature Page to Asset Purchase Agreement

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

EXHIBITS
 
Exhibit A -                            Form of Bill of Sale
 
Exhibit B -                            Form of Assignment Agreement
 
Exhibit C -                            Form of Intellectual Property Assignment
Agreement
 
Exhibit D-                            Form of Employment Agreement
 
Exhibit E -                            Form of Stock Restriction Agreement
 

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

EXHIBIT A
 
Form of Bill of Sale

THIS BILL OF SALE AND ASSIGNMENT AGREEMENT (this “Agreement”) is dated as of
November 30, 2007 by and between Commission River Inc., a Utah corporation
(“Transferor”), and Cognigen Networks, Inc., a Colorado corporation
(“Transferee”).

RECITALS:

WHEREAS, in connection with the transactions contemplated by that certain Asset
Purchase and Reorganization Agreement by and among Transferor and Transferee,
dated as of November 30, 2007 (the “Purchase Agreement”), Transferor has agreed
to sell, transfer, convey, assign and deliver to Transferee certain assets, and
Transferee is willing to purchase such assets of Transferor, all in accordance
with the terms, conditions and agreements therein contained; and

WHEREAS, pursuant to Section 1.6(b) of the Purchase Agreement, Transferor is
obligated to execute and deliver this Agreement.

NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged:

1.            Transferor hereby irrevocably contributes, sells, transfers,
conveys, assigns and delivers to Transferee, and Transferee hereby purchases and
acquires all right, title, interest, assumed duties and obligations of
Transferor in and to the Assets. The assets and properties being sold,
transferred, conveyed, assigned and delivered hereby do not include any of the
Excluded Assets.

2.            This Agreement is subject to and includes by reference all of the
representations, warranties, covenants and indemnities set forth in the Purchase
Agreement.

3.            Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Purchase Agreement.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which, when taken together, shall constitute
one instrument.

[Signature page follows]

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

IN WITNESS WHEREOF, the undersigned have caused a duly authorized officer to
execute this Bill of Sale and Assignment Agreement as of the date first above
written.

TRANSFEROR:

COMMISSION RIVER INC.

By: _____________________________                                                               
Name: ___________________________                                                                         
Title: ____________________________                                                                          

TRANSFEREE:

COGNIGEN NETWORKS, INC.

By: ____________________________                                                               
Name: __________________________                                                                          
Title: ___________________________                                                                          

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

EXHIBIT B

Form of Assignment Agreement

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is dated as of
November 30, 2007 by and between Commission River Inc., a Utah corporation
(“Assignor”), and Cognigen Networks, Inc., a Colorado corporation (“Assignee”).

RECITALS:

WHEREAS, in connection with the transactions contemplated by that certain Asset
Purchase and Reorganization Agreement by and among Assignor and Assignee, dated
as of November 30, 2007 (the “Purchase Agreement”), Assignor has agreed to sell,
transfer, convey, assign and deliver to Assignee certain assets, and Assignee is
willing to purchase such assets of Assignor, all in accordance with the terms,
conditions and agreements therein contained; and

WHEREAS, pursuant to Section 1.6(b) of the Purchase Agreement, Assignor is
obligated to execute and deliver this Agreement.

NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged:

1.            Assignor hereby assigns and transfers to Assignee, and Assignee
hereby assumes and agrees to pay, perform and discharge the Assumed Liabilities
when such Assumed Liabilities become due. The Assumed Liabilities being assigned
and transferred hereby do not include any of the Retained Liabilities.

2.            This Agreement is subject to and includes by reference all of the
representations, warranties, covenants and indemnities set forth in the Purchase
Agreement.

3.            Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Purchase Agreement.

4.            This Agreement shall be governed by, and construed and interpreted
with, the laws of the State of Utah.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which, when taken together, shall constitute
one instrument.

[Signature page follows]

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

IN WITNESS WHEREOF, the undersigned have caused a duly authorized officer to
execute this Assignment and Assumption Agreement as of the date first above
written.

ASSIGNOR:

COMMISSION RIVER INC.

By: _______________________                                                               
Name:  _____________________                                                                         
Title:  ______________________                                                                         

ASSIGNEE:

COGNIGEN NETWORKS, INC.

By:  _______________________                                                              
Name: ______________________                                                                          
Title:  ______________________                                                                         

 

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

EXHIBIT C
 
Form of Intellectual Property Assignment Agreement

THIS INTELLECTUAL PROPERTY ASSIGNMENT AGREEMENT (this “Agreement”) is dated as
of November 30, 2007 by and between Commission River Inc., a Utah corporation
(“Assignor”), and Cognigen Networks, Inc., a Colorado corporation (“Assignee”).

RECITALS:

WHEREAS, in connection with the transactions contemplated by that certain Asset
Purchase and Reorganization Agreement by and among Assignor and Assignee, dated
as of November 30, 2007 (the “Purchase Agreement”), Assignor has agreed to sell,
transfer, convey, assign and deliver to Assignee certain assets, and Assignee is
willing to purchase such assets of Assignor, all in accordance with the terms,
conditions and agreements therein contained; and

WHEREAS, pursuant to Section 1.6(b) of the Purchase Agreement, Assignor is
obligated to execute and deliver this Agreement.

NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged:

1.            Assignor hereby contributes, assigns, transfers, conveys and
delivers unto Assignee, its successors and assigns, and Assignee hereby accepts
and acquires from Assignor, all of Assignors’ right, title, and interest in, to,
and under any patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, proprietary rights, processes, computer software
and internet domain names, together with the goodwill of the business relating
to the goods and services in respect upon which the trademarks are used,  rights
under and remedies against infringement of any of the foregoing, all income,
royalties, and damages hereafter due or payable to Assignor with respect to the
foregoing, all rights to sue for past, present, and future infringements or
misappropriations of the foregoing, and rights to protection of interests in any
of the foregoing under any applicable Laws used or held for use by the Assignor
in connection with the Business, including without limitation, the intellectual
property identified on Exhibit A attached hereto, the same to be held and
enjoyed by Assignee for its own use and for the use of its successors and
assigns.
 
Assignor further covenants that it will execute all documents, papers, forms and
authorizations and take all other actions that may be necessary for securing,
completing, vesting, or enforcing in Assignee full right, title, and interest in
any patents, trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, proprietary rights, processes, computer software and
internet domain names owned by Assignor.
 
2.            This Agreement is subject to and includes by reference all of the
representations, warranties, covenants and indemnities set forth in the Purchase
Agreement.
 
 

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

 
3.            Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Purchase Agreement.
 

4.            This Agreement shall be governed by, and construed and interpreted
with, the laws of the State of Utah.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which, when taken together, shall constitute
one instrument.

[Signature page follows]
 
 

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

IN WITNESS WHEREOF, the undersigned have caused a duly authorized officer to
execute this Intellectual Property Assignment Agreement as of the date first
above written.

ASSIGNOR:

COMMISSION RIVER INC.

By: ___________________________                                                               
Name: _________________________                                                                         
Title: __________________________                                                                          

ACKNOWLEDGMENT
 

STATE OF UTAH                                )
)
COUNTY OF SALT LAKE                 )

On this the 30th day of November, 2007, before me, the undersigned Notary
Public, personally appeared _______________________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person who
executed the above and foregoing Assignment, and acknowledged to me that he
executed it.
 
WITNESS my hand and official seal.
 

___________________________________
Notary Public in and for the State of Utah
 

 

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

 
ASSIGNEE:

COGNIGEN NETWORKS, INC.

By: _____________________________                                                               
Name: ___________________________                                                                          
Title: ____________________________                                                                          

 
ACKNOWLEDGMENT
 

STATE OF UTAH                                                       )
)
COUNTY OF SALT
LAKE                                                                 )

On this the 30th day of November, 2007, before me, the undersigned Notary
Public, personally appeared _______________________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person who
executed the above and foregoing Assignment, and acknowledged to me that he
executed it.
 
WITNESS my hand and official seal.
 

___________________________________
Notary Public in and for the State of Utah

 

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

Exhibit A
 
[See Attached]
 

ACKNOWLEDGMENT
 

STATE OF UTAH                                )
)
COUNTY OF SALT LAKE                 )

On this the ____ day of November, 2007, before me, the undersigned Notary
Public, personally appeared _______________________________, personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person who
executed the above and foregoing Assignment, and acknowledged to me that he
executed it.
 
WITNESS my hand and official seal.
 

___________________________________
Notary Public in and for the State of Utah

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

EXHIBIT D
 
Form of Employment Agreement
 
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective
as of November __, 2007 (the “Effective Date”), by and between Cognigen
Networks, Inc., a Colorado corporation (the “Company”) and [Adam Edwards]
[Patrick Oborn], an individual (the “Employee”).
 
RECITAL
 
WHEREAS, pursuant to the terms of that certain Asset Purchase and Reorganization
Agreement (the “Purchase Agreement“) dated November __, 2007 by and among the
Company and Commission River Inc. (“Commission River”), the Company proposes to
acquire substantially all of the assets of Commission River in exchange for
shares of voting common stock of the Company (the “Transaction”);
 
WHEREAS, an essential condition to the Transaction is the execution of an
Employment Agreement to be entered into between the Employee and the Company;
and
 
WHEREAS, the Company desires to employ Employee and the Employee desires to be
employed by the Company, upon the terms and subject to the conditions
hereinafter set forth.
 
NOW, THEREFORE, in consideration of the mutual premises and agreements
hereinafter set forth, and for other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, Company and Employee,
intending to be legally bound, agree as follows:
 
AGREEMENT
 
1. Employment.  Commencing on the Effective Date and continuing throughout the
term of this Agreement, the Company hereby agrees to employ the Employee as the
[Vice President of the Company and President and General Manager of Commission
River Operations] [Vice President of Marketing of the Company and Vice President
of Marketing of Commission River Operations] or a similar position with a
subsidiary of the Company, and the Employee hereby accepts employment with the
Company or subsidiary of the Company, upon the terms and subject to the
conditions set forth herein.
 
2. Term.  The Employee shall be employed by the Company for a period of three
(3) years from the Effective Date or until the Employee’s employment with the
Company is terminated in accordance with Section 6.
 
3. Duties.
 
General Duties.  The Employee will initially be employed as the [Vice President
of the Company and President and General Manager of Commission River Operations]
[Vice President of Marketing of the Company and Vice President of Marketing of
Commission
 
 

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

 
River Operations], and will have and perform those duties and responsibilities
which are appropriate and customary to the position held by the Employee and
assigned or delegated to the Employee from time to time by the Company’s Board
of Directors (the “Board”), President or Chief Executive Officer.  The Board or
the Company’s President or Chief Executive Officer may, in their sole
discretion, alter, modify, or change the Employee’s duties, offices, positions,
responsibilities and obligations set forth in this Agreement at any time
(including employing the Employee with a subsidiary of the Company), consistent
with the Employee’s status as [Vice President of the Company and President and
General Manager of Commission River Operations] [Vice President of Marketing of
the Company and Vice President of Marketing of Commission River Operations].
 
(a) Performance.  To the best of the Employee’s ability and experience, the
Employee will at all times loyally and conscientiously perform all duties, and
discharge all responsibilities and obligations, required of and from the
Employee pursuant to the terms hereof, and to the satisfaction of the
Company.  Notwithstanding the foregoing, the Employee shall be free to engage in
the business management and ownership of, or employment by, Telarus, Inc.
(“Telarus”), as long as such engagement does not materially interfere with his
employment with the Company.  For purposes of this Agreement, the scope of
Telarus’ business in which Employee may be engaged shall be limited to (i)
ownership of common shares of Telarus, and (ii) sales, marketing and consulting
services in the area of commercial information technology, including without
limitation telecommunications services and devices, networking services and
devices, residential broadband sales and services through www.shop4DSL.com,
software and software as a service (collectively, the “Telarus
Business”).  Additional products, services and business pursuits may be added to
the Telarus Business by written consent of the Company which consent will not be
unreasonably withheld.
 
(b) Place of Performance.  In connection with the Employee’s employment by the
Company and unless the parties hereto mutually agree otherwise, the Employee
will be based at the Company’s offices in Draper, Utah, except for required
travel on Company business.
 
4. Compensation and Related Matters.
 
(a) Salary and Bonus.  In consideration for services rendered to the Company as
provided herein, the Company will pay to the Employee a base salary (the “Base
Salary”) at a rate of: (x) $72,000 per annum for the first thirteen (13) months
following the Effective Date; and (y) $100,000 per annum thereafter during the
term of this Agreement.  The Base Salary shall be paid as follows:
 
(i)  For the first thirteen (13) months following the Effective Date and
calculated on a per annum basis: (x) $24,000 of the Base Salary will be paid in
cash according to the Company’s standard payroll policy as in effect from time
to time, which currently provides for payments to be made twice a month, in
arrears; and (y) $48,000 of the Base Salary will be paid within thirty (30) days
of the Company’s fiscal year end, and shall be paid in shares of common stock of
the Company (the “Shares”).  The Company shall issue such Shares to Employee
based on the stock price of $.03 per share of common
 
 

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

 
stock of the Company.  The Company shall issue the Shares in compliance with all
applicable state and federal securities laws.
 
(ii)  Subsequent to the first thirteen (13) months following the Effective Date
and calculated on a per annum basis, the Base Salary will be paid in cash
according to the Company’s standard payroll policy as in effect from time to
time, which currently provides for payments to be made twice a month, in
arrears.
 
(iii)  The Employee shall also be eligible to receive bonuses (each a “Bonus”),
payable in cash within forty-five (45) days after the Company’s fiscal year
end.  Each Bonus will be based upon the Employee achieving certain performance
objectives established and provided to the Employee by the Board or the
Company’s President or Chief Executive Officer.
 
Subject to Section 6(a)(iv) hereof, the Base Salary may be increased from time
to time in accordance with normal business practices of the Company.
 
(b) Expenses.  The Employee will be entitled to receive reimbursement for
reasonable expenses incurred by the Employee in performing services hereunder,
including expenses for travel and living expense while away from home on
business in the service of the Company; provided that all expenses are incurred,
documented, and accounted for in accordance with the policies and procedures as
are from time to time established by the Company and expenses in excess of
$5,000 are approved in advance by the President, Chief Executive Officer or
Chief Financial Officer of the Company.
 
(c) Employee Benefit Plans.  During the term of this Agreement, the Employee is
entitled to participate in any employee benefit plans which may be made
available by the Company to its employees generally, including, but not limited
to, cafeteria plans and health, life, hospitalization, stock purchase plans,
option plans, dental, disability or other insurance plans as may be in effect
from time to time and in accordance with rules established from time to time for
individual participation in such plans.
 
(d) Paid Leave.  The Employee will be entitled to the number of paid leave days
in each calendar year as is determined in accordance with the Company’s paid
leave policy as in effect from time to time.  The Employee will also be entitled
to all paid holidays given by the Company to its employees.  Use of paid leave
(and, if applicable, accrual of and compensation for unused paid leave) will be
subject to the Company’s policies.
 
5. Facilities and Services Furnished.  The Company will furnish the Employee
with office space, and such other facilities, furniture, equipment, and services
as it may determine to be reasonably necessary for the performance of the
Employee’s duties as set forth herein.
 
6. Termination.
 
(a) Termination Events.  The Employee’s employment hereunder may be terminated
under any of the following circumstances:
 

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

(i) Death.  The Employee’s employment hereunder shall terminate upon the
Employee’s death.
 
(ii) Disability.  If the Employee is determined to be “disabled” in accordance
with this Section 6(a)(ii), the Company may terminate the Employee’s employment
hereunder.  For purposes of this Agreement, the Employee shall be considered
“disabled” if in the reasonable, good faith judgment of a licensed physician
selected jointly by the Company and the Employee (or the Employee’s personal
representative), the Employee is unable, after any accommodation required by
applicable law, to perform the Employee’s customary duties as an employee of the
Company because of a physical or mental impairment for a period of three (3)
consecutive months.  The determination by the physician selected by the Company
and the Employee (or the Employee’s personal representative) shall be binding
and conclusive for all purposes.  If the Company and the Employee (or the
Employee’s personal representative) cannot agree on a single physician, the
Company and the Employee (or the Employee’s personal representative) may each
designate a physician.  If the two (2) physicians do not agree on whether the
Employee is “disabled” as defined in this Section 6(a)(ii), they shall jointly
appoint a third (3rd) physician, whose judgment concerning whether the Employee
is disabled shall be binding and conclusive on all parties.  The Employee agrees
to submit to such physical examinations as may be ordered by any physician
selected pursuant to this Section 6(a)(ii).
 
(iii) Cause.  The Company may terminate the Employee’s employment hereunder for
Cause (as defined below) at any time upon delivery of written Notice of
Termination (as defined below) to the Employee.  For purposes of this Agreement,
“Cause” shall mean (1) the conviction of (or the plea of guilty or no contest
to) a felony, as evidenced by a judgment, order or decree of, or acceptance of a
plea of nolo contendere (or similar plea) by, a court of competent jurisdiction,
which the Board reasonably determines is likely to have a material adverse
effect on the ability of the Employee to effectively perform the Employee’s
duties, (2) unreasonable neglect or refusal by the Employee to perform the
Employee’s duties or responsibilities that remains uncured for at least ten (10)
days following the Employee’s receipt of written notice of such neglect or
refusal from the Board, (3) the Employee’s performance of an act or failure to
perform an act which, if the Employee were prosecuted and convicted, would
constitute a felony, (4) a material violation by the Employee of the Company’s
established policies and procedures that remains uncured for at least ten (10)
days following the Employee’s receipt of written notice of such violation from
the Board, (5) the breach by the Employee of any of the Employee’s material
obligations under this Agreement that remains uncured for at least ten (10) days
following the Employee’s receipt of written notice of such breach from the
Board; provided that the Employee shall not have any opportunity to cure any
material breach of Section 8 or Section 9 hereof, or (6) the Employee’s
commission of an act of fraud, misappropriation or embezzlement against the
Company.  A determination of whether the Employee’s actions justify termination
for Cause and the date on which such termination is effective shall in each case
be made in good faith by the Board; provided that the mere allegation of any act
described in clause (3) or (6)
 
 

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

 
above shall not constitute a sufficient basis for “Cause” under such clause (3)
or (6), as applicable, and the Employee shall be given in advance of such
determination a full and detailed written statement of the basis of such claim
and shall be given the opportunity to provide contrary proof before the Board,
except that such opportunity will not be required to be given in the event of
actual conviction of the type of felony referred to above.
 
(iv) Other Events of Termination.  The Employee’s employment hereunder may be
terminated (1) by the Company at any time for any other reason or no reason by
providing written Notice of Termination to the Employee; (2) by the Employee,
upon the Company’s breach of any material provision of this Agreement that is
not cured by the Company within ten (10) days of the Company’s written receipt
of written notice of such breach from Employee; or (3) by the Employee for “Good
Reason” at any time, which shall mean (i) a change in the Employee’s position
that materially reduces his level of authority or responsibility; (ii) a change
in Employee’s reporting authority to the Company’s Chief Executive Officer or
the Board; (iii) the Company’s failure to pay any amount due or owing to the
Employee under the terms of this Agreement; (iv) the Company’s reduction of the
Base Salary to an amount less than the amount provided for in Section 4(a)
above; or (v) the Company’s breach of any material provisions of this Agreement
not involving the payment of money and the expiration of ten (10) business days
after the Company’s receipt of written notice of such breach from the Employee
unless cured within twenty (20) business days following the notice period.
 
(b) Notice of Termination.  “Notice of Termination” shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee’s employment under the provision
so indicated.
 
(c) Effect of Termination.  In the event the Employee’s employment is
terminated, all obligations of the Company and the Employee under this Agreement
shall cease, except that if the Employee is terminated pursuant to Section
6(a)(i), 6(a)(ii) or 6(a)(iii) hereof, the terms of Section 7 through Section 11
shall survive such termination.  Upon termination for any reason, the Employee
or the Employee’s representative or estate shall be entitled to receive any
applicable compensation, benefits, and reimbursements set forth in Section
7.  The Employee acknowledges that, upon termination of the Employee’s
employment, the Employee is entitled to no other compensation, severance or
other benefits other than those specifically set forth under Section 7(b) or any
other provision of this Agreement.
 
7. Compensation and Severance Upon Termination.
 
In the event the Employee’s employment hereunder is terminated pursuant to
Section 6(a)(i), 6(a)(ii) or 6(a)(iii) above, the Employee or his estate shall
only be entitled to receive the amount of the Base Salary payable through the
date of termination, and shall not be entitled to any salary, compensation or
benefits from the Company thereafter,
 
 

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

 
except as otherwise specifically provided for under the Company’s employee
benefit plans or as otherwise expressly required by applicable law.
 
(a)  In the event the Employee’s employment hereunder is terminated pursuant to
Section 6(a)(iv) above, Employee shall be entitled receive the following
payments (all such payments will be made according to the Company’s standard
payroll policy as in effect from time to time):
 
(i)  If Employee’s employment is terminated within the twelve (12) month period
from the Effective Date, the Company shall pay to the Employee an amount that is
equal to the sum of: (1) twelve (12) months of the Base Salary payable pursuant
to Section 4(a)(x), and (2) any Bonus earned by the Employee in accordance with
Section 4(a) hereof, all paid in cash pro rata over the twelve (12) month period
commencing on the date of termination, plus the full medical, dental and vision
premiums for continuation coverage under COBRA for the Employee and his
dependents who qualify for continuation coverage under COBRA for one (1) year
following the date of termination.
 
(ii)  If Employee’s employment is terminated at any time on or after the first
anniversary of the Effective Date, the Company shall pay to the Employee an
amount that is equal to the sum of three (3) months of the Base Salary for the
year in which the termination occurred, plus the full medical, dental and vision
premiums for continuation coverage under COBRA for the Employee and his
dependents who qualify for continuation coverage under COBRA for three (3)
months following the date of termination.
 
8. Confidentiality and Inventions Assignment.
 
(a) Confidential Information and Work for Hire.  The Employee and the Company
hereby acknowledge and agree that in connection with the employment of the
Employee, the Employee has been and will be provided with or shall otherwise be
exposed to or receive certain confidential and/or proprietary information of the
Company or of third parties and may develop certain products, services, methods,
know-how, procedures, formulae, processes, specifications, and information of a
similar nature that relate to the services provided by the Employee to the
Company.  The Employee shall abide by the terms of this Section 8.
 
(b) Definitions.  As used herein:
 
(i)            “Confidential Information” shall mean any and all tangible and
intangible information, whether oral or in writing or in any other medium,
relating to the management, business, strategy, plans, intellectual property,
operations, products, inventions, financial condition, financial results, and
financial projections of Commission River or the Company, including without
limitation, any and all trade secrets, know-how, designs, drawings, schematics,
formulations, ingredients, samples, processes, machines, prototypes, mock-ups,
processing and control information, product performance data, manuals, supplier
lists, customer lists, purchase and sales records, marketing information and
computer programs, whether developed by Commission River or the Company or
furnished to Commission River or the Company by other third parties; and all
information
 
 

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

                which relates to the analysis and evaluation of the Confidential
Information and/or the use thereof developed or compiled by Commission River or
the Company.
                Confidential Information shall not include Excluded Information
(as defined below).
 
(ii)            “Excluded Information” shall refer to information, if any, that
would otherwise constitute Confidential Information and that (1) is generally
available to or known by the public other than as a result of a disclosure made
by Employee in breach of this Agreement; (2) was available to Employee on a
nonconfidential basis prior to disclosure to Employee by the Company; (3) is
disclosed to Employee on a nonconfidential basis from a source other than the
Company; provided that Employee is not, in good faith after reasonable inquiry,
aware that such source is or was bound by a confidentiality agreement with the
Company or otherwise prohibited from transmitting the information to Employee by
any contractual, legal, or fiduciary obligation or by any other obligation
enforceable by law or in equity; (4) is hereafter independently developed or
compiled by Employee without the aid, application, or use of the Confidential
Information; or (5) was available to the Employee or is hereinafter
independently developed, compiled or obtained by the Employee while the Employee
was engaged in the Telarus Business.  Excluded Information does not include
information that would otherwise constitute Confidential Information during the
period from the date the information was disclosed by the Company to Employee
and the date that such information became Excluded Information.
 
(iii)            “Person,” whether or not the term is capitalized, will be
interpreted very broadly and will include, without limitation, any individual,
corporation (including a business trust), partnership, joint stock company,
limited liability company, trust, estate, unincorporated association, joint
venture, or other entity, or a government or any political subdivision or agency
thereof, whether or not any such person is an officer, director, employee, or
agent of the Company.
 
(c) Use of Confidential Information.  The Confidential Information will be used
by the Employee solely for the purposes of performing services for the
Company.  The Confidential Information will not, without the prior written
consent of the Company, be used by the Employee, directly or indirectly, for any
other purpose.  Such use shall cease at any time when this Agreement has
terminated in accordance with its terms.
 
(d) Nondisclosure.  The Employee agrees to safeguard the confidentiality of the
Confidential Information and not to disclose any part of it to any Person except
to those employees of the Company who need to know such information for the
purposes of performing services for the Company.
 
(e) Return of Confidential Information.  Promptly upon the request of the
Company, the Employee will return to the Company all copies of Confidential
Information furnished to the Employee by the Company, together with all copies
of any of the same (whether in hard-copy form or on intangible media, such as
electronic mail or computer files), or any part thereof, made by the
Employee.  All notes, studies, reports,
 

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

 
memoranda, and other documents prepared by the Employee that contain or reflect
the Confidential Information shall also be returned to the Company.
 
(f) Dispute as to Confidential Nature of Information.  In the event of a dispute
or litigation between the Employee and the Company, the Employee shall have the
burden of proving that any information disclosed to the Employee by the Company
or used by the Employee, and which information the Employee claims does not
constitute Confidential Information, is not in fact Confidential Information or
a derivative thereof.
 
(g) Subpoena; Court Order; Other Legal Requirement.  If the Employee is
requested, under the terms of a subpoena or order or other compulsory instrument
issued by or under the authority of a court of competent jurisdiction or by a
governmental agency, or is advised in writing by counsel for any such party that
there is otherwise a legal obligation to disclose (i) all or any part of the
Confidential Information, (ii) the fact that the Confidential Information has
been made available to the Employee, or (iii) any of the terms, conditions, or
other facts with respect to the Employee’s employment with the Company or the
services provided by the Employee to the Company, the Employee agrees to, at the
Company’s expense: (1) provide the Company with prompt written notice of the
existence, terms, and circumstances surrounding such request or requirement; (2)
consult with the Company on the advisability of taking steps to resist or narrow
that request; (3) if disclosure of Confidential Information is required, furnish
only such portion of the Confidential Information as the Employee is advised in
writing by the Employee’s counsel is legally required to be disclosed; and (4)
cooperate with the Company, at the request of the Company and at the Company’s
expense, in its efforts to obtain an order excusing the Confidential Information
from disclosure, or an order or other reliable assurance that confidential
treatment will be accorded to that portion of the Confidential Information that
is required to be disclosed.
 
(h) Inventions and Other Intellectual Property
 
Attached hereto as Schedule A is a list describing all inventions, original
works of authorship, developments, improvements, and trade secrets which were
owned or developed by the Employee prior to the Employee’s relationship with
Commission River or the Company, which relate to the Company’s proposed
businesses and products, and which are not assigned to the Company pursuant to
this Section 8(h).  If no such list is attached, the Employee represents that
there are no such inventions. The Employee agrees to promptly make full written
disclosure to the Company, to hold in trust for the sole right and benefit of
the Company, and to assign to the Company all of the Employee’s right, title,
and interest in and to any and all inventions, original works of authorship,
developments, improvements, discoveries, ideas, know-how, processes, methods,
formulae, techniques or trade secrets, whether or not patentable or
copyrightable, which the Employee has solely or jointly conceived or developed
or reduced to practice, may solely or jointly conceive or develop or reduce to
practice, or cause to be conceived or developed or reduced to practice, during
the Employee’s relationship with the Company, whether as an officer, employee or
other service provider.  The Employee acknowledges and understands that this
Section 8(h) will not apply to an invention as to which the Employee can prove
the following:
 
 

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

 
(1)            It was created by the Employee entirely on the Employee’s own
time;
 
(2)            It was not conceived, developed, reduced to practice or created
by the Employee:
 
(A)          within the scope of the Employee’s engagement or employment;
 
(B)          on the Company’s time; or
 
(C)          with the aid, assistance or use of any of the Company’s property,
equipment, facilities, supplies, resources or intellectual property;
 
(3)            It does not result from any work, services or duties performed by
the Employee for the Company;
 
(4)            It does not relate to the industry or trade of the Company; and
 
(5)            It does not relate to the current or demonstrably anticipated
business, research or development of the Company.
 
The Employee acknowledges that all original works of authorship which are made
by the Employee (solely or jointly with others) within the scope of the
Employee’s work related to the Company and which are protectable by copyright
are “works made by hire,” as that term is defined in the United States Copyright
Act (17 U.S.C.A. § 101).  The Employee further agrees that, with respect to any
“works made by hire” by the Employee (solely or jointly with others), the
Employee will receive no royalty or other consideration therefor.
 
(ii)            Maintenance of Records.  The Employee agrees to keep and
maintain adequate and current written records of all inventions and original
works of authorship made by the Employee (solely or jointly with others) during
the term of the Employee’s relationship with the Company, whether as an officer,
employee or other service provider, which will be in the form of notes,
sketches, drawings, and any other format that may be specified by the Company;
provided that the Employee shall not be required to maintain such records for
any invention or original work of authorship made by the Employee in connection
with the Employee’s services to Telarus related to the Telarus Business, as
permitted hereunder.  Except as limited by the foregoing sentence, the records
will be available to and remain the sole property of the Company at all
times.  The records will include, but will not be limited to information as to
all inventions, as well as information as to any studies or research projects
undertaken on the Company’s behalf or with the aid, assistance or use of any of
the Company’s property, equipment, facilities, supplies, resources or
intellectual property, describing in detail the procedures employed and the
results achieved, and any other information the Company requires.
 
 

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

 
(iii)            Inventions Assigned to the United States.  The Employee agrees
to assign to the United States government or any state or local government all
of the Employee’s right, title, and interest in and to any and all inventions,
original works of authorship, developments, improvements or trade secrets
whenever such full title is required to be in the United States or any state or
local government by contract between the Company and the United States
government or any state or local government if applicable, except for
inventions, original works of authorship, developments, improvements or trade
secrets that are expressly excluded in this Agreement.
 
(iv)            Obtaining Letters Patent and Copyright Registrations.  The
Employee agrees that the Employee will apply, at the Company’s expense and
request, for United States and foreign letters patent or copyrights, either in
the Employee’s name or otherwise as the Company desires, covering inventions and
original works of authorship assigned hereunder to the Company.  The Employee
further agrees that the Employee’s obligation to assist the Company to obtain
such United States or foreign letters patent and copyright registrations will
continue beyond the termination of the Employee’s relationship with the Company,
whether as an officer, employee or other service provider, but the Company shall
compensate the Employee for such assistance at a reasonable rate for time
actually spent by the Employee beyond termination of the Employee’s relationship
with the Company at the Company’s request.  If the Company is unable because of
the Employee’s mental or physical incapacity or for any other reason to secure
the Employee’s signature to apply for or to pursue any application for any
United States or foreign letters patent or copyright registrations covering
inventions or original works of authorship assigned to the Company pursuant to
this Agreement, then the Employee hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as the Employee’s agent and
attorney in fact, to act for and in the Employee’s behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by the
Employee.  The Employee hereby waives and quitclaims to the Company any and all
claims, of any nature whatsoever, which the Employee now or may hereafter have
for infringement of any patents or copyright resulting from any application for
letters patent or copyright registrations assigned hereunder to the Company.
 
9. Non-Competition
 
Non-Competition Provision is Integral Part of Agreement.  The Company and the
Employee have negotiated the non-competition provisions as an integral part of
this Agreement.  The Company and the Employee agree to the non-competition and
other provisions contained herein and agree that such provisions are reasonable
and are necessary to induce the Company and the Employee to enter into this
Agreement.  If, at the time of enforcement of any provision of this Agreement, a
court or other tribunal shall hold that the restrictions herein are unreasonable
or unenforceable under circumstances then existing, the Employee agrees that the
maximum period, scope or geographical area
 
 

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

 
reasonable under such circumstances shall be substituted for the period, scope
or area stated herein.
 
(a) Non-Competition.  The Employee agrees that during the term of the Employee’s
employment with the Company and for a period of two (2) years thereafter (the
“Restrictive Period”), the Employee will not, unless otherwise agreed by the
Company in writing, directly or indirectly, as promoter, shareholder, agent,
representative, manager, director, officers, owner, independent contractor or
otherwise or in connection with any consultant, employee, agent, partner,
relative, or affiliate of the Employee:
 
(i)  Anywhere in the world (the “Restricted Area”) own, manage, operate or
control any business of the type and character engaged in and competitive with
the Company or any affiliate thereof (for purposes of this paragraph, ownership
of securities of not in excess of two percent (2%) of any class of securities of
a public company shall not be considered to be competition with the Company or
any affiliate thereof);
 
(ii)  Anywhere in the Restricted Area, act as an employee, officer, director,
manager, member, advisor, representative, partner, consultant or agent for any
business of the type and character engaged in and competitive with the Company,
or any of its affiliates; or
 
(iii)  Solicit the employment of any employee or independent contractor of the
Company or any of its affiliates.
 
The Company hereby acknowledges and agrees that any of the Employee’s ownership
interest in, or services to, Telarus during the Restricted Period shall not be
deemed a breach of this Section 9 or any other provision of this agreement,
provided that Telarus does not engage, directly or indirectly, in business other
than the Telarus Business.
 
(b) Definitions.  For purposes of this Agreement, the term “competitive with the
Company” shall mean any business (other than the Telarus Business) located
anywhere in the Restricted Area that (i) conducts business similar to the
Company during the Employee’s employment with the Company or (ii) is engaged in
the business of providing services and/or products similar to those of the
Company during Employees employment with the Company related to providing
technology, tools, and products to affiliate marketers and creating and managing
affiliate programs for product vendors, but shall expressly exclude the
Employee’s ownership of, providing services to, or employment by, Telarus.  As
used in this Agreement, the term “affiliate” shall mean any individual, joint
venture, partnership, corporation, limited liability company, or shareholder
which controls, is controlled by, or is under common control with, the Company,
or in which the Company owns any interest, as required by the context of this
Agreement.
 
10. Availability of Equitable Remedies.  The Employee hereby acknowledges and
agrees that a breach of any of the agreements contained in this Agreement will
cause irreparable harm and damage to the Company, that the remedy at law for the
breach or threatened breach of the agreements set forth in this Agreement will
be inadequate, and that, in addition to all other
 
 

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

 
remedies available to the Company for such breach or threatened breach
(including, without limitation, the right to recover damages), the Company will
be entitled to injunctive relief for any breach or threatened breach of the
agreements contained in this Agreement.
 
11. Representations and Warranties.
 
(a) Restricted Securities.  The Employee understands that any Shares that may be
issued to Employee hereunder have not been, and will not be, registered under
the Securities Act of 1933, as amended (the “Securities Act”), by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of the Employee’s representations as expressed herein.  The
Company understands that the Shares are “restricted securities” under applicable
U.S. federal and state securities laws and that, pursuant to these laws, the
Employee must hold the Shares indefinitely unless they are registered with the
SEC and qualified by state authorities, or an exemption from such registration
and qualification requirements is available.  The Employee acknowledges that the
Company has no obligation to register or qualify the Shares for resale.  The
Employee further acknowledges that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Shares, and on requirements relating to the Company which are outside of
the Employee’s control, and which the Company is under no obligation and may not
be able to satisfy.
 
(b) Limited Market.  The Employee understands that the Shares are quoted on the
Over-the-Counter Bulletin Board and that a limited public market exists for the
Shares.  The Company has made no assurances that an active public market will
ever exist for the Shares.
 
(c) Legends.  The Employee understands that the Shares and any securities issued
in respect of or exchange for the Shares, may bear one or all of the following
legends:
 
(i)            “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF.  NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933.”
 
(ii)            Any legend required by the securities laws of any state to the
extent such laws are applicable to the Shares represented by the certificate
with such legend.
 
(d) Adequate Knowledge; No Reliance Upon Representations.
 
 

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

 
(i)            The Employee acknowledges and confirms that he has been given a
reasonable opportunity to review all documents, books, records and materials of
the Company pertaining to the Shares, has been supplied with all additional
information concerning the Company and the Shares that has been requested, has
had a reasonable opportunity to ask questions of and receive answers from the
Company or its authorized representatives concerning the Shares and that all
questions have been answered to the full satisfaction of Employee.
 
(ii)            The Employee has received no representations, written or oral,
from the Company or its officers, directors, employees, attorneys or agents
other than those contained in this Agreement. In making the decision to receive
the Shares as a portion of the Base Salary, the Employee has relied solely upon
his review of the Company’s books and records, this Agreement, the Purchase
Agreement and independent investigations made by him.
 
12. Miscellaneous.
 
(a) Severability. In the event that a court of competent jurisdiction determines
that any portion of this Agreement is in violation of any statute or public
policy, then only the portions of this Agreement which violate such statute or
public policy shall be stricken.  All portions of this Agreement which do not
violate any statute or public policy shall continue in full force and
effect.  Further, any court order striking any portion of this Agreement shall
modify the stricken terms to give as much effect as possible to the intentions
of the parties under this Agreement.
 
(b) Notices.  All notices, demands, and other communications provided for
hereunder shall be in writing (including facsimile or similar transmission) and
mailed (by U.S. certified mail, return receipt requested, postage prepaid),
sent, or delivered (including by way of overnight courier service), (i) if to
the Company, to Cognigen Networks, Inc., 1559 North Technology Way, Orem, Utah,
Attn: Bob Bench, and in the case of facsimile transmission, to facsimile number
(801) 705-9372; (ii) if to the Employee, to the address set forth opposite the
Employee’s name on the signature page, and in the case of facsimile
transmission, to the facsimile number set forth opposite the Employee’s name on
the signature page or, as to each party, to such other person and/or at such
other address or number as shall be designated by such party in a written notice
to the other party.  All such notices, demands, and communications, if mailed,
shall be effective upon the earlier of (1) actual receipt by the addressee, (2)
the date shown on the return receipt of such mailing, or (3) three (3) days
after deposit in the mail.  All such notices, demands, and communications, if
not mailed, shall be effective upon the earlier of (A) actual receipt by the
addressee, (B) with respect to facsimile and similar electronic transmission,
the earlier of (x) the time that electronic confirmation of a successful
transmission is received, or (y) the date of transmission, if a confirming copy
of the transmission is also mailed as described above on the date of
transmission, and (C) with respect to delivery by overnight courier service, the
day after deposit with the courier service, if delivery on such day by such
courier is confirmed with the courier or the recipient orally or in writing.
 
 

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

 
(c) Governing Law.  This Agreement shall be governed by the laws of the State of
Utah without regard to its conflict of law provisions, and all claims or
disputes arising hereunder shall be subject to the jurisdiction of the state and
federal courts in the State of Utah.
 
(d) Successors and Assigns.  The rights and obligations of the Company under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company.  This Agreement is for the unique
personal services of the Employee, and the Employee shall not be entitled to
assign any of Employee’s rights or obligations hereunder.
 
(e) Entire Agreement; Amendment.  This Agreement constitutes the entire
agreement and understanding between the parties with respect to the subject
matter hereof, and supersedes all prior agreements and understandings with
respect thereto.  This Agreement can be amended or modified only in a writing
signed by the Employee and the Company.
 
(f) No Waiver.  No waiver by either party at any time of any breach by the other
party of, or compliance with, any condition or provision of this Agreement to be
performed by the other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time.
 
(g) Headings.  The headings herein contained are for reference only and shall
not affect the meaning or interpretation of any provision of this Agreement.
 
(h) Counterparts.  This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
 
(i) Attorneys’ Fees.  In the event of any action at law, equity, or under this
Agreement to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys’ fees and court costs in
addition to any other relief to which such party may be entitled.
 
(j) Section 409A of the Internal Revenue Code.  To the extent any payments under
this Agreement are subject to the provisions of Section 409A of the Internal
Revenue Code (the “Code”), it is intended that the Agreement will comply fully
with and meet all the requirements of Code Section 409A. 
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.

 
THE COMPANY:
 
COGNIGEN NETWORKS, INC.
 
 
_______________________________

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

By: _________________________________                                                               
Its: _________________________________                                                               
 
THE EMPLOYEE:
 

 
____________________________________
        [Adam Edwards][Patrick Oborn]
 
Address:  ____________________________                    
             

 

 
Facsimile
Number:  ___________________________                                                                         
 

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

SCHEDULE A
 
LIST OF PRIOR INVENTIONS
 
AND ORIGINAL WORKS OF AUTHORSHIP
 
Title                                                       Brief Description 
Identifying Number

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

EXHIBIT E
 
Form of Stock Restriction Agreement

This Stock Restriction Agreement (this “Agreement”) is entered into effective as
of November 30, 2007 (the “Effective Date”), by and among Cognigen Networks,
Inc., a Colorado corporation (“Cognigen”), Commission River Inc., a Utah
corporation (“Commission River”), BayHill Group, LC (“Group”), BayHill Capital,
LC (“Capital” and together with Group, collectively, the “BayHill Entities”),
Robert K. Bench, an individual, and Adam Edwards, an individual, Patrick Oborn,
an individual, and Aaron J. Lieberman, an individual, (Messrs. Edwards, Oborn
and Lieberman collectively, the “Shareholders”).  Cognigen, Commission River,
the BayHill Entities, Mr. Bench and the Shareholders are referred to in this
Agreement collectively as the “Parties.”
RECITALS

WHEREAS, in connection with the transactions contemplated by that certain Asset
Purchase and Reorganization Agreement by and among Cognigen and Commission
River, dated as of November 30, 2007 (the “Purchase Agreement”), Commission
River has agreed to sell, transfer, convey, assign and deliver to Cognigen
certain assets (the “Assets”), and Cognigen is willing to purchase such Assets
in exchange for Cognigen’s issuance to Commission River of 16,000,000 shares of
common stock of Cognigen (the “Shares”), all in accordance with the terms,
conditions and agreements therein contained;

WHEREAS, in partial consideration for Cognigen’s agreement to issue and deliver
the Shares to Commission River, and in accordance with Section 1.6(b) of the
Purchase Agreement, Commission River and the Shareholders are obligated to
execute and deliver this Agreement;

WHEREAS, in consideration for Commission River’s agreement to sell, transfer,
convey assign and deliver the Assets to Cognigen, and in accordance with Section
1.6(c) of the Purchase Agreement, Cognigen, the BayHill Entities and Mr. Bench
are obligated to execute and deliver this Agreement;

WHEREAS, the BayHill Entites are shareholders of Cognigen, and as such, own
shares of common stock of Cognigen (such shares, the “BayHill Shares”); and

WHEREAS, the Shareholders, the Bayhill Entities and Mr. Bench will benefit from
the transactions contemplated by the Purchase Agreement, and desire to enter
into this Agreement as an inducement to Commission River to sell, transfer,
convey, assign and deliver the Assets and Cognigen to issue and deliver the
Shares.

NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt, adequacy and
legal sufficiency of which are hereby acknowledged, the Parties agree as
follows:

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

AGREEMENT

1.  Restrictions on Transfers of Stock.
 

(a)  In addition to the restrictions set forth below, each of Commission River,
the Shareholders and Mr. Bench covenants and agrees that during the six (6)
month period immediately following the Effective Date, they will not assign,
sell, pledge, encumber, give or otherwise transfer, alienate or dispose of,
whether voluntarily or by operation of law (any such action, a “Transfer”) any
shares of common stock of Cognigen held by such Party.  Notwithstanding the
foregoing, the Parties agree that Commission River may distribute all, but not
less than all, of the Shares to the Shareholders in connection with the
liquidation of Commission River as contemplated by Section 1.5 of the Purchase
Agreement, provided that such distribution results in all of the Shares being
owned solely by the Shareholders, each of whom will hold such Shares pursuant
to, and will comply in all respects with, Section 1(c) of this Agreement.
 
(b) Commission River.  Subject to the provisions set forth in Section 1(a)
above, Commission River covenants and agrees that it will not, during any three
(3) month period commencing on or after the Effective Date, Transfer any Shares
in an amount that exceeds the greater of: (i) one percent (1%) of the then
outstanding shares of common stock of Cognigen; or (ii) the previous three (3)
week period’s average weekly reported trading volume of shares of common stock
of Cognigen.  Notwithstanding Section 1(a) hereof or the foregoing, the Parties
agree that Commission River may distribute all, but not less than all, of the
Shares to the Shareholders in connection with the liquidation of Commission
River as contemplated by Section 1.5 of the Purchase Agreement, provided that
such distribution results in all of the Shares being owned solely by the
Shareholders, each of whom will hold such Shares pursuant to, and will comply in
all respects with, Section 1(c) of this Agreement.
 
(c) Shareholders.  Subject to the provisions set forth in Section 1(a) above,
each of the Shareholders covenants and agrees that he will not, during any three
(3) month period commencing on or after the Effective Date, Transfer any Shares
in an amount that exceeds the greater of: (i) one percent (1%) of the then
outstanding shares of common stock of Cognigen; or (ii) the previous three (3)
week period’s average weekly reported trading volume of shares of common stock
of Cognigen.
 
(d) BayHill Entities.  Each of the BayHill Entities covenants and agrees that it
will not, during any three (3) month period commencing on or after the Effective
Date, Transfer any of the BayHill Shares in an amount that exceeds the greater
of: (i) one percent (1%) of the then outstanding shares of common stock of
Cognigen; or (ii) the previous three (3) week period’s average weekly reported
trading volume of shares of common stock of Cognigen.  Notwithstanding the
provisions of Section 1(a) above or the foregoing, the Parties agree that the
BayHill Entities may distribute some or all of the BayHill Shares to individual
members of Group or Capital and that such members will not be bound by the terms
of this Agreement.
 
(e) Robert K. Bench.  Subject to the provisions set forth in Section 1(a) above,
Mr. Bench covenants and agrees that he will not, during any three (3) month
period commencing on or after the Effective Date, Transfer any of the shares of
common stock of Cognigen acquired
 
 

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

 
by him (the “Bench Shares”) in an amount that exceeds the greater of: (i) one
percent (1%) of the then outstanding shares of common stock of Cognigen; or (ii)
the previous three (3) week period’s average weekly reported trading volume of
shares of common stock of Cognigen.
 
(f) Null and Void.  Any Transfer of Shares, BayHill Shares or Bench Shares made
other than in conformity with the provisions of this Agreement shall be null and
void, and neither Cognigen nor its transfer agent shall recognize or give effect
to such Transfer on its books and records.
 
(g) Restrictive Legend.  Cognigen shall cause the certificates evidencing the
Shares and the BayHill Shares to bear the following legend:
 
THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF A STOCK RESTRICTION AGREEMENT DATED NOVEMBER 30, 2007 AMONG COGNIGEN
NETWORKS, INC., COMMISSION RIVER INC., BAYHILL GROUP, LC, BAYHILL CAPITAL, LC,
ROBERT K. BENCH, ADAM EDWARDS, PATRICK OBORN AND AARON J. LIEBERMAN.  A COPY OF
THE STOCK RESTRICTION AGREEMENT IS MAINTAINED AT THE PRINCIPAL OFFICE OF
COGNIGEN NETWORKS, INC. AND IS AVAILABLE FOR INSPECTION UPON REASONABLE NOTICE
AND EVIDENCE OF A PROPER PURPOSE FOR THE INSPECTION.

2. Miscellaneous Provisions.
 
(a) Termination.  This Agreement shall terminate upon the first to occur of
either of the following events:
 
(i)  Cognigen's completion of an underwritten public offering of the Cognigen
common stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended, with a sales price per share (prior to
underwriter commissions and expenses) of common stock (as adjusted for
combinations, stock dividends, subdivisions or split-ups and the like) of at
least $5.00 and with total net offering proceeds to Cognigen, at the public
offering price, in excess of $30,000,000; or
 
(ii)  the unanimous agreement of the Parties.
 
(b) Notice.  All offers and notices provided for or permitted herein shall be in
writing and shall be delivered either (i) personally or (ii) by recognized
overnight courier with proof of delivery directed to the Parties at the
addresses set forth below, or to such other address as either Party designates
by notice delivered or sent in the above manner.  An offer or notice shall be
deemed received and be deemed effective when received by the party or the
party’s agents.
 
If to Cognigen:
Cognigen Networks, Inc.
10757 South Riverfront Parkway
Suite 125
South Jordan, Utah 84095
Attn: Robert K. Bench, Chief Executive Officer
 
 

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

 
Copy to:
Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Attn: Brian G. Lloyd

If to BayHill Capital, LC:

BayHill Capital, LC
1559 N. Technology Way
Orem, Utah 84097
Attention: Robert K. Bench
Telephone: (801) 437-9679
Facsimile: (801) 705-9372

Copy to:
Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Attn: Brian G. Lloyd

If to BayHill Group, LC:

BayHill Group, LC
1559 N. Technology Way
Orem, Utah 84097
Attention: Robert K. Bench
Telephone: (801) 437-9679
Facsimile: (801) 705-9372

Copy to:
Parr Waddoups Brown Gee & Loveless
185 South State Street, Suite 1300
Salt Lake City, Utah 84111
Attn: Brian G. Lloyd

If to Commission River:

12401 South 450 East
Suite D-1
Draper, Utah 84062

Copy to:
Snell & Wilmer L.L.P.
15 West South Temple, Suite 1200
Salt Lake City, Utah 84101
Fax:  (801) 257-1800
Attn: John G. Weston, Esq.
 
 

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

 
If to Robert K. Bench:

Robert K. Bench
1559 N. Technology Way
Orem, Utah 84097

If to Adam Edwards:
Adam Edwards
12401 South 450 East
Suite D-1
Draper, Utah 84062

If to Patrick Oborn:
Patrick Oborn
12401 South 450 East
Suite D-1
Draper, Utah 84062

If to Aaron J. Lieberman:
Aaron J. Lieberman
12401 South 450 East
Suite D-1
Draper, Utah 84062

(c) Specific Performance.  The Parties hereby agree that damages are an
inadequate remedy in the event the terms of this Agreement are breached and that
any Party to this Agreement may institute and maintain a proceeding to compel
specific performance of this Agreement.
 
(d) Successors and Assigns.  Notwithstanding anything to the contrary herein,
this Agreement may not be assigned by any of the Parties without the written
consent of the other Parties.  This Agreement and all rights hereunder shall be
binding upon the Parties, their heirs, executors, administrators, successors and
permitted assigns, and they agree for themselves, their heirs, executors,
administrators, successors and permitted assigns to execute any instrument and
to perform any acts necessary to effectuate this Agreement and its purposes.
 
(e) Governing Law; Jurisdiction.  This Agreement shall be governed and construed
in accordance with the internal laws of the state of Utah, without giving effect
to conflicts of laws rules.  Each of the Parties hereto expressly and
irrevocably consents and submits to the jurisdiction of the state and federal
courts located in Salt Lake County, Utah in connection with any legal proceeding
in connection with this Agreement.
 
(f) Entire Agreement; Waiver; Severability.  This Agreement reflects the entire
understanding of the Parties with respect to restrictions and obligations
relating to the Shares except as may be set forth in a contemporaneous or
subsequent writing and signed by the party against whom enforcement is
sought.  The provisions of this Agreement may not be waived or changed except by
a writing signed by the Parties.  No waiver of breach shall constitute a
 
 

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

 
subsequent waiver of any subsequent breach, and if any provision of this
Agreement is found to be invalid, the remaining provisions shall remain
enforceable.
 
(g) Counterparts; Facsimile.  This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same instrument.  A facsimile copy or other accurate copy of this Agreement or
any counterpart of this Agreement is binding as an original.
 
(h) Attorneys Fees; Costs.  In any action brought because of a breach or to
enforce or interpret any of the provisions of this Agreement, the party which
prevails in that action by enforcing the provisions of this Agreement shall be
entitled to recover from the other party reasonable attorneys’ fees and court
costs incurred in connection with that action, the amount of which shall be
fixed by the court and made a part of any judgment rendered.
 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above.
COGNIGEN NETWORKS, INC.

By: ______________________________________
Name:
Title:

COMMISSION RIVER INC.

By: ______________________________________
Name:
Title:

BAYHILL CAPITAL, LC

By: ______________________________________
Name:
Title:

BAYHILL GROUP LC

By: ______________________________________
Name:
Title:

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

_____________________________________
    Robert K. Bench, an individual

SHAREHOLDERS:

_____________________________________
    Adam Edwards, an individual

 
_____________________________________

                                            Patrick Oborn, an individual

 
_____________________________________

 
Aaron J. Lieberman, an individual

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