exv10w1



 





Exhibit 10.1




EXECUTION COPY





ASSET PURCHASE AGREEMENT




DATED AS OF JUNE 23, 2004




BY AND BETWEEN




ELOYALTY CORPORATION




and




INTERELATE, INC.





 









 








	 	 	 	 	 
	ARTICLE I            DEFINITIONS
	 	 	1	 
	Section 1.01 Specified Definitions
	 	 	1	 
	Section 1.02 Other Definitional Provisions
	 	 	13	 
	ARTICLE II            PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
	 	 	14	 
	Section 2.01 Purchased Assets
	 	 	14	 
	Section 2.02 Excluded Assets
	 	 	15	 
	Section 2.03 Assumed Liabilities
	 	 	15	 
	Section 2.04 Excluded Liabilities
	 	 	16	 
	ARTICLE III            PURCHASE PRICE AND PAYMENT
	 	 	16	 
	Section 3.01 Purchase Price
	 	 	16	 
	Section 3.02 Closing
	 	 	16	 
	Section 3.03 Deliveries by Seller.
	 	 	16	 
	Section 3.04 Deliveries by Purchaser
	 	 	17	 
	Section 3.05 Post-Closing Adjustment
	 	 	17	 
	Section 3.06 Escrow
	 	 	19	 
	Section 3.07 Allocation of Purchase Price
	 	 	19	 
	Section 3.08 Procedures for Purchased Assets not Transferable
	 	 	20	 
	ARTICLE IV            REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	20	 
	Section 4.01 Organization, Standing and Power
	 	 	20	 
	Section 4.02 Seller Subsidiaries; Equity Interests
	 	 	21	 
	Section 4.03 Capital Structure
	 	 	21	 
	Section 4.04 Authorization; Validity of Agreements; Necessary Action
	 	 	22	 
	Section 4.05 No Conflicts; Consents
	 	 	23	 
	Section 4.06 Financial Statements; Undisclosed Liabilities
	 	 	24	 
	Section 4.07 Absence of Certain Changes or Events
	 	 	24	 
	Section 4.08 Title to Properties
	 	 	27	 
	Section 4.09 Condition and Sufficiency of Assets; Capital Improvements
	 	 	27	 
	Section 4.10 Taxes
	 	 	27	 
	Section 4.11 Employee Benefits
	 	 	28	 
	Section 4.12 Employee and Labor Matters
	 	 	29	 
	Section 4.13 Litigation and Claims
	 	 	30	 
	Section 4.14 Compliance with Applicable Laws
	 	 	30	 
	Section 4.15 Computer System
	 	 	30	 







 









 






	 	 	 	 	 
	Section 4.16 Real Property
	 	 	31	 
	Section 4.17 Intellectual Property
	 	 	32	 
	Section 4.18 Contracts
	 	 	34	 
	Section 4.19 Affiliate Transactions
	 	 	36	 
	Section 4.20 Environmental, Health and Safety
	 	 	36	 
	Section 4.21 Business Activity Restriction
	 	 	37	 
	Section 4.22 Insurance
	 	 	37	 
	Section 4.23 Compensation
	 	 	37	 
	Section 4.24 Receivables
	 	 	38	 
	Section 4.25 Licenses and Permits
	 	 	38	 
	Section 4.26 Underlying Documents
	 	 	38	 
	Section 4.27 Brokers; Fees and Expenses
	 	 	38	 
	Section 4.28 Disclosure
	 	 	39	 
	ARTICLE V              REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 	39	 
	Section 5.01 Organization, Standing and Power
	 	 	39	 
	Section 5.02 Authorization; Validity of Agreement; Necessary Action
	 	 	39	 
	Section 5.03 No Conflicts; Consents
	 	 	40	 
	Section 5.04 Brokers
	 	 	40	 
	Section 5.05 Litigation
	 	 	40	 
	ARTICLE VI            COVENANTS RELATING TO CONDUCT OF BUSINESS
	 	 	41	 
	Section 6.01 Conduct of Business
	 	 	41	 
	Section 6.02 No Solicitation
	 	 	43	 
	ARTICLE VII           ADDITIONAL AGREEMENTS
	 	 	45	 
	Section 7.01 Charter Amendment; Preparation of Proxy Statement;
Stockholders Meeting
	 	 	45	 
	Section 7.02 Access to Information; Confidentiality
	 	 	45	 
	Section 7.03 Reasonable Best Efforts; Notification
	 	 	46	 
	Section 7.04 Public Announcements
	 	 	47	 
	Section 7.05 Return of Deposit
	 	 	47	 
	Section 7.06 Estimation of Working Capital
	 	 	47	 
	Section 7.07 Bulk Sales
	 	 	47	 
	Section 7.08 Non-Solicitation
	 	 	47	 







 









 






	 	 	 	 	 
	Section 7.09 Taxes
	 	 	48	 
	Section 7.10 Fees and Expenses
	 	 	49	 
	Section 7.11 Books and Records
	 	 	49	 
	Section 7.12 Great Plains Assets
	 	 	49	 
	Section 7.13 Contractual Consents
	 	 	50	 
	ARTICLE
VIII          CONDITIONS PRECEDENT
	 	 	50	 
	Section 8.01 Conditions to Each Party’s Obligation to Effect the Closing
	 	 	50	 
	Section 8.02 Conditions to Obligation of Seller to Effect the Closing
	 	 	50	 
	Section 8.03 Conditions to Obligations of Purchaser to Effect the Closing
	 	 	51	 
	ARTICLE
IX            EMPLOYEES AND EMPLOYEE BENEFITS
	 	 	53	 
	Section 9.01 Transferred Employees
	 	 	53	 
	Section 9.02 Severance Amounts
	 	 	53	 
	Section 9.03 Flexible Spending Plan
	 	 	53	 
	Section 9.04 COBRA
	 	 	53	 
	Section 9.05 Other Seller Plans
	 	 	53	 
	ARTICLE X            TERMINATION
	 	 	54	 
	Section 10.01 Termination
	 	 	54	 
	Section 10.02 Effect of Termination
	 	 	55	 
	ARTICLE XI          INDEMNIFICATION
	 	 	56	 
	Section 11.01 Survival
	 	 	56	 
	Section 11.02 Indemnification of Purchaser Indemnified Parties
	 	 	56	 
	Section 11.03 Termination of Escrow Fund
	 	 	57	 
	Section 11.04 Indemnification of Seller Indemnified Parties
	 	 	57	 
	Section 11.05 Claims
	 	 	57	 
	Section 11.06 Notice of Third Party Claim; Assumption of Defense
	 	 	58	 
	Section 11.07 Settlement or Compromise
	 	 	58	 
	Section 11.08 Failure of Indemnifying Person to Act
	 	 	58	 
	Section 11.09 Escrow
	 	 	59	 
	Section 11.10 Gap Escrow
	 	 	59	 
	ARTICLE XII        GENERAL PROVISIONS
	 	 	59	 
	Section 12.01 Knowledge
	 	 	59	 
	Section 12.02 Notices
	 	 	60	 







 









 






	 	 	 	 	 
	Section 12.03 Interpretation
	 	 	60	 
	Section 12.04 Severability
	 	 	60	 
	Section 12.05 Counterparts
	 	 	61	 
	Section 12.06 Entire Agreement; No Third-Party Beneficiaries
	 	 	61	 
	Section 12.07 Governing Law; Waiver of Jury Trial
	 	 	61	 
	Section 12.08 Assignment
	 	 	62	 
	Section 12.09 Enforcement
	 	 	62	 
	Section 12.10 Amendment
	 	 	62	 
	Section 12.11 Waiver
	 	 	62	 
	Section 12.12 Effect of Investigation
	 	 	62	 
	Section 12.13 Remedies Cumulative
	 	 	63	 
	Section 12.14 Further Assurances
	 	 	63	 







	 	 	 	 	 
	LIST OF EXHIBITS
	 	 	 	 
	Exhibit A

	 	-
	 	Escrow Agreement
	Exhibit B

	 	-
	 	Non-Solicitation Agreements
	Exhibit C

	 	-
	 	Charter Amendment
	Exhibit 5.03

	 	-
	 	Purchaser Consents
	Exhibit 8.03(h)

	 	-
	 	Legal Opinion
	Exhibit 9.01

	 	-
	 	Offered Employees







 









 






Asset Purchase Agreement




     THIS ASSET PURCHASE AGREEMENT (as the same may be amended from time to
time in accordance herewith, this “Agreement”) is made and entered into as of
June 23, 2004 by and between ELOYALTY CORPORATION, a Delaware corporation
(“Purchaser”), and INTERELATE, INC., a Delaware corporation (the “Seller”).



Recitals




     WHEREAS, Purchaser wishes to purchase from Seller and Seller wishes to
sell to Purchaser all of the Purchased Assets (defined herein), and Purchaser
wishes to assume all of the Assumed Liabilities (also defined herein), all upon
the terms and conditions hereinafter set forth;



     NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties herein contained, the parties agree as
follows:



ARTICLE I




Definitions




     Section 1.01 Specified Definitions As used in this Agreement, the
following terms shall have the following meanings:



     “Affiliate” means, for any Person, another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with such first Person, where “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract, as trustee or executor or
otherwise.



     “Agreement” has the meaning set forth in the first paragraph of page one
hereto.



     “Alternative Acquisition” has the meaning set forth in Section 6.02(a).



     “Alternative Acquisition Proposal” has the meaning set forth in Section
6.02(b)



     “Applicable Law” means all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including common law), rules, regulations, ordinances
or codes of any Governmental Entity, and (ii) Orders of any Governmental
Entity.



     “Assigned Contracts” means the (i) Assigned Customer Contracts, (ii)
Assigned IP Agreements, (iii) Assigned Personal Property Leases, (iv) Assigned
Purchase Contracts, (v) Assigned Real Property Leases, (vi) those other
Contracts of Seller or any Seller Subsidiary set forth on Schedule 1.01(a) to
the Seller Disclosure Schedule, and (vii) such other Contracts of Seller or any
Seller Subsidiary as are of a nature described in the foregoing clauses (i)
through (vi) and were entered into between the date hereof and the Closing Date
in the Ordinary Course of Business in accordance with the terms and conditions
of this Agreement.



 









 





     “Assigned Customer Contracts” means the purchase orders and other
Contracts for the sale by Seller or the Seller Subsidiaries of goods, materials
or services set forth on Schedule 1.01(b) to the Seller Disclosure Schedule.



     “Assigned IP Agreements” means the Intellectual Property Agreements set
forth on Schedule 1.01(c) to the Seller Disclosure Schedule.



     “Assigned Personal Property Leases” means the leases of equipment,
machinery, computer hardware and other personal property by Seller set forth on
Schedule 1.01(d) to the Seller Disclosure Schedule.



     “Assigned Purchase Contracts” means the purchase orders and other
Contracts for the purchase by Seller of goods, materials or services set forth
on Schedule 1.01(e) to the Seller Disclosure Schedule.



     “Assigned Real Property Leases” means the leases of real property by
Seller set forth on Schedule 1.01(f) to the Seller Disclosure Schedule.



     “Assumed Liabilities” has the meaning specified in Section 2.03.



     “Assumption Agreement” means an assumption agreement pursuant to which
Purchaser assumes as of the Closing all of the Assumed Liabilities, in form and
substance that is reasonably acceptable to Seller.



     “Basket” has the meaning set forth in Section 11.02.



     “Bill of Sale” means a bill of sale pursuant to which Seller and each
applicable Seller Subsidiary sells, transfers, conveys and assigns to Purchaser
all of their rights title and interest in and to the Purchased Assets, in form
and substance that is reasonably acceptable to Purchaser.



     “Books and Records” means all books of account, records, files and
invoices, including all confidential information, equipment maintenance data,
employee files (for Transferred Employees only), accounting records, inventory
records, sales and sales promotional data and materials, advertising materials,
sales training materials, educational support program materials, customer
lists, cost and pricing information, supplier lists, business plans, catalogs
and brochures, blueprints, research and development files, patent disclosures,
correspondence, litigation files and any other records and data, except in each
case to the extent included in, or related to, any Excluded Assets.



     “Business Day” means any day other than a Saturday, Sunday or day on which
banks in the City of Chicago, Illinois are authorized or obligated by
Applicable Law to be closed.



     “Cash” means all cash and cash equivalents determined in accordance with
GAAP, together with all non-marketable securities and short term investments.



     “Charter Amendment” means an amendment to the Seller Charter in the form
set forth as Exhibit C.



-2-









 





     “Closing” means the closing of the transactions contemplated by this
Agreement.



     “Closing Consideration” means (i) $4,900,000, minus (ii) the Deposit
Amount, and (iii) to the extent applicable, (A) plus the amount of any
Estimated Working Capital Increase or (B) minus the amount of any Estimated
Working Capital Decrease.



     “Closing Date” means the date on which the Closing occurs.



     “Closing Payment” has the meaning set forth in Section 3.01.



     “Closing Statement” has the meaning set forth in Section 3.05(a).



     “Closing Working Capital Amount” means the amount of the Working Capital
as of the Closing.



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



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



     “Computer System” has the meaning set forth in Section 4.15.



     “Confidentiality Agreement” means the letter regarding confidentiality
between Purchaser and Seller dated February 19, 2004.



     “Consent” means any consent, approval, license, waiver, authorization or
Permit.



     “Contract” means any contract, lease, sublease, license, indenture, note,
bond, mortgage, agreement, Permit, concession, franchise, instrument,
undertaking, commitment, understanding or other arrangement (whether written or
oral).



     “CPA Firm” has the meaning set forth in Section 3.05(b).



     “Current Assets” means all current and other assets determined in
accordance with GAAP to the extent identified on Schedule 1.01(g) to the Seller
Disclosure Schedule as being items of type or nature to be included in the
calculation of “Working Capital” for purposes of this Agreement, excluding any
such assets to the extent comprising or relating to any asset, property or
right that is not assigned to Purchaser (and therefore not included in the
Purchased Assets) by virtue of Section 3.08.



     “Current Liabilities” means all current and other liabilities determined
in accordance with GAAP to the extent identified on Schedule 1.01(g) to the
Seller Disclosure Schedule as being items of type or nature to be included in
the calculation of “Working Capital” for purposes of this Agreement.



     “Customer Certificate” means a certificate addressed to Purchaser from a
customer of Seller or any Seller Subsidiary, dated as of the Closing Date (or
such other date as is acceptable to Purchaser), in form acceptable to Purchaser
(i) identifying the Contracts to which such customer is a party with Seller or
any Seller Subsidiary and (ii) stating that such Contracts are in



-3-









 





full force and effect and, to the knowledge of the customer, that Seller
and the Seller Subsidiaries are not in default under such Contracts and no
event has occurred and is continuing that, with notice or the lapse of time or
both, would constitute a default by any of them under the Contracts. To the
extent a customer from whom Purchaser is requiring a Customer Certificate shall
also be delivering a Consent to the transactions contemplated hereby, the
Customer Certificate shall incorporate such Consent.



     “Damages” means any and all claims, actions, Liabilities, damages,
judgments, assessments, losses, costs and expenses (including reasonable
attorneys’ fees and expenses).



     “Deposit Amount” means $100,000, which was deposited by Purchaser with
Seller pursuant to the Letter of Intent.



     “DGCL” means the General Corporation Law of the State of Delaware.



     “Employment Laws” has the meaning set forth in Section 4.12(b).



     “Environmental Laws” means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery
Act of 1976 and the Occupational Safety and Health Act of 1970, each as
amended, together with all other Applicable Laws (including rules, regulations,
codes, common law, plans, injunctions, judgments, Orders, decrees, rulings and
charges thereunder) of any Governmental Entity concerning pollution or
protection of the environment, public health and safety, or employee health and
safety, including laws relating to emissions, discharges, releases, or
threatened releases of Hazardous Substances into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture, generation,
processing, distribution, use, treatment, storage, disposal, clean-up,
transport, or handling of Hazardous Substances.



     “Environmental Permits” means any federal, state and local Permit,
registration, or other authorization with respect to Seller or any Seller
Subsidiary necessary for the conduct of its business as currently conducted or
previously conducted under any Environmental Law.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.



     “ERISA Affiliate” means, with respect to any Person, any corporation,
trade or business which, together with such Person, is a member of a controlled
group of corporations or a group of trades or businesses under common control
within the meaning of Section 414 of the Code.



     “Escrow Agent” means LaSalle National Bank, or another similar institution
selected by Purchaser (with the consent of Seller, which shall not be
unreasonably withheld or delayed) prior to the closing, and any Person who
becomes successor thereto in accordance with the Escrow Agreement.



     “Escrow Agreement” means an escrow agreement to be entered into among
Purchaser, Seller and the Escrow Agent in substantially the form of Exhibit A,
with such changes thereto as the Escrow Agent may reasonably request.



     “Escrow Amount” means $800,000.



-4-









 





     “Escrow Fund” has the meaning set forth in Section 3.06.



     “Estimated Working Capital Amount” means an estimate of the Closing
Working Capital Amount based on (i) the Working Capital as of April 30, 2004
shown on the statement attached hereto as Schedule 1.01(g) to the Seller
Disclosure Schedule, and (ii) an estimate of the increases and decreases of the
various components of Working Capital from April 30, 2004 through the Closing.



     “Estimated Working Capital Decrease” means the amount, if any, by which
zero exceeds the Estimated Working Capital Amount.



     “Estimated Working Capital Increase” means the amount, if any, by which
the Estimated Working Capital Amount exceeds zero.



     “Estoppel Certificate” means a certificate addressed to Purchaser from a
lessor under an Assigned Real Property Lease, dated as of the Closing Date (or
such other date as is acceptable to Purchaser), in form acceptable to Purchaser
(i) identifying the Lease documents, (ii) stating that the Lease is in full
force and effect and, to the knowledge of the lessor, that the tenant is not in
default under the Lease and no event has occurred and is continuing that, with
notice or the lapse of time or both, would constitute a default by the tenant
under the Lease and (iii) containing any other information reasonably requested
by Purchaser.



     “Excess COBRA Liabilities” has the meaning set forth in Section 9.04.



     “Excluded Assets” has the meaning set forth in Section 2.02.



     “Excluded Current Assets” means Cash, and all current and other assets of
Seller and the Seller Subsidiaries to the extent identified as “Excluded
Current Assets” on Schedule 1.01(g) to the Seller Disclosure Schedule.



     “Excluded Current Liabilities” means all current and other liabilities of
Seller and the Seller Subsidiaries to the extent identified as “Excluded
Current Liabilities” on Schedule 1.01(g) to the Seller Disclosure Schedule.



     “Excluded Liabilities” has the meaning set forth in Section 2.04.



     “Final Closing Statement” has the meaning set forth in Section 3.05(b).



     “Final Working Capital Decrease” means the amount, if any, by which the
Estimated Working Capital Amount exceeds the Closing Working Capital Amount as
reflected in the Final Closing Statement.



     “Final Working Capital Increase” means the amount, if any, by which the
Closing Working Capital Amount as reflected in the Final Closing Statement
exceeds the Estimated Working Capital Amount.



     “Financial Statements” has the meaning set forth in Section 4.06(a).



-5-









 





     “Franke Employment Agreement” means an employment agreement between James
Franke and Purchaser, effective as of the Closing Date, entered into upon terms
and conditions reasonably satisfactory to Purchaser and reasonably equivalent
to those terms enjoyed by James Franke with respect to his aggregate
compensation, responsibilities and location pursuant to his employment
arrangement with Seller as in effect on the date hereof.



     “GAAP” means, as to any Person, accounting principles generally accepted
in the United States of America, applied on a basis consistent with the basis
on which the most recent audited financial statements of such Person were
prepared prior to the date of this Agreement.



     “Gap Escrow” means a portion of the Escrow Amount equal to $400,000.



     “Governmental Entity” means any:



     (i) federal, state, local, municipal, or foreign government;



     (ii) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, instrumentality or
entity and any court or other tribunal); or



     (iii) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power.



     “Great Plains Assets” has the meaning set forth in Section 2.02(viii).



     “Hazardous Substance” means any hazardous, acutely hazardous, or toxic
substance, waste or contaminant, or any other material, including petroleum
hydrocarbons and asbestos, regulated under any law regarding the protection or
condition of the environment or health or safety and applicable to the
material, substance, waste or contaminant in the jurisdiction in which such
material, substance, waste or contaminant is located.



     “Indebtedness” means, without duplication, (i) all obligations for
borrowed money, or with respect to deposits or advances of any kind, (ii) all
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations upon which interest charges are customarily paid, (iv)
all obligations under conditional sale or other title retention agreements
relating to purchased property, (v) all obligations issued or assumed as the
deferred purchase price of property or services (excluding obligations to
creditors for raw materials, inventory, services and supplies incurred in the
Ordinary Course of Business), (vi) all capitalized lease obligations, (vii) all
obligations of others secured by a Lien, other than Permitted Liens under
clause (i) of the definition thereof, on property or assets of Seller or a
Seller Subsidiary, whether or not the obligations secured thereby have been
assumed, (viii) all obligations under interest rate or currency hedging
transactions (valued at the termination value thereof), (ix) all obligations
(including contingent obligations) in respect of letters of credit and (x) all
guarantees and arrangements having the economic effect of a guarantee of any
indebtedness of any other Person; provided, however, that “Indebtedness” shall
exclude in all cases obligations owing to vendors of Seller or any Seller
Subsidiary for services and supplies incurred in the Ordinary Course of
Business.



-6-









 





     “Indemnified Party” means any Purchaser Indemnified Party or Seller
Indemnified Party.



     “Indemnifying Party” means any party from which indemnification is sought
pursuant to Article XI.



     “Intellectual Property” means any and all: United States and foreign
patents (including continuations, continuations-in-part, reissues and
re-examinations thereof) and patent applications; registered and unregistered
trade names, trademarks, service names and service marks (and applications for
registration of the same) and all goodwill associated therewith; copyrights and
copyright registrations (and applications for the same); trade secrets;
computer data (including formulations and analyses), computer programs and
software (in source code and object code form) and firmware and all related
programming, user and systems documentation; proprietary inventions, processes,
designs (whether or not patentable or reduced to practice), know-how, recipes
and formulae; and all other intellectual property rights and assets.



     “Intellectual Property Agreements” has the meaning set forth in Section
4.17(a).



     “IRS” means the Internal Revenue Service.



     “Knowledge” has the meaning set forth in Section 12.01.



     “Leased Real Property” has the meaning set forth in Section 4.16(b).



     “Leases” has the meaning set forth in Section 4.16(b).



     “Letter of Intent” means the Letter of Intent, dated as of April 22, 2004,
between Seller and Purchaser.



     “Liabilities” means any and all debts, liabilities, obligations,
responsibilities, fines, penalties and sanctions, absolute or contingent,
matured or unmatured, liquidated or unliquidated, foreseen or unforeseen,
joint, several or individual, asserted or unasserted, accrued or unaccrued,
known or unknown, whenever arising, including any costs, expenses, interests,
reasonable attorneys’ fees, disbursements and expense of counsel, expert and
consulting fees and costs related thereto or to the investigation or defense
thereof.



     “LIBOR” means the London Interbank Offered Rate for three-month U.S.
Dollar deposits prevailing on the Closing Date.



     “Licensed Intellectual Property” means all Intellectual Property used by
Seller or any Seller Subsidiary other than Owned Intellectual Property.



     “Liens” means pledges, liens, charges, rights of others, subleases,
easements, title defects, mortgages, licenses, encumbrances, security interests
and other adverse claims or interests of any kind or nature whatsoever.



     “Material Contracts” means the Contracts that are or would be required to
be set forth in Schedules 4.11(a), 4.16(b), 4.17(a)(iii), or 4.18(a) to the
Seller Disclosure Schedule.



-7-









 





     “Non-Solicitation Agreements” means one or more agreements, substantially
in the form attached hereto as Exhibit B, to be entered into between Purchaser
and each of Senior Management whereby each agrees (i) to not solicit, for a
period of eighteen (18) months following the Closing Date, (a) any customers of
Purchaser or its Subsidiaries with respect to services the same or
substantially similar to those provided by Seller in connection with any
business conducted by Seller during the one-year period prior to the Closing
Date or (b) any employees of Purchaser or its Subsidiaries, in each case on
terms reasonably satisfactory to Purchaser and (ii) to obligations in favor of
Purchaser with respect to confidentiality, proprietary information and
Intellectual Property relating to the business of Seller and the Seller
Subsidiaries that are substantially similar to his or her obligations to Seller
with respect thereto.



     “Non-Transferred Employee” means any employee of Seller or any Seller
Subsidiary other than a Transferred Employee.



     “Order” means, with respect to any Person, any award, decision,
injunction, judgment, stipulation, order, ruling, subpoena, writ, decree,
consent decree, or verdict entered, issued, made, or rendered by any court,
administrative agency, arbitrator or other Governmental Entity affecting such
Person or any of its properties.



     “Ordinary Course of Business” means an action taken by a Person that is
consistent with the past practices of such Person and is taken in the ordinary
course of operations of such Person.



     “Other Financial Statements” has the meaning set forth in Section 4.06(a).



     “Owned Intellectual Property” means all Intellectual Property owned by
Seller or any Seller Subsidiary.



     “Permit” has the meaning set forth in Section 4.25.



     “Permitted Liens” means (i) liens for Taxes (which are not related to
income, sales or withholding Taxes), assessments and other governmental charges
(X) not yet due and payable or due but not delinquent or (Y) being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP on the Financial Statements, (ii) with
respect to the Leased Real Property, (A) easements of record, covenants,
rights-of-way and other similar restrictions or other matters which would be
shown by a current title report for the property and (B) zoning, building and
other similar restrictions, none of which Liens in (A) or (B) is violated by
the existing improvements or materially impairs the uses of the Leased Real
Property as currently used by Seller or materially detracts from the value
thereof as currently used and (iii) liens which may remain outstanding at
Closing as set forth on Schedule 1.01(h) to the Seller Disclosure Schedule.



     “Permitted Non-transferable Licenses” means the licenses identified on
attachment 13 to Schedule 4.05(b) to the Seller Disclosure Schedule.



     “Person” means any individual, firm, corporation (including any non-profit
corporation), general or limited partnership, company, limited liability
company, trust, joint venture, estate, association, organization, labor union,
or other entity or Governmental Entity.



-8-









 





     “Personal Property” means all machinery, equipment, furniture, fixtures,
computer hardware, tools, spare parts, supplies, maintenance equipment and
supplies, materials and other items of personal property of every kind and
description, including (i) four voice over internet handsets currently located
in Seller’s Boulder, Colorado facility and (ii) those items set forth on
Schedule 1.01(i) to the Seller Disclosure Schedule.



     “Post-Closing Adjustment” has the meaning set forth in Section 3.05(d).



     “Pre-Closing Certificate” has the meaning set forth in Section 7.06.



     “Preferred Stock” means, collectively, the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock.



     “Preferred Stock Majority Interest” has the meaning specified in the
Seller Charter.



     “Proceedings” means any action, arbitration, audit, hearing, proceeding,
investigation, litigation, or suit (whether civil, criminal, administrative or
investigative) commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Entity or arbitrator.



     “Proxy Statement” means a proxy statement to be sent to holders of Seller
Stock in connection with the Seller Stockholders Meeting, which shall include
information regarding the condition of Seller, the composition of the Seller
Board, payments to management in connection herewith, the plan and timing for
any distribution of Seller assets to holders of Seller Stock after Closing and
all other information regarding this Agreement and the transactions
contemplated hereby as is required to be provided in such a notice under the
Seller Charter, the Stockholders Agreement and Applicable Law and in form and
substance satisfactory to Purchaser.



     “Purchased Assets” has the meaning set forth in Section 2.01.



     “Purchase Price” means the Closing Consideration as adjusted pursuant to
Section 3.05(d).



     “Purchaser” has the meaning set forth in the first paragraph of page one
hereof.



     “Purchaser Board” has the meaning set forth in Section 5.02.



     “Purchaser Ancillary Agreements” means the Escrow Agreement and each other
agreement to be entered into by Purchaser pursuant hereto or as contemplated
hereby.



     “Purchaser Indemnified Parties” shall mean Purchaser, each of its
Affiliates and their respective officers, directors, employees, agents and
representatives.



     “Purchaser Material Adverse Effect” means any event, circumstance, change
or effect that, individually or when taken with all such other events,
circumstances, changes and effects, has or could reasonably be expected to have
a material adverse effect on the ability of Purchaser to perform its
obligations under this Agreement or the ability of Purchaser to consummate the
transactions contemplated hereby.



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     “Quarterly Financial Statements” has the meaning set forth in Section
4.06(a).



     “Real Property Laws” has the meaning set forth in Section 4.16(f).



     “Receivables” has the meaning set forth in Section 4.24.



     “Representation Termination Date” means the close of business on April 1,
2005.



     “Required Contractual Consents” has the meaning set forth in Section 4.05.



     “Review Period” has the meaning set forth in Section 3.05(b).



     “Seller Ancillary Agreements” means the Escrow Agreement, the Seller
Disclosure Schedule and each other agreement to be entered into by Seller or
any Seller Subsidiary pursuant hereto or as contemplated hereby.



     “Seller Board” means the Board of Directors of Seller.



     “Seller By-laws” means the by-laws of Seller, as the same may be amended.



     “Seller Charter” means the certificate of incorporation of Seller, as the
same may be amended.



     “Seller Disclosure Schedule” means the Disclosure Schedule, dated the date
hereof, and executed and delivered by Seller to Purchaser.



     “Seller Employee Stock Options” means all options or rights to acquire
Seller Stock granted pursuant to any Seller Plan.



     “Seller Indemnified Parties” means Seller and each Seller Subsidiary.



     “Seller Material Adverse Effect” means any event, circumstance, change or
effect that, individually or when taken with all such other events,
circumstances, changes and effects, has or could reasonably be expected to have
a material adverse effect on the business, prospects, assets, liabilities,
results of operations or financial condition of Seller and the Seller
Subsidiaries, taken as a whole, or a material adverse effect on the ability of
Seller to perform its obligations under this Agreement or the ability of Seller
to consummate the transactions contemplated hereby; provided, however, that in
no event shall any of the following constitute a Seller Material Adverse
Effect: (i) any change resulting from conditions affecting the industry in
which Seller operates or from changes in general business or economic
conditions; (ii) any change resulting from the announcement or pendency of any
of the transactions contemplated by this Agreement; (iii) any adverse change
arising from or relating to any change in accounting requirements or principles
or any change in applicable Laws, rules or regulations or the interpretation
thereof; or (iv) any change resulting from compliance by Seller with the terms
of, or the taking of any action contemplated or permitted by, this Agreement.



     “Seller Plans” has the meaning set forth in Section 4.11(a).



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     “Seller’s Auditors” means Grant & Thornton LLP.



     “Seller Stock” means the Common Stock, Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock.



     “Seller Stockholder Approval” has the meaning set forth in Section
4.04(c).



     “Seller Stockholder Claims” means any claim or Proceeding by or on behalf
of a current or former holder or beneficial owner of any capital stock or other
securities of Seller arising out of or relating to the ownership, management,
governance or operation of Seller or the Seller Subsidiaries, any violation of
securities laws, any breach of fiduciary duties or this Agreement and the
transactions contemplated hereby, whether brought or asserted against Seller,
any Seller Subsidiary, Purchaser or any other Person.



     “Seller Stockholders Meeting” means a meeting of Seller’s stockholders for
the purpose of seeking Seller Stockholder Approval.



     “Senior Management” means Larry Jones, Mary Beth Loesch and Craig Lamborn.



     “Seller Subsidiaries” means all the Subsidiaries of Seller.



     “Series A Majority Interest” has the meaning specified in the Seller
Charter.



     “Series B Majority Interest” has the meaning specified in the Seller
Charter.



     “Series C Majority Interest” has the meaning specified in the Seller
Charter.



     “Series A Preferred Stock” means the Series A Convertible Preferred Stock,
par value $.01 per share, of Seller.



     “Series B Preferred Stock” means the Series B Convertible Preferred Stock,
par value $.01 per share, of Seller.



     “Series C Preferred Stock” means the Series C Convertible Preferred Stock,
par value $.01 per share, of Seller.



     “Specified Confidentiality Agreements” means any Contract listed in
attachment 2 to Schedule 1.01(a) to the Seller Disclosure Schedule to the
extent immaterial to Seller and the Seller Subsidiaries.



     “Specified Contracts” has the meaning set forth in Section 4.18(a).



     “Stockholder Waiver” means a document, in form and substance satisfactory
to Purchaser, signed by a holder of Seller Stock (i) waiving any Seller
Stockholder Claim against any Purchaser Indemnified Party and (ii) agreeing to
not take, cause or permit any action that is inconsistent with, or avoid or
seek to avoid, any term of the Charter Amendment or this Agreement.



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     “Stockholders Agreement” means that Stockholders Agreement, dated as of
February 28, 2001, among Seller and the holders of Seller Stock named therein.



     “Subsidiary” means, with respect to any Person, any corporation,
association, general or limited partnership, company, limited liability
company, trust, joint venture, organization or other entity of which more than
50% of the total voting power of shares of capital stock or other interests
(including partnership interests) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by (i) such
Person, (ii) such Person and one or more Subsidiaries of such Person or (iii)
one or more Subsidiaries of such Person.



     “Superior Proposal” has the meaning set forth in Section 10.01(d)(iii).



     “Tax” or “Taxes” means: (i) any income, corporation, gross income, gross
receipts, franchise, profits, gains, capital stock, capital duty, withholding,
social security (or similar), employment, unemployment, disability, real
property, personal property, wealth, welfare, stamp, excise, license,
severance, environmental (including taxes under Section 59A of the Code),
customs duties, occupation, sales, use, transfer, registration, value added,
payroll, premium, property, or windfall profits tax, estimated, ad valorem or
excise tax, alternative or add-on minimum tax or other tax of any kind
whatsoever (whether or not measured in whole or in part by net income and
including any fee, assessment or other charge in the nature of or in lieu of
any tax) imposed by any Tax Authority; (ii) any liability by contract or
agreement for the payment of any amount of the type described in clause (i) as
a result of Seller or any Seller Subsidiary being a successor to or transferee
of any other corporation or other entity at any time at or prior to the
Closing; (iii) any liability for the payment of any amount of the type
described in clause (i) as a result of Seller or any Seller Subsidiary being a
member of any affiliated, consolidated, combined, unitary or similar group at
or prior to the Closing; and (iv) any interest, penalties and additions to any
such tax (whether imposed by Applicable Law, contract, agreement or otherwise
and whether or not disputed); provided that any interest, penalties, additions
to tax or additional amounts that relate to Taxes for any taxable period shall
be deemed to be Taxes for such period regardless of when incurred, accrued,
assessed or imposed.



     “Tax Authority” means, with respect to any Tax, the Governmental Entity or
political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Taxes for such entity or subdivision,
including any Governmental Entity that imposes, or is charged with collecting,
social security or similar charges or premiums.



     “Tax Return” means all federal, state, local, provincial and foreign
returns, declarations, statements, reports, schedules, forms and information
returns related to Taxes, and any amendments to any of the foregoing.



     “Terminated Contracts” means those Contracts identified on Schedule
1.01(j) to the Seller Disclosure Schedule and any other Contracts of Seller or
any Seller Subsidiary that were terminated prior to the date hereof, in each
case to the extent such Contracts include any provision regarding
confidentiality which remains in effect or any provision regarding the
ownership, use or ongoing rights or obligations with respect to Intellectual
Property.



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     “Transaction Agreements” means this Agreement, the Seller Ancillary
Agreements and the Purchaser Ancillary Agreements.



     “Transferred Employee” has the meaning set forth in Section 9.01.



     “Unassigned Contracts” means any Assigned Contract that is not assigned to
Purchaser (and therefore not included in the Purchased Assets) by virtue of
Section 3.08.



     “Voting Seller Debt” means any bonds, debentures, notes or other
indebtedness of the Seller or any Seller Subsidiary having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Seller or any Seller Subsidiary may
vote.



     “Working Capital” means the amount of the total consolidated Current
Assets less the amount of the total consolidated Current Liabilities of Seller
and the Seller Subsidiaries, determined in accordance with Agreement.



     “Year-End Balance Sheet” has the meaning set forth in Section 4.06(a).

     
“Year-End Financial Statements” has the meaning set forth in Section 4.06(a).

     
Section 1.02 Other Definitional Provisions



     (a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
masculine and feminine genders.



     (b) The parties agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement.



     (c) As used in this Agreement, the words “include” and “including,” and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words “without limitation.”



     (d) Terms, other than those defined or referenced in Section 1.01, may be
defined elsewhere in the text of this Agreement and, unless otherwise
indicated, shall have the specified meaning throughout this Agreement.



     (e) The words “hereof”, “herein”, “hereby”, and “hereunder”, and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.



     (f) References to an Article or Section, or an Exhibit or Schedule, are
(unless otherwise stated) references to an Article or Section of, or an Exhibit
or Schedule to, this Agreement.



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     (g) For purposes of determining whether a particular number of holders of
Seller Stock have taken an action, the affirmative action of any holder of
Seller Stock that is not validly issued, fully paid and non-assessable shall
not be counted.



ARTICLE II




Purchase and Sale of Assets; Assumption of Liabilities




     Section 2.01 Purchased Assets. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Seller shall sell, transfer,
convey, assign and deliver to Purchaser, and shall cause the Seller
Subsidiaries to sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser shall purchase, acquire and accept from Seller and the Seller
Subsidiaries, all of Seller’s and the Seller Subsidiaries’ right, title and
interest in and to all of their properties, assets, rights, claims and
contracts, wherever located and in whatever form, real, personal, tangible or
intangible, in each case as the same may exist on the Closing Date as a result
of purchases, payments, additions, dispositions and other changes, except for
the Excluded Assets (collectively, the “Purchased Assets”). Without in any way
limiting the generality of the foregoing, the Purchased Assets shall include
(other than Excluded Assets) all right, title and interest of Seller and the
Seller Subsidiaries in, to and under:




     (i) all Current Assets to the extent that such Current Assets are
included in the Closing Working Capital Amount as reflected in the Final
Closing Statement;




     (ii) all Personal Property;




     (iii) all Intellectual Property, including such rights to sue and
recover for past infringement or misappropriation thereof and to receive
all income, royalties, damages and payments for past and future
infringements thereof;




     (iv) all Books and Records;




     (v) subject to receipt of any Required Contractual Consents, all
rights, title and interest in and under the Assigned Contracts, including
all rights to receive goods and services purchased pursuant to such
Assigned Contracts and to assert claims and take other actions in respect
of breaches or other violations thereof;




     (vi) all rights of Seller and any Seller Subsidiary under any
confidentiality or inventors’ rights provisions contained in any
agreements with current or former employees and under any confidentiality
or Intellectual Property provisions contained in any Terminated Contract
or Unassigned Contract, in each case to which any Seller or Seller
Subsidiary is or was a party;




     (vii) to the extent assignable, all Permits; and




     (viii) to the extent not included in the foregoing, all other assets
of Seller (except for Excluded Assets), including any warranties or other
rights, claims, demands or causes of action relating to the Purchased
Assets.



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     Section 2.02 Excluded Assets. The following assets of Seller and the
Seller Subsidiaries shall be retained by Seller and the Seller Subsidiaries and
are not being sold or assigned to Purchaser hereunder (all of the following are
referred to collectively as the “Excluded Assets”);




     (i) all Cash and other Excluded Current Assets;




     (ii) all rights, title and interest in and under any Contract other
than the Assigned Contracts, including the Lease of the Seller’s facility
in Boulder, Colorado, Terminated Contracts and the employment agreements
with employees of Seller who have indicated that they do not intend to
become Transferred Employees (including Senior Management), except to the
extent expressly provided otherwise in Section 2.01(vi);




     (iii) all refunds, rebates or similar payments of Taxes to the
extent such Taxes were paid by or on behalf of Seller or any Seller
Subsidiary and all Tax attributes, other than any such refund, rebate or
similar payment which relates to any Assumed Liability (which shall be
deemed a Purchased Asset);




     (iv) all Tax Returns;




     (v) any Books and Records that Seller or any Seller Subsidiary is
required by law to retain (including personnel records) so long as Seller
delivers, upon written request from Purchaser and at Purchaser’s cost, at
least one copy thereof to Purchaser;




     (vi) the minute books for the board of directors, committees or
stockholder meetings, incorporation documents, corporate seal and stock
transfer and tax or similar or related corporate records and any other
documents relating solely to the organization, maintenance and existence
of Seller and any Seller Subsidiary;




     (vii) all interests in Subsidiaries;




     (viii) subject to Section 7.12, one computer server (to be
designated by Purchaser) with Great Plains accounting software,
historical accounting data, and integrated word processing, spreadsheet
and email software (collectively, the “Great Plains Assets”);




     (ix) all rights in connection with and assets of Seller Plans; and




     (x) any rights of Seller under this Agreement, the Purchaser
Ancillary Agreements and the Seller Ancillary Agreements.



     Section 2.03 Assumed Liabilities. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Purchaser agrees to assume and
discharge or perform when due, and shall assume pursuant to the Assumption
Agreement, all of the following Liabilities (the “Assumed Liabilities”):




     (i) all Current Liabilities to the extent included in the Closing
Working Capital Amount as reflected in the Final Closing Statement;



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     (ii) all Liabilities and commitments of Seller or any Seller
Subsidiary arising under any Assigned Contract or under any Permit
constituting a Purchased Asset, that do not relate to any default or
breach thereunder by Seller or any Seller Subsidiary on or before the
Closing Date or to any obligation performed or due to be performed
thereunder by Seller or any Seller Subsidiary on or before the Closing
Date;




     (iii) all Liabilities assumed by Purchaser with respect to the
Transferred Employees pursuant to Article IX; and




     (iv) all other Liabilities of Seller or any Seller Subsidiary
specifically assumed by Purchaser under this Agreement.



     Section 2.04 Excluded Liabilities. Anything in this Agreement to the
contrary notwithstanding, except as specifically set forth in Section 2.03,
neither Purchaser nor any of its Affiliates shall assume or otherwise be liable
in respect of, or be deemed to have assumed or otherwise be liable in respect
of, any Seller Stockholder Claim or any other debt, claim, obligation or other
Liability of Seller or any of its Affiliates whatsoever (the “Excluded
Liabilities”).



ARTICLE III




Purchase Price and Payment




     Section 3.01 Purchase Price. On the Closing Date, in consideration for
the Purchased Assets and the agreement of Seller pursuant to Section 7.08,
Purchaser shall pay to Seller an aggregate amount equal to the Closing
Consideration minus the Escrow Amount (such net amount being referred to as the
“Closing Payment”). Purchaser shall, concurrently therewith, deposit the
Escrow Amount into the Escrow Fund pursuant to the Escrow Agreement.



     Section 3.02 Closing. Unless otherwise mutually agreed, the Closing will
take place on or before July 16, 2004, at 9:00 a.m., Chicago time, at the
offices of Mayer, Brown, Rowe & Maw LLP, 190 South LaSalle Street, Chicago,
Illinois 60603, on the second Business Day following the satisfaction or waiver
of the conditions to Closing set forth in Article VIII (other than those
conditions that relate to actions to be taken at the Closing), or at such other
place, time or date as Seller and Purchaser may agree.



     Section 3.03 Deliveries by Seller. At the Closing, Seller will deliver or
cause to be delivered to Purchaser the following:



     (a) a duly executed Assumption Agreement;



     (b) a duly executed Bill of Sale;



     (c) the certificates and other agreements described in Section 8.03;



     (d) a counterpart of the Escrow Agreement duly executed by Seller;



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     (e) instruments of assignment with respect to the Assigned Contracts in
form and substance reasonably acceptable to Purchaser;



     (f) instruments of transfer with respect to the Intellectual Property in
form and substance reasonably acceptable to Purchaser; and



     (g) all such other deeds, endorsements, assignments and other instruments
as, in the reasonable opinion of Purchaser, shall be necessary to vest in
Purchaser title to the Purchased Assets.



     Section 3.04 Deliveries by Purchaser. At the Closing, Purchaser will
deliver or cause to be delivered to Seller the following:



     (a) same day funds by wire transfer in an amount equal to the Closing
Payment to an account specified by Seller at least two Business Days prior to
the Closing;



     (b) the certificates and other agreements described in Section 8.02;



     (c) a counterpart of the Escrow Agreement duly executed by Purchaser;



     (d) a duly executed Assumption Agreement and such other good and
sufficient instruments of assumption as, in the reasonable opinion of Seller,
shall be necessary to vest in Purchaser the Assumed Liabilities as of the
Closing Date; and



     (e) a duly executed Bill of Sale.



     Section 3.05 Post-Closing Adjustment.



     (a) Preparation of Closing Statement. As soon as practicable (but in any
event within 30 days) following the Closing, Seller shall prepare, or cause to
be prepared, and deliver to Purchaser a written notice setting forth the
Seller’s determination and calculation of the Closing Working Capital Amount
(the “Closing Statement”), which shall include such information as is
sufficient to reflect how the Seller made such determination and calculation.
In no event shall the Closing Statement include any reduction to the bad debt
reserve reflected on Schedule 1.01(g) to the Seller Disclosure Schedule as a
component of Working Capital inconsistent with the thirteen and one-half
percent (13.5%) bad debt methodology currently used by Seller.



     (b) Review of and Resolution of Disputes Relating to Closing Statement.
Purchaser shall complete its review of the Closing Statement within 30 days
after the later of (i) the date on which the work papers of Seller’s chief
financial officer supporting the Closing Statement are first made available to
Purchaser, (ii) the date on which the Closing Statement is delivered to
Purchaser and (iii) the date on which Seller delivers to Purchaser a list, by
invoice number, of all accounts payable and receivable reflected on the Closing
Statement (the “Review Period”). In the event that Purchaser determines that
any item reflected on the Closing Statement has not been determined on the
basis set forth in this Agreement, Purchaser shall so inform Seller in writing
(the “Objection”), on or before the last day of the Review Period, setting
forth a specific description of the basis or bases of the Objection and the
adjustments to the Closing Statement which Purchaser believes should be made.
Seller shall have 15 days after the delivery of the



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Objection to review and respond to the Objection and the parties shall
attempt in good faith to reach an agreement with respect to any matters in
dispute. If Seller and Purchaser are unable to resolve all of their
differences within 15 days after delivery of the Objection, they shall refer
their remaining differences to KPMG LLP or another internationally recognized
firm of independent public accountants as to which Purchaser and the Seller
shall mutually agree (the “CPA Firm”). The CPA Firm shall determine, on the
basis of the standards set forth in this Agreement, and only with respect to
the remaining differences so submitted, whether and to what extent, if any, the
items reflected on the Closing Statement require adjustment. The CPA Firm’s
determination shall be conclusive and binding upon Purchaser and Seller and
shall be set forth in a written determination of the CPA Firm. The fees and
disbursements of the CPA Firm shall be paid 50% by Purchaser and 50% by Seller.
Each of Purchaser and Seller shall make readily available to the CPA Firm all
relevant books and records and any work papers (including those, if any, of
their respective accountants) in its respective possession relating to the
Closing Statement, and all other items reasonably requested by the CPA Firm.
As used herein, the term “Final Closing Statement” shall mean (i) the Closing
Statement as delivered by Seller in the event no Objection regarding the
Closing Statement is delivered to the Seller during the Review Period specified
above, (ii) the Closing Statement, adjusted in accordance with the Objection
regarding the Closing Statement in the event that the Seller does not respond
to such Objection within the 15-day period following receipt by the Seller of
such Objection, (iii) the Closing Statement, as adjusted or otherwise agreed
upon by the mutual agreement of Purchaser and the Seller, or (iv) the Closing
Statement as determined by the CPA Firm pursuant hereto if Purchaser and the
Seller are unable to reach a mutual agreement and refer their remaining
differences to the CPA Firm for final settlement.



     (c) Access to Information. Seller shall (and shall cause its Subsidiaries
to), to the extent they or Seller’s Auditors remain in possession or control
thereof at or after the Closing Date, provide (or cause to be provided) to
Purchaser and their accountants reasonable access to all books and records and
any other information or data relating to the pre-Closing operation of Seller
and the Seller Subsidiaries and shall otherwise reasonably cooperate with
Purchaser and, to the extent necessary for Purchaser’s review of the Closing
Statement, grant Purchaser reasonable access to their representatives familiar
with the pre-Closing operation of Seller and the Seller Subsidiaries.
Purchaser shall provide Seller reasonable access to the books and records of
Seller and the Seller Subsidiaries in its possession or control at or after the
Closing Date and any other information relating to the pre-Closing operation of
Seller and the Seller Subsidiaries to the extent necessary for them to prepare
the Closing Statement, subject to such confidentiality arrangements as
Purchaser may reasonably request.



     (d) Adjustment.




     (i) The Closing Consideration shall be increased by the amount of
any Final Working Capital Increase, or decreased by the amount of any
Final Working Capital Decrease, as applicable, and, as so increased or
decreased, shall be the Purchase Price (the “Post-Closing Adjustment”).




     (ii) In the event of a Final Working Capital Decrease, Seller shall
pay Purchaser an amount in cash equal to the amount of such Net
Consideration Decrease, plus interest thereon at a rate per annum equal
to LIBOR, payable from the Closing Date through the



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date of payment. Seller shall make such payment by wire transfer of
immediately available funds within 10 days after the determination of the
Final Closing Statement to an account designated in writing by Purchaser.




     (iii) In the event of a Final Working Capital Increase, Purchaser
shall pay Seller an amount in cash equal to the amount of such Net
Consideration Increase, plus interest therein at a rate per annum equal
to LIBOR, payable from the Closing Date to the date of payment.
Purchaser shall make such payment by wire transfer of immediately
available funds within 10 days after determination of the Final Closing
Statement to an account designated in writing by Seller.



     Section 3.06 Escrow. Prior to the Closing Date, Purchaser and Seller
shall use all commercially reasonable efforts to duly execute and deliver the
Escrow Agreement. Amounts deposited with the Escrow Agent pursuant to Section
3.01 (together with all accrued interest thereon, except as provided in the
Escrow Agreement, and less any amounts distributed to Seller or any other
Person pursuant to the Escrow Agreement, the “Escrow Fund”) shall be deposited
for satisfying claims for indemnification made against the Escrow Fund by any
of the Purchaser Indemnified Parties as provided in Article XI. The Escrow
Fund shall be held as a trust fund and shall not be subject to any lien,
attachment or other judicial process of any creditor of any party, and shall be
held and disbursed solely for the purposes and in accordance with the terms
hereof and of the Escrow Agreement.



     Section 3.07 Allocation of Purchase Price. (a) The parties shall
determine the amount of and allocate the Purchase Price in conformity with
Section 1060 of the Code, based on the fair market value of the assets and
liabilities transferred. No later than 90 days after the Closing Date,
Purchaser shall provide Seller with one or more schedules finally allocating
the Purchase Price. If Seller disagrees with any items reflected on the final
schedules so provided, Seller shall have the right to notify Purchaser of such
disagreement and its reasons for so disagreeing, and shall do so within five
Business Days from the delivery of the allocation of the Purchase Price, in
which case Seller and Purchaser shall attempt to resolve the disagreement;
provided that Seller agrees to accept and be bound by the determination of
Purchaser, which should be reasonable. Seller and Purchaser shall prepare and
file an IRS Form 8594 in a timely fashion in accordance with the rules under
Section 1060 of the Code. To the extent that the Purchase Price is adjusted,
the parties agree, if necessary, to revise and amend the schedule and IRS Form
8594.



     (b) Seller and Purchaser agree that all of the items listed below relating
to the Purchased Assets will be prorated as of the Closing Date, with Seller
liable to the extent such items relate to any time period up to the Closing
Date (except to the extent included in the Closing Working Capital Amount as
reflected on the Final Closing Statement in accordance with the terms hereof),
and Purchaser (with effect from and after the Closing) liable to the extent
such items relate to periods from and after the Closing Date: (i) personal
property, ad valorem, occupancy and water taxes and payments in lieu of the
foregoing, if any, on or with respect to the Purchased Assets; (ii) rents,
taxes and other items payable by Seller or any Seller Subsidiary under any
Assigned Contract; (iii) the amount of any license or registration fees with
respect to any licenses or registrations which are being assigned or
transferred hereunder; (iv) the amount of sewer rents and charges for water,
telephone, equipment driver and control services and other utilities; and (v)
the amount of any rebates granted or paid to customers of Seller or the Seller
Subsidiaries.



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Seller agrees to furnish Purchaser with such documents and other records
as Purchaser reasonably requests in order to confirm all adjustment and
proration calculations made. The net amount of such prorations shall be part
of the calculation of the Purchase Price. If current payments with respect to
items to be prorated pursuant to this Section 3.07(b) are not ascertainable on
or before the Closing Date, such payments shall be prorated on the basis of the
most recently ascertainable bill therefore and shall be prorated between Seller
and Purchaser when the current bills with respect to such items have been
issued and a cash settlement shall be made promptly thereafter.



     Section 3.08 Procedures for Purchased Assets not Transferable. If, either
by virtue of the provisions thereof or under Applicable Law, any of the
Contracts or any other property or rights included in the Purchased Assets are
not assignable or transferable without the Consent of some other Person, Seller
shall diligently use all commercially reasonable efforts to obtain such Consent
prior to the Closing Date. If any such Consent cannot be obtained prior to the
Closing Date, (i) at Purchaser’s request the parties shall negotiate in good
faith a commercially reasonable arrangement designed to provide Purchaser the
practical benefit of such related property or rights (such obligation to
negotiate will terminate on April 1, 2005) and (ii) unless the parties reach an
agreement to the contrary pursuant to clause (i), if the Closing occurs this
Agreement and the related instruments of transfer shall not constitute an
assignment or transfer thereof (or the assumption by Purchaser of any Liability
related thereto), except as provided in Section 2.01(vi).



ARTICLE IV




Representations and Warranties of Seller




     Seller represents and warrants to Purchaser, as of the date hereof and as
of the Closing Date (as if such representations and warranties were made as of
the Closing Date), as follows:



     Section 4.01 Organization, Standing and Power. Seller and each of the
Seller Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has the
requisite corporate power and authority to own, lease or otherwise hold its
properties and assets and to conduct its business as presently conducted and as
contemplated by Seller to be conducted. Seller and each Seller Subsidiary is
duly qualified to do business and is in good standing in all jurisdictions
where the nature of its business or its ownership of its properties make such
qualification necessary or beneficial, except in such jurisdictions where the
failure to be so qualified or in good standing, individually or in the
aggregate, has not had and could not reasonably be expected to have a Seller
Material Adverse Effect. Schedule 4.01 to the Seller Disclosure Schedule sets
forth a true and complete list for Seller and each Seller Subsidiary, of its
jurisdiction of organization and each jurisdiction in which it is qualified to
do business. True and complete copies of the Seller Charter, the Seller
By-laws and the charter documents, by-laws, organizational documents and
partnership, limited liability company and joint venture agreements of each of
the Seller Subsidiaries (and in each case all amendments thereto) have been
delivered to Purchaser. Neither Seller nor any of the Seller Subsidiaries is
in violation of any term of its respective charter or by-laws (or other
organizational documents).



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     Section 4.02 Seller Subsidiaries; Equity Interests.



     (a) Seller owns and has good, valid and marketable title to, directly or
indirectly, all of the outstanding shares of capital stock or a 100% ownership
interest, as applicable, of each of the Seller Subsidiaries, free and clear of
all Liens. Each of the outstanding shares of capital stock of each of the
Seller Subsidiaries having corporate form is duly authorized, validly issued,
fully paid and nonassessable. Schedule 4.02(a) to the Seller Disclosure
Schedule sets forth a true and complete list of the Seller Subsidiaries and,
for each Seller Subsidiary: (i) the amount and type of its authorized capital
stock or share capital; and (ii) the amount, type and owner of its issued and
outstanding shares of capital stock or share capital.



     (b) Except for its interests in the Seller Subsidiaries, neither Seller
nor any Seller Subsidiary (i) owns, has any right to acquire or is involved in
negotiations to acquire, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
or participation right in any Person or (ii) has the ability to control
(whether through the ownership of voting securities or otherwise) any other
Person.



     (c) No Seller Subsidiary or other Affiliate of Seller owns, controls or
has an interest in any asset, real or personal, tangible or intangible, used at
any time in the last 12 months or held for use in connection with the business
of Seller and the Seller Subsidiaries, except as included in the Excluded
Assets.



     Section 4.03 Capital Structure. The authorized capital stock of Seller
consists of 235,266,500 shares of Common Stock, 6,250,000 shares of Series A
Preferred Stock, 149,112,500 shares of Series B Preferred Stock and 21,883,000
shares of Series C Preferred Stock. As of the date hereof, (a) 12,877,106
shares of Common Stock are issued and outstanding, (b) 5,737,500 shares of
Series A Preferred Stock are issued and outstanding, (c) 144,166,719 shares of
Series B Preferred Stock are issued and outstanding, (d) 19,192,519 shares of
Series C Preferred Stock are issued and outstanding, and (e) 426,403 shares of
Common Stock are subject to outstanding Seller Employee Stock Options. There
are no shares of Seller Stock held in the treasury of Seller or owned by any
Seller Subsidiary. Each share of Series A Preferred Stock and Series C
Preferred Stock is convertible into the following number of shares of Common
Stock: (i) Series A Preferred Stock – 2.904 shares; and (ii) Series C
Preferred Stock – 1.0 shares. As to Series B Preferred Stock, the Seller
Charter provides that, at the time of conversion, accrued but unpaid dividends
on such stock shall be added to the stated conversion value (with 8% compound
interest); in accordance therewith, as of July 14, 2004, each share of Series B
Preferred Stock will be or was convertible into 1.29750 shares of Common Stock.
Schedule 4.03 to the Seller Disclosure Schedule sets forth a true and complete
list of all holders of Seller Stock as of the date of this Agreement, and the
number of shares held by each such Person. Schedule 4.03 to the Seller
Disclosure Schedule sets forth a true and complete description of all
outstanding Seller Employee Stock Options, including the name of the Person to
whom such options have been granted, the number of shares subject to each
option, and the per share exercise price for each option. As of the date
hereof, except as set forth above, no shares of capital stock or other voting
securities of Seller were issued, reserved for issuance or outstanding. As of
immediately prior to the Closing, except as set forth above and except for the
issuance of shares of Seller Stock upon the exercise of Seller Employee Stock
Options described above or upon the conversion of shares of Preferred Stock, in
each case in accordance with the



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terms thereof existing as of the date of this Agreement, no shares of
capital stock or other voting securities of Seller will be issued, reserved for
issuance or outstanding. Except as set forth on Schedule 4.03 to the Seller
Disclosure Schedule, all outstanding shares of Seller Stock are, and all such
shares that may be issued prior to the Closing will be when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to or
issued in violation of any purchase option, call option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of the DGCL, the Seller Charter, the Seller By-laws or any Contract
to which Seller or any Seller Subsidiary is a party or otherwise bound. There
is no Voting Seller Debt. Except as set forth above, there are no options,
warrants, puts, calls, rights, convertible or exchangeable securities,
performance units, or other Contracts of any kind to which Seller or any Seller
Subsidiary is a party or by which any of them is bound obligating Seller or any
Seller Subsidiary to issue, deliver, transfer or sell, or cause to be issued,
delivered, transferred or sold, shares of capital stock or any other security
of (including any security convertible into or exercisable for or exchangeable
into any capital stock or other security of) Seller or any Seller Subsidiary
(whether or not such security has voting rights). There are no preemptive or
similar rights with respect to the issuance, sale or other transfer (whether
present, past or future) of the capital stock or other securities by Seller or
any Seller Subsidiary. Except as set forth on Schedule 4.03 to the Seller
Disclosure Schedule, none of Seller or Seller Subsidiaries is a party to or
bound by, and Seller has no Knowledge of the current existence of, any
stockholder agreement, voting trust agreement or other Contract relating to the
purchase, repurchase, sale, acquisition, disposition, holding, voting,
dividend, ownership or transfer rights or restrictions of any shares of capital
stock or other securities of Seller or any Seller Subsidiary.



     Section 4.04 Authorization; Validity of Agreements; Necessary Action.



     (a) Seller has the requisite corporate power and authority to enter into
this Agreement and the Seller Ancillary Agreements, to perform its obligations
hereunder and thereunder and, subject to the Seller Stockholder Approval, to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement by Seller and the Seller Ancillary Agreements by
Seller and the Seller Subsidiaries and the consummation by Seller and the
Seller Subsidiaries of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Seller
and the Seller Subsidiaries, as applicable, subject, in the case of this
Agreement, to Seller Stockholder Approval. This Agreement has been duly
executed and delivered by Seller.



     (b) The Seller Ancillary Agreements executed as of the date hereof have
been, and on the Closing Date the other Seller Ancillary Agreements will have
been, duly executed and delivered by Seller and any Seller Subsidiary party
thereto and no other corporate action on the part of Seller or any Seller
Subsidiary is or will be necessary in connection therewith. Assuming the due
execution and delivery hereof and thereof by, the validity and binding effect
hereof and thereof on, the other parties hereto and thereto, this Agreement
constitutes the valid and binding obligation of Seller enforceable against it
in accordance with its terms, and each of the Seller Ancillary Agreements, upon
execution and delivery thereof by Seller and any Seller Subsidiary party
thereto, will constitute the valid and binding obligation of each of Seller and
any applicable Seller Subsidiary enforceable against it in accordance with its
terms, except to the extent enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors’ rights generally and by the effect of



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general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).



     (c) The Seller Board, at a meeting duly called and held prior to execution
of this Agreement, duly and unanimously adopted resolutions (i) approving and
declaring advisable this Agreement and the Seller Ancillary Agreements to which
Seller or any Seller Subsidiary is or will be a party and the transactions
contemplated hereby and thereby, (ii) determining that the terms of the
Agreement are in the best interests of Seller, (iii) recommending that Seller’s
stockholders approve this Agreement and the transactions contemplated hereby,
(iv) established a record date for the Seller Stockholders Meeting in
accordance with the DGCL, (v) approved the Charter Amendment and determined
that it is advisable and (vi) recommended that Seller’s stockholders approve
the Charter Amendment.



     (d) The only vote of holders of any class or series of capital stock of
Seller necessary to approve (i) the Charter Amendment is the approval of (a)
the holders of a majority of the outstanding shares of Common and Preferred
Stock voting together on an as-converted to Common Stock basis, (b) the holders
of a majority of the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock voting together as a single class
on an as-converted to Common Stock basis, (c) the holders of a majority of the
outstanding shares of Series A Preferred Stock, (d) the holders of a majority
of the outstanding shares of Series B Preferred Stock and (e) the holders of a
majority of the outstanding shares of Series C Preferred Stock and (ii) this
Agreement and the transactions contemplated hereby is the approval of this
Agreement by the holders of (a) the holders of a majority of the outstanding
shares of Common and Preferred Stock voting together on an as-converted to
Common Stock basis and (b) the holders of a majority of the outstanding shares
of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock voting together as a single class on an as-converted to Common Stock
basis (the “Seller Stockholder Approval”).



     Section 4.05 No Conflicts; Consents. The execution and delivery by Seller
and any Seller Subsidiary party thereto of each Transaction Agreement to which
it is a party does and will not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof and thereof will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any Person under, or result in the creation of any Lien upon
any of the properties or assets of Seller or any Seller Subsidiary under, any
provision of (a) the Seller Charter, the Seller By-laws or the comparable
charter or organizational documents of any Seller Subsidiary, (b) assuming
receipt of the Consents listed in Schedule 4.05(b) to the Seller Disclosure
Schedule (the “Required Contractual Consents”) and excluding any Terminated
Contract or Specified Confidentiality Agreement, any Contract to which Seller
or any Seller Subsidiary is a party or by which any of them is bound or to
which any of their respective properties or assets are subject, including any
Assigned Contract, or result in the creation of a Lien upon any Purchased
Asset, or (c) any provision of any Order or Applicable Law applicable to Seller
or any Seller Subsidiary or their respective properties or assets. No Consent
of, or registration, declaration or filing with, any Governmental Entity is
required to be obtained or made by or with respect to Seller or any Seller
Subsidiary in connection with the



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execution, delivery and performance of any Transaction Agreement to which
it is a party or the consummation of the transactions contemplated hereby



     Section 4.06 Financial Statements; Undisclosed Liabilities.



     (a) Schedule 4.06 to the Seller Disclosure Schedule contains (i) the
audited consolidated balance sheet (the “Year-End Balance Sheet”) of Seller and
Seller Subsidiaries as of December 31, 2003, and the related audited
consolidated statements of operations, stockholders’ equity and cash flows for
the year then ended, together with the appropriate notes to such financial
statements, accompanied by the report thereon of Seller’s Auditors (the
“Year-End Financial Statements”), (ii) the unaudited consolidated balance sheet
of Seller and the Seller Subsidiaries as of March 31, 2004 and the related
unaudited statements of operations and cash flows for the three months then
ended, together with the appropriate notes to such financial statements (the
“Quarterly Financial Statements”), and (iii) the unaudited consolidated balance
sheet of Seller and the Seller Subsidiaries as of May 31, 2004 and the related
unaudited statements of operations and cash flows for the one month period
then-ended (the “Other Financial Statements,” and, together with the Year-End
Financial Statements and Quarterly Financial Statements, the “Financial
Statements”). The Financial Statements have been prepared in conformity with
GAAP (except as provided in Schedule 4.06) to the Seller Disclosure Schedule
and fairly present the consolidated financial position of Seller and the Seller
Subsidiaries at the dates of the balance sheets included therein and the
consolidated results of their operations and cash flows for the respective
periods indicated therein (subject, in the case of the Quarterly Financial
Statements and the Other Financial Statements, to all adjustments and accruals
of a normal, recurring nature which are necessary for a fair statement of the
balance sheet and results of operations and cash flows at the date or for the
period presented). The Financial Statements are in accordance with the books
and records of Seller and Seller Subsidiaries do not and will not reflect any
transactions which are not bona fide transactions.



     (b) Except for expenses related to the consummation of the transactions
contemplated by this Agreement, Seller and the Seller Subsidiaries have no
Liabilities, and whether or not required to be disclosed on a balance sheet
prepared in accordance with GAAP, except (i) Liabilities stated or adequately
reserved against in the Financial Statements, and (ii) Liabilities incurred in
the Ordinary Course of Business since December 31, 2003.



     Section 4.07 Absence of Certain Changes or Events. Since December 31,
2003, Seller has conducted its business only in the Ordinary Course of
Business, and, except as set forth on Schedule 4.07 to the Seller Disclosure
Schedule, during such period none of Seller or any Seller Subsidiary has:



     (a) experienced or been affected by any event, change, effect or
development that, individually or in the aggregate, has had or could reasonably
be expected to have a Seller Material Adverse Effect;



     (b) suffered any damage, destruction or loss to any of its assets or
properties (whether or not covered by insurance) in excess of $10,000, in the
aggregate;



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     (c) (A) declared, set aside or paid any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise made any payments to its stockholders in their capacity as
such, other than dividends and distributions by a direct or indirect wholly
owned subsidiary of Seller to its parent, (B) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital stock,
(C) purchase, redeem or otherwise acquire any shares of capital stock of Seller
or any Seller Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities or (D) adopt
a plan of or effect any complete or partial liquidation or adopt resolutions
providing for or authorizing such liquidation or adopt a plan of or effect any
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization of Seller or any of the Seller Subsidiaries;



     (d) authorized for issuance, issue, deliver, sell, pledge, dispose of or
grant (A) any shares of its capital stock, (B) any other equity or voting
securities, (C) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares, equity or voting
securities or convertible or exchangeable securities or (D) any “phantom”
stock, “phantom” stock rights, stock appreciation rights or stock-based
performance units, other than (x) the issuance of Common Stock upon the
exercise of Seller Employee Stock Options outstanding on December 31, 2003 in
accordance with their present terms, and (y) the issuance of Common Stock upon
the conversion of Preferred Stock in accordance with its present terms;



     (e) amend its articles or certificate of incorporation, by-laws or other
comparable charter or organizational documents;



     (f) acquired or agreed to acquire (A) by merging or consolidating with, or
by purchasing all or a substantial portion of the assets of, or by any other
manner, any business of any Person or any corporation, limited liability
company, partnership, association or other business organization or division
thereof, (B) any assets other than those acquired in the Ordinary Course of
Business and not, individually or in the aggregate, material to Seller and the
Seller Subsidiaries, taken as a whole, or (C) capital stock or equity interests
in any Person;



     (g) (A) granted to any present or former employee, officer or director of
Seller or any Seller Subsidiary any increase in compensation or benefits, (B)
granted to any present or former employee, officer or director of Seller or any
Seller Subsidiary any increase in severance or termination pay, (C) except as
set forth on Schedule 4.27(a) to the Seller Disclosure Schedule, entered into
or amended any employment, consulting, indemnification, severance or
termination agreement with any such present or former employee, officer or
director, including James Franke, (D) established, adopted, entered into or
amended in any material respect any Seller Plan (or arrangement that, had it
been in existence on December 31, 2003, would have been a Seller Plan), (E)
taken any action to accelerate any payments, rights or benefits, or made any
material determinations not in the Ordinary Course of Business, under any
Seller Plan, or (F) loaned or advanced money or other property to any present
or former employee, officer or director of Seller or any Seller Subsidiary;



     (h) made any change in accounting methods, principles or practices
affecting the reported consolidated assets, liabilities or results of
operations of Seller and the Seller Subsidiaries;



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     (i) sold, leased, licensed, mortgaged, encumbered or otherwise disposed of
or permitted to become subject to any Lien any properties or assets, tangible
or intangible, except sales of inventory or the disposal of equipment in the
Ordinary Course of Business;



     (j) entered into any transaction with an Affiliate (other than Seller or a
Seller Subsidiary);



     (k) (A) incurred any Indebtedness, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Seller or any Seller
Subsidiary, entered into any “keep well” or other agreement to maintain any
financial statement condition of another Person or enter into any arrangement
having the economic effect of any of the foregoing, or (B) made any loans,
advances or capital contributions to, or investments in, any other Person,
other than to or in Seller or any Seller Subsidiary or the advancement of trade
credit to customers of Seller or a Seller Subsidiary in the Ordinary Course of
Business;



     (l) made any Tax election or settle or compromise any Tax Liability or
refund;



     (m) prepared or filed any Tax Return inconsistent with past practice or,
on any such Tax Return, taken any position, made any election or adopt any
method that is inconsistent with positions taken, elections made or methods
used in preparing or filing similar Tax Returns in prior periods;



     (n) (A) paid, discharged, written off or satisfied any claims, obligations
or other Liabilities, other than the payment, discharge or satisfaction, in the
Ordinary Course of Business or in accordance with their terms, of Liabilities
reflected or reserved against in the Year-End Balance Sheet or the Quarterly
Financial Statements or incurred after the date thereof in the Ordinary Course
of Business, or (B) waived the benefits of, or agreed to modify in any manner,
any confidentiality, inventor’s right, standstill or similar agreement to which
Seller or any Seller Subsidiary is a party;



     (o) to the Knowledge of Seller, violated or failed to perform any
obligation or duty imposed upon it by any Applicable Law;



     (p) initiated, settled or compromised any litigation or arbitration
Proceeding, or otherwise waived, released or cancelled any claims against third
parties or debts owing to it, or any rights which have any value;



     (q) terminated, rescinded, modified, amended or otherwise altered or
changed any of the terms or provisions of any Material Contract, pay any amount
not required by Applicable Law or by any Material Contract, or reduced,
discounted, waived or forewent any material payment or right thereunder, or
agreed to any compromise or settlement with respect thereto;



     (r) made any changes in the terms of any of the Assumed Liabilities;



     (s) except for the settlement with Comcast dated December 2003 or as set
forth on Schedules 4.11(a), 4.16(b), 4.17(a)(iii) or 4.18(a) to the Seller
Disclosure Schedule, entered into any Contract that, if it were effective on
the December 31, 2003, would constitute a Material Contract; or



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     (t) authorized, recommended, proposed or announced an intention to do any
of the foregoing, or entered into any contract, agreement, commitment or
arrangement to do any of the foregoing.



     Section 4.08 Title to Properties. Except for Permitted Liens and as set
forth on Schedule 4.08 to the Seller Disclosure Schedule, Seller and the Seller
Subsidiaries have good and valid record and marketable title to, and as of the
date hereof are the lawful owners of, the Purchased Assets, free and clear of
any Lien. Except for Permitted Liens, at Closing Seller and the Seller
Subsidiaries will have good and marketable title to, and will be the lawful
owners of, the Purchased Assets, free and clear of any Lien. Seller and the
Seller Subsidiaries have the full right to sell, convey, transfer, assign and
deliver the Purchased Assets to Purchaser (subject to Seller Stockholder
Approval), and, at and as of the Closing, Seller and the Seller Subsidiaries
will convey the Purchased Assets to Purchaser by deeds, bills of sale,
certificates of title and instruments of assignment and transfer effective to
vest in Purchaser, and Purchaser shall have, good and valid record and
marketable title to all of the Purchased Assets, free and clear of all Liens
other than Permitted Liens. Seller’s representations in paragraph 2 of
Schedule 4.08 to the Seller Disclosure Schedule are true and correct.



     Section 4.09 Condition and Sufficiency of Assets; Capital Improvements.
All of the tangible Purchased Assets, whether real or personal, owned or
leased, have been maintained consistent with industry standards and are in good
operating condition and repair (with the exception of normal wear and tear),
and are free from defects other than such minor defects as do not interfere
with the intended use thereof in the conduct of normal operations. Schedule
4.09 to the Seller Disclosure Schedule sets forth a true, accurate and complete
list of all of the capital improvements or purchases or other capital
expenditures to which Seller or any Seller Subsidiary has committed or for
which it has contracted and which in any event have not been completed prior to
the date hereof and the cost and expense reasonably estimated to complete such
work and purchases. Except for the items identified in clauses (i) and (iii)
through (ix) of Section 2.02, the licenses identified in attachment 12 to
Schedule 1.01(c) to the Seller Disclosure Schedule, the office lease for and
equipment located at Seller’s Boulder, Colorado facility and Seller’s
employment arrangements with Senior Management, the Purchased Assets constitute
all the assets, properties and rights which are required for or currently used
in connection with the conduct of the business of Seller and the Seller
Subsidiaries as it is presently conducted and, except for equipment failures
and ordinary wear and tear and as set forth on Schedule 4.09 to the Seller
Disclosure Schedule, is contemplated by Seller to be conducted. For purposes
of the foregoing sentence, the term “contemplated” refers to the actual plans
and intentions of Seller and the requirements of any customer of Seller or a
Seller Subsidiary to the extent communicated to Seller or a Seller Subsidiary
by such customer and of which Seller has Knowledge.



     Section 4.10 Taxes.



     (a) Except as set forth on Schedule 4.10(a) to the Seller Disclosure
Schedule, all Federal, state, local and foreign income, corporation and other
Tax Returns have been filed for Seller and the Seller Subsidiaries and all
other filings in respect of Taxes have been made for Seller and the Seller
Subsidiaries for all periods through and including the Closing Date as required
by Applicable Law. All Taxes shown as due on all such Tax Returns and other
filings have been paid. Each such Tax Return and filing is true, accurate and
complete and Seller and the Seller



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Subsidiaries do not and will not have any additional Liability for Taxes
with respect to any Tax Return or other filing heretofore filed or which was
required by Applicable Law to be filed, other than as reflected as liabilities
on the Financial Statements. There are no Tax Liens (other than Permitted
Liens) upon the Purchased Assets. All Taxes which Seller is required by
Applicable Law to withhold or collect, including sales and use taxes, and
amounts required to be withheld for Taxes of employees and other withholding
taxes, have been duly withheld or collected and, to the extent required, have
been paid over to the proper Governmental Entities or are held in separate bank
accounts for such purpose.



     (b) Seller is not a “foreign person” as defined in Section 1445(f)(3) of
the Code. Seller Subsidiaries have no interests in real property within the
meaning of Section 1445 of the Code.



     (c) None of the Purchased Assets constitutes a joint venture, partnership
or other arrangement or contract which is treated as a partnership for Federal
income tax purposes.



     (d) None of the Purchased Assets constitutes tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of the
Code, and none of the Purchased Assets is subject to a lease, safe harbor lease
or other arrangement as a result of which Seller or a Seller Subsidiary is not
treated as the owner for Federal income tax purposes.



     Section 4.11 Employee Benefits.



     (a) Except as set forth on Schedule 4.11(a) to the Seller Disclosure
Schedule, with respect to current or former employees of Seller or any Seller
Subsidiary, independent contractors, or the spouses, beneficiaries or
dependents thereof, none of Seller or any Seller Subsidiary maintains,
contributes to or has an obligation to contribute to, or has any liability or
potential liability with respect to any (i) defined contribution or defined
benefit plans or arrangements (whether or not terminated) which are employee
pension benefit plans (as defined in Section 3(2) of ERISA) and which are
intended to be qualified under Code Section 401(a) and which are not
Multiemployer Plans (the “Seller Pension Plans”); (ii) any funded or unfunded
employee welfare benefit plans (as defined in Section 3(1) of ERISA) which are
not Multiemployer Plans (“Seller Welfare Plans”); or (iii) any plan, policy,
program or arrangement which provides non qualified deferred compensation,
severance benefits or compensation, “change of control” (as set forth in Code
Section 280G) benefits or compensation or any program, plan policy or
arrangement which provides any health, life, disability, accident, vacation,
tuition reimbursement or other fringe benefits (“Other Plans”). None of Seller
or any Seller Subsidiary participates in or contributes to any multiemployer
plan (as defined in Section 3(37) of ERISA) (“Multiemployer Plan”) nor does
Seller or any Seller Subsidiary have any other Liability, including, without
limitation, any potential withdrawal liability, with respect to any
Multiemployer Plan. None of Seller or any Seller Subsidiary maintains or has
any obligation to contribute to (or any other liability with respect to) any
funded or unfunded Seller Welfare Plan or Other Plan which provides
post-retirement health, accident or life insurance benefits to current or
former employees or, current or former independent contractors, their spouses,
dependents or beneficiaries, other than medical benefits required to be
provided to former employees, their spouses and other dependents under Code
Section 4980B or similar provisions of applicable state law. (Any Seller
Pension Plan, any Seller Welfare Plan and any Other Plan shall be referred to
herein collectively as the “Seller Plans”).



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     (b) All Seller Plans comply and have been administered in form and in
operation in all material respects in accordance with their terms and with all
applicable requirements of law (including, in the case of any Seller Pension
Plan, the requirements of sections 401(a) and 501(a) of the Code).



     (c) Each Seller Pension Plan has received a favorable determination letter
from the Internal Revenue Service with respect to the qualified status of such
plan under Code Section 401(a) and the tax-exempt status of any trust which
forms a part of such plan under Code Section 501(a); all amendments to any such
plan for which the remedial amendment period (within the meaning of section
401(b) of the Code and applicable regulations) has expired are covered by a
favorable IRS determination letter.



     (d) With respect to any Seller Plan, none of Seller or any Seller
Subsidiary has incurred any liability to the Pension Benefit Guaranty
Corporation (the “PBGC”), the Internal Revenue Service, the Department of
Labor, or any other governmental agency that has not been satisfied in full,
and no condition exists that presents a material risk to Seller or any Seller
Subsidiary of incurring such a liability with respect to any Seller Plan.



     (e) There are no pending or threatened claims (other than routine claims
for benefits) by or on behalf of any Seller Plan or any trust which are
associated with such Seller Plans and none of the Seller Plans are under audit
or investigation by the Internal Revenue Service, the Department of Labor, the
PBGC or any other agency.



     (f) No Seller Plan is subject to Title IV of ERISA.



     (g) Schedule 4.11(g) to the Seller Disclosure Schedule sets forth a true
and complete list of all persons for whom Seller or any Seller Subsidiary is
providing health or medical insurance coverage or benefits (regardless of
whether such persons are employed by Seller or any Seller Subsidiary), as well
as the date on which such persons’ coverage or benefits are scheduled to
terminate.



     Section 4.12 Employee and Labor Matters.



     (a) Neither Seller nor any Seller Subsidiary is a party to or bound by any
collective bargaining agreement and there are no labor unions or other
organizations representing, purporting to represent or attempting to represent
any employees employed in the operation of their respective businesses. There
has not occurred or, to Seller’s Knowledge, been threatened any strike,
slowdown, picketing, work stoppage, concerted refusal to work overtime or other
similar labor activity with respect to any employees employed by Seller or any
Seller Subsidiary. There are no labor disputes currently subject to any
grievance procedure, arbitration or litigation and there is no representation
petition pending or, to Seller’s Knowledge, threatened with respect to any
employee employed by Seller or any Seller Subsidiary.



     (b) To Seller’s Knowledge, each of Seller and the Seller Subsidiaries has
complied with all provisions of Applicable Law pertaining to the employment of
employees, including all such Applicable Laws relating to labor relations,
equal employment, fair employment practices, wages and hours, rest periods,
affirmative action, entitlements, prohibited discrimination, retaliation or
other similar employment practices or acts (the “Employment Laws”).



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     (c) To Seller’s Knowledge, neither Seller nor any Seller Subsidiary has
received any notice from any Governmental Entity or any other Person that
Seller or any of the Seller Subsidiaries has violated any Employment Law.



     (d) Since January 1, 2003 and except as set forth in Schedule 4.12(d) to
the Seller Disclosure Schedule, neither Seller nor any Seller Subsidiary is or
has been the subject of any litigation or other Proceedings in any forum,
judicial or administrative, involving a demand for damages, injunctive relief,
penalties or other potential Liability with respect to any violation of any
Employment Law.



     Section 4.13 Litigation and Claims.



     (a) Schedule 4.13(a) to the Seller Disclosure Schedule sets forth a true
and complete list of all Proceedings pending or, to Seller’s Knowledge,
threatened against or that would materially affect (i) Seller or any Seller
Subsidiary, (ii) any of their respective officers, directors, employees, agents
or stockholders in their capacity as such or (iii) any Purchased Asset, and, to
Seller’s Knowledge, there are no facts which may constitute a valid basis for
any claim that, if it were pending or threatened, would be set forth in
Schedule 4.13(a) to the Seller Disclosure Schedule. All of the Proceedings
pending against Seller or any Seller Subsidiary are fully covered by insurance
policies (or other indemnification agreements with third parties) and are being
defended by the insurers (or such third parties). To Seller’s Knowledge,
neither Seller nor any Seller Subsidiary is subject to any Order. Neither
Seller nor any Seller Subsidiary has entered into any agreement to settle or
compromise any Proceeding pending or threatened against it which has involved
any obligation other than the payment of money or for which Seller or any
Seller Subsidiary has any continuing obligation.



     (b) There are no claims or Proceedings pending or, to Seller’s Knowledge,
threatened against Seller or any Seller Subsidiary with respect to this
Agreement or the transactions contemplated hereby, and Seller has no Knowledge
of any fact which may constitute a valid basis for any such claim or
Proceeding.



     Section 4.14 Compliance with Applicable Laws. The business of Seller and
each Seller Subsidiary has been and is being conducted in compliance in all
material respects with all Applicable Laws and Orders. Since January 1, 2003,
none of Seller or the Seller Subsidiaries (i) has been subject to any Order
with respect to any actual or alleged non-compliance with Applicable Law, or
(ii) received any notice, demand letter, federal or state administrative
inquiry, or formal complaint or claim with respect to any actual or alleged
non-compliance with Applicable Law or the enforcement of any Applicable Law.
None of Seller or any Seller Subsidiary has ever been the subject of any
criminal Proceedings or convicted of any felony or misdemeanor.



     Section 4.15 Computer System. Schedule 4.15 to the Seller Disclosure
Schedule sets forth all computer hardware and software and related materials
used by Seller or any Seller Subsidiary (herein collectively referred to as the
“Computer System”) and, except as set forth on Schedule 4.15 to the Seller
Disclosure Schedule, the Computer System is in good working order and
condition, and neither Seller nor any Seller Subsidiary has experienced any
significant defects in design, workmanship or material, and the Computer System
has the performance



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capabilities, characteristics and functions necessary to the conduct of
its business. Except as set forth on Schedule 4.15 to the Seller Disclosure
Schedule, the use of the Computer System (including any software modifications)
(i) has not violated or infringed upon and will not violate or infringe upon,
in any material respect, the rights of any third parties and (ii) has not
resulted and will not result in, in any material respect, the termination of
any maintenance, service or support agreement relating to any part of the
Computer System or any reduction in the services provided to Seller or any
Seller Subsidiary, warranties available to Seller or any Seller Subsidiary or
rights of Seller or any Seller Subsidiary thereunder. Seller has commercially
adequate user and service documentation or access thereto for the Computer
System.



     Section 4.16 Real Property.



     (a) Owned Real Property. Neither Seller nor any Seller Subsidiary owns
any real property.



     (b) Leases. Schedule 4.16(b) to the Seller Disclosure Schedule contains a
complete and correct list of all oral and written leases, occupancy agreements
or similar agreements or arrangements (the “Leases”) under which Seller or any
Seller Subsidiary leases or otherwise uses any real property (the “Leased Real
Property”), setting forth the address, landlord, tenant, term, current rent and
use for each Lease. Seller has delivered or made available to Purchaser
correct and complete copies of the Leases. All rent and other amounts due and
payable by Seller or any Seller Subsidiary with respect to the Leases have been
paid through the date of this Agreement and all rents and other amounts which
will become due and payable by Seller or any Seller Subsidiary with respect to
the Leases on or prior to the Closing Date will have been paid on or prior to
the Closing Date. Each Lease is legal, valid, binding, enforceable and in full
force and effect in accordance with its terms. Neither Seller nor any Seller
Subsidiary nor, to Seller’s Knowledge, any other party, has received any notice
of any or is in default, violation or breach in any respect under any Lease,
and no event has occurred and is continuing that constitutes or, with notice or
the passage of time or both, would constitute a default, violation or breach in
any respect under any Lease by Seller or any Seller Subsidiary or, to Seller’s
Knowledge, any other party. Each Lease grants the tenant under the Lease the
exclusive right to use and occupy the demised premises thereunder. Except as
set forth in Schedule 4.16(b) to the Seller Disclosure Schedule, none of the
Leases contain any non-assignment or other terms or conditions that will become
applicable or inapplicable as a result of the transactions contemplated by this
Agreement, and no Consent of any third party under any such Lease is required
in connection with the transactions contemplated hereby. Seller and the Seller
Subsidiaries have good and valid title to the leasehold estate under each
Lease, free and clear of all Liens other than Permitted Liens. Seller and the
Seller Subsidiaries enjoy peaceful and undisturbed possession of the Leased
Real Property under their respective Leases.



     (c) Adequacy. The Leased Real Property constitutes all the fee and
leasehold interests in real property necessary for the conduct of the
businesses of Seller and the Seller Subsidiaries as presently conducted and as
contemplated by Seller to be conducted.



     (d) No Proceedings. There are no eminent domain or other similar
Proceedings pending or threatened affecting any portion of the Leased Real
Property. There is no Order outstanding,



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nor any action, claim, suit or Proceeding pending or, to Seller’s
Knowledge, threatened, relating to the ownership, lease, use, occupancy or
operation by any Person of any Leased Real Property.



     (e) Current Use. To Seller’s Knowledge, the use and operation of the
Leased Real Property by Seller and the Seller Subsidiaries do not violate in
any material respect any instrument of record or agreement affecting the Leased
Real Property. To Seller’s Knowledge, there is no violation of any covenant,
condition, restriction, easement or order of any Governmental Entity having
jurisdiction over such property or of any other Person entitled to enforce the
same affecting the Leased Real Property or the use or occupancy thereof. To
Seller’s Knowledge, each location of Leased Real Property has commercially
reasonable access to and from, and is contiguous to, a publicly dedicated road
or relies on or regularly makes use of access to a publicly dedicated road by
means of one or more valid and enforceable recorded easements not subject to
divesture. Each location is adequately serviced by all utilities necessary for
the effective business operations of Seller and Seller Subsidiaries. No
commitment has been made by Seller or any of Seller Subsidiaries to any
Governmental Entity, utility company or any other Person relating to the Leased
Real Property and which imposes upon Seller or any Seller Subsidiary an
obligation to make any contribution or dedication of money or land or to
construct, install or maintain any improvements of a public or private nature.
To Seller’s Knowledge, no special assessments or other assessments for public
improvements have been made against any Leased Real Property the current (or
any prior) periodic payment of which is unpaid and for which Seller or any
Seller Subsidiary is liable, including those for construction of sewer, water,
gas and electrical lines and mains, streets, roads, sidewalks and curbs.
Seller has no Knowledge of, and no notice has been received that, any such
assessments are currently pending or proposed.



     (f) Compliance with Real Property Laws. To Seller’s Knowledge, the Leased
Real Property and its current use is in full compliance in all material
respects with all applicable building, zoning, subdivision and other land use
and similar Applicable Laws affecting the Leased Real Property (collectively,
the “Real Property Laws”), and neither Seller nor any Seller Subsidiary has
received any notice of violation or claimed violation of any Real Property Law.
To Seller’s Knowledge, there is no pending, or to Seller’s Knowledge,
anticipated condemnation, eminent domain or rezoning proceeding or any change
in any Real Property Law that will have or result in a material adverse effect
upon the ownership, alteration, use, occupancy or operation of the Leased Real
Property or any portion thereof. To Seller’s Knowledge, no current use by
Seller or any of Seller Subsidiaries of the Leased Real Property is dependent
on a nonconforming use or other Consent or Permit the absence of which would
materially limit the use of such Real Property.



     (g) Other. Neither Seller nor any Seller Subsidiary has any interest in,
or any right or obligation to acquire any interest in, or any residual
Liability in respect of, any real property other than the Leased Real Property.



     Section 4.17 Intellectual Property.



     (a) General. Schedule 4.17(a)(i) to the Seller Disclosure Schedule
contains a complete and correct list of all Owned Intellectual Property that
has been registered or is the subject of a pending application registration.
Schedule 4.17(a)(ii) to the Seller Disclosure Schedule contains a complete list
of all Licensed Intellectual Property that has been registered or is the
subject of a



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pending registration. Schedule 4.17(a)(iii) to the Seller Disclosure
Schedule contains a list of all Contracts which govern Seller’s or any Seller
Subsidiary’s rights or obligations with respect to any Intellectual Property,
showing in each case the parties thereto (the “Intellectual Property
Agreements”). Correct and complete copies of all written items identified in
Schedule 4.17(a)(i), (ii) or (iii) to the Seller Disclosure Schedule have been
delivered or made available by Seller to Purchaser.



     (b) Title and Sufficiency. Seller and the Seller Subsidiaries own the
entire right, title and interest in and to the Owned Intellectual Property and
have the unrestricted right to use the Licensed Intellectual Property in
accordance with any relevant license terms, in each case free and clear of any
Liens. The Owned Intellectual Property and Licensed Intellectual Property
comprise all of the Intellectual Property necessary for the conduct and
operation of the businesses of Seller and the Seller Subsidiaries as presently
conducted and as contemplated by Seller to be conducted.



     (c) No Infringement. Neither Seller nor any Seller Subsidiary has
infringed or otherwise conflicted with, in any material respect, any rights of
any Person in respect of any Intellectual Property. To Seller’s Knowledge,
none of the Owned Intellectual Property or Licensed Intellectual Property is
being infringed or otherwise used or is available for use by any other Person.



     (d) Intellectual Property Agreements. The Intellectual Property
Agreements (x) are valid, legal, binding, enforceable and in full force and
effect in accordance with their terms (except to the extent that enforcement
may be affected by applicable bankruptcy, reorganization, insolvency or similar
laws affecting creditor’s rights and remedies), and no default, violation or
breach exists thereunder by Seller or any Seller Subsidiary or, to Seller’s
Knowledge, by any other party thereto, and no event has occurred and is
continuing that, with notice or the passage of time or both, would constitute a
default, violation or breach thereunder by Seller or any Seller Subsidiary or,
to Seller’s Knowledge, any other party, (y) are free and clear of all Liens,
and (z) except as set forth on Schedule 4.17(d) to the Seller Disclosure
Schedule, do not contain any non-assignment or other terms or conditions that
will become applicable or inapplicable as a result of the consummation of the
transactions contemplated by this Agreement, and no Consent of any third party
under any such Intellectual Property Agreement is required in connection with
the transactions contemplated hereby. All royalties, license fees, charges or
other amounts payable by, on behalf of, to or for the account of Seller or any
Seller Subsidiary in respect of any Intellectual Property are disclosed in the
Financial Statements.



     (e) No Intellectual Property Litigation. No claim or demand of any Person
has been made, nor is there any Proceeding that is pending or, to Seller’s
Knowledge, threatened, which (i) challenges the rights of Seller or any Seller
Subsidiary in respect of any Intellectual Property, (ii) asserts that Seller or
any Seller Subsidiary is infringing or otherwise in conflict with, or is,
except as disclosed in the Financial Statements, required to pay any royalty,
license fee, charge or other amount with regard to, any Intellectual Property,
or (iii) claims that any default exists under any Intellectual Property
Agreement, and there is no reasonable basis for any such claim, demand or
Proceeding. Since January 1, 2003, none of the Owned Intellectual Property or,
to Seller’s Knowledge, the Licensed Intellectual Property has been subject to
any outstanding



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ruling, decree, judgment, stipulation or other Order by or with any court,
arbitrator or administrative agency, or has been the subject of any litigation.



     (f) Due Registration, Etc. The Owned Intellectual Property (other than
inventions, trade secrets, processes, formulas and confidential business and
technical information and any other Owned Intellectual Property not material to
Seller and Seller Subsidiaries) as set forth on Schedule 4.17(f) to the Seller
Disclosure Schedule has been duly registered with or filed in the United States
Patent and Trademark Office, United States Copyright Office and any other
applicable filing office, domestic or foreign, and except as set forth on
Schedule 4.17(f) to the Seller Disclosure Schedule, such registrations, filings
and other actions remain in full force and effect.



     (g) Protection. Except for Jayant Dhamne, each of the employees, agents,
consultants, contractors and others who has contributed to or participated in
the discovery, creation or development of any Intellectual Property on behalf
of Seller or any Seller Subsidiary: (i) has assigned to Seller or a Seller
Subsidiary, or is under a valid obligation to assign to Seller or a Seller
Subsidiary, all right, title and interest in such Intellectual Property; (ii)
is a party to a valid “work-made-for-hire” agreement under which Seller or a
Seller Subsidiary is deemed to be the original owner/author of all subject
matter included in such Intellectual Property; or (iii) otherwise has by
operation of Applicable Law vested in Seller or any Seller Subsidiary all
right, title and interest in such Intellectual Property by virtue of his
employment relationship with Seller or any Seller Subsidiary.



     (h) Certain Employees. No current or former officer, director or employee
of Seller or any Seller Subsidiary has any valid claim to ownership of or an
interest in any Owned Intellectual Property.



     (i) Certain Toolkits. The EcTL and RTWI toolkits were not created
pursuant to, under or subject to any customer Contract and Seller owns all
right, title and interest in and to such toolkits, free and clear of any Liens.



     Section 4.18 Contracts. (a) Schedule 4.18(a) to the Seller Disclosure
Schedule lists all the Contracts and arrangements of the following types to
which Seller or any Seller Subsidiary is a party or by which any of them is
bound, or to which any of their respective assets or properties is subject, in
each case to the extent not fully performed or containing any residual license,
confidentiality obligation or right or obligation regarding Intellectual
Property (the “Specified Contracts”):




     (i) any Contract of any kind with any employee, officer or director
of Seller or any Seller Subsidiary, or with any stockholder or other
Affiliate of Seller (other than a Seller Subsidiary), other than any
Contracts with Senior Management;




     (ii) any active Contract pursuant to which the Seller or any Seller
Subsidiary is providing or will be providing goods and/or services to any
Customer;




     (iii) except for employment Contracts, any Contract or Contracts
with any sales representative, distributor, dealer, broker, sales agency,
advertising agency or other Person engaged in sales, distributing or
promotional activities, and any Contract or



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Contracts to act as one of the foregoing on behalf of any Person,
which (A) involves in excess of $5,000 per year individually, or $25,000
per year in the aggregate, (B) has a term that will extend for more than
12 months after the Closing Date or (C) is not cancellable without cost
upon 30 days’ or less notice by Seller or any Seller Subsidiary;




     (iv) except for Contracts of Seller Subsidiaries, any other Contract
of any nature which involves the payment or receipt of cash or other
property, an unperformed commitment or goods or services having a value
in excess of $5,000;




     (v) any Contract or Contracts pursuant to which Seller or any Seller
Subsidiary has made or will make loans or advances, or has or will have
incurred Indebtedness or become a guarantor or surety or pledged its
credit on or otherwise become responsible with respect to any undertaking
of another (except for the negotiation or collection of negotiable
instruments in transactions in the Ordinary Course of Business);




     (vi) any Contract involving a partnership, joint venture or other
cooperative undertaking;




     (vii) any Contract relating to a Computer System;




     (viii) any power of attorney or agency Contract or arrangement with
any Person pursuant to which such Person is granted the authority to act
for or on behalf of Seller or any Seller Subsidiary, or Seller or any
Seller Subsidiary is granted the authority to act for or on behalf of any
Person;




     (ix) any Lease or Leases relating to personal property that (A)
involves payments in excess of $5,000 per year individually, or $25,000
per year in the aggregate, (B) has a term that will extend for more than
12 months after the Closing Date or (C) is not terminable without cost on
30 days’ or less notice by Seller or a Seller Subsidiary;




     (x) any Contract (except employment agreements) which relates to the
management, operation or governance of, or issuance of capital stock by,
Seller or any Seller Subsidiary (A) to which Seller or any Seller
Subsidiary is a party or (B) of which Seller has Knowledge (it being
understood that for purposes of this clause (B) the term “Knowledge” does
not contemplate any inquiry by Seller or its management of holders of
Seller Stock as such);




     (xi) any other Contract for which the full performance thereof may
extend beyond three months from the date of this Agreement;




     (xii) any Contract entered into after March 31, 2004, relating to
any acquisition or disposition of all or any material portion of the
assets or capital stock of Seller, any Seller Subsidiary or any
predecessor in interest of either;




     (xiii) any other Contract not made in the Ordinary Course of
Business which is to be performed by Seller or the Seller Subsidiary in
whole or in part at or after the date of this Agreement (except
employment agreements with Senior Management); and



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     (xiv) any other Contracts that are material to Seller or any Seller
Subsidiary.



     (b) Seller has delivered to Purchaser complete and correct copies of all
written Specified Contracts, together with all amendments thereto, and accurate
descriptions of all material terms of all oral Specified Contracts.



     (c) Except as set forth on Schedule 4.18(c) and the Terminated Contracts
listed in Schedule 4.18(a) to the Seller Disclosure Schedule, each of the
Specified Contracts is legal, valid, binding, enforceable and in full force and
effect in accordance with its respective terms (except to the extent that
enforcement may be affected by applicable bankruptcy, reorganization,
insolvency or similar laws affecting creditor’s rights and remedies). Except
as set forth on Schedule 4.18(c) to the Seller Disclosure Schedule, neither
Seller nor any Seller Subsidiary nor, to Seller’s Knowledge, any other party,
is in default, violation or breach in any respect under any Specified Contract,
and no event has occurred and is continuing that constitutes or, with notice or
the passage of time or both, would constitute a default, violation or breach in
any respect under any Specified Contract by Seller or any Seller Subsidiary or,
to Seller’s Knowledge, any other party. Except as set forth on Schedule
4.18(c) to the Seller Disclosure Schedule, none of the Specified Contracts
contain any non-assignment or other terms or conditions that will become
applicable or inapplicable as a result of the transactions contemplated by this
Agreement, and no Consent of any third party under any such Specified Contract
is required in connection with the transactions contemplated hereby.



     Section 4.19 Affiliate Transactions. Except as set forth on Schedule
4.18(a) to the Seller Disclosure Schedule, there are no loans, leases or other
continuing transactions between Seller or any of the Seller Subsidiaries and
any present or former stockholder, director or officer thereof or any member of
such officer’s, director’s or stockholder’s family, or any Person controlled by
such executive officer, director or stockholder or his or her family.



     Section 4.20 Environmental, Health and Safety.



     (a) To Seller’s Knowledge, Seller’s and each Seller Subsidiary’s business
and operations are in full compliance with all Environmental Laws, and, to
Seller’s Knowledge, no condition exists or event has occurred which, with or
without notice or the passage of time or both, constituted or would constitute
a violation of, or has given or would give rise to any Liability under, any
Environmental Law.



     (b) Seller and each Seller Subsidiary is in possession of all
Environmental Permits required for the conduct or operation of Seller’s or the
Seller Subsidiary’s business (or any part thereof), and is in full compliance
with all of the requirements and limitations included in such Environmental
Permits.



     (c) Seller and the Seller Subsidiaries have not used or stored any
Hazardous Substances in, on or at any of their properties or facilities except
for inventories of substances which are used or are to be used in the Ordinary
Course of Business (which inventories have been stored and used in accordance
with all applicable Environmental Laws and Environmental Permits).



     (d) Neither Seller nor any Seller Subsidiary has received any notice from
any Governmental Entity or any other Person that Seller’s or the Seller
Subsidiary’s business or the



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operation of any of their facilities is in violation of any Environmental
Law or Environmental Permit, or that any of them is responsible (or potentially
responsible) for the cleanup or remediation of any substances at any location.



     (e) Neither Seller nor any Seller Subsidiary has deposited or incorporated
any Hazardous Substances into, on, beneath or adjacent to any property.



     (f) Since January 1, 2003, neither Seller nor any Seller Subsidiary is or
has been the subject of any litigation or other Proceedings in any forum,
judicial or administrative, involving a demand for damages, injunctive relief,
penalties or other potential Liability with respect to violations of any
Environmental Law.



     (g) Seller and each Seller Subsidiary has timely filed all reports and
notifications required to be filed with respect to all of their property and
facilities and have generated and maintained all required records and data
under all applicable Environmental Laws.



     (h) To Seller’s Knowledge, no condition has existed or event has occurred
with respect to any property that is or was at any time owned or leased (or any
direct or indirect Subsidiary that is or was at any time owned) by Seller or
any Seller Subsidiary, that gives rise to, or would, with or without notice,
passage of time or both, give rise to, any present or future Liability of
Seller or any Seller Subsidiary pursuant to any Environmental Law.



     Section 4.21 Business Activity Restriction. Except as set forth on
Schedule 4.21 to the Seller Disclosure Schedule, there is no non-competition or
other similar Contract or Order to which Seller or any Seller Subsidiary is a
party, or by which any of them or their properties or assets are bound, that
has or could reasonably be expected to have the effect of prohibiting or
impairing the conduct of business by Seller or any Seller Subsidiary. Except
as set forth on Schedule 4.21 to the Seller Disclosure Schedule, neither Seller
nor any of the Seller Subsidiaries is a party to or otherwise bound by any
Contract under which Seller or any Seller Subsidiary is restricted from
selling, licensing or otherwise distributing any of their respective products
to, or providing services to, customers or potential customers or any class of
customers, in any geographic area, during any period of time or in any segment
of the market or line of business (and neither Seller nor any Seller Subsidiary
is restricted from granting any other Person the right to do any of the
foregoing).



     Section 4.22 Insurance. The physical properties, assets, business,
operations, employees, officers and directors of Seller and the Seller
Subsidiaries are insured to the extent disclosed in Schedule 4.22 to the Seller
Disclosure Schedule. There is no claim by Seller or any of the Seller
Subsidiaries pending under any such policies as to which coverage has been
questioned, denied or disputed by the insurer. Said insurance policies and
arrangements are in full force and effect, all premiums with respect thereto
are currently paid, and Seller and the Seller Subsidiaries are in compliance
with the terms thereof. No notice of cancellation or termination has been
received by Seller or any Seller Subsidiary with respect to any insurance
policy described in Schedule 4.22 to the Seller Disclosure Schedule. Seller
and each Seller Subsidiary carry insurance in amounts and types of coverage
which are adequate and customary in the industry and against risks and losses
which are usually insured against by Persons holding or operating similar
properties and similar businesses.



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     Section 4.23 Compensation. Except with respect to Senior Management, by
email from Seller’s counsel to Purchaser’s counsel, sent June 3, 2004 at 9:13
p.m. Mountain time, Seller delivered to Purchaser a full and complete list of
each director, officer or employee of Seller or any Seller Subsidiary,
specifying each individual’s name and job designation, (i) the total amount of
base salary and bonus or other cash compensation paid to such individual for
2003, the basis of such compensation, whether fixed or commission or a
combination thereof, (ii) the amount of base salary, target bonus (including
disclosure regarding how the bonus is calculated) and other cash compensation
payable to such individual for 2004 and (iii) any severance, termination or
similar payment to which such individual would be entitled upon termination of
his or her service.



     Section 4.24 Receivables. All short-term and long-term accounts and notes
receivables of Seller and the Seller Subsidiaries that will be reflected on the
Closing Statement (collectively, the “Receivables”) will represent valid
obligations arising from transactions actually made or services actually
performed in the Ordinary Course of Business. The Receivables will be as of
the Closing current and fully collectible net of the respective reserves shown
on the Closing Statement (which reserves are adequate and calculated consistent
with past practice). To Seller’s Knowledge, there is no contest, claim or
right of set-off, other than returns in the Ordinary Course of Business, under
any Contract with any obligor of any Receivables relating to the amount or
validity of such Receivables. Neither Seller nor any Seller Subsidiary has any
Receivables from any Person that is affiliated with it or from any of its
directors, officers, employees or stockholders.



     Section 4.25 Licenses and Permits. Seller and each Seller Subsidiary have
obtained, and are in compliance in all material respects with, all necessary
licenses, franchises, permits, consents, approvals, Orders, certificates,
authorizations, declarations and filings (collectively, “Permits”) required by
all Governmental Entities for the conduct of the business and operations of
Seller and each Seller Subsidiary as now conducted. There are no Proceedings
pending or, to the Knowledge of Seller, threatened which may result in the
revocation, cancellation or suspension, or any adverse modification of any such
Permits. There are no disciplinary actions under any such Permits pending or,
to the Knowledge of Seller, threatened, against Seller, any Seller Subsidiary
or any of their respective officers, directors or employees. No such prior
Proceeding or disciplinary action has resulted in any materially adverse action
against Seller or any Seller Subsidiary and, to the Knowledge of Seller, there
are no facts which may give rise to such Proceedings or disciplinary actions.
Schedule 4.25 to the Seller Disclosure Schedule contains a correct and complete
list of all such required Permits that are material to the conduct of the
business of Seller or any Seller Subsidiary.



     Section 4.26 Underlying Documents. All documents furnished to Purchaser
as described in this Article IV are true and complete copies, and there are no
amendments or modifications thereto, except as expressly noted in the Schedule
in which such documents are listed or described. The minute books of Seller
and each Seller Subsidiary contain reasonably accurate records of all corporate
actions taken by the directors and stockholders of Seller and each Seller
Subsidiary.



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     Section 4.27 Brokers; Fees and Expenses.



     (a) Except for certain transaction bonuses and compensation payable to
Senior Management or to employees as set forth in Schedule 4.27(a) to the
Seller Disclosure Schedule, neither Seller nor any Seller Subsidiary has
entered into any Contract with any Person which may result in the obligation of
Seller or any Seller Subsidiary to pay any finder’s fees, brokerage or agent’s
commission or other like payments in connection with the negotiations leading
to this Agreement or consummation of the transactions contemplated hereby.
Except as provided in Schedule 4.27(a) to the Seller Disclosure Schedule, all
such transaction bonuses and compensation will be paid by Seller to the
applicable employee within 90 days of Closing. Seller is not aware of any
claim for payment of any finder’s fees, brokerage or agent’s commissions or
other like payments against it or any of the Seller Subsidiaries in connection
with the negotiations leading to this Agreement or consummation of the
transactions contemplated hereby.



     (b) No valid claim against Seller or a Seller Subsidiary exists or will
exist for payment of any “topping,” “break-up,” “bust-up” or “termination” fee
or any similar compensation or payment arrangement as a result of the
transactions contemplated hereby except as provided herein.



     Section 4.28 Disclosure. No representation, warranty or statement made by
or on behalf of Seller in this Agreement or in the certificates furnished to
Purchaser or its representatives pursuant to this Agreement, intentionally or
recklessly contains any untrue statement of material fact or intentionally or
recklessly omits to state a material fact required to be stated herein or
therein or necessary to make the statements contained herein or therein not
materially misleading. There is no fact which has not been disclosed to
Purchaser of which the officers or directors of Seller or any Seller Subsidiary
are aware and which has had or could reasonably be expected to have a Seller
Material Adverse Effect.



ARTICLE V




Representations and Warranties of Purchaser




     Purchaser represents and warrants to Seller, as of the date hereof and as
of the Closing Date (as if such representations and warranties were made as of
the Closing Date), as follows:



     Section 5.01 Organization, Standing and Power. Purchaser is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power and
authority to own, lease or otherwise hold its properties and assets and to
conduct its businesses as presently conducted.



     Section 5.02 Authorization; Validity of Agreement; Necessary Action.
Purchaser has the requisite corporate power and authority to enter into this
Agreement and the Purchaser Ancillary Agreements to which it is or will be a
party, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery
of this Agreement, and the Purchaser Ancillary Agreements to which it is or
will be a party, by Purchaser and the consummation by Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Purchaser. The Board of Directors of
Purchaser (the “Purchaser Board”) has approved this Agreement. This



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Agreement has been duly executed and delivered by Purchaser. The
Purchaser Ancillary Agreements executed as of the date hereof have been, and on
the Closing Date the other Purchaser Ancillary Agreements will have been, duly
executed and delivered by Purchaser and no other corporate action on the part
of Purchaser is or will be necessary in connection therewith. This Agreement,
assuming due and valid authorization, execution and delivery thereof by Seller,
constitutes, and when executed and delivered by Purchaser, each other Purchaser
Ancillary Agreement will constitute (assuming due and valid authorization,
execution and delivery thereof by the other parties thereto), the legal, valid
and binding obligation of Purchaser, enforceable against it in accordance with
its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors’ rights generally and by the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding at law or in equity).



     Section 5.03 No Conflicts; Consents. The execution and delivery by
Purchaser of each Transaction Agreement to which it is a party, do not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof and thereof will not, conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under any
provision of (a) the charter or organizational documents of Purchaser, (b) any
material Contract to which Purchaser is a party or by which any of their
respective properties or assets is bound or (c) any Order or Applicable Law
applicable to Purchaser or their respective properties or assets, other than,
in the case of clause (b) or (c) above, any such items that, individually or in
the aggregate, have not had and could not reasonably be expected to have a
Purchaser Material Adverse Effect. No Consent of, or registration, declaration
or filing with, any Governmental Entity is required to be obtained or made by
or with respect to Purchaser in connection with the execution, delivery and
performance of any Transaction Agreement to which Purchaser is a party or the
consummation of the transactions contemplated hereby, other than as set forth
in Exhibit 5.03.



     Section 5.04 Brokers. Purchaser has not entered into any Contract or
understanding with any Person which may result in the obligation of Purchaser
to pay any finder’s fees, brokerage or agent’s commission or other like
payments in connection with the negotiations leading to this Agreement or
consummation of the transactions contemplated hereby. Purchaser is not aware
of any claim for payment of any finder’s fees, brokerage or agent’s commissions
or other like payments against Purchaser in connection with the negotiations
leading to this Agreement or consummation of the transactions contemplated
hereby.



     Section 5.05 Litigation. As of the date of this Agreement, there are no
Proceedings pending or, to the Knowledge of Purchaser, threatened against
Purchaser which may call into question the validity or hinder the
enforceability or performance of this Agreement or any of the other Transaction
Agreements.



     Section 5.06 Knowledge of Breach. As of the date of this Agreement,
Purchaser has no Knowledge of any facts or circumstances that would serve as
the basis for a claim by Purchaser against Seller based upon a breach of any of
the representations and warranties of Seller contained in this Agreement or
breach of any of Seller’s covenants or agreements to be performed by it under
this Agreement at or prior to Closing. Purchaser shall be deemed to have
waived in full any breach of Seller’s representations or warranties in this
Agreement and any



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breach of such covenants and agreements of which, as of the date of this
Agreement, Purchaser has Knowledge.



ARTICLE VI




Covenants Relating to Conduct of Business




     Section 6.01 Conduct of Business.



     (a) Conduct of Business by Seller. Except for matters expressly permitted
by this Agreement, from the date of this Agreement to the Closing Seller shall,
and shall cause each Seller Subsidiary to, conduct its business in the Ordinary
Course of Business and use its commercially reasonable best efforts to preserve
intact its current business organization, keep available the services of its
officers and employees and maintain its relationships with customers,
suppliers, vendors, licensors, licensees, franchisees, distributors and agents
and others having business dealings with them. In addition, and without
limiting the generality of the foregoing, except for matters expressly
permitted by this Agreement, from the date of this Agreement to the Closing,
Seller shall not, and shall not permit any Seller Subsidiary to, do any of the
following without the prior written consent of Purchaser:




     (i) (A) declare, set aside or pay any dividends on, or make any
other actual, constructive or deemed distributions in respect of, any of
its capital stock, or otherwise make any payments to its stockholders in
their capacity as such, other than dividends and distributions by a
direct or indirect wholly owned subsidiary of Seller to its parent, (B)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (C) purchase, redeem
or otherwise acquire any shares of capital stock of Seller or any Seller
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities or (D) adopt a
plan of or effect any complete or partial liquidation or adopt
resolutions providing for or authorizing such liquidation or adopt a plan
of or effect any dissolution, merger, consolidation, restructuring,
recapitalization or reorganization of Seller or any of the Seller
Subsidiaries;




     (ii) authorize for issuance, issue, deliver, sell, pledge, dispose
of or grant (A) any shares of its capital stock, (B) any other equity or
voting securities, (C) any securities convertible into or exchangeable
for, or any options, warrants or rights to acquire, any such shares,
equity or voting securities or convertible or exchangeable securities or
(D) any “phantom” stock, “phantom” stock rights, stock appreciation
rights or stock-based performance units, other than (x) the issuance of
Common Stock upon the exercise of Seller Employee Stock Options
outstanding on the date of this Agreement in accordance with their
present terms, and (y) the issuance of Common Stock upon the conversion
of Preferred Stock in accordance with its present terms;




     (iii) amend its articles or certificate of incorporation, by-laws or
other comparable charter or organizational documents;



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     (iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing all or a substantial portion of the assets of, or
by any other manner, any business of any Person or any corporation,
limited liability company, partnership, association or other business
organization or division thereof, (B) any assets other than those
acquired in the Ordinary Course of Business and not, individually or in
the aggregate, material to Seller and the Seller Subsidiaries, taken as a
whole, or (C) capital stock or equity interests in any Person;




     (v) (A) grant to any present or former employee, officer or director
of Seller or any Seller Subsidiary any increase in compensation or
benefits, (B) grant to any present or former employee, officer or
director of Seller or any Seller Subsidiary any increase in severance or
termination pay, (C) other than entering into employment agreements with
employees of Seller approved in writing in advance by Purchaser, which
approval shall not be unreasonably withheld or delayed, and other than
employment agreements with Senior Management, enter into or amend any
employment, consulting, indemnification, severance or termination
agreement with any such present or former employee, officer or director,
(D) establish, adopt, enter into or amend in any material respect any
Seller Plan (or arrangement that, had it been in existence on the date
hereof, would be a Seller Plan), (E) take any action to accelerate any
payments, rights or benefits, or make any material determinations not in
the Ordinary Course of Business, under any Seller Plan, or (F) loan or
advance money or other property to any present or former employee,
officer or director of Seller or any Seller Subsidiary;




     (vi) make any change in accounting methods, principles or practices
affecting the reported consolidated assets, liabilities or results of
operations of Seller and the Seller Subsidiaries, except insofar as may
have been required by a change in United States generally accepted
accounting principles;




     (vii) sell, lease, license, mortgage, encumber or otherwise dispose
of or permit to become subject to any Lien any properties or assets,
tangible or intangible, except sales of inventory in the Ordinary Course
of Business;




     (viii) enter into any transaction with an Affiliate (other than
Seller or a Seller Subsidiary);




     (ix) (A) incur any Indebtedness or guarantee any indebtedness of
another Person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of Seller or any Seller Subsidiary,
guarantee any debt securities of another Person, enter into any “keep
well” or other agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the economic effect
of any of the foregoing, except for short-term borrowings for working
capital purposes incurred in the Ordinary Course of Business, or (B) make
any loans, advances or capital contributions to, or investments in, any
other Person, other than to or in Seller or any Seller Subsidiary or the
advancement of trade credit to customers of Seller or a Seller Subsidiary
in the Ordinary Course of Business;



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     (x) make or agree to make any new capital expenditure or
expenditures or otherwise acquire, lease or encumber any assets outside
the Ordinary Course of Business;




     (xi) make any Tax election or settle or compromise any Tax liability
or refund;




     (xii) prepare or file any Tax Return inconsistent with past practice
or, on any such Tax Return, take any position, make any election or adopt
any method that is inconsistent with positions taken, elections made or
methods used in preparing or filing similar Tax Returns in prior periods;




     (xiii) (A) pay, discharge or satisfy any claims, Liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
Ordinary Course of Business or in accordance with their terms, of
Liabilities reflected or reserved against in the Financial Statements or
incurred after the date thereof in the Ordinary Course of Business, or
(B) waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which Seller or any
Seller Subsidiary is a party;




     (xiv) violate or fail to perform any obligation or duty imposed upon
it by any material Applicable Law;




     (xv) initiate, settle or compromise any litigation or arbitration
Proceeding, or otherwise waive, release or cancel any claims against
third parties or debts owing to it, or any rights which have any value;




     (xvi) terminate, rescind, modify, amend or otherwise alter or change
any of the terms or provisions of any Material Contract, pay any amount
not required by Law or by any Material Contract, or reduce, discount,
waive or forego any material payment or right thereunder, or agree to any
compromise or settlement with respect thereto;




     (xvii) other than Contracts with customers or in the Ordinary Course
of Business, in each case entered into with Purchaser’s prior written
approval (which approval shall not be unreasonably withheld or delayed),
enter into any Contract that, if it were effective on the date hereof,
would constitute a Material Contract,




     (xviii) authorize, recommend, propose or announce an intention to do
any of the foregoing, or enter into any contract, agreement, commitment
or arrangement to do any of the foregoing.



Any Contract entered into by Seller or a Seller Subsidiary after the date
hereof with Purchaser’s consent as contemplated by this Section 6.01(a) shall,
unless the parties agree otherwise with respect thereto, automatically be
deemed a part of the applicable schedule hereto and be an Assigned Contract
hereunder.



     (b) Other Actions. Seller shall not, and shall not permit any Seller
Subsidiary to, take any action or permit any inaction that would, or that could
reasonably be expected to, result in (i) any of the representations and
warranties of Seller set forth in this Agreement becoming untrue



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at any time from the date hereof to the Closing or (ii) any condition to
the Closing set forth in Article VIII not being satisfied in all material
respects.



     Section 6.02 No Solicitation. (a) From the date of this Agreement until
the earlier of the Closing or the termination of this Agreement, Seller shall
not, and Seller shall cause the Seller Subsidiaries and each of their
respective officers, directors and employees and each investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of them not to, directly or indirectly, (i) solicit, encourage, engage
in discussions or negotiate with any Person (whether such discussions or
negotiations are initiated by Seller or otherwise) or take any other action
intended or designed to facilitate any inquiry or effort of any Person (other
than Purchaser) relating to any possible business combination with or any
possible acquisition of Seller or any Seller Subsidiary (whether by way of
merger, purchase of capital stock, purchase of assets or otherwise) or any
material portion of the capital stock or assets of Seller or any Seller
Subsidiary (any such combination or acquisition referred to as an “Alternative
Acquisition”), (ii) provide information with respect to Seller or any Seller
Subsidiary to any Person, other than Purchaser, relating to a possible
Alternative Acquisition by any Person, other than Purchaser, (iii) enter into
an agreement with any Person, other than Purchaser, providing for a possible
Alternative Acquisition, or (iv) make or authorize any statement,
recommendation or solicitation in support of any possible Alternative
Acquisition by any Person, other than by Purchaser. Seller and the Seller
Subsidiaries and their respective representatives have ceased all discussions
and negotiations that may have occurred prior to the date of this Agreement
regarding any proposal that constitutes, or could reasonably be expected to
lead to, a proposal for an Alternative Acquisition. For purposes of this
Section 6.02, the term “Person” shall include any group as defined in the
Securities Exchange Act of 1934, as amended.



     (b) Notwithstanding the provisions of paragraph (a) above, Seller may, in
response to an unsolicited written proposal or indication of interest with
respect to a potential or proposed Alternative Acquisition (“Alternative
Acquisition Proposal”), furnish (subject to the execution of a confidentiality
agreement containing provisions not more favorable than the confidentiality
provisions of the Confidentiality Agreement) confidential or non-public
information to a financially capable corporation, partnership or other Person
(a “Potential Acquirer”) and negotiate with such Potential Acquirer if the
Seller Board in good faith, after consultation with outside legal counsel,
determines that the failure to provide such confidential or non-public
information to or negotiate with such Potential Acquirer would constitute a
breach of its fiduciary duty to Seller’s stockholders. Negotiations conducted
in accordance with this paragraph (b) shall not constitute a violation of
paragraph (a) of this Section 6.02.



     (c) Seller shall notify Purchaser as soon as practicable after (i) Seller
has received any Acquisition Proposal, (ii) the Seller Board or Seller’s chief
executive officer or chief financial officer has actual knowledge that any
person or entity intends to make an Alternative Acquisition Proposal, or (iii)
Seller has received any request for nonpublic information relating to Seller or
the Seller Subsidiaries in connection with an Alternative Acquisition Proposal
or for access to the properties, books or records of Seller or any Seller
Subsidiary by any Person that informs Seller or the Seller Subsidiary that it
is considering making, or has made, an Alternative Acquisition Proposal. Such
notice to Purchaser shall be made orally and in writing and shall indicate in
reasonable detail the identity of the offeror and the terms and conditions of
such



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proposal, inquiry or contact. Seller will keep Purchaser fully informed
of the status and details of any such Alternative Acquisition Proposal or
request.



ARTICLE VII




Additional Agreements




     Section 7.01 Charter Amendment; Preparation of Proxy Statement;
Stockholders Meeting. (a) As soon as practicable following the date of this
Agreement, Seller shall prepare, in accordance with Applicable Law and the
Seller Charter, a Proxy Statement to be sent to holders of Seller Stock in
connection with Seller Stockholders Meeting. Seller shall cooperate with
Purchaser with respect to the preparation of, and provide Purchaser the
opportunity to review and comment upon drafts of, the Proxy Statement and
related proxy and any amendment or supplement thereto, and shall incorporate
into the Proxy Statement and related proxy or any such amendment or supplement
any reasonable comments made by Purchaser with respect thereto. If at any time
prior to receipt of the Seller Stockholder Approval there shall occur any event
that should be set forth in an amendment or supplement to the Proxy Statement,
Seller shall promptly prepare and mail to its stockholders such an amendment or
supplement (subject to the foregoing provisions of this Section 7.01). Seller
shall not mail any Proxy Statement or related proxy, or any amendment or
supplement thereto, without Purchaser’s consent, which consent shall not be
unreasonably withheld or delayed. Each of Seller and Purchaser shall use its
reasonable best efforts (to the extent within its control) to cause the Proxy
Statement or related proxy to be mailed to Seller’s stockholders entitled to
vote at the Seller Stockholder Meeting as promptly as practicable after the
date of this Agreement.



     (b) In accordance with Applicable Law, the Seller Charter and the
Stockholders Agreement, Seller will, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold the Seller
Stockholders Meeting for the purpose of considering the approval of this
Agreement and the transactions contemplated hereby and shall solicit proxies
from holders of Seller Stock in connection therewith. Seller will use its
commercially reasonable best efforts to ensure the attendance of a quorum of
its stockholders (in person or by proxy) at the Seller Stockholders Meeting.
Except as may be required, in response to any bona fide, unsolicited written
Alternative Acquisition Proposal, in order to comply with the Seller Board’s
fiduciary duties to holders of Seller Stock (as determined by the Seller Board
in good faith after consultation with outside legal counsel), Seller will,
through its Board of Directors, recommend to its stockholders approval of this
Agreement and the transactions contemplated hereby and shall use its reasonable
best efforts to obtain such approval by its stockholders.



     (c) At least one week before the Seller Stockholders Meeting, Seller shall
hold and cause the Senior Management to participate in a telephonic conference
during which all holders of Seller Stock may ask and receive answers from
Senior Management of any reasonable questions regarding this Agreement and the
transactions contemplated hereby. The Proxy Statement shall include
information regarding how holders of Seller Stock can participate in such
telephone conference.



     Section 7.02 Access to Information; Confidentiality. (a) Seller shall,
and shall cause each of the Seller Subsidiaries to, afford to Purchaser, and to
their respective officers, employees,



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accountants, counsel, financial advisers and other representatives,
reasonable access during normal business hours during the period prior to the
Closing to all their respective properties, books and records, Contracts,
commitments and personnel and, during such period, Seller shall, and shall
cause each of the Seller Subsidiaries to, furnish promptly to Purchaser all
information concerning its business, properties and personnel as Purchaser may
reasonably request; provided, however, that (A) no investigation pursuant to
this Section 7.02 shall amend or modify any representations or warranties made
herein or the conditions to the obligations of the respective parties to
consummate the transactions contemplated hereby and (B) no access or disclosure
shall be required to be provided if such access or disclosure would impair any
attorney-client privilege of the disclosing party or would violate any
Applicable Law.



     (b) All information exchanged pursuant to this Section 7.02 shall be
subject to the Confidentiality Agreement and the Confidentiality Agreement
shall remain in full force and effect in accordance with its terms.



     Section 7.03 Reasonable Best Efforts; Notification. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
shall use their respective commercially reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated hereby, including (i) the obtaining
of all necessary actions or nonactions, waivers and other Consents from
Governmental Entities and the making of all necessary registrations and filings
and the taking of all reasonable steps as may be necessary to obtain any
necessary waiver or other Consent from, or to avoid an action or proceeding by,
any Governmental Entity, (ii) the obtaining of all necessary waivers or other
Consents from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions
contemplated hereby and to fully carry out the purposes of this Agreement.



     (b) In the event any litigation is commenced against Seller by any Person
relating to the transactions contemplated by this Agreement, Purchaser shall
have the right, at their own expense, to participate therein, and Seller will
not settle any such litigation without the consent of Purchaser.



     (c) Seller and Purchaser each shall keep the other apprised of the status
of matters relating to completion of the transactions contemplated by this
Agreement, including promptly furnishing the other with copies of notice or
other communications received by Purchaser or Seller, as the case may be, or
any of their respective Subsidiaries, from any Governmental Entity with respect
to the transactions contemplated by this Agreement.



     (d) Seller shall give prompt notice to Purchaser, and Purchaser shall give
prompt notice to Seller, of, and such party shall use its reasonable best
efforts to prevent, or promptly remedy, (i) any representation or warranty made
by it contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty



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that is not so qualified becoming untrue or inaccurate in any material
respect or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement within the time contemplated hereby. Seller shall
promptly advise Purchaser in writing of any change or the occurrence of any
event after the date of this Agreement having, or which could reasonably be
expected to have, any Seller Material Adverse Effect. In addition, Purchaser
shall give Seller prompt written notice in the event it obtains Knowledge after
the date hereof that any of Seller’s representations or warranties contained
herein are untrue or inaccurate (it being understood and agreed that such
notice shall not constitute an amendment or modification of Seller’s
representations and warranties hereunder). Notwithstanding anything to the
contrary herein, in no event shall Purchaser have any Liability to Seller or
any other Person for (A) any breach of Section 5.06 (other than compliance with
the waiver as and to the extent provided in the final sentence of Section 5.06)
or (B) any notice delivered to Seller pursuant to the immediately preceding
sentence of this Section 7.03(d).



     Section 7.04 Public Announcements. Purchaser, on the one hand, and
Seller, on the other hand, shall consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press
release or other public statement with respect to the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation or without the prior consent of the other
parties (which shall not be unreasonably withheld or delayed); provided,
however, that a party may, without the prior consent of any other party, issue
such a press release or other similar public statement as may be required by
Applicable Law or any listing agreement with a national securities exchange or
market to which the disclosing party is a party, if the disclosing party has
used all reasonable efforts to consult with such other parties and to obtain
such other parties’ consent but has been unable to do so in a timely manner.



     Section 7.05 Return of Deposit. Notwithstanding anything to the contrary
contained herein, (i) Seller shall pay to Purchaser the Deposit Amount in the
event the Closing does not occur on or before July 16, 2004, unless such
failure is due to a default by Purchaser under this Agreement, and (ii) such
payment shall be made, by wire transfer of immediately available funds to an
account designated in writing by Purchaser, no later than two Business Days
following July 16, 2004.



     Section 7.06 Estimation of Working Capital. No later than two Business
Days prior to the Closing Date, Seller shall cause the Estimated Working
Capital Amount to be calculated in good faith and in conformance with Schedule
1.01(g) to the Seller Disclosure Schedule, and provide Purchaser with a
certificate of its chief financial officer setting forth the Estimated Working
Capital Amount (including the components thereof), stating that the Estimated
Working Capital Amount was prepared in good faith in accordance with the terms
of this Agreement (the “Pre-Closing Certificate”). Unless Purchaser reasonably
objects to the amounts reflected in the Pre-Closing Certificate, the Estimated
Working Capital Amount for purposes hereof shall be as set forth in the
Pre-Closing Certificate.



     Section 7.07 Bulk Sales. The parties hereto waive compliance with the
requirements of Applicable Laws governing bulk sales of assets or sales of
assets outside the ordinary course of business in connection with the
consummation of the transactions contemplated hereby.



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     Section 7.08 Non-Solicitation. (a) Covenant. In consideration of the
Purchase Price and the other mutual covenants provided for herein, during the
period beginning on the Closing Date and ending on the date which is 18 months
after the Closing Date (the “Non-Solicitation Period”), Seller shall not (and
shall not permit any of its Subsidiaries to), directly or indirectly, (i)
solicit, induce or attempt to solicit or induce any customer of Purchaser or
any of their respective Affiliates (including customers who have become such as
a result of the transactions contemplated hereby) to terminate or alter its
business relationship with Purchaser or any of their respective Affiliates, or
to become a customer of Seller or any of its Subsidiaries, in each case with
respect to products or services the same or substantially similar to those
provided by Seller and the Seller Subsidiaries in connection with any business
conducted by any of them during the one-year period prior to the Closing Date,
or (ii) solicit the employment of or employ any employee of Purchaser or any of
its Subsidiaries (including employees who have become such as a result of the
transactions contemplated hereby), or discourage any such employee from
remaining in the employment of Purchaser or any of its Subsidiaries.



     (b) Severability. The parties hereto agree that the covenant set forth in
Section 7.08(a) is reasonable with respect to its duration, geographical area
and scope. If the final judgment of a court of competent jurisdiction declares
that any term or provision of Section 7.08(a) is invalid or unenforceable, the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.



     (c) Remedy for Breach. The parties acknowledge and agree that in the
event of a breach of any of the provisions of this Section 7.08, monetary
damages shall not constitute a sufficient remedy. Consequently, without
limiting the generality of the other provisions of this Agreement, the parties
agree that, in the event of any such breach, Purchaser and/or their respective
successors or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violation of the provision hereof.



     Section 7.09 Taxes. (a) Each Party shall make available to the others
such records as the others may require for the preparation of any Tax Returns
or other similar reports or forms required to be filed by the others and such
records as the others may require for the defense of any audit, examination,
administrative appeal or litigation of any such Tax Return or other similar
report or form.



     (b) The parties agree that all applicable excise, sales, transfer,
documentary, filing, recordation and other similar Taxes, levies, fees and
charges, if any that may be imposed upon, or payable or collectible or incurred
in connection with, this Agreement and the transactions contemplated hereby
shall be borne and paid by Seller. Each party to this Agreement agrees to file
all necessary documentation (including all Tax Returns) with respect to such
Taxes in a timely manner.



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     (c) Seller shall be responsible for the timely filing (taking into account
any extensions received from the relevant tax authorities) of all Tax Returns
required by law to be filed in respect of the Purchased Assets or the operation
of the business of Seller and the Seller Subsidiaries for periods ending on or
prior to the Closing Date. All Taxes indicated as due and payable on such
returns shall be paid or will be paid by Seller as and when required by
Applicable Law, except for such taxes as may be contested by Seller in good
faith and in appropriate Proceedings. Purchaser shall be responsible for the
timely filing (taking into account any extensions received from the relevant
tax authorities) of all Tax Returns required by Applicable Law to be filed in
respect of the Purchased Assets or its operation thereof for periods ending
after the Closing Date, it being understood that all Taxes indicated as due and
payable on such returns shall be paid or will be paid by Purchaser as and when
required by Applicable Law, except for such taxes as may be contested by
Purchaser in good faith and in appropriate Proceedings.



     (d) Each of Seller and Purchaser shall be entitled to deduct and withhold
from any amounts otherwise payable to any Person pursuant to this Agreement
such amounts as it is required to deduct and withhold with respect to the
making of such payments under any provision of federal, state, local or foreign
law. Any such withheld amount shall be treated for all purposes of this
Agreement as having been paid to the payee from whose payment such amount was
withheld.



     Section 7.10 Fees and Expenses. (a) Except as set forth in this
Section 7.10 and Section 7.05, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses.



     (b) Seller agrees to immediately pay to Purchaser a fee of $200,000 if:




     (i) Seller terminates this Agreement pursuant to clause (iii) of
Section 10.01(d); or




     (ii) Purchaser terminates this Agreement pursuant to clause (iii) of
Section 10.01(c); or




     (iii) Purchaser terminates this Agreement pursuant to clause (v) of
Section 10.01(c) or Seller terminates this Agreement pursuant to clause
(iv) of Section 10.01(d).



     Section 7.11 Books and Records. Seller shall not destroy or otherwise
dispose of any Books and Records included in the Excluded Assets unless Seller
(i) gives Purchaser no less than 15 Business Days’ prior written notice of its
intention to do so and (ii) if requested by Purchaser, permits Purchaser to
obtain, at Purchaser’s expense, possession of such Books and Records or a copy
thereof.



     Section 7.12 Great Plains Assets. The Excluded Assets shall include the
Great Plains Assets, provided, however, that (i) for a period of 120 days after
Closing Seller shall permit the Great Plains Assets to remain in the facility
in Eden Prairie, Minnesota to be assumed by Purchaser hereunder (or any
successor facility), (ii) during such period Purchaser shall have full access
to all data and information related to the businesses and operations of Seller
and the Seller Subsidiaries included in the Great Plains Assets, including the
right to make copies thereof, (iii)



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Seller shall arrange to have the Great Plains Assets moved to a facility
of Seller upon termination of said period and (iv) notwithstanding the
foregoing, after such period Purchaser shall continue to have rights and access
to the Books and Records included in the Great Plains Assets as contemplated by
Sections 2.02(viii) and 7.11.



     Section 7.13 Contractual Consents. Notwithstanding anything to the
contrary herein, in no event shall Seller be required to solicit or seek any
third party Consent to the assignment to Purchaser of any Terminated Contract,
Specified Confidentiality Agreement or Permitted Non-transferable License.



ARTICLE VIII




Conditions Precedent




     Section 8.01 Conditions to Each Party’s Obligation to Effect the Closing.
The respective obligation of each party to effect the Closing is subject to the
satisfaction or waiver at or prior to the Closing Date of the following
conditions:



     (a) Stockholder Approval. The stockholders of Seller entitled to vote at
the Seller Stockholders Meeting shall have approved this Agreement and the
transactions contemplated hereby by the requisite votes under the DGCL, Seller
Charter, Seller By-laws and Stockholders Agreement.



     (b) No Injunctions or Restraints. No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other Order
(whether temporary, preliminary or permanent) which is in effect and which
materially restricts, prevents or prohibits, or makes illegal, consummation of
any transaction contemplated by this Agreement (it being understood that the
parties hereto hereby agree to use their reasonable best efforts to cause any
such decree, judgment, injunction or other order to be vacated or lifted as
promptly as possible).



     (c) Governmental Approvals. All Consents of any Governmental Entity
legally required for the consummation of the transactions contemplated hereby
shall have been obtained and be in effect at the Closing Date, except where the
failure to obtain the same would not be reasonably likely to have a Seller
Material Adverse Effect.



     (d) Escrow Agreement. The Escrow Agreement shall have been validly
executed and delivered by Seller, Purchaser and the Escrow Agent.



     Section 8.02 Conditions to Obligation of Seller to Effect the Closing.
Unless waived by Seller, the obligation of Seller to effect the Closing shall
be subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:



     (a) Representations and Warranties; Covenants. Purchaser shall have
performed in all material respects their covenants and agreements contained in
this Agreement required to be performed on or prior to the Closing Date, each
of the representations and warranties of Purchaser contained in this Agreement
that is qualified by materiality shall be true and correct on and as of the
Closing Date as if made on and as of such date (other than representations and



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warranties which address matters only as of a certain date which shall be
true and correct as of such certain date) and each of the representations and
warranties that is not so qualified shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct in all material respects as of such
certain date).



     (b) Certificates. Seller shall have received certificates, dated the
Closing Date, of:




     (i) the President or any Vice President of Purchaser certifying as
to the matters specified in Section 8.02(a); and




     (ii) the Secretary or any Assistant Secretary of Purchaser
certifying as to the content and continuing effectiveness as of the
Closing Date of the resolutions of the Purchaser Board approving this
Agreement and the transactions contemplated hereby.



     Section 8.03 Conditions to Obligations of Purchaser to Effect the Closing.
Unless waived by Purchaser, the obligations of Purchaser to effect the Closing
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:



     (a) Representations and Warranties; Covenants. Seller shall have
performed in all material respects its covenants and agreements contained in
this Agreement required to be performed on or prior to the Closing Date, each
of the representations and warranties of Seller contained in this Agreement
that is qualified by materiality shall be true and correct on and as of the
Closing Date as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct as of such certain date) and each of the representations and
warranties that is not so qualified shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct in all material respects as of such
certain date).



     (b) No Seller Material Adverse Effect. There shall have been no Seller
Material Adverse Effect.



     (c) Certificates. Purchaser shall have received certificates, dated the
Closing Date, of:




     (i) the President or any Vice President of Seller certifying as to
the matters specified in Sections 8.03(a) and (b); and




     (ii) the Secretary of Seller certifying as to (A) the content and
continuing effectiveness as of the Closing Date of the resolutions of the
Seller Board approving (x) the Charter Amendment and declaring its
advisability and (y) this Agreement and declaring the advisability of the
Agreement on the terms and conditions set forth herein, and (B) the fact
that the Charter Amendment, this Agreement and the transactions
contemplated hereby have been duly approved by the requisite vote of the
stockholders of Seller in accordance with the DGCL, Seller Charter,
Seller By-laws and Stockholders Agreement and that such approval is in
full force and effect.



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     (d) Consents and Approvals. Purchaser shall have received written
evidence satisfactory to it that (i) all Consents of Governmental Entities
required for the consummation of the transactions contemplated hereby or the
ownership or operation by Purchaser of the Purchased Assets have been obtained
or made and (ii) all Consents of other Persons have been obtained or made to
the extent such Persons’ Consent is required so that the consummation of the
transactions contemplated by this Agreement, including the assignment to
Purchaser of the Assigned Contracts, will not cause a default, violation or
breach of, or otherwise cause or permit Seller, any Seller Subsidiary or
Purchaser to lose the benefits under, any Assigned Contract or material Permit,
except for: (x) Specified Confidentiality Agreements, Permitted
Non-Transferable Licenses and Terminated Contracts; and (y) those Assigned
Contracts identified specifically as “inactive customer” or “inactive client”
contracts on the applicable schedule to the Seller Disclosure Schedule (it
being understood that, notwithstanding the foregoing, Seller nonetheless shall
be required hereunder to seek such a Consent as soon as practicable after the
date hereof with respect to such Assigned Contracts).



     (e) Estoppel Certificates. Purchaser shall have received Estoppel
Certificates from each of the lessors under the Assigned Real Property Leases.



     (f) Customer Certificates. Purchaser shall have received Customer
Certificates from Nissan, The Gap, GMAC-RFC, American Airlines, The Financial
Times, River Deep and Franciscan.



     (g) No Litigation. There shall not be instituted or pending any suit,
action or other Proceeding by or before any Governmental Entity relating to
this Agreement or any of the transactions contemplated hereby.



     (h) Legal Opinion. Purchaser shall have received an opinion of counsel to
Seller, dated the Closing Date and addressed to Purchaser, in the form of
Exhibit 8.03(h).



     (i) Employment Agreement. Purchaser shall have entered into the Franke
Employment Agreement.



     (j) Non-Solicitation Agreements. Purchaser shall have entered into the
Non-Solicitation Agreements.



     (k) Stockholder Waivers. Purchaser shall have received Stockholder
Waivers from holders of (i) at least 75% of the Seller Stock, calculated on an
as-converted basis, and (ii) holders of each of a Series A Majority, Series B
Majority and Series C Majority.



     (l) Stockholder Agreement. Purchaser shall have received an agreement or
other instrument signed by the holders of Seller Stock party to the
Stockholders Agreement, waiving any non-compliance with the Stockholders
Agreement through the Closing.



     (m) Charter Amendment. The Charter Amendment shall have become effective
in accordance with the DGCL.



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ARTICLE IX




Employees and Employee Benefits




     Section 9.01 Transferred Employees. On or prior to the Closing, Purchaser
will make offers of employment to each of the employees of Seller listed on
Schedule 9.01 to the Seller Disclosure Schedule (the “Offered Employees”).
Purchaser’s offers of employment to the Offered Employees shall be on such
terms and conditions as Buyer determines in its sole discretion and shall be
effective as of and conditioned upon the Closing, except as otherwise provided
herein regarding the Franke Employment Agreement. Any Offered Employee who
accepts Purchaser’s offer of employment and becomes an employee of Purchaser
effective as of the Closing shall be referred to herein as a “Transferred
Employee.” The employment of any Offered Employee of Seller or a Seller
Subsidiary who is not a Transferred Employee shall be terminated by Seller or
the Seller Subsidiary, as applicable, prior to the Closing.



     Section 9.02 Severance Amounts. From and after Closing, with respect to
any Offered Employees who do not become Transferred Employees, Purchaser shall
reimburse Seller for any severance payments Seller makes to such employees (to
the extent such payments are not greater than the severance amounts indicated
for such employees on Schedule 4.23). Purchaser shall make such reimbursement
from time to time within five Business Days after receipt from Seller of an
invoice therefor, indicating the applicable employee and the amount of
severance payment.



     Section 9.03 Flexible Spending Plan. Immediately prior to the Closing
Date, Seller shall furnish to Purchaser (i) a record of all of the Health Care
Expense Accounts and Dependent Care Assistance Accounts (collectively, the
“Spending Accounts”) under the Cafeteria Plan with Flexible Spending
Arrangement Provided by Interrelate, Inc. for Transferred Employees who elected
to contribute to either or both of the Spending Accounts for the period
beginning on January 1 of the year in which the Closing Date occurs (the
“Participants”), broken down by individual Participant, and a record of claims
history and contributions since January 1 of the year in which the Closing Date
occurs for the Spending Accounts, and (ii) a record showing Participant
elections as of the Closing Date. As soon as practicable after the Closing
Date, Seller shall furnish to each Participant a record of the balance of his
or her Spending Accounts as of the Closing Date. Seller shall process all
Claims pending as of the Closing Date.



     Section 9.04 COBRA. To the extent Purchaser is obligated to provide (and
provides) continuation coverage under a group health plan pursuant to Section
4980B of the Code (“COBRA benefits”) to any person who is an employee
immediately prior to the Closing and not a Transferred Employee or was an
employee prior to the Closing of Seller or any Seller Subsidiary (or a
“qualified beneficiary” of any such employee, as such term is defined in
Section 4980B of the Code) (each, a “COBRA Recipient”), Purchaser shall be
reimbursed by Seller (or from the Escrow Fund) to the extent the aggregate
COBRA Recipients’ claims for such COBRA benefits for the period ending April 1,
2005 exceed the aggregate COBRA Recipients’ premiums paid to Purchaser during
such period, to the extent not covered by other applicable insurance of
Purchaser (the “Excess COBRA Liabilities”).



     Section 9.05 Other Seller Plans. Except to the extent included in the
Working Capital as reflected in the Final Closing Statement or as expressly
provided in the foregoing provisions of



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this Article IX, Purchaser shall not assume or be deemed to have assumed
any Liabilities with respect to any Seller Plan.



ARTICLE X




Termination




     Section 10.01 Termination. This Agreement may be terminated at any time
prior to the Closing, whether before or after approval of this Agreement by the
stockholders of Seller:



     (a) by mutual written consent of Purchaser and Seller; or



     (b) by Purchaser or Seller upon written notice to the other:




     (i) if the Closing is not consummated on or before July 16, 2004,
unless the failure to consummate the Closing is the result of a breach of
this Agreement by the party seeking to terminate this Agreement; or




     (ii) if any Governmental Authority issues an order or takes any
other action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by this Agreement and such order or other
action shall have become final and nonappealable, unless such order or
other action was issued or taken at the request or with the support of
the party seeking to terminate this Agreement; or



     (c) by Purchaser upon written notice to Seller:




     (i) if Seller shall have failed to comply in any material respect
with any of its covenants or agreements in this Agreement required to be
complied with prior to the date of such termination, which failure to
comply has not been cured within 30 days following receipt by Seller of
written notice from Purchaser of such failure to comply;




     (ii) if there has been (A) a breach by Seller of any representation
or warranty in this Agreement that is not qualified as to materiality
which has the effect of making such representation or warranty not true
and correct in all material respects or (B) a breach by Seller of any
representation or warranty in this Agreement that is qualified as to
materiality, in each case which breach has not been cured within 30 days
following receipt by Seller from Purchaser of written notice of the
breach;




     (iii) if Seller Stockholder Approval is not obtained at the Seller
Stockholders Meeting or at any adjournment or postponement thereof;




     (iv) if there has occurred a Seller Material Adverse Effect, which
has not been cured within 30 days following receipt by Seller from
Purchaser of written notice thereof;




     (v) if the Seller Board resolves to accept a Superior Proposal,
withdraws its recommendation to the holders of Seller Stock of this
Agreement and the transactions contemplated hereby or recommends to the
holders of Seller Stock that they tender or otherwise transfer their
 shares of Seller Stock to a Person other than Purchaser; or



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     (d) by Seller upon written notice to Purchaser:




     (i) if Purchaser shall have failed to comply in any material respect
with any of its covenants or agreements in this Agreement required to be
complied with prior to the date of such termination, which failure to
comply has not been cured within 30 days following receipt by such other
party of written notice from Seller of such failure to comply;




     (ii) if there has been (i) a breach by Purchaser of any
representation or warranty made by it in this Agreement that is not
qualified as to materiality which has the effect of making such
representation or warranty not true and correct in all material respects
or (ii) a breach by Purchaser of any representation or warranty made by
it in this Agreement that is qualified as to materiality, in each case
which breach has not been cured within 30 days following receipt by
Purchaser from Seller of written notice of the breach;




     (iii) if (A) Seller receives an offer or proposal from any Potential
Acquirer (excluding any director or officer of Seller or any group of
which any director or officer of Seller is a member) with respect to a
merger, sale of substantial assets or other business combination
involving Seller, (B) the Seller Board determines, in good faith and
after consultation with an independent financial advisor, that such offer
or proposal (if consummated pursuant to its terms) would result in an
Alternative Acquisition more favorable to Seller’s stockholders than the
transactions contemplated hereby (any such offer or proposal being
referred to as a “Superior Proposal”) and resolves to accept such
Superior Proposal and (C) Seller shall have given Purchaser two days’
prior written notice of its intention to terminate pursuant to this
provision; provided, however, that such termination shall not be
effective until such time as the payment required by Section 7.10 shall
have been received by Purchaser;




     (iv) if Seller Stockholder Approval is not obtained at the Seller
Stockholders’ Meeting or any adjournment or postponement thereof;
provided, however, that such termination shall not be effective until the
payment required by Section 7.10 shall have been received by Purchaser;
or



     (e) by any party upon written notice to the others if the parties are
unable to resolve an objection to the Pre-Closing Certificate as contemplated
by Section 7.06.



     Section 10.02 Effect of Termination. In the event of termination of this
Agreement pursuant to the provisions of Section 10.01, this Agreement shall
forthwith become void and there shall be no further obligation on the part of
Seller, Purchaser or their respective officers or directors (except as set
forth in this Section 10.02 and in Section 7.02(b) (confidentiality), 7.04
(Public Announcements), 7.05 (Return of Deposit) and 7.10 (Fees and Expenses)
all of which shall survive the termination); provided, that nothing in this
Section 10.02 shall relieve any party from liability which such party may have
for any breach of this Agreement which occurs upon or prior to termination
hereof.



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ARTICLE XI




Indemnification




     Section 11.01 Survival. Nothing in this Agreement shall limit the
liability of any party for any breach of any representation, warranty, covenant
or agreement if this Agreement shall be terminated prior to the Closing.
Subject to the foregoing, the representations and warranties of the parties in
this Agreement and the other Transaction Documents shall survive the Closing
until the Representation Termination Date, and no claims for any breach of such
representations and warranties shall be made by any Indemnified Party under
this Article XI thereafter, except that (i) such claims may be made as to any
Damages suffered or incurred in connection with, relating to or arising out of
a matter which is a subject of a claim notice given in accordance with the
requirements of this Article XI or, if applicable, the Escrow Agreement on or
prior to the Representation Termination Date and the indemnification, hold
harmless and reimbursement obligations hereunder shall continue as to such
matter until the Liability, if any, to be satisfied shall have been determined
pursuant to this Article XI and, if applicable, the Escrow Agreement and all
Indemnified Parties shall have been indemnified, held harmless and reimbursed
for such Damages in accordance with the terms hereof and thereof and (ii) the
representations and warranties contained (a) in Section 4.10, shall survive
until the expiration of the applicable statutes of limitation with respect to
the matters set forth therein, and (b) in Section 4.08 shall survive forever.
The covenants of each party in this Agreement to be performed in whole or in
part after the Closing will survive the Closing and will continue in full force
and effect in accordance with their terms.



     Section 11.02 Indemnification of Purchaser Indemnified Parties. (a)
Subject to the other provisions of this Article XI and the terms and conditions
of the Escrow Agreement, from and after the Closing each Purchaser Indemnified
Party shall be indemnified, held harmless and reimbursed by Seller or, subject
to Section 11.10, from the Escrow Fund (as applicable) against, from and for
any and all actual Damages suffered or incurred by such Purchaser Indemnified
Party in connection with, relating to or arising out of:




     (i) the Excluded Assets, Excluded Liabilities, any Seller
Stockholder Claim and the Excess COBRA Liabilities;




     (ii) all Permitted Non-transferable Licenses which are not included
in the Purchased Assets, if the aggregate Damages suffered with respect
thereto is $30,000 or more;




     (iii) any breach by Seller of, or failure by Seller to perform, any
of its agreements, covenants or obligations in this Agreement;




     (iv) any breach of or inaccuracy in any warranty or representation
of Seller contained in Article IV, any Transaction Document or any
certificate delivered by or on behalf of Seller or any officer thereof
pursuant to Article VIII;



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     (v) the failure to comply with Applicable Laws governing bulk sales
of assets or sales of assets outside the ordinary course of business in
connection with the consummation of the transactions contemplated hereby;



provided, however, that the Purchaser Indemnified Parties shall be indemnified,
held harmless and reimbursed hereunder with respect to the matters set forth in
clause (iii) of this Section 11.02 (a) only in the event that the aggregate
amount (without duplication) of actual Damages suffered or incurred by all
Purchaser Indemnified Parties with respect to all such matters, in the
aggregate, exceeds $50,000 (the “Basket”); it being understood that, once all
such Damages reach the amount of the Basket, the Purchaser Indemnified Parties
shall be entitled to all Damages incurred by them with respect to such matters;
and (b) only up to an aggregate amount equal to 100% of the Purchase Price.



     Section 11.03 Termination of Escrow Fund. Upon termination of the
indemnification, hold harmless and reimbursement obligations with respect to
representations and warranties under Section 11.01, and the indemnification,
holding harmless and reimbursement of the Purchaser Indemnified Parties
against, from and for all related Damages hereunder and under the Escrow
Agreement, the Escrow Fund shall terminate and shall be distributed in
accordance with the Escrow Agreement after payment of any amounts therefrom due
to the Escrow Agent.



     Section 11.04 Indemnification of Seller Indemnified Parties. From and
after the Closing, each Seller Indemnified Party shall be indemnified, held
harmless and reimbursed jointly and severally by Purchaser against, from and
for any and all actual Damages suffered or incurred by such Seller Indemnified
Party in connection with, relating to or arising out of:




     (i) any breach by Purchaser of, or failure by Purchaser to perform,
any of its agreements, covenants or obligations in this Agreement; or




     (ii) any breach of or inaccuracy in any warranty or representation
of Purchaser contained in Article V (other than Section 5.06), any other
Transaction Document or any certificate delivered by or on behalf of
Purchaser or any officer thereof pursuant to Article VIII.



     Section 11.05 Claims. The provisions of this Section 11.05 shall be
subject to Section 11.06. As soon as is reasonably practicable after becoming
aware of a claim for indemnification under this Agreement, the Indemnified
Party shall promptly give notice to the Indemnifying Party (and, if a Purchaser
Indemnified Party is the Indemnified Party and the Escrow Fund continues to be
held by the Escrow Agent, the Escrow Agent) of such claim in accordance with
the provisions hereof and of the Escrow Agreement and of the Known Claimed
Amount (as defined in the Escrow Agreement) and, if applicable, the Estimated
Claimed Amount (as defined in the Escrow Agreement); provided that the failure
of the Indemnified Party to give notice shall not relieve the Indemnifying
Party of its obligations under Article XI except to the extent (if any) that
the Indemnifying Party shall have been prejudiced thereby. If the Indemnifying
Party does not object in writing to such indemnification claim within 30 days
of receiving notice thereof, the Indemnified Party shall be entitled to recover
promptly from the Indemnifying Party (and, if a Purchaser Indemnified Party is
the Indemnified Party and the Escrow Fund continues to be held by the Escrow
Agent, the Escrow Fund) the Known Claimed Amount and Estimated Claimed



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Amount (but such recovery shall not limit the amount of any additional
indemnification to which the Indemnified Party may be entitled pursuant to
Section 11.02 or 11.04), and no later objection by the Indemnifying Party shall
be permitted. If the Indemnifying Party agrees that it has an indemnification
obligation but objects that it is obligated to pay only a lesser amount, the
Indemnified Party shall nevertheless be entitled to recover promptly from the
Indemnifying Party (and, if a Purchaser Indemnified Party is the Indemnified
Party and the Escrow Fund continues to be held by the Escrow Agent, the Escrow
Fund) the lesser amount, without prejudice to the Indemnified Party’s claim for
the difference.



     Section 11.06 Notice of Third Party Claim; Assumption of Defense. The
Indemnified Party shall give notice as promptly as is reasonably practicable to
the Indemnifying Party (and, if the Indemnified Party is a Purchaser
Indemnified Party and the Escrow Fund continues to be held by the Escrow Agent,
the Escrow Agent) of the assertion of any claim, or the commencement of any
suit, action or other Proceeding, by any Person not a party hereto in respect
of which indemnity may be sought under this Agreement; provided that the
failure of the Indemnified Party to give notice shall not relieve the
Indemnifying Party of its obligations under this Article XI except to the
extent (if any) that the Indemnifying Party shall have been prejudiced thereby.
The Indemnifying Party may, at its own expense (a) participate in the defense
of any such Proceeding and (b) upon notice to the Indemnified Party and the
Indemnifying Party’s delivering to the Indemnified Party a written agreement
that the Indemnified Party is entitled to indemnification pursuant to Section
11.02 or 11.04 for all actual Damages arising out of such Proceeding and that
the Indemnifying Party shall be liable for the entire amount of any Damages, at
any time during the course of any such Proceeding, assume the defense thereof;
provided that (i) the Indemnifying Party’s counsel is reasonably satisfactory
to the Indemnified Party and (ii) the Indemnifying Party shall thereafter
consult with the Indemnified Party upon the Indemnified Party’s reasonable
request for such consultation from time to time with respect to such
Proceeding. If the Indemnifying Party assumes such defense, the Indemnified
Party shall have the right (but not the obligation) to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party. If, however, the Indemnified Party
reasonably determines in its judgment that representation by the Indemnifying
Party’s counsel of both the Indemnifying Party and the Indemnified Party would
present such counsel with a conflict of interest, then such Indemnified Party
may employ separate counsel to represent or defend it in any such Proceeding
and the Indemnifying Party shall pay the reasonable fees and disbursements of
such separate counsel. Whether or not the Indemnifying Party chooses to defend
or prosecute any such Proceeding, all of the parties hereto shall reasonably
cooperate in the defense or prosecution thereof.



     Section 11.07 Settlement or Compromise. The Indemnified Party shall have
the right in its sole discretion to settle any such Proceeding of the kind
referred to in Section 11.06; provided, however, that the Indemnified Party
shall not be entitled to recovery under this Article XI in respect of amounts
paid pursuant to such settlement unless it was effected with the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld or delayed, or it was effected after the Indemnifying Party
unreasonably withheld or delayed its consent thereto. The parties agree that
it would be reasonable to withhold consent to a settlement to the extent such
settlement would impose on the Indemnifying Party any restriction on the
operation of its business or assets.



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     Section 11.08 Failure of Indemnifying Person to Act. In the event that
the Indemnifying Party does not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Party to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnifying Party of its
obligations hereunder.



     Section 11.09 Escrow. In the event a Purchaser Indemnified Party is
entitled to receive any amount from Seller under this Agreement, including any
indemnification payment under this Agreement, without limiting the Purchaser
Indemnified Party’s rights to seek any recovery against Seller directly, the
Purchaser Indemnified Party may, at its option, recover all or any portion of
such amount from the Escrow Fund in accordance with the terms of the Escrow
Agreement and subject to Section 11.10. Any claim notice required to be given
by a Purchaser Indemnified Party under this Article XI shall specify to what
extent the Purchaser Indemnified Party is seeking indemnification from Seller,
the Escrow Fund or both.



     Section 11.10 Gap Escrow. The Gap Escrow shall be subject to the
additional provisions and limitations of this Section 11.10:



     (a) One-third of the Gap Escrow shall be paid from the Escrow Fund to
Seller on the first day of each month of the fourth calendar quarter of 2004;
provided, however, that if The Gap terminates (in writing) any Contract or
customer relationship with Seller or any Seller Subsidiary (or Purchaser, as
owner and operator of the Purchased Assets after Closing) (a “Gap Termination
Event”) effective on or prior to December 31, 2004, then (i) such monthly
payments from the Escrow Fund shall cease starting with the payment due to be
made at the beginning of the first month in which the GAP Termination Event is
or will be effective (as indicated in the Gap Notice), (ii) on or before
January 3, 2005, Seller shall be paid from the Escrow Fund an amount equal to
$4,348 multiplied by the number of service days during the fourth calendar
quarter of 2004 for which Purchaser has received payment from The Gap of all
amounts due therefrom, less any amount previously paid to Seller pursuant to
this Section 11.10(a) and not to exceed the amount of the remaining Gap Escrow,
and (iii) any Gap Escrow remaining after giving effect to the foregoing clause
(ii) shall be paid to Purchaser contemporaneously with the payment to Seller
under clause (ii) (or, if no amount is payable to Seller thereunder, on January
3, 2005). If Seller receives monthly payments under this Section 11.10(a)
which total more than (X) $4,348 multiplied by (Y) 92 less the number of
service days during the fourth quarter of 2004 for which Purchaser should have
received payment from The Gap as indicated in the Gap Notice but which were not
paid, Seller shall reimburse Purchaser the amount of such excess (to the extent
not paid to Purchaser out of the Gap Escrow) and Purchaser shall assign to
Seller the right to collect the receivable related to the amount so reimbursed.
Each party shall provide the other (and the Escrow Agent) with written notice
of any Gap Termination Event of which it obtains Knowledge, which notice shall
be in the form of the written notice thereof from The Gap (the “Gap Notice”).



     (b) The Gap Escrow shall not be available to satisfy any claims for
indemnification by the Purchaser Indemnified Parties under this Article XI.



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ARTICLE XII




General Provisions




     Section 12.01 Knowledge. An individual will be deemed to have “Knowledge”
of a particular fact or other matter if such individual is actually aware, or
should have been aware after reasonable inquiry, of such fact or other matter.
Seller will be deemed to have “Knowledge” of a particular fact or other matter
if any member of Senior Management and James Franke has Knowledge of such fact
or other matter. Purchaser will be deemed to have “Knowledge” of a particular
fact or other matter if Kelly Conway, Tim Cunninghan, Steve Pollema, Jay Istvan
or Rob Wert has Knowledge of such fact or other matter (provided, however, that
for purposes hereof, reasonable inquiry by any of such individual shall be
limited to reasonable inquiry of employees and representatives of Purchaser).



     Section 12.02 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):



	 	 	 	 	 
	 
	 	(a) if to Seller, to:	 	 
	 
	 	 	 	 
	 
	 	 	 	Interelate, Inc.
	 
	 	 	 	Boulder Office
	 
	 	 	 	Flatirons Park West
	 
	 	 	 	2425 55th Street
	 
	 	 	 	Boulder, Colorado 80301
	 
	 	 	 	Attention:  Larry Jones
	 
	 	 	 	Tel: (303) 444-5102
	 
	 	 	 	Fax: (303) 444-5048
	 
	 	 	 	 
	 
	 	With a copy to:	 	Jessop & Company, P.C.
	 
	 	 	 	303 E. 17th Avenue, Suite 930
	 
	 	 	 	Denver, Colorado 80203
	 
	 	 	 	Attention:  Douglas W. Jessop
	 
	 	 	 	Tel: (303) 860-7700
	 
	 	 	 	Fax: (303) 860-7233
	 
	 	 	 	 
	 
	 	(b) if to Purchaser, to:	 	 
	 
	 	 	 	 
	 
	 	 	 	eLoyalty Corporation
	 
	 	 	 	150 Field Drive, Suite 250
	 
	 	 	 	Lake Forest, Illinois 60045
	 
	 	 	 	Attention:  Robert S. Wert
	 
	 	 	 	Tel: (847) 582-7160
	 
	 	 	 	Fax: (847) 582-7002







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	 	With a copy to:	 	Mayer, Brown, Rowe & Maw LLP
	 
	 	 	 	190 South LaSalle Street
	 
	 	 	 	Chicago, Illinois 60603-3441
	 
	 	 	 	Attention:  Jodi A. Simala
	 
	 	 	 	Tel: (312) 782-0600
	 
	 	 	 	Fax: (312) 701-7711







     Section 12.03 Interpretation. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.



     Section 12.04 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any Person or
any circumstance, is invalid or unenforceable: (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision; and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.



     Section 12.05 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties. Delivery of an executed
counterpart of this Agreement by facsimile shall be effective to the fullest
extent permitted by Applicable Law.



     Section 12.06 Entire Agreement; No Third-Party Beneficiaries. The
Transaction Agreements and all exhibits and schedules hereto and thereto and
the Confidentiality Agreement, taken together, (i) constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the matters contemplated hereby and
(ii) except for, from and after the Closing, Article XI, are not intended to
confer upon any Person other than the parties hereto or thereto, as applicable,
any rights or remedies.



     Section 12.07 Governing Law; Waiver of Jury Trial.



     (a) This Agreement shall be construed in accordance with, and governed in
all respects by, the laws of the State of Delaware without giving effect to
principles of conflicts of laws.



     (b) Any legal action or other legal proceeding relating to this Agreement
or the enforcement of any provision of this Agreement may be brought or
otherwise commenced only in the state courts or federal courts located in Cook
County, Illinois. Each party:




     (i) expressly and irrevocably consents and submits to the exclusive
jurisdiction and venue of the state and federal courts located in Cook
County, Illinois (and each appellate court therefrom), in connection with
any such legal proceeding;



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     (ii) agrees that service of any process, summons, notice or document
by U.S. mail addressed to him at the address set forth in Section 12.02
shall constitute effective service of such process, summons, notice or
document for purposes of any such legal proceeding;




     (iii) agrees that the state and federal courts located in Cook
County, Illinois (and each appellate court therefrom) shall be deemed to
be a convenient forum;




     (iv) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or
federal court located in Cook County, Illinois, any claim that the party
is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the
venue of such proceeding is improper or that this Agreement or the
subject matter of this Agreement may not be enforced in or by such court;
and




     (v) agrees to pay the reasonable attorneys’ fees and costs to the
prevailing party in any such action or proceeding.



     (c) EACH PARTY IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION
WITH ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR THE ENFORCEMENT OF ANY
PROVISION OF THIS AGREEMENT.



     Section 12.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties and any purported assignment without such
consent shall be void, provided that Purchaser may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Purchaser or to any direct or indirect wholly owned Subsidiary of
Purchaser, but no such assignment shall relieve Purchaser of any of its
obligations under this Agreement. Any purported assignment without such consent
shall be void. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.



     Section 12.09 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
The parties agree that, in the event of any breach or threatened breach by any
party of any covenant or obligation contained in this Agreement, each party
shall be entitled (in addition to any other remedy that may be available to it,
including monetary damages) to seek and obtain (a) a decree or order of
specific performance to enforce the observance and performance of such covenant
or obligation, and (b) an injunction restraining such breach or threatened
breach. The parties further agree that no party shall be required to obtain,
furnish or post any bond or similar instrument in connection with or as a
condition to obtaining any remedy referred to in this Section 12.09, and each
party irrevocably waives any right it may have to require the obtaining,
furnishing or posting of any such bond or similar instrument.



     Section 12.10 Amendment. This Agreement may be amended, modified or
supplemented but only in writing signed by Purchaser and Seller.



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     Section 12.11 Waiver. The failure of a party hereto at any time or times
to require performance of any provision hereof shall in no manner affect its
right at a later time to enforce the same. No waiver by a party of any
condition or of any breach of any term, covenant, representation or warranty
contained in this Agreement shall be effective unless in writing, and no waiver
in any one or more instances shall be deemed to be a further or continuing
waiver of any such condition or breach in other instances or a waiver of any
other condition or breach of any other term, covenant, representation or
warranty.



     Section 12.12 Effect of Investigation. Subject to Section 5.06, any due
diligence review, audit or other investigation or inquiry undertaken or
performed by or on behalf of Purchaser shall not limit, qualify, modify or
amend the representations, warranties or covenants of, or indemnities, by,
Seller made or undertaken pursuant to this Agreement, irrespective of the
knowledge and information received (or which should have been received)
therefrom by Purchaser.



     Section 12.13 Remedies Cumulative. The remedies provided in this
Agreement shall be cumulative and shall not preclude the assertion or exercise
of any other rights or remedies available by law, in equity or otherwise.



     Section 12.14 Further Assurances. From time to time after the Closing and
without further consideration, Seller, upon the request of Purchaser and at
Purchaser’s expense, shall execute and deliver such documents and instruments
of conveyance and transfer, and take such additional action, as Purchaser may
reasonably request in order to consummate more effectively the purchase and
sale of the Purchased Assets as contemplated by this Agreement and to vest in
Purchaser title to the Purchased Assets transferred under this Agreement.
Seller shall not take, cause or permit any action that is inconsistent with, or
avoid or seek to avoid, any term of the Charter Amendment.



[Intentionally left blank]




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     IN WITNESS WHEREOF, Purchaser and Seller have duly executed this
Agreement, all as of the date first written above.



	 	 	 	 	 
	 	 	ELOYALTY CORPORATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ Timothy J. Cunningham

   

	

	 	 	 	Name: Timothy J. Cunningham
	

	 	 	 	Title: Vice President, Chief
Financial Officer and Corporate Secretary
	 
	 	 	 	 
	

	 	INTERELATE, INC.
	 
	 	 	 	 
	

	 	By:	 	/s/ Laurence Jones

    

	

	 	 	 	Name: Laurence Jones
	

	 	 	 	Title: Chief Executive Officer







-64-









 






EXHIBIT C




CHARTER AMENDMENT




CERTIFICATE OF AMENDMENT

TO THE

RESTATED CERTIFICATE OF INCORPORATION

OF

INTERELATE, INC.




     Interelate, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (“DGCL”), does hereby certify that:



     First: The name of the corporation is Interelate, Inc.



     Second: The corporation was originally incorporated on January 3, 2000.



     Third: The following amendments shall be made to the Second Amended and
Restated Certificate of Incorporation.



     1. Article IV, Section A.4(b) is hereby amended to add the following after
the last sentence of such Section:



     “Notwithstanding anything herein to the contrary, the sale of all or
substantially all of the assets of the Corporation (the “eLoyalty Transaction”)
to eLoyalty Corporation or its affiliates (“eLoyalty”) pursuant to the terms of
that certain Asset Purchase Agreement dated on or about June 23, 2004 by and
between eLoyalty and the Corporation, as such may be amended or amended and
restated from time to time (the “Asset Purchase Agreement”), shall neither be
treated as nor deemed to be a Liquidation Event or an Extraordinary Transaction
for any and all purposes hereunder. In the event of a dividend or distribution
by the Corporation to the holders of any of its capital stock that is paid on
or after the date on which the closing of the eLoyalty Transaction occurs, such
dividend or distribution shall be distributed ratably to the holders of the
Common Stock and the Preferred Stock on an as-if-converted to Common Stock
basis.”



     2. Article IV, Section A.6(h) is hereby amended to add the following after
the last sentence of such Section:



     “In the event of the eLoyalty Transaction, no such provisions shall be
made with respect to the Series A Convertible Preferred Stock.”



     3. Article IV, Section A.8(b) is hereby amended to add the following after
the last sentence of such Section:



     “The notice provisions hereunder shall not apply with respect to the
eLoyalty Transaction.”



 









 





     4. Article IV, Section B.4(b) is hereby amended to add the following
immediately prior to the penultimate sentence of such Section:



     “Notwithstanding anything herein to the contrary, the eLoyalty Transaction
shall neither be treated as nor deemed to be a Liquidation Event or an
Extraordinary Transaction for any and all purposes hereunder. In the event of
a dividend or distribution by the Corporation to the holders of any of its
capital stock that is paid on or after the date on which the closing of the
eLoyalty Transaction occurs, such dividend or distribution shall be distributed
ratably to the holders of the Common Stock and the Preferred Stock on an
as-if-converted to Common Stock basis..”



     5. Article IV, Section B.6(h) is hereby amended to add the following after
the last sentence of such Section:



     “In the event of the eLoyalty Transaction, no such provisions shall be
made with respect to the Series B Convertible Preferred Stock.”



     6. Article IV, Section B.8(b) is hereby amended to add the following after
the last sentence of such Section:



     “The notice provisions hereunder shall not apply with respect to the
eLoyalty Transaction.”



     7. Article IV, Section C.4(b) is hereby amended to add the following
immediately prior to the penultimate sentence of such Section:



     “Notwithstanding anything herein to the contrary, the eLoyalty Transaction
shall neither be treated as nor deemed to be a Liquidation Event or an
Extraordinary Transaction for any and all purposes hereunder. In the event of
a dividend or distribution by the Corporation to the holders of any of its
capital stock that is paid on or after the date on which the closing of the
eLoyalty Transaction occurs, such dividend or distribution shall be distributed
ratably to the holders of the Common Stock and the Preferred Stock on an
as-if-converted to Common Stock basis.”



     8. Article IV, Section C.6(h) is hereby amended to add the following after
the last sentence of such Section:



     “In the event of the eLoyalty Transaction, no such provisions shall be
made with respect to the Series C Convertible Preferred Stock.”



     9. Article IV, Section C.8(b) is hereby amended to add the following after
the last sentence of such Section:



     “The notice provisions hereunder shall not apply with respect to the
eLoyalty Transaction.”



     Fourth: The foregoing amendment to the Restated Certificate of
Incorporation of the corporation has been duly adopted by the directors and
stockholders of the Corporation in



-2-









 





accordance with the provisions of Sections 141, 228 and 242 of the General
Corporation Law of the State of Delaware, and notice of such adoption has been
provided in accordance with said Section 228.



-3-









 








     In Witness Whereof, Interelate, Inc. has caused this Certificate to be
signed this                     day of July, 2004.



	 	 	 	 	 
	 	 	Interelate, Inc.
	 
	 	 	 	 
	

	 	By:
	 	

	

	 	 	 	Laurence Jones,
	

	 	 	 	Chief Executive Officer







-4-









 






EXHIBIT 5.03




PURCHASER CONSENTS




Purchaser is required to file with the Securities and Exchange Commission a
Current Report on Form 8-K with respect to the transactions contemplated
hereby.



 









 








EXHIBIT 8.03(h)




LEGAL OPINION





	1.	 	Seller is validly existing and in good standing under the laws of the
State of Delaware.
	 
	2.	 	Seller has the requisite corporate power to enter into the Agreement and
the Seller Ancillary Agreements (collectively, the “Transaction
Documents”), to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution, delivery and
performance by Seller of the Transaction Documents has been duly
authorized by all necessary corporate action on behalf of Seller,
including without limitation approval of the Agreement and the
transactions contemplated thereby by the requisite votes of the holders of
the capital stock of Seller at the Seller Stockholders Meeting. Each of
the Transaction Documents has been duly executed and delivered by Seller.
	 
	3.	 	Neither the execution and delivery of the Transaction Documents by
Seller, nor the consummation by Seller of the transactions contemplated
thereby, including without limitation the filing and effectiveness of the
Charter Amendment, did or will (i) violate or conflict with any provision
of the Seller Charter, Seller Bylaws or Stockholders Agreement, or (ii)
violate, contravene or conflict with any law, statute, rule or regulation
applicable to Seller or any Seller Subsidiary.
	 
	4.	 	The Charter Amendment has been duly authorized by all necessary corporate
action on behalf of Seller, including without limitation approval by the
requisite votes of the holders of the capital stock of Seller at the
Seller Stockholders Meeting.





The opinion shall set forth the procedures undertaken by such counsel to review
the authorized and outstanding capitalization of Seller for purposes of the
opinions set forth above.



 









 








EXHIBIT 9.01




OFFERED EMPLOYEES




	 	 	 
	NAME

	 	INTERELATE TITLE
	Autio, Wendy J.

	 	Engineer
	Bamlett, Thomas L.

	 	Senior
	Benson, Allan F.

	 	Senior
	Bornholdt, Jason J

	 	Manager
	Dhamne, Jayant G.

	 	Senior
	Fenger, Melissa A.

	 	Operator
	Feyereisen, Wren S

	 	Director
	Franke, James G

	 	VP
	Gorans, Robert A.

	 	Senior
	Harper, Michael J.

	 	Director
	Knecht, Amy

	 	Paralegal
	Louks, Brian

	 	Automation Eng
	Meyers, Shawn

	 	Engineer
	Michaels, Tim K.

	 	Director
	Mueller, Michael L

	 	Operator
	Narum, Kyle J

	 	Engineer
	Navarro, Richard S

	 	Operator
	Nielsen, Patrick

	 	PT Email
	Phrommany, Phaylot

	 	Support
	Shurson, Maureen

	 	Manager
	Singleton, Justin

	 	Senior
	Smith, Amanda R

	 	Operator
	Tait, Don

	 	Controller
	Vaughn, Michael B.

	 	Senior
	Weidemeijer, Wouter

	 	Engagement Exec
	Weigand, Todd C

	 	Director
	Yevzelman, Alexandr V

	 	Engineer
	Ziegenfuss, Joseph K

	 	Senior