**Exhibit 10.1**

 

 

**ASSET PURCHASE AGREEMENT**

 

                ThisAsset Purchase Agreement (the “**Agreement**”)is dated June 28, 2002, by and between CallVision, Inc., a Washingtoncorporation (the “**Buyer**”), andOneLink, Inc., a Minnesota corporation (the “**Seller**”).

 

                Sellerdesires to sell, and Buyer desires to purchase, the Assets of Seller for theconsideration and on the terms set forth in this Agreement.  Accordingly, the parties, intending to belegally bound, hereby agree as follows:

 

**1.DEFINITIONS AND USAGE**

 

                1.1           Definitions.  For purposes of this Agreement, thefollowing terms and variations thereof have the meanings specified or referredto in this Section 1.1:

 

                “**Accounts Receivable**” (a) all trade accountsreceivable and other rights to payment from customers of Seller and the fullbenefit of all security for such accounts or rights to payment, including alltrade accounts receivable representing amounts receivable in respect of goodsshipped or products sold or services rendered to customers of Seller, (b) allother accounts or notes receivable of Seller and the full benefit of allsecurity for such accounts or notes, and (c) any claim, remedy or other rightrelated to any of the foregoing.

 

                “**Active Employees**”  means Jon Anderson, Andrew Armstrong, Steve Taylor, Mike Feckler,Jon Schleifer, Paul Lidsky and Brenda Groff.

 

                “**Adjustment Amount**”  as defined in Section 2.8.

 

                “**Assets**” as defined in Section 2.1.

 

                “**Assignment and Assumption Agreement**”  as defined in Section 2.7(a)(ii).

 

                “**Assumed Liabilities**”  as defined in Section 2.4(a).

 

                “**Best Efforts**”  the efforts that a prudent Person desirous of achieving a resultwould use in similar circumstances to achieve that result as expeditiously aspossible, provided, however, that a Person required to use Best Efforts underthis Agreement will not be thereby required to take actions that would resultin a material adverse change in the benefits to such Person of this Agreementand the Contemplated Transactions or to dispose of or make any change to itsbusiness, expend any material funds or incur any other material burden.

 

                “**Bill of Sale**”  as defined in Section 2.7(a)(i).

 

                “**Breach**” any breach of, or any inaccuracy in, any representation or warranty orany breach of, or failure to perform or comply with, any covenant or obligation,in or of this Agreement or any other Contract, or any event which with thepassing of time or the giving of notice, or both, would constitute such abreach, inaccuracy or failure.

 

 

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                “**Business Day**”  any day other than (a) Saturday or Sunday or (b) any other day onwhich banks in Washington are permitted or required to be closed.

 

                “**Buyer**” as defined in the first paragraph of this Agreement.

 

                “**Buyer Indemnified Persons**”  as defined in Section 11.2.

 

                “**Closing**” as defined in Section 2.6.

 

                “**Closing Date**”  the date on which the Closing actually takes place.

 

                “**COBRA**” as defined in Section 10.1.

 

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

 

                “**Confidential Information**”  as defined in Section 12.1.

 

                “**Consent**” any approval, consent, ratification, waiver or other authorization.

 

                “**Contemplated Transactions**”  all of the transactions contemplated by thisAgreement.

 

                “**Contract**” any agreement, contract or lease related to the Products.

 

                “**Copyrights**”  as defined in Section 3.12(a)(iii).

 

                “**Damages**” as defined in Section 11.2.

 

                “**Disclosure Letter**”  the disclosure letter delivered by Seller toBuyer concurrently with the execution and delivery of this Agreement.

 

                “**Effective Time**”  12:01 AM on the day following the Closing Date.

 

                “**Encumbrance**”  any charge, claim, community or other marital property interest,condition, equitable interest, lien, option, pledge, security interest,mortgage, right of way, easement, encroachment, servitude, right of first option,right of first refusal or similar restriction, including any restriction onuse, voting (in the case of any security or equity interest), transfer, receiptof income or exercise of any other attribute of ownership.

 

                “**ERISA**” the Employee Retirement Income Security Act of 1974.

 

                “**Exchange Act**”  the Securities Exchange Act of 1934.

 

                “**Excluded Assets**”  as defined in Section 2.2.

 

                “**Facilities**”  any real property, leasehold or other interest in real propertycurrently owned or operated by Seller, including the Tangible Personal Propertyused or operated by Seller at such locations.

 

                “**GAAP**” generally accepted accounting principles for financial reporting in theUnited States.

 

 

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                “**Governing Documents**”  with respect to any particular entity, (a)if a corporation, the articles or certificate of incorporation and the bylaws;(b) if a general partnership, the partnership agreement and any statement ofpartnership; (c) if a limited partnership, the limited partnership agreement and the certificate of limitedpartnership; (d) if a limited liability company, the articles of organizationand operating agreement; (e) if another type of Person, any other charter orsimilar document adopted or filed in connection with the creation, formation ororganization of the Person; (f) all shareholders’ agreements, votingagreements, voting trust agreements, joint venture agreements; and (g) anyamendment or supplement to any of the foregoing.

 

                “**Governmental Authorization**”  any Consent, license, registration or permitissued, granted, given or otherwise made available by or under the authority ofany Governmental Body or pursuant to any Legal Requirement.

 

                “**Governmental Body**”  any:

 

(a)           nation, state, county, city, town,borough, village, district or other jurisdiction;

(b)           federal, state, local, municipal,foreign or other government;

(c)           governmental or quasi-governmentalauthority of any nature (including any agency, branch, department, board,commission, court, tribunal or other entity exercising governmental orquasi-governmental powers);

(d)           multinational organization or body;

(e)           body exercising, or entitled orpurporting to exercise, any administrative, executive, judicial, legislative,police, regulatory or taxing authority or power; or

(f)            official of any of the foregoing.

 

                “**Indemnified Person**”  as defined in Section 11.7.

 

                “**Indemnifying Person**”  as defined in Section 11.7.

 

                “**Intellectual Property Assets**”  as defined in Section 3.12(a).

 

                “**Inventories**”  all inventories of Seller, wherever located, including allfinished goods, work in process, raw materials, spare parts and all othermaterials and supplies to be used or consumed by Seller in the production offinished goods.

 

                “**IRS**” the United States Internal Revenue Service and, to the extent relevant,the United States Department of the Treasury.

 

                “**Knowledge**”—an individual will be deemed tohave Knowledge of a particular fact or other matter if:

 

                (a)           that individual is actually aware ofthat fact or matter; or

                (b)           a prudent individual could beexpected to discover or otherwise become aware of that fact or matter in thecourse of conducting a reasonably comprehensive investigation regarding theaccuracy of any representation or warranty contained in this Agreement.

 

Seller will be deemed to have Knowledge of aparticular fact or other matter if Paul Lidsky or Brenda Groff has, or at anytime had, Knowledge of that fact or other matter (as set forth in (a) and (b)above).

 

 

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A Person (other than an individual or Seller)will be deemed to have Knowledge of a particular fact or other matter if anyindividual who is serving, or who has at any time served, as a director,officer, partner, executor or trustee of that Person (or in any similar capacity)has, or at any time had, Knowledge of that fact or other matter (as set forthin (a) and (b) above), and any such individual (and any individual party tothis Agreement) will be deemed to have conducted a reasonably comprehensiveinvestigation regarding the accuracy of the representations and warranties madeherein by that Person or individual.

 

                “**Legal Requirement**”  any federal, state, local, municipal,foreign, international, multinational or other constitution, law, ordinance,principle of common law, code, regulation, statute or treaty.

 

                “**Liability**” with respect to any Person, any liability or obligation of such Personof any kind, character or description, whether known or unknown, absolute orcontingent, accrued or unaccrued, disputed or undisputed, liquidated orunliquidated, secured or unsecured, joint or several, due or to become due,vested or unvested, executory, determined, determinable or otherwise, andwhether or not the same is required to be accrued on the financial statementsof such Person.

 

                “**Marks**” as defined in Section 3.12(a)(i).

 

                “**Material Consents**”  as defined in Section 7.3.

 

                “**Note**” as defined in Section 2.3.

 

                “**Occupational Safety and Health Law**”  any Legal Requirement designed to providesafe and healthful working conditions and to reduce occupational safety andhealth hazards, including the Occupational Safety and Health Act, and anyprogram, whether governmental or private (such as those promulgated orsponsored by industry associations and insurance companies), designed to providesafe and healthful working conditions.

 

                “**Order**” any order, injunction, judgment, decree, ruling, assessment orarbitration award of any Governmental Body or arbitrator.

 

                “**Ordinary Course of Business**”  an action taken by a Person will be deemed tohave been taken in the Ordinary Course of Business only if that action:

 

(a)           is consistent in nature, scope andmagnitude with the past practices of such Person and is taken in the ordinarycourse of the normal, day-to-day operations of such Person;

(b)           does not require authorization by theboard of directors or shareholders of such Person (or by any Person or group ofPersons exercising similar authority) and does not require any other separateor special authorization of any nature; and

(c)           is similar in nature, scope andmagnitude to actions customarily taken, without any separate or specialauthorization, in the ordinary course of the normal, day-to-day operations ofother Persons that are in the same line of business as such Person.

 

                “**Part**” a part or section of the Disclosure Letter.

 

                “**Patents**” as defined in Section 3.12(a)(ii).

 

 

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                “**Person**” an individual, partnership, corporation, business trust, limitedliability company, limited liability partnership, joint stock company, trust,unincorporated association, joint venture or other entity or a GovernmentalBody.

 

                “**Proceeding**”  any action, arbitration, audit, hearing, investigation,litigation or suit (whether civil, criminal, administrative, judicial orinvestigative, whether formal or informal, whether public or private)commenced, brought, conducted or heard by or before, or otherwise involving,any Governmental Body or arbitrator.

 

                “**Purchase Price**”  as defined in Section 2.3.

 

                “**Record**” information that is inscribed on a tangible medium or that is stored inan electronic or other medium and is retrievable in perceivable form.

 

                “**Related Person**”  With respect to a particular individual: (a)  each other member of such individual’sFamily; (b)  any Person that is directlyor indirectly controlled by any one or more members of such individual’sFamily; (c)  any Person in which membersof such individual’s Family hold (individually or in the aggregate) a MaterialInterest; and (d)  any Person with respectto which one or more members of such individual’s Family serves as a director,officer, partner, executor or trustee (or in a similar capacity).

 

                Withrespect to a specified Person other than an individual: (a)  any Person that directly or indirectlycontrols, is directly or indirectly controlled by or is directly or indirectlyunder common control with such specified Person; (b)  any Person that holds a Material Interest in such specifiedPerson; (c)  each Person that serves asa director, officer, partner, executor or trustee of such specified Person (orin a similar capacity); (d)  any Personin which such specified Person holds a Material Interest; and (e)  any Person with respect to which suchspecified Person serves as a general partner or a trustee (or in a similarcapacity).

 

                Forpurposes of this definition, (a) “control” (including “controlling,”“controlled by,” and “under common control with”) means the possession, director indirect, of the power to direct or cause the direction of the managementand policies of a Person, whether through the ownership of voting securities,by contract or otherwise, and shall be construed as such term is used in therules promulgated under the Securities Act; (b) the “Family” of an individualincludes (i) the individual, (ii) the individual’s spouse, (iii) any othernatural person who is related to the individual or the individual’s spousewithin the second degree and (iv) any other natural person who resides withsuch individual; and (c) “Material Interest” means direct or indirectbeneficial ownership (as defined in Rule 13d-3 under the Exchange Act) ofvoting securities or other voting interests representing at least ten percent(10%) of the outstanding voting power of a Person or equity securities or otherequity interests representing at least ten percent (10%) of the outstandingequity securities or equity interests in a Person.

 

                “**Representative**”  with respect to a particular Person, any director, officer,manager, employee, agent, consultant, advisor, accountant, financial advisor,legal counsel or other representative of that Person.

 

                “**Retained Liabilities**”  as defined in Section 2.4(b).

 

                “**Securities Act**” the Securities Act of 1933,as amended.

 

 

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                “**Seller**” as defined in the first paragraph of this Agreement.

 

                “**Seller Contract**”  any Contract (a) under which Seller has or may acquire any rightsor benefits; (b) under which Seller has or may become subject to any obligationor liability; or (c) by which Seller or any of the assets owned or used bySeller is or may become bound.

 

                “**Seller’s Closing Representations and Warranties**”  all representations and warranties inArticle III, other than those set forth in Sections 3.3, 3.5 and 3.10(c)(i); *provided, however*, that for purposes ofthis definition only the representations and warranties set forth in Section3.14 shall not include the representations and warranties set forth in Sections3.3, 3.5 and 3.10(c)(i).

 

                “**Software**” all computer software and subsequent versions thereof, including sourcecode, object, executable or binary code, objects, comments, screens, userinterfaces, report formats, schema, templates, menus, buttons and icons and allfiles, data, materials, manuals, design notes and other items and documentationrelated thereto or associated therewith.

 

                “**Subsidiary**”  with respect to any Person (the “Owner”), any corporation orother Person of which securities or other interests having the power to elect amajority of that corporation’s or other Person’s board of directors or similargoverning body, or otherwise having the power to direct the business andpolicies of that corporation or other Person (other than securities or otherinterests having such power only upon the happening of a contingency that hasnot occurred), are held by the Owner or one or more of its Subsidiaries.

 

                “**Tangible Personal Property**”  all machinery, equipment, tools, furniture,office equipment, computer hardware, supplies, materials, vehicles and otheritems of tangible personal property (other than Inventories) of every kindowned or leased by Seller (wherever located and whether or not carried onSeller’s books), together with any express or implied warranty by themanufacturers or sellers or lessors of any item or component part thereof andall maintenance records and other documents relating thereto.

 

                “**Tax**” any income, gross receipts, license, payroll, employment, excise,severance, stamp, occupation, premium, property, environmental, windfallprofit, customs, vehicle, airplane, boat, vessel or other title orregistration, capital stock, franchise, employees’ income withholding, foreignor domestic withholding, social security, unemployment, disability, realproperty, personal property, sales, use, transfer, value added, alternative,add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty ofany kind whatsoever and any interest, penalty, addition or additional amountthereon imposed, assessed or collected by or under the authority of anyGovernmental Body or payable under any tax-sharing agreement or any otherContract.

 

                “**Tax Return**”  any return (including any information return), report, statement,schedule, notice, form, declaration, claim for refund or other document orinformation filed with or submitted to, or required to be filed with orsubmitted to, any Governmental Body in connection with the determination,assessment, collection or payment of any Tax or in connection with theadministration, implementation or enforcement of or compliance with any LegalRequirement relating to any Tax.

 

                “**Third Party**”  a Person that is not a party to this Agreement.

 

                “**Third-Party Claim**”  any claim against any Indemnified Person bya Third Party, whether or not involving a Proceeding.

 

 

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                1.2           Usage & Interpretation.  In this Agreement, unless a clear contraryintention appears:

 

(a)           the singular number includes theplural number and vice versa;

 

(b)           reference to any Person includes suchPerson’s successors and assigns but, if applicable, only if such successors andassigns are not prohibited by this Agreement, and reference to a Person in aparticular capacity excludes such Person in any other capacity or individually;

 

(c)           reference to any gender includes eachother gender;

 

(d)           reference to any agreement, documentor instrument means such agreement, document or instrument as amended ormodified and in effect from time to time in accordance with the terms thereof;

 

(e)           reference to any Legal Requirementmeans such Legal Requirement as amended, modified, codified, replaced orreenacted, in whole or in part, and in effect from time to time, includingrules and regulations promulgated thereunder, and reference to any section orother provision of any Legal Requirement means that provision of such LegalRequirement from time to time in effect and constituting the substantiveamendment, modification, codification, replacement or reenactment of suchsection or other provision;

 

(f)            “hereunder,” “hereof,”“hereto,”  and words of similar importshall be deemed references to this Agreement as a whole and not to anyparticular Article, Section or other provision hereof;

 

(g)           “including” (and with correlativemeaning “include”) means including without limiting the generality of anydescription preceding such term;

 

(h)           “or” is used in the inclusive senseof “and/or”;

 

(i)            with respect to the determination ofany period of time, “from” means “from and including” and “to” means “to butexcluding”; and

 

(j)            references to documents, instrumentsor agreements shall be deemed to refer as well to all addenda, exhibits,schedules or amendments thereto.

 

                1.3           Accounting Terms andDeterminations. Unless otherwise specified herein, all accounting termsused herein shall be interpreted and all accounting determinations hereundershall be made in accordance with GAAP.

 

                1.4           Legal Representation of theParties. This Agreement was negotiated by the parties with the benefit oflegal representation, and any rule of construction or interpretation otherwiserequiring this Agreement to be construed or interpreted against any party shallnot apply to any construction or interpretation hereof.

 

 

2. SALE AND TRANSFER OF ASSETS; CLOSING

 

 

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                2.1           Assets to be Sold.  Upon the terms and subject to the conditionsset forth in this Agreement, at the Closing, but effective as of the EffectiveTime, Seller shall sell, convey, assign, transfer and deliver to Buyer, andBuyer shall purchase and acquire from Seller, free and clear of anyEncumbrances, all of Seller’s right, title and interest in all of Seller’sassets related to Seller’s TeleSmart and TeleMetrics products (the“Products”).  Such assets include anyand all hardware, proprietary Software, third party Software, know-how anddocumentation related to the operation and service of the Products, allContracts and revenue streams related to the Products, all IntellectualProperty Assets, proprietary information and other intellectual property orRecords related to the Products, and any other tangible or intangible rightsrelated, directly or indirectly, to the Products, including, withoutlimitation, those assets described on Schedule 2.1 attached hereto andincorporated herein by this reference. Without limiting the generality of the foregoing, the Assets shallinclude:

 

(a)           all Accounts Receivable related tothe Products that arise on and after June 8, 2002;

 

(b)           all Seller Contracts related to theProducts, and all outstanding offers or solicitations made by or to Seller toenter into any Contract related to the Products;

 

(c)           all Governmental Authorizationsrelated to the Products and all pending applications therefor or renewalsthereof, in each case to the extent transferable to Buyer;

 

(d)           all data and Records related to theProducts, including client and customer lists and Records, referral sources,research and development reports and Records, production reports and Records,service and warranty Records, equipment logs, operating guides and manuals, financialRecords and receipts, creative materials, advertising materials, promotionalmaterials, studies, reports, correspondence and other similar documents andRecords;

 

(e)           all of the intangible rights andproperty of Seller related to the Products, including Intellectual PropertyAssets, going concern value, goodwill, telephone, telecopy and e-mail addressesand listings;

 

(f)            all insurance benefits, includingrights and proceeds, arising from or relating to the Assets or the AssumedLiabilities prior to the Effective Time, unless expended in accordance withthis Agreement;

 

(g)           all claims of Seller against thirdparties relating to the Assets, whether choate or inchoate, known or unknown,contingent or noncontingent, including all such claims listed in Part 2.1(g);and

 

(h)           all rights of Seller relating todeposits and prepaid expenses, claims for refunds and rights to offset inrespect thereof with respect to the Products.

 

All of the property and assets to betransferred to Buyer hereunder are herein referred to collectively as the “**Assets**.”

 

Notwithstanding the foregoing, the transferof the Assets pursuant to this Agreement shall not include the assumption ofany Liability related to the Assets unless Buyer expressly assumes thatLiability pursuant to Section 2.4(a).

 

 

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                2.2           Excluded Assets.  All assets of Seller other than the Assetsare not part of the sale and purchase contemplated hereunder, are excluded fromthe Assets and shall remain the property of Seller after the Closing(collectively, the “**Excluded Assets**”).

 

                2.3           Consideration.  The consideration for the Assets will be (a)up to two hundred fourteen thousand three hundred and no dollars  ($214,300) (which includes the AdjustmentAmount as determined pursuant to Section 2.8) (the “**Purchase Price**”), (b) the assumption of the AssumedLiabilities, and (c) payment of an amount equal to fifteen percent (15%) of anyrevenue (i.e., set-up or recurring revenue) generated from the sale of currentor future versions of the Products to any customers other than Qwest (ashereinafter defined) pursuant to the Qwest Contract (as hereinafter defined)during the period from the date hereof through December 31, 2003.  Revenue generated on or prior to December 31,2003, but collected after such time shall be included in the obligations underthis Section 2.3.  Buyer will use itscommercially reasonable Best Efforts to collect such revenues,; however, Selleracknowledges that Buyer’s obligations pursuant to this Section 2.3 are forrevenue generated and collected, not just for revenue generated.  Buyer will compute and remit such paymentson a quarterly basis to Seller within fifteen (15) days after the end of eachcalendar quarter.  Seller shall have theright to inspect Buyer’s computations relating to the generated revenue andrecords underlying such computations.

 

                ThePurchase Price shall be paid as follows:

 

(a)           upon the signing of this Agreement,Seller shall deliver to Buyer by wire transfer the sum of one hundred thousandand no dollars ($100,000) plus the Adjustment Amount (such aggregate sum not toexceed one hundred fourteen thousand three hundred and no dollars ($114,300);in exchange for a Secured Promissory Note of Seller (the “Note”) in the form ofExhibit 2.3 hereto in an amount equal to one hundred thousand ($100,000) plusthe Adjustment Amount, which Note shall be cancelled  and the security interest released at Closing; and

 

(b)           at the Closing, Seller shall deliverto Buyer by wire transfer one hundred thousand and no dollars ($100,000).

 

                2.4           Liabilities.

 

(a)           Assumed Liabilities. On theClosing Date, but effective as of the Effective Time, Buyer shall assume andagree to discharge only the following Liabilities of Seller (the “**Assumed Liabilities**”):

 

(i)            Seller’s obligations under theSoftware Development and License Agreement between US West Communications,Inc., a Colorado corporation (n/k/a “Qwest Communications, Inc.” and referredto herein as “**Qwest**”) and Sellerdated November 11, 1997, as amended on March 5, 1998, and on January 25, 2000(as amended, the “**Qwest Contract**”);and

 

(ii)           Seller’s obligations to provideservices under the Qwest Contract in consideration of a $50,000 prepayment fromQwest to Seller on January 10, 2002.

 

(iii)          Seller’s obligations under thespecific Seller Contracts identified in Part 3.10(a) that are listed onSchedule A to Exhibit 2.7(a)(ii) at Closing.

 

 

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(b)           Retained Liabilities. TheRetained Liabilities shall remain the sole responsibility of and shall beretained, paid, performed and discharged solely by Seller. “**Retained Liabilities**” shall mean everyLiability of Seller other than the Assumed Liabilities.

 

                2.5           Allocation.  The Purchase Price shall be allocated inaccordance with a schedule mutually agreed upon between the parties prior tothe Closing.  After the Closing, theparties shall make consistent use of the allocation, fair market value anduseful lives specified in Exhibit 2.5 for all Tax purposes and in all filings,declarations and reports with the IRS in respect thereof, including the reportsrequired to be filed under Section 1060 of the Code.  Buyer shall prepare and deliver IRS Form 8594 to Seller, withinforty-five (45) days after the Closing Date, to be filed with the IRS.  In any Proceeding related to thedetermination of any Tax, neither Buyer nor Seller shall contend or representthat such allocation is not a correct allocation.

 

                2.6           Closing.  The purchase and sale provided for in thisAgreement (the “**Closing**”) willtake place by the release of the Closing documents by each of the parties tothe other after delivery thereof by overnight courier on or prior to the datethat is two (2) Business Days following the approval of the transaction contemplatedhereby by Seller’s shareholders, or by such other means or later date as ismutually agreeable to Buyer and Seller. Subject to the provisions of Article 9, failure to consummate theContemplated Transactions on the date and time determined pursuant to thisSection 2.6 will not result in this Agreement’s termination and will notrelieve any party of any obligation under this Agreement.  In such a situation, the Closing will occuras soon as practicable, subject to Article 9.

 

                2.7           Closing Obligations.  At the Closing:

 

(a)           Seller shall deliver to Buyer:

 

(i)            an executed bill of sale in the formof Exhibit 2.7(a)(i) (the “**Bill of Sale**”);

 

(ii)           an executed assignment in the form ofExhibit 2.7(a)(ii), which assignment shall also contain Buyer’s undertaking andassumption of the Assumed Liabilities (the “**Assignment  and Assumption Agreement**”);

 

(iii)          separate assignments of all registeredMarks, Patents and Copyrights in the form of Exhibit 2.7(a)(iii);

 

(iv)          such other deeds, bills of sale,assignments, certificates of title, documents and other instruments of transfer and conveyance as may reasonably berequested by Buyer, each in form and substance satisfactory to Buyer and itslegal counsel and executed by Seller;

 

(v)           evidence that Seller shall have receivedthe approval of its shareholders necessary to consummate the ContemplatedTransactions;

 

(vi)          an officer’s certificate certifyingthe accuracy of each of Seller’s representations and warranties as of the dateof this Agreement and Seller’s Closing Representations and Warranties as of theClosing in accordance with Section 7.1, and 

 

 

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Seller’s compliance with andperformance of its covenants and obligations to be performed or complied withat or before the Closing in accordance with Section 7.2; and

 

(vii)         a Secretary’s certificate certifyingand attaching, as of the Closing, complete and accurate copies of Seller’sGoverning Documents, all requisite resolutions or actions of Seller’s board ofdirectors and shareholders authorizing and approving the execution and deliveryof this Agreement and the consummation of the Contemplated Transactions, andcertifying to the incumbency and signatures of the officers of Seller executingthis Agreement and any other document relating to the ContemplatedTransactions.

 

(b)           Buyer shall deliver to Seller:

 

(i)            The sum of one hundred thousanddollars ($100,000) by wire transfer to an account specified by Seller inwriting delivered to Buyer at least two (2) business days prior to the ClosingDate;

 

(ii)           The Assignment and AssumptionAgreement executed by Buyer;

 

(iii)          a certificate certifying the accuracyof Buyer’s representations and warranties as of the date of this Agreement andas of the Closing in accordance with Section 8.1, and Buyer’s compliance withand performance of its covenants and obligations to be performed or compliedwith at or before the Closing in accordance with Section 8.2; and

 

(iv)          a Secretary’s certificate certifyingand attaching, as of the Closing, complete and accurate copies of Buyer’sGoverning Documents all, requisite resolutions or actions of Buyer’s board ofdirectors approving the execution and delivery of this Agreement and theconsummation of the Contemplated Transactions and certifying to the incumbencyand signatures of the officers of Buyer executing this Agreement and any otherdocument relating to the Contemplated Transactions.

 

(v)           the cancelled Note.

 

                2.8           Adjustment Amount and Payment.  The “**AdjustmentAmount**” will be equal to the amount paid by Seller for office rentfor the period from June 8, 2002 through June 30, 2002, pursuant to theIndustrial Space Lease by and between Thomas S. Schreier and Seller, datedDecember 6, 1994, as amended on May 12, 1998, and the fee paid by Seller forT-1 bandwith pursuant to the Worldcom/OneLink agreement dated September 25,2001 for the period from June 8, 2002 through June 30, 2002; *provided, however*, that the AdjustmentAmount shall not exceed fourteen thousand three hundred and no dollars($14,300).

 

 

3. REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer asfollows:

 

                3.1           Organization and Good Standing.

 

 

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(a)           Part 3.1(a) contains a complete andaccurate list of Seller’s jurisdiction of incorporation and any otherjurisdictions in which it is qualified to do business as a foreign corporation.Seller is a corporation duly organized, validly existing and in good standingunder the laws of its jurisdiction of incorporation, with full corporate powerand authority to conduct its business as it is now being conducted, to own oruse the properties and assets that it purports to own or use, and to performall its obligations under the Seller Contracts.    Seller is qualified to do business as a foreign corporation inevery jurisdiction in which the nature of its business or its ownership ofproperty requires it to be so qualified except for those jurisdictions in whichthe failure to be so qualified would not, individually or in the aggregate,have a material adverse effect on the Seller’s business, assets, properties,financial condition or results of operations.

 

(b)           Complete and accurate copies of theGoverning Documents of Seller, as currently in effect, are attached to Part3.1(b).  Part 3.1(b) also contains anaccurate listing of outstanding options, warrants or other securitiesconvertible into common stock of Seller.

 

3.2           Enforceability;Authority; No Conflict.

 

(a)           This Agreement constitutes the legal,valid and binding obligation of Seller, enforceable against it in accordancewith its terms.  Upon the execution anddelivery by Seller of any other agreement to be executed or delivered by Sellerat the Closing (collectively, the “**Seller’sClosing Documents**”), each of Seller’s Closing Documents willconstitute the legal, valid and binding obligation of Seller, enforceableagainst it in accordance with its terms. Seller has the absolute and unrestricted right, power and authority toexecute and deliver this Agreement and the Seller’s Closing Documents to whichit is a party and to perform its obligations under this Agreement and theSeller’s Closing Documents, and such action has been duly authorized by allnecessary action by Seller’s board of directors and, prior to Closing, willhave been authorized by Seller’s shareholders.

 

(b)           Except as set forth in Part 3.2(b),neither the execution and delivery of this Agreement nor the consummation orperformance of any of the Contemplated Transactions will, directly or indirectly(with or without notice or lapse of time):

 

(i)            Breach (A) any provision of any ofthe Governing Documents of Seller or (B) any resolution adopted by the board ofdirectors or the shareholders of Seller;

 

(ii)           Breach or give any Governmental Bodyor other Person the right to challenge any of the Contemplated Transactions orto exercise any remedy or obtain any relief under any Legal Requirement or anyOrder to which Seller or any of the Assets may be subject;

 

(iii)          contravene, conflict with or result ina violation or breach of any of the terms or requirements of, or give anyGovernmental Body the right to revoke, withdraw, suspend, cancel, terminate ormodify, any Governmental Authorization that is held by Seller or that otherwiserelates to the Assets or to the business of Seller;

 

(iv)          cause Buyer to become subject to, orto become liable for the payment of, any Tax that may be imposed by anyGovernmental Body in the State of Minnesota;

 

 

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(v)           Breach any provision of, or give anyPerson the right to declare a default or exercise any remedy under, or toaccelerate the maturity or performance of, or payment under, or to cancel,terminate or modify, any Seller Contract; or

 

(vi)          result in the imposition or creationof any Encumbrance upon or with respect to any of the Assets.

 

(c)           Except as set forth in Part 3.2(c),and except for the approval of Seller’s shareholders, Seller is not required togive any notice to or obtain any Consent from any Person in connection with theexecution and delivery of this Agreement or the consummation or performance ofany of the Contemplated Transactions.

 

                3.3          Sufficiency of Assets.  Except as set forth in Part 3.3, the Assetsconstitute all of the assets, tangible and intangible, of any naturewhatsoever, related to the Products.

 

                3.4           Title to Assets.  Seller owns good and transferable title toall of the Assets free and clear of any Encumbrances other than those describedin Part 3.4.  Seller warrants to Buyerthat, at the time of Closing, all Assets shall be free and clear of all Encumbrances.

 

                3.5           Condition of Assets.  Each item of Tangible Personal Propertyincluded in the Assets is in good repair and good operating condition, ordinarywear and tear excepted, is suitable for immediate use in the Ordinary Course ofBusiness and to Seller’s Knowledge is free from latent and patent defects.  No item of Tangible Personal Property is inneed of repair or replacement other than as part of routine maintenance in theOrdinary Course of Business.  AllTangible Personal Property included in the Assets is in the possession ofSeller.

 

                3.6          Taxes.  Except as listed in Part 3.6, Seller hasfiled or caused to be filed on a timely basis all Tax Returns and all reportswith respect to Taxes related to the Assets that are or were required to befiled pursuant to applicable Legal Requirements.  All Tax Returns and reports filed by Seller are true, correct andcomplete.  Seller has paid, or madeprovision for the payment of, all Taxes that have or may have become due forall periods covered by the Tax Returns or otherwise, or pursuant to anyassessment received by Seller, except such Taxes, if any, as are listed in Part3.6 and are being contested in good faith. Except as provided in Part 3.6, Seller currently is not the beneficiaryof any extension of time within which to file any Tax Return.  No claim has ever been made or is expectedto be made by any Governmental Body in a jurisdiction where Seller does notfile Tax Returns that it is or may be subject to taxation by thatjurisdiction.  There are no Encumbranceson any of the Assets that arose in connection with any failure (or allegedfailure) to pay any Tax, and Seller has no Knowledge of any basis for assertionof any claims attributable to Taxes which, if adversely determined, wouldresult in any such Encumbrance.

 

                3.7           Employee Benefits.  Except as set forth on Part 3.7, neitherSeller nor any ERISA Affiliate has any employee benefit plans that are (i) a“defined benefit plan” (as defined in Section 414(l) of the Code); (ii) a planintended to meet the requirements of Section 401(a) of the Code; (iii) a“multiemployer plan” (as defined in Section 3(37) of ERISA); or (iv) a plansubject to Title IV of ERISA, other than a multiemployer plan.  As used herein, “ERISA Affiliate” shall meanor any other corporation or trade or business controlled by, controlling orunder common control with Seller (within the meaning of Section 414 of the Codeor Section 4001(a)(14) or 4001(b) of ERISA). With respect to any plan disclosed or required to be disclosed on Part3.7, Seller has made full payment of all amounts that are required to be paidas contributions, premiums, or other payments under the terms of any such planor of such amounts as the Seller may be statutorily obligated to make underERISA with respect to 

 

 

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all periods prior to the date hereof, and noaccumulated funding deficiency, underfunding, or liquidity shortfall (as thoseterms are defined in Section 302 of ERISA and Section 412 of the Code) has beenincurred with respect to any such plan, whether or not waived.

 

                3.8           Compliance with LegalRequirements; Governmental Authorizations. With respect to the Assets, except as set forth in Part 3.8:

 

(a)            Seller is, and at all times sinceJanuary 1, 2000, has been, in full compliance with each Legal Requirementrelating to the Assets that is or was applicable to it, or to the conduct oroperation of its business as it relates to the Assets, or the ownership or useof the Assets;

 

(b)           Seller has not received, at any timesince January 1, 2000, any notice or other communication (whether oral orwritten) from any Governmental Body or any other Person regarding (A) anyactual, alleged, possible or potential violation of, or failure to comply with,any Legal Requirement related to the Assets, or (B) any actual, alleged,possible or potential obligation on the part of Seller to undertake, or to bearall or any portion of the cost of, any remedial action of any nature; and

 

(c)           to Seller’s Knowledge, no event hasoccurred or circumstance exists that (with or without notice or lapse of time)(A) may constitute or result in a violation by Seller of, or a failure on thepart of Seller to comply with, any Legal Requirement or (B) may give rise toany obligation on the part of Seller to undertake, or to bear all or anyportion of the cost of, any remedial action of any nature.

 

                3.9           Legal Proceedings; Orders.

 

(a)           Except as set forth in Part 3.9(a),there is no pending or, to Seller’s Knowledge, threatened Proceeding relatingto or affecting the Assets.  To Seller’sKnowledge, no event has occurred or circumstance exists that is reasonablylikely to give rise to or serve as a basis for the commencement of any suchProceeding.

 

(b)           With respect to the Assets, except asset forth in Part 3.9(b): there is no Order to which Seller or any of theAssets is subject.  To Seller’sKnowledge, no event has occurred or circumstance exists that is reasonably likelyto constitute or result in (with or without notice or lapse of time) aviolation of or failure to comply with any term or requirement of any Order towhich Seller or any of the Assets is subject.

 

                3.10         Contracts; No Defaults.

 

(a)           Part 3.10(a) contains an accurate andcomplete list, and Seller has delivered to Buyer accurate and complete copies,of: (i)  each Seller Contract relatingto the Products or the Assets currently in effect; (ii)  each written warranty, guaranty and/or othersimilar undertaking that relates to the Products with respect to contractualperformance extended by Seller other than in the Ordinary Course of Business;and (iii)  each amendment, supplementand modification (whether oral or written) in respect of any of the foregoing.

 

(b)           Except as set forth in Part 3.10(b):(i)  each Contract identified orrequired to be identified in Part 3.10(a) and which is to be assigned to orassumed by Buyer under this Agreement is in full force and effect and is validand enforceable against Seller and, to Seller’s 

 

 

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Knowledge, against the otherparty or parties thereto, in accordance with its terms; (ii)  each Contract identified or required to beidentified in Part 3.10(a) and which is being assigned to or assumed by Buyeris assignable by Seller to Buyer without the consent of any other Person; and(iii)  to the Knowledge of Seller, noContract identified or required to be identified in Part 3.10(a) and which isto be assigned to or assumed by Buyer under this Agreement will upon completionor performance thereof have an adverse effect on the Assets.

 

(c)           Except as set forth in Part 3.10(c):(i)  Seller is in compliance with allapplicable terms and requirements of each Seller Contract which is beingassumed by Buyer; (ii) to Seller’s Knowledge, each other Person that has or hadany obligation or liability under any Seller Contract which is being assignedto Buyer is in full compliance with all applicable terms and requirements ofsuch Contract; (iii) to Seller’s Knowledge, no event has occurred orcircumstance exists that (with or without notice or lapse of time) maycontravene, conflict with or result in a Breach of, or give Seller or otherPerson the right to declare a default or exercise any remedy under, or toaccelerate the maturity or performance of, or payment under, or to cancel,terminate or modify, any Seller Contract that is being assigned to or assumedby Buyer; (iv)  no event has occurred orcircumstance exists under or by virtue of any Contract that (with or withoutnotice or lapse of time) would cause the creation of any Encumbrance affectingany of the Assets; and (v)  Seller hasnot given to or received from any other Person any notice or othercommunication (whether oral or written) regarding any actual, alleged, possibleor potential violation or Breach of, or default under, any Contract which isbeing assigned to or assumed by Buyer.

 

(d)           There are no renegotiations of,attempts to renegotiate or, to Seller’s Knowledge, outstanding rights torenegotiate any material amounts paid or payable to Seller under currentContracts with any Person having the contractual or statutory right to demandor require such renegotiation and no such Person has made written demand forsuch renegotiation.

 

(e)           Each Contract has been entered intowithout the commission of any act (alone or in concert with any other Person)or any consideration having been paid or promised, that is or would be inviolation of any Legal Requirement.

 

(f)            Qwest has granted its Consent toSeller’s assignment of the Qwest Contract to Buyer and to Buyer’s assumption ofthe Qwest Contract.

 

                3.11        Insurance.

 

(a)           Seller has delivered to Buyer:(i)  an accurate and completecertificate of insurance for policies of insurance pertaining to the Assets towhich Seller is a party or under which Seller is or has been covered at anytime since January 1, 2000 (a list of which is included in Part 3.11(a));(ii)  accurate and complete copies of allpending applications by Seller for policies of insurance; and (iii)  any statement by the auditor of Seller’sfinancial statements or any consultant or risk management advisor with regardto the adequacy of Seller’s coverage or of the reserves for claims.

 

(b)           Part 3.11(b) describes: (i)  any self-insurance arrangement by Sellerwith respect to the Assets, including any reserves established thereunder;(ii)  any Contract or arrangement, otherthan a policy of insurance, for the transfer or sharing of any risk to whichSeller is a party or to which the Assets are subject; and (iii)  all obligations of Seller to provideinsurance 

 

 

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coverage to Third Parties(for example, under Contracts or service agreements) and identifies the policyunder which such coverage is provided.

 

(c)           Except as set forth in Part 3.11(c):(i)  all policies of insuranceidentified in Part 3.11(a) are valid, outstanding and enforceable, are issuedby a financially sound and reputable insurer, and taken together, provide adequateinsurance coverage for the Assets and the operations of Seller for all risks towhich Seller is normally exposed, and are sufficient for compliance with allLegal Requirements and Seller Contracts; (ii) Seller has not received with respect to the Assets (A) any refusal ofcoverage or any notice that a defense will be afforded with reservation ofrights, or (B) any notice of cancellation or any other indication that anypolicy of insurance is no longer in full force or effect or that the issuer of anypolicy of insurance is not willing or able to perform its obligationsthereunder; (iii)  Seller has paid allpremiums due with respect to the policies of insurance identified in Part3.11(a), and has otherwise performed all of its obligations, under each policyof insurance to which it is a party or that provides coverage to Seller; and(iv)  Seller has given notice to theinsurer of all claims that may be insured thereby.

 

                3.12         Intellectual Property Assets.

 

(a)           The term “**Intellectual Property Assets**” means all intellectual propertyrelated to the Products owned or licensed (as licensor or licensee) by Sellerin which Seller has a proprietary interest, including: (i)  all assumed fictional business names, trade names,registered and unregistered trademarks, service marks and applications(collectively, “**Marks**”); (ii)  all patents, patent applications andinventions, improvements and discoveries that may be patentable (collectively,“**Patents**”); (iii)  all registered and unregistered copyrightsin both published works and unpublished works (collectively, “**Copyrights**”); (iv)  all rights in mask works; (v)  all know-how, trade secrets, confidential orproprietary information, development tools, customer lists, Software, technicalinformation, data, schema, process technology, documentation, plans, drawingsand blue prints (collectively, “**Trade Secrets**”);and (vi)  all rights in internet websites and internet domain names presently used by Seller (collectively, “**Net Names**”).

 

(b)           Part 3.12(b) contains a complete andaccurate list and summary description, including any royalties paid or receivedby Seller, and Seller has delivered to Buyer accurate and complete copies, ofall Seller Contracts relating to the Intellectual Property Assets. There are nooutstanding and, to Seller’s Knowledge, no threatened disputes or disagreementswith respect to any such Contract.

 

(c)           Except as set forth in Part 3.12(c),the Intellectual Property Assets are all those necessary for the operation ofSeller’s business relating to the Products as it is currently conducted, andSeller is the owner or licensee of all right, title and interest in and to eachof the Intellectual Property Assets, free and clear of all Encumbrances, andhas the right to use without payment to a Third Party all of the IntellectualProperty Assets, other than in respect of licenses listed in Part 3.12(c).

 

Exceptas set forth in Part 3.12(c), all former and current employees, consultants andcontractors of Seller have executed written Contracts with Seller that assignto Seller all rights to any Intellectual Property Assets relating to theProducts.

 

 

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(d)           Part 3.12(d) contains a complete andaccurate list and summary description of all Patents pertaining to theProducts.  Except as set forth on Part..12(d), all of the issued Patents are currently in compliance with formal legalrequirements (including payment of filing, examination and maintenance fees andproofs of working or use), are valid and enforceable, and are not subject toany maintenance fees or taxes or actions falling due within ninety (90) daysafter the Closing Date.  No Patent hasbeen or is now involved in any interference, reissue, reexamination, or oppositionProceeding. To Seller’s Knowledge, there is no potentially interfering patentor patent application of any Third Party. Except as set forth in Part 3.12(d), (A) no Patent is infringed or, toSeller’s Knowledge, has been challenged or threatened in any way and (B) noneof the products developed, manufactured or sold, nor any process or know-howused, by Seller infringes or is alleged to infringe any patent or otherproprietary right of any other Person. All products made, used or sold under the Patents have been marked withthe appropriate patent notice as required by applicable law.

 

(e)           Part 3.12(e) contains a complete andaccurate list of all registered Marks. Except as set forth on Part 3.12(e), all Marks that have been registeredwith the United States Patent and Trademark Office are currently in compliancewith all U.S. registration requirements (including the timely post-registrationfiling of affidavits of use and incontestability and renewal applications), arevalid and enforceable and are not subject to any maintenance fees or taxes oractions falling due within ninety (90) days after the Closing Date.  No registered Mark has been or is nowinvolved in any opposition, invalidation or cancellation Proceeding and, toSeller’s Knowledge, no such action is threatened with respect to any of theregistered Marks.  To Seller’sKnowledge, there is no potentially interfering trademark or trademarkapplication of any other Person.  Noregistered Mark is infringed or, to Seller’s Knowledge, has been challenged orthreatened in any way.  None of theregistered Marks used by Seller infringes or is alleged to infringe any tradename, trademark or service mark of any other Person.  All products and materials containing a registered Mark bear theproper federal registration notice where permitted by law.

 

(f)            Part 3.12(f) contains a complete andaccurate list and summary description of all registered Copyrights.  All of the registered Copyrights arecurrently in compliance with formal Legal Requirements, are valid and enforceable,and are not subject to any maintenance fees or taxes or actions falling duewithin ninety (90) days after the date of Closing.  No Copyright is infringed or, to Seller’s Knowledge, has beenchallenged or threatened in any way. None of the subject matter of any of the Copyrights infringes or isalleged to infringe any copyright of any Third Party or is a derivative workbased upon the work of any other Person. All works encompassed by the Copyrights have been marked with the propercopyright notice.

 

(g)           Except as set forth in Part 3.12(g),with respect to each Trade Secret, the documentation relating to such TradeSecret is current, accurate and sufficient in detail and content to identifyand explain it and to allow its full and proper use without reliance on theknowledge or memory of any individual. Seller has taken all commercially reasonable precautions to protect thesecrecy, confidentiality and value of all Trade Secrets (including theenforcement by Seller of a policy requiring each employee, consultant orcontractor to execute proprietary information and confidentiality agreementssubstantially in Seller’s standard form, and all current and former employees,consultants and contractors of Seller have executed such an agreement). Sellerhas good title to and an absolute right to use the Trade Secrets.  The Trade Secrets are not part of the publicknowledge or literature and, to Seller’s Knowledge, have not been used,divulged or appropriated either for the benefit of any Person (other thanSeller) or to 

 

 

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the detriment ofSeller.  No Trade Secret is subject toany adverse claim or has been challenged or threatened in any way or infringesany intellectual property right of any other Person.

 

(h)           Part 3.12(h) contains a complete andaccurate list and summary description of all Net Names.  All Net Names have been registered in thename of Seller and are in compliance with all formal Legal Requirements.  No Net Name has been or is now involved inany dispute, opposition, invalidation or cancellation Proceeding and, toSeller’s Knowledge, no such action is threatened with respect to any NetName.  To Seller’s Knowledge, there isno domain name application pending of any other person which would or wouldpotentially interfere with or infringe any Net Name.  No Net Name is infringed or, to Seller’s Knowledge, has beenchallenged, interfered with or threatened in any way.  No Net Name infringes, interferes with or is alleged to interferewith or infringe the trademark, copyright or domain name of any other Person.

 

(i)            Except as set forth in Part 3.12(i).The Intellectual Property Assets do not contain any Open Source Software, andno Open Source Software has been used in the course of creating or otherwise inconnection with or related to the Intellectual Property Assets.  As used in this Section 3.25(i), “**Open Source Software**” means Software thatis licensed under terms that grant or purport to grant any of Seller’s orBuyer’s rights or immunities under any of Seller’s or Buyer’s intellectualproperty or proprietary rights in the Intellectual Property Assets to a thirdparty or that create or purport to create any obligations for Seller or Buyerregarding the Intellectual Property Assets, including but not limited toSoftware distributed in source code form under a license that guarantees theright to read, redistribute, modify, create derivative works, and use theSoftware free of charge, such as Software certified by the Open SourceInitiative and Software subject to GNU’s General Public License (GPL) orLesser/Library GPL (LGPL), the Artistic License (e.g., PERL), the MozillaPublic License, the Netscape Public License, the Sun Community Source License(SCSL), the Sun Industry Standards License (SISL), the Apache Software License,and the like.

 

                3.13         Brokers or Finders.  Neither Seller nor any of itsRepresentatives have incurred any obligation or liability, contingent orotherwise, for brokerage or finders’ fees or agents’ commissions or othersimilar payments in connection with the sale of the Assets or the ContemplatedTransactions.

 

                3.14         Disclosure.

 

(a)           No representation or warranty orother statement made by Seller in this Agreement, the Disclosure Letter, anysupplement to the Disclosure Letter, or the certificates delivered pursuant toSection 2.7(a) in connection with the Contemplated Transactions contains anyuntrue statement of a material fact regarding the Assets or omits to state amaterial fact regarding the Assets necessary to make any of them, in light ofthe circumstances in which it was made, not misleading.

 

(b)           Seller does not have Knowledge of anyfact that has specific application to Seller (other than general economic orindustry conditions) and that may materially adversely affect the economicvalue to the Buyer of the Assets that has not been set forth in this Agreementor the Disclosure Letter.

 

 

4. REPRESENTATIONS AND WARRANTIES OF BUYER

 

 

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Buyer represents and warrants to Seller asfollows:

 

                4.1           Organization and Good Standing.  Buyer is a corporation duly organized,validly existing and in good standing under the laws of the State ofWashington, with full corporate power and authority to conduct its business asit is now conducted.

 

                4.2           Authority; No Conflict.

 

(a)           This Agreement constitutes the legal,valid and binding obligation of Buyer, enforceable against Buyer in accordancewith its terms. Upon the execution and delivery by Buyer of the Assignment andAssumption Agreement and each other agreement to be executed or delivered byBuyer at Closing (collectively, the “**Buyer’sClosing Documents**”), each of the Buyer’s Closing Documents willconstitute the legal, valid and binding obligation of Buyer, enforceableagainst Buyer in accordance with its respective terms. Buyer has the absoluteand unrestricted right, power and authority to execute and deliver thisAgreement and the Buyer’s Closing Documents and to perform its obligationsunder this Agreement and the Buyer’s Closing Documents, and such action hasbeen duly authorized by all necessary corporate action.

 

(b)           Neither the execution and delivery ofthis Agreement by Buyer nor the consummation or performance of any of theContemplated Transactions by Buyer will give any Person the right to prevent, delayor otherwise interfere with any of the Contemplated Transactions pursuant to:(i)  any provision of Buyer’s GoverningDocuments; (ii)  any resolution adoptedby the board of directors or the shareholders of Buyer; (iii)  any Legal Requirement or Order to whichBuyer may be subject; or (iv)  anyContract to which Buyer is a party or by which Buyer may be bound.

 

Buyeris not and will not be required to obtain any Consent from any Person inconnection with the execution and delivery of this Agreement or theconsummation or performance of any of the Contemplated Transactions.

 

                4.3           Certain Proceedings.  There is no pending Proceeding that has beencommenced against Buyer and that challenges, or may have the effect ofpreventing, delaying, making illegal or otherwise interfering with, any of theContemplated Transactions. To Buyer’s Knowledge, no such Proceeding has beenthreatened.

 

                4.4           Brokers or Finders.  Neither Buyer nor any of its Representativeshave incurred any obligation or liability, contingent or otherwise, forbrokerage or finders’ fees or agents’ commissions or other similar payment inconnection with the Contemplated Transactions.

 

                4.5           Financial Ability.  Buyer has sufficient cash or other liquidfinancial resources to pay the Purchase Price to Seller as contemplated bySection 2.3.

 

 

5. COVENANTS OF SELLER PRIOR TO CLOSING

 

                5.1           Access and Investigation.  Between the date of this Agreement and theClosing Date, and upon reasonable advance notice received from Buyer, Sellershall: (a) afford Buyer and its Representatives and prospective lenders andtheir Representatives (collectively, “**BuyerGroup**”) full 

 

 

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and free access, during regular businesshours, to Seller’s personnel, properties (including subsurface testing),Contracts, Governmental Authorizations, books and Records and other documentsand data, such rights of access to be exercised in a manner that does notunreasonably interfere with the operations of Seller; (b) furnish Buyer Groupwith copies of all such Contracts, Governmental Authorizations, books andRecords and other existing documents and data as Buyer may reasonably request;(c) furnish Buyer Group with such additional financial, operating and otherrelevant data and information as Buyer may reasonably request; and (d)otherwise cooperate and assist, to the extent reasonably requested by Buyer,with Buyer’s investigation of the properties, assets and financial conditionrelated to Seller. In addition, Buyer shall have the right to have the TangiblePersonal Property inspected by Buyer Group, at Buyer’s sole cost and expense,for purposes of determining the physical condition and legal characteristics ofthe Tangible Personal Property.

 

                5.2           Operation of the Seller’s Business.

 

(a)           At 12:01 AM on the day following thedate hereof and upon receipt of the consideration set forth in Section 2.3(a),Seller shall transfer possession of the Assets to Buyer.   Between the date of this Agreement and theClosing, Seller shall cooperate fully to complete the orderly transfer ofpossession of the Assets, shall allow Buyer reasonable access to its premisesand shall take no action which reduces the value of the Assets.

 

(b)           Seller acknowledges that, as anaccommodation to Seller, Buyer has agreed to insure the Assets for$400,000.  Seller agrees that it shalllimit any claims it may have against Buyer for damage to or loss of the Assetsduring the period from the date hereof through the Closing Date to the amountof such insurance coverage.

 

(c)           Seller shall cooperate with Buyer andassist Buyer in identifying the Governmental Authorizations (if any) requiredby Buyer to operate the business related to the Assets from and after the datehereof and either transferring existing Governmental Authorizations of Sellerto Buyer, where permissible, or obtaining new Governmental Authorizations forBuyer;

 

(d)           Seller shall, upon request from timeto time, execute and deliver all documents, make all truthful oaths, testify inany Proceedings and do all other acts that may be reasonably necessary ordesirable in the opinion of Buyer to consummate the Contemplated Transactions,all without further consideration.

 

(e)           Before transferring possession of theAssets, Seller shall make copies of all Intellectual Property Assets whichmight be subject to modification by Buyer. At the Effective Time, Seller shall destroy all such copies.

 

(f)            Seller hereby grants Buyer a royaltyfree worldwide license to use the Assets (including, without limitation, theright to reverse-engineer Software and create derivative works as appropriatein Buyer’s sole discretion) as necessary to perform Buyer’s covenants underSection 6.3 hereof.

 

                5.3           Negative Covenant.  Except as otherwise expressly permittedherein, between the date of this Agreement and the Closing Date, Seller shallnot, without the prior written Consent of Buyer, (a) make any modification toany material Contract or Governmental Authorization; or (b) enter into anycompromise or settlement of any litigation, proceeding or governmentalinvestigation relating to the Assets or the Assumed Liabilities.

 

 

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                5.4           Required Approvals.  As promptly as practicable after the date ofthis Agreement, Seller shall make all filings required by Legal Requirements tobe made by it in order to consummate the Contemplated Transactions, including,without limitation, the filings required to obtain the approval of Seller’sshareholders.  Seller also shallcooperate with Buyer and its Representatives with respect to all filingspursuant to Legal Requirements that Buyer shall be required to make inconnection with the Contemplated Transactions. Seller also shall cooperate with Buyer and its Representatives inobtaining all Material Consents.

 

                5.5           Notification.  Between the date hereof and the ClosingDate, Seller shall promptly notify Buyer in writing if it becomes aware of (a)any fact or condition that causes or constitutes a Breach of any of Seller’srepresentations and warranties made as of the date of this Agreement or (b) theoccurrence after the date of this Agreement of any fact or condition that isreasonably likely to (except as expressly contemplated by this Agreement) causeor constitute a Breach of any of Seller’s Closing Representations andWarranties had that representation or warranty been made as of the time of theoccurrence of, or Seller’s discovery of, such fact or condition. Should anysuch fact or condition require any change to the Disclosure Letter, Sellershall promptly deliver to Buyer a supplement to the Disclosure Letterspecifying such change. Such delivery shall not affect any rights of Buyerunder Section 9.2 and Article 11. During the same period, Seller also shallpromptly notify Buyer of the occurrence of any Breach of any covenant of Sellerin this Article 5 or of the occurrence of any event that may make thesatisfaction of the conditions in Article 7 impossible or unlikely.

 

                5.6           No Negotiation.  Until such time as this Agreement shall beterminated pursuant to Section 9.1:

 

(a)           Seller shall, and shall direct anduse reasonable efforts to cause its officers, directors, employees, investmentbankers, brokers and other representatives and agents to, immediately cease anydiscussions or negotiations with any parties that may be ongoing with respectto an Acquisition Proposal. Seller shall not, nor shall it authorize or permitany of its officers, directors, employees, investment bankers, brokers or otherrepresentatives and agents to directly or indirectly (i) take any action tosolicit, initiate or encourage (including by way of furnishing information), ortake any other action designed or reasonably likely to facilitate, anyinquiries or the making of any proposal which constitutes or may reasonably beexpected to lead to any Acquisition Proposal, or (ii) engage in negotiationswith, or disclose any information relating to Seller or afford access toSeller’s properties, books, or records to any Person that may be consideringmaking, or has made, an Acquisition Proposal. For purposes of this Agreement, “**AcquisitionProposal**” means any offer or proposal for the acquisition of theAssets through purchase, merger, consolidation or otherwise (other than inconnection with the Contemplated Transactions or sales of inventory in theordinary course).

 

(b)           Neither Seller’s board of directorsnor any committee thereof shall (i) approve or recommend, or propose publiclyto approve or recommend, any Acquisition Proposal, or (ii) cause Seller toenter into any letter of intent, agreement in principle, acquisition agreementor other similar agreement (each a “**SellerAcquisition Agreement**”) related to any Acquisition Proposal; *provided, however*, that if prior to theClosing Seller’s board of directors determines in good faith that the failureto do so could create a reasonable possibility of a breach of its fiduciaryduties to Seller’s shareholders under applicable law, the board of directorsmay approve or recommend a Superior Proposal or terminate this Agreement (andconcurrently with or after such termination, if it so chooses, cause Seller toenter into any Acquisition Agreement with 

 

 

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respect to any SuperiorProposal).  For purposes of thisAgreement, a “**Superior Proposal**”means any *bona fide* offer orproposal for, or any indication of interest in, any merger, consolidation,share exchange, business combination, recapitalization, liquidation,dissolution or similar transaction involving Seller, or the acquisition of anysignificant equity interest in, or a substantial portion of the assets ofSeller (including the Assets) which Seller’s board of directors determines ingood faith (and based on the advice of its advisors) to be more favorable toSeller’s shareholders than the Contemplated Transactions (taking into accountall factors relating to such proposed transaction deemed relevant by the boardof directors of Seller, including without limitation the financing thereof andall other conditions thereto).

 

(c)           Seller shall promptly notify Buyer inwriting after receipt of any Acquisition Proposal or any request forinformation relating to Seller by any third party that may be consideringmaking, or has made, an Acquisition Proposal. The notification shall describe the material terms and conditions ofsuch request or Seller Acquisition Proposal and the identity of the third partymaking such request or Seller Acquisition Proposal.

 

(d)           Notwithstanding the covenantscontained in this Section 5.6, Seller may furnish information concerning itsbusiness to a third party making an unsolicited Acquisition Proposal and enterinto discussions, negotiations or agreements with such third party if Sellerconcludes, after consultation with legal counsel and other advisors, that anapplicable fiduciary duty of any of Seller’s directors or officers requiressuch actions.

 

                5.7           Best Efforts.  Seller shall use its Best Efforts to causethe conditions in Article 7 and Section 8.3 to be satisfied.

 

                5.8           Payment of Liabilities.  Seller shall pay or otherwise satisfy in theOrdinary Course of Business all of its Liabilities and obligations, *provided, however*, that Seller shall notbe obligated to do so if failure to do so does not materially adversely affectthe economic value to the Buyer of the Assets. Buyer and Seller hereby waivecompliance with the bulk-transfer provisions of the Uniform Commercial Code (orany similar law) (“Bulk Sales Laws”) in connection with the ContemplatedTransactions.

 

 

6. COVENANTS OF BUYER PRIOR TO CLOSING

 

                6.1           Required Approvals.  As promptly as practicable after the date ofthis Agreement, Buyer shall make, or cause to be made, all filings required byLegal Requirements to be made by it to consummate the ContemplatedTransactions. Buyer also shall cooperate, and cause its Related Persons tocooperate, with Seller (a) with respect to all filings Seller shall be requiredby Legal Requirements to make and (b) in obtaining all Consents identified inPart 3.2(c), provided, however, that Buyer shall not be required to dispose ofor make any change to its business, expend any material funds or incur anyother burden in order to comply with this Section 6.1.

 

                6.2           Best Efforts.  Buyer shall use its Best Efforts to causethe conditions in Article 8 and Section 7.3 to be satisfied.

 

                6.3           Operation of Assets; Performanceof Qwest Contract.

 

(a)           As an accommodation to Seller due itscurrent distressed financial situation, and acting solely as Seller’s agent:

 

 

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(i)            On and after the date hereof(provided that Buyer has made the payment contemplated by Section 2.3(a)),Buyer shall take possession of the Assets and shall operate the business as itrelates to the Products and the Assets. All revenue generated by such operation shall be for the account ofBuyer, including, without limitation, any revenue generated pursuant to theterms of the Letter Agreement between Buyer and Seller dated June 7, 2002,pursuant to which the parties agreed that all revenues from June 8, 2002forward are for the account of Buyer.

 

(ii)           On and after the date hereof, Buyeragrees to perform Seller’s obligations under the Qwest Contract and the otherSeller Contracts comprising part of the Assets.

 

(b)           On and after the date hereof, Buyerwill insure the Assets for $400,000 at Buyer’s sole cost and expense.

 

                6.4           Seller’s Information Statement.  Buyer agrees to cooperate with Seller inSeller’s efforts to provide information in an information statement to be filedwith the United States Securities and Exchange Commission and transmitted toshareholders pursuant to the Minnesota Business Corporation Act, Seller’sbylaws, and the Exchange Act.

 

 

**7.  CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONTO CLOSE**

 

Buyer’s obligation to take the actionsrequired to be taken by Buyer at the Closing is subject to the satisfaction, ator prior to the Closing, of each of the following conditions (any of which maybe waived by Buyer, in whole or in part):

 

                7.1           Accuracy of Representations.

 

(a)           All of Seller’s representations and warrantiesin this Agreement (considered collectively), and each of these representationsand warranties (considered individually), shall have been accurate in allmaterial respects as of the date of this Agreement and Seller’s ClosingRepresentations and Warranties shall be accurate in all material respects as ofthe time of the Closing as if then made, without giving effect to anysupplement to the Disclosure Letter.

 

(b)           Each of the representations andwarranties in Section 3.2(a), and each of the representations and warranties inthis Agreement that contains an express materiality qualification, shall havebeen accurate in all respects as of the date of this Agreement.  Any of Seller’s Closing Representations and Warrantiesthat contains an express materiality qualification shall be accurate in allrespects as of the time of the Closing as if then made, without giving effectto any supplement to the Disclosure Letter.

 

                7.2           Seller’s Performance.  All of the covenants and obligations thatSeller is required to perform or to comply with pursuant to this Agreement ator prior to the Closing (considered collectively), and each of these covenantsand obligations (considered individually), shall have been duly performed andcomplied with in all material respects.

 

                7.3           Consents.  Each of the Consents identified in Exhibit7.3 (the “**Material Consents**”)shall have been obtained and shall be in full force and effect.

 

 

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                7.4           Additional Documents.  Seller shall have caused the documents andinstruments required by Section 2.7(a) and the following documents to bedelivered (or tendered subject only to Closing) to Buyer:

 

(a)           an opinion of Maslon Edelman Borman& Brand, LLP , dated the Closing Date, in the form of Exhibit 7.4(a);

 

(b)           articles of incorporation and allamendments thereto of Seller, duly certified as of a recent date by theSecretary of State of the jurisdiction of Seller’’s incorporation;

 

(c)           releases of all Encumbrances on theAssets;

 

(d)           certificates dated as of a date notearlier than the fifth business day prior to the Closing as to the goodstanding of Seller and payment of all applicable state Taxes by Seller,executed by the appropriate officials of the State of Minnesota; and

 

(e)           such other documents as Buyer mayreasonably request for the purpose of: (i) evidencing the accuracy of any of Seller’s representations andwarranties; (ii)  evidencing theperformance or compliance by Seller with any covenant or obligation required tobe performed or complied with by Seller; (iii) evidencing the satisfaction of any condition referred to in this Article7; or (iv)  otherwise facilitating theconsummation or performance of any of the Contemplated Transactions.

 

                7.5           No Proceedings.  Since the date of this Agreement, (i) thereshall not have been commenced or threatened against Buyer any Proceeding which,if adversely determined, would prevent the consummation of the ContemplatedTransactions, and (ii) there shall not have been any Order binding on Buyer andSeller prohibiting Buyer and Seller from consummating the ContemplatedTransactions.

 

                7.6           Shareholder Approval.  Seller shall have received the approval ofits shareholders necessary to consummate the Contemplated Transactions inaccordance with all Legal Requirements.

 

                7.7           Ancillary Agreements.  The relevant Persons shall have entered intoancillary agreements in form and substance as set forth in Exhibit 7.7 hereto.

 

 

8. CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

 

Seller’s obligation to sell the Assets and totake the other actions required to be taken by Seller at the Closing is subjectto the satisfaction, at or prior to the Closing, of each of the followingconditions (any of which may be waived by Seller in whole or in part):

 

                8.1           Accuracy of Representations.  All of Buyer’s representations andwarranties in this Agreement (considered collectively), and each of theserepresentations and warranties (considered individually), shall have beenaccurate in all material respects as of the date of this Agreement and shall beaccurate in all material respects as of the time of the Closing as if thenmade.

 

                8.2           Buyer’s Performance.  All of the covenants and obligations thatBuyer is required to perform or to comply with pursuant to this Agreement at orprior to the Closing (considered collectively), and each of these covenants andobligations (considered individually), shall have been performed and compliedwith in all material respects.

 

 

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                8.3           Consents.  Each of the Consents identified in Exhibit8.3 shall have been obtained and shall be in full force and effect.

 

                8.4           Additional Documents.  Buyer shall have caused the documents andinstruments required by Section 2.7(b), and such documents as Seller mayreasonably request for the purpose of (i) evidencing the accuracy of any representation or warranty of Buyer,(ii)  evidencing the performance byBuyer of, or the compliance by Buyer with, any covenant or obligation requiredto be performed or complied with by Buyer, or (iii)  evidencing the satisfaction of any condition referred to in thisArticle 8.

 

                8.5           No Injunction.  Since the date of this Agreement, (i) thereshall not have been commenced or threatened against Seller any Proceeding which,if adversely determined, would prevent the consummation of ContemplatedTransactions, and (ii) there shall not have been any Order binding on Buyer andSeller prohibiting Buyer and Seller from consummating the ContemplatedTransactions.

 

 

9.  **TERMINATION**

 

                9.1           Termination Events.  By notice given prior to or at the Closing,subject to Section 9.2, this Agreement may be terminated as follows:

 

(a)           by Buyer if a material Breach of anyprovision of this Agreement has been committed by Seller and such Breach hasnot been waived by Buyer;

 

(b)           by Seller if a material Breach of anyprovision of this Agreement has been committed by Buyer and such Breach has notbeen waived by Seller;

 

(c)           by Buyer if any condition in Article7 has not been satisfied as of the date specified for Closing in the firstsentence of Section 2.6 or if satisfaction of such a condition by such date isor becomes impossible (other than through the failure of Buyer to comply withits obligations under this Agreement), and Buyer has not waived such conditionon or before such date;

 

(d)           by Seller if any condition in Article8 has not been satisfied as of the date specified for Closing in the firstsentence of Section 2.6 or if satisfaction of such a condition by such date isor becomes impossible (other than through the failure of Seller to comply withits obligations under this Agreement), and Seller has not waived such conditionon or before such date;

 

(e)           by mutual consent of Buyer andSeller;

 

(f)            by Buyer if the Closing has notoccurred on or before December 31, 2002, or such later date as the parties mayagree upon, unless Buyer is in material Breach of this Agreement; or

 

(g)           by Seller if the Closing has notoccurred on or before December 31, 2002, or such later date as the parties may agreeupon, unless Seller is in material Breach of this Agreement.

 

                9.2           Effect of Termination.

 

 

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(a)           Each party’s right of terminationunder Section 9.1 is in addition to any other rights it may have under thisAgreement or otherwise, and the exercise of such right of termination will notbe an election of remedies. If this Agreement is terminated pursuant to Section9.1, all obligations of the parties under this Agreement will terminate, exceptthat the obligations of the parties in Sections 9.2, 11.2 (c), 11.3(e) and (f)and Articles 12 and 13 (except for those in Section 13.5) will survive; *provided, however*, that, if this Agreementis terminated because of a Breach of this Agreement by the nonterminating partyor because one or more of the conditions to the terminating party’s obligationsunder this Agreement is not satisfied as a result of the party’s failure tocomply with its obligations under this Agreement, the terminating party’s rightto pursue all legal remedies will survive such termination unimpaired.

 

(b)           If this Agreement is terminated:

 

(i)            Buyer shall return possession of theAssets to Seller as soon as reasonably practicable;

 

(ii)           Seller shall immediately return thepayment specified in Section 2.3(a) hereof to Buyer;

 

(iii)          Buyer shall be entitled to retain allrevenues and Accounts Receivable associated with its operation of the Assetsfrom June 8, 2002 until the date this Agreement is terminated;

 

(iv)          if Seller has breached Section 5.6hereof, Seller shall reimburse Buyer for all of its out-of-pocket costsincurred by Buyer, directly or indirectly, in connection with the ContemplatedTransactions; and

 

(v)           due to a failure by Seller to satisfythe condition set forth in Section 7.6 hereof by December 29, 2002, and Buyerbids no more than the principal amount outstanding under the Note in aforeclosure sale and is unsuccessful in purchasing the Assets for thatconsideration in such sale, then Seller shall reimburse Buyer for all of its out-of-pocketcosts incurred by Buyer, directly or indirectly, in connection with theContemplated Transactions.

 

 

10. ADDITIONAL COVENANTS

 

                10.1         Employees and Employee Benefits.

 

(a)           It is understood and agreed thatBuyer’s hiring of any Active Employees shall not constitute any commitment,Contract or understanding (expressed or implied) of any obligation on the partof Buyer to an employment relationship of any fixed term or duration or uponany terms or conditions other than those that Buyer may establish pursuant toindividual offers of employment, and employment offered by Buyer is “at will”and may be terminated by Buyer or by an employee at any time for any reason.

 

(b)           Seller represents and warrants thatthe definition of Active Employees includes all employees of Seller as of May31, 2002.  Seller shall be responsiblefor (and has paid or shall pay by Closing, to the extent that any such amountsare due and payable on the date hereof, or become due and payable by theClosing Date):

 

 

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(i)            the payment of all wages and otherremuneration due to Active Employees with respect to their services asemployees of Seller through each employee’s date of termination (“**Termination Date**”), including pro rata bonuspayments and all vacation pay earned prior to each employee’s Termination Date;

 

(ii)           the payment of any termination orseverance payments and the provision of health plan continuation coverage inaccordance with the requirements of Section 4980B of the Code (as well as itspredecessor provision, Section 162(k) of the Code) and Sections 601 through608, inclusive, of ERISA (which provisions are hereinafter referred tocollectively as “COBRA”); and

 

(iii)          any claims made or incurred by ActiveEmployees and their beneficiaries through such employee’s Termination Dateunder any of Seller’s existing employee benefit plans (including, but notlimited to, any retirement, savings or pension plans).

 

(c)           Buyer shall not have anyresponsibility, liability or obligation, whether to Active Employees, formeremployees, their beneficiaries or to any other Person, with respect to anyemployee benefit plans, practices, programs or arrangements (including theestablishment, operation or termination thereof and the notification andprovision of COBRA coverage extension) maintained by Seller.

 

                10.2         Payment of Retained Liabilities.  If Seller fails to pay the RetainedLiabilities and other Liabilities of Seller under this Agreement (other thanthe Assumed Liabilities), and if Buyer reasonably determines that failure tomake any payments will impair Buyer’s use or enjoyment of the Assets, Buyermay, at any time after the date hereof, elect to make all such paymentsdirectly (but shall have no obligation to do so) and seek indemnification fromSeller.

 

                10.3         Restrictions on Seller Dissolutionand Distributions.  Seller shall notdissolve or make any distributions to its shareholders until the lapse of morethan two years after the Closing Date, *provided,however*, that Seller may make distributions to its shareholders ifit has first made adequate provision for the satisfaction in full of any andall obligations of Seller to indemnify Buyer under this Agreement.

 

                10.4         Assistance in Proceedings.  Seller will cooperate with Buyer and itscounsel in the contest or defense of, and make available its then-currentpersonnel and provide any testimony and access to its books and Records inconnection with, any Proceeding involving or relating to (a) any ContemplatedTransaction or (b) any action, activity, circumstance, condition, conduct,event, fact, failure to act, incident, occurrence, plan, practice, situation,status or transaction by Seller on or before the Closing Date involving theAssets.  Buyer will reimburse Seller forits reasonable expenses in connection with any such assistance.

 

                10.5         Noncompetition, Nonsolicitation andNondisparagement.

 

(a)           Noncompetition. For a periodof one (1) year after the Closing Date, Seller shall not, anywhere in theworld, directly or indirectly invest in, own, manage, operate, finance,control, advise, render services to or guarantee the obligations of any Personengaged in or planning to become engaged in the analysis of telecommunicationsusage data business; *provided, however*,that Seller may purchase or otherwise acquire up to (but not more than) one 

 

 

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percent (1%) of any class ofthe securities of any Person (but may not otherwise participate in theactivities of such Person) if such securities are listed on any national orregional securities exchange or have been registered under Section 12(g) of theExchange Act.

 

(b)           Nonsolicitation. For a periodof one (1) year after the Closing Date, Seller shall not, directly orindirectly:

 

(i)            solicit the competing business ofany Person who is a customer of Buyer;

 

(ii)           cause, induce or attempt to cause orinduce any customer, supplier, licensee, licensor, franchisee, employee,consultant or other business relation of Buyer to cease doing business withBuyer, to deal with any competitor of Buyer or in any way interfere with itsrelationship with Buyer;

 

(iii)          cause, induce or attempt to cause orinduce any customer, supplier, licensee, licensor, franchisee, employee,consultant or other business relation of Seller on the Closing Date or withinthe year preceding the Closing Date to cease doing business with Buyer, to dealwith any competitor of Buyer or in any way interfere with its relationship withBuyer; or

 

(iv)          hire, retain or attempt to hire orretain any employee or independent contractor of Buyer or in any way interferewith the relationship between Buyer and any of its employees or independentcontractors.

 

(c)           Nondisparagement. After theClosing Date, Seller will not disparage Buyer or any of Buyer’s shareholders,directors, officers, employees or agents.

 

(d)           Modification of Covenant. If afinal judgment of a court or tribunal of competent jurisdiction determines thatany term or provision contained in Section 10.5(a) through (c) is invalid orunenforceable, then the parties agree that the court or tribunal will have thepower to reduce the scope, duration or geographic area of the term orprovision, to delete specific words or phrases or to replace any invalid orunenforceable term or provision with a term or provision that is valid andenforceable and that comes closest to expressing the intention of the invalidor unenforceable term or provision. This Section 10.5 will be enforceable as somodified after the expiration of the time within which the judgment may beappealed. This Section 10.5 is reasonable and necessary to protect and preserveBuyer’s legitimate business interests and the value of the Assets and toprevent any unfair advantage conferred on Seller.

 

                10.6         Customer and Other BusinessRelationships.  Neither Seller norany of its current officers, current directors or current employees shall takeany action that would tend to diminish the value of the Assets or that wouldinterfere with the business of Buyer to be engaged in after the date hereof,including disparaging the name or business of Buyer.

 

                10.7         Retention of and Access to Records.  After the Closing Date until the secondanniversary of the date hereof, Seller shall provide Buyer and itsRepresentatives reasonable access to Records that are Excluded Assets, duringnormal business hours and on at least three days’ prior written notice, for anyreasonable business purpose specified by Buyer in such notice.

 

 

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                10.8         Further Assurances.  Subject to the proviso in Section 6.1, theparties shall cooperate reasonably with each other and with their respectiveRepresentatives in connection with any steps required to be taken as part oftheir respective obligations under this Agreement, and shall (a) furnish uponrequest to each other such further information; (b) execute and deliver to eachother such other documents; and (c) do such other acts and things, all as theother party may reasonably request for the purpose of carrying out the intentof this Agreement and the Contemplated Transactions.

 

 

11. INDEMNIFICATION; REMEDIES

 

                11.1         Survival.  All representations, warranties, covenantsand obligations in this Agreement, the Disclosure Letter, the supplements tothe Disclosure Letter, the certificates delivered pursuant to Section 2.7 andany other certificate or document delivered pursuant to this Agreement shallsurvive the Closing and the consummation of the Contemplated Transactions,subject to Section 11.7.  The right toindemnification, reimbursement or other remedy based upon such representations,warranties, covenants and obligations shall not be affected by anyinvestigation or assessment) conducted with respect to, or any Knowledgeacquired (or capable of being acquired) at any time, whether before or afterthe execution and delivery of this Agreement or the Closing Date, with respectto the accuracy or inaccuracy of or compliance with any such representation,warranty, covenant or obligation. The waiver of any condition based upon theaccuracy of any representation or warranty, or on the performance of orcompliance with any covenant or obligation, will not affect the right toindemnification, reimbursement or other remedy based upon such representations,warranties, covenants and obligations.

 

                11.2         Indemnification and Reimbursement bySeller.  Seller will indemnify andhold harmless Buyer, and its Representatives, shareholders, subsidiaries andRelated Persons (collectively, the “**BuyerIndemnified Persons**”), and will reimburse the Buyer IndemnifiedPersons for any loss, liability, claim, damage, expense (including costs ofinvestigation and defense and reasonable attorneys’ fees and expenses) ordiminution of value, whether or not involving a Third-Party Claim (collectively,“**Damages**”), arising from or inconnection with:

 

(a)           any Breach of any representation orwarranty made by Seller in (i) this Agreement (without giving effect to anysupplement to the Disclosure Letter), (ii) the Disclosure Letter, (iii) thesupplements to the Disclosure Letter , (iv) the certificates delivered pursuantto Section 2.7 (for this purpose, each such certificate will be deemed to havestated that Seller’s Closing Representations and Warranties fulfill therequirements of Section 7.1 as of the Closing Date as if made on the ClosingDate without giving effect to any supplement to the Disclosure Letter, unlessthe certificate expressly states that the matters disclosed in a supplementhave caused a condition specified in Section 7.1 not to be satisfied), (v) anytransfer instrument or (vi) any other certificate, document, writing orinstrument delivered by Seller pursuant to this Agreement;

 

(b)           any Breach of any covenant orobligation of Seller in this Agreement or in any other certificate, document,writing or instrument delivered by Seller pursuant to this Agreement;

 

(c)           any Liability arising out of theownership or operation of the Assets prior to the Effective Time other than theAssumed Liabilities; *provided, however*that Seller shall not be responsible for any such Liability arising solely as aresult of Buyer’s action or failure to act during the period between the datehereof and the Effective Time;

 

 

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(d)           any brokerage or finder’s fees or commissionsor similar payments based upon any agreement or understanding made, or allegedto have been made, by any Person with Seller (or any Person acting on itsbehalf) in connection with any of the Contemplated Transactions; or

 

(e)           any Retained Liabilities.

 

                11.3         Indemnification and Reimbursement byBuyer.  Buyer will indemnify andhold harmless Seller, and will reimburse Seller, for any Damages arising fromor in connection with:

 

(a)           any Breach of any representation orwarranty made by Buyer in this Agreement or in any certificate, document,writing or instrument delivered by Buyer pursuant to this Agreement;

 

(b)           any Breach of any covenant orobligation of Buyer in this Agreement or in any other certificate, document,writing or instrument delivered by Buyer pursuant to this Agreement;

 

(c)           any claim by any Person for brokerageor finder’s fees or commissions or similar payments based upon any agreement orunderstanding alleged to have been made by such Person with Buyer (or anyPerson acting on Buyer’s behalf) in connection with any of the ContemplatedTransactions;

 

(d)           any Assumed Liabilities;

 

(e)           any Liability arising out of Buyer’sownership or operation of the Assets after the Effective Time, or any Liabilityarising out of Buyer’s operation of the Assets during the period from the datehereof through the Effective Time, to the extent that such Liability was causedsolely by Buyer’s action or failure to act; or

 

(f)            any Damages to Seller arising fromBuyer’s default under the Qwest Contract or other Seller Contracts, unless suchdefault was a result of an action or failure to act by Seller.

 

                11.4         Limitations on Amount—Seller.  Seller shall have no liability (forindemnification or otherwise) with respect to claims under Section 11.2(a)until the total of all Damages with respect to such matters exceeds twentythousand and no dollars ($20,000) and then only for the amount by which suchDamages exceed twenty thousand and no dollars ($20,000) (such limitations, the“**Seller Basket**”).  However, the Seller Basket will not apply toclaims under Sections 11.2 (d) and (e) or to matters arising in respect ofSections 3.4, 3.7 and 10.1 or to any intentional Breach by Seller of anycovenant or obligation hereunder, and Seller will be liable for all Damages withrespect to such Breaches.  In no eventshall the indemnification obligations of Seller exceed the Purchase Price.

 

                11.5         Limitations on Amount—Buyer.  Buyer will have no liability (forindemnification or otherwise) with respect to claims under Section 11.4(a)until the total of all Damages with respect to such matters exceeds twentythousand and no dollars ($20,000) and then only for the amount by which suchDamages exceed twenty thousand and no dollars ($20,000) (such limitation, the “**Buyer Basket**”).  However, the Buyer Basket will not apply to claims under Section11.3(e) and (f) or to any intentional Breach by Buyer of any covenant orobligation hereunder, and Buyer will be liable for all Damages with respect tosuch Breaches.  In no event shall the indemnificationobligations of Buyer hereunder exceed the Purchase Price.

 

 

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                11.6         Time Limitations.

 

(a)           If the Closing occurs, Seller willhave liability (for indemnification or otherwise) with respect to any Breach of(i) a covenant or obligation to be performed or complied with prior to theClosing Date (other than those in Sections 2.1 and 2.4(b) and Articles 10 and12, as to which a claim may be made at any time), or (ii) a representation orwarranty only if Buyer notifies Seller of such a claim within one year from theClosing, specifying the factual basis of the claim in reasonable detail to theextent then known by Buyer (other than those in Section 3.4, as to which aclaim may be made at any time, those in Section 3.12, with respect torepresentations and warranties about the existence of infringement actions orinfringing activities, as to which a claim may be made on or before the latestexpiration date of all statutes of limitations pertaining to infringementclaims by a third party), *provided, however*,that Seller will have no liability if the infringement or infringing activityarises from (1) Buyer’s interconnection, combination, operation or use of theProducts with other software, if such a claim would not have arisen except forsuch a combination, or (2) Buyer’s use or operation of such Products in amanner for which they were not designed or used by Seller.

 

(b)           If the Closing occurs, Buyer willhave liability (for indemnification or otherwise) with respect to any Breach of(i) a covenant or obligation to be performed or complied with prior to theClosing Date (other than those in Article 12, as to which a claim may be madeat any time), or (ii) a representation or warranty, only if Seller notifiesBuyer of a claim within one year from the Closing, specifying the factual basisof the claim in reasonable detail to the extent then known by Seller.

 

                11.7         Third-Party Claims.

 

(a)           Promptly after receipt by a Personentitled to indemnity under Section 11.2 or 11.3 (an “**Indemnified Person**”) of notice of theassertion of a Third-Party Claim against it, such Indemnified Person shall givenotice to the Person obligated to indemnify under such Section (an “**Indemnifying Person**”) of the assertion ofsuch Third-Party Claim, provided that the failure to notify the IndemnifyingPerson will not relieve the Indemnifying Person of any liability that it mayhave to any Indemnified Person, except to the extent that the IndemnifyingPerson demonstrates that the defense of such Third-Party Claim is prejudiced bythe Indemnified Person’s failure to give such notice.

 

(b)           If an Indemnified Person gives noticeto the Indemnifying Person pursuant to Section 11.7(a) of the assertion of aThird-Party Claim, the Indemnifying Person shall be entitled to participate inthe defense of such Third-Party Claim and, to the extent that it wishes (unless(i) the Indemnifying Person is also a Person against whom the Third-Party Claimis made and the Indemnified Person determines in good faith that jointrepresentation would be inappropriate or (ii) the Indemnifying Person fails toprovide reasonable assurance to the Indemnified Person of its financialcapacity to defend such Third-Party Claim and provide indemnification withrespect to such Third-Party Claim), to assume the defense of such Third-PartyClaim with counsel satisfactory to the Indemnified Person. After notice fromthe Indemnifying Person to the Indemnified Person of its election to assume thedefense of such Third-Party Claim, the Indemnifying Person shall not, so longas it diligently conducts such defense, be liable to the Indemnified Personunder this Article 11 for any fees of other counsel or any other expenses withrespect to the defense of such Third-Party Claim, in each case subsequentlyincurred by the Indemnified Person in connection with the defense of suchThird-Party Claim, other than 

 

 

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reasonable costs ofinvestigation. If the Indemnifying Person assumes the defense of a Third-PartyClaim, (i) such assumption will conclusively establish for purposes of thisAgreement that the claims made in that Third-Party Claim are within the scopeof and subject to indemnification, and (ii) no compromise or settlement of suchThird-Party Claims may be effected by the Indemnifying Person without theIndemnified Person’s Consent unless (A) there is no finding or admission of anyviolation of Legal Requirement or any violation of the rights of any Person;(B) the sole relief provided is monetary damages that are paid in full by theIndemnifying Person; and (C) the Indemnified Person shall have no liabilitywith respect to any compromise or settlement of such Third-Party Claimseffected without its Consent. If notice is given to an Indemnifying Person ofthe assertion of any Third-Party Claim and the Indemnifying Person does not,within ten (10) days after the Indemnified Person’s notice is given, givenotice to the Indemnified Person of its election to assume the defense of such Third-PartyClaim, the Indemnifying Person will be bound by any determination made in suchThird-Party Claim or any compromise or settlement effected by the IndemnifiedPerson.

 

(c)           Notwithstanding the foregoing, if anIndemnified Person determines in good faith that there is a reasonableprobability that a Third-Party Claim may adversely affect it or its RelatedPersons other than as a result of monetary damages for which it would beentitled to indemnification under this Agreement, the Indemnified Person may,by notice to the Indemnifying Person, assume the exclusive right to defend,compromise or settle such Third-Party Claim, but the Indemnifying Person willnot be bound by any determination of any Third-Party Claim so defended for thepurposes of this Agreement or any compromise or settlement effected without itsConsent (which may not be unreasonably withheld).

 

(d)           Notwithstanding the provisions ofSection 13.4, the parties hereby consent to the nonexclusive jurisdiction ofany court in which a Proceeding in respect of a Third-Party Claim is broughtagainst any Indemnified Person for purposes of any claim that an IndemnifiedPerson may have under this Agreement with respect to such Proceeding or thematters alleged therein, and agree that process may be served on theIndemnifying Person with respect to such a claim anywhere in the world.

 

(e)           With respect to any Third-Party Claimsubject to indemnification under this Article 11: (i) both the IndemnifiedPerson and the Indemnifying Person, as the case may be, shall keep the otherPerson fully informed of the status of such Third-Party Claim and any relatedProceedings at all stages thereof where such Person is not represented by itsown counsel, and (ii) the parties agree (each at its own expense) to render toeach other such assistance as they may reasonably require of each other and tocooperate in good faith with each other in order to ensure the proper andadequate defense of any Third-Party Claim.

 

(f)            With respect to any Third-PartyClaim subject to indemnification under this Article 11, the parties agree tocooperate in such a manner as to preserve in full (to the extent possible) theconfidentiality of all Confidential Information and the attorney-client andwork-product privileges. In connection therewith, each party agrees that: (i)it will use its Best Efforts, in respect of any Third-Party Claim in which ithas assumed or participated in the defense, to avoid production of ConfidentialInformation (consistent with applicable law and rules of procedure), and (ii)all communications between any party hereto and counsel responsible for orparticipating in the defense of any Third-Party Claim shall, to the extentpossible, be made so as to preserve any applicable attorney-client orwork-product privilege.

 

 

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                11.8         Other Claims.  A claim for indemnification for any matternot involving a Third-Party Claim may be asserted by notice to the party fromwhom indemnification is sought and shall be paid promptly after such notice.

 

                11.9         INDEMNIFICATION IN CASE OF STRICTLIABILITY OR INDEMNITEE NEGLIGENCE

 

THE INDEMNIFICATION PROVISIONS IN THISARTICLE 11 SHALL BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASEDUPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANYPAST, PRESENT OR FUTURE BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFERACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OROTHER LEGAL REQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THEPERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE,CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKINGINDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THEPERSON SEEKING INDEMNIFICATION.

 

                11.10       Exclusive Remedy.  The rights of indemnification provided forunder this Article 11 shall be the parties’ sole and exclusive remedies for allclaims arising under this Agreement, other than claims for fraud.  Unless a representation by any party isintentionally inaccurate, such representation shall not constitute fraud.

 

 

12. CONFIDENTIALITY

 

                12.1         Definition of ConfidentialInformation.

 

(a)           As used in this Article 12, the term“**Confidential Information**”includes any and all of the following information of Seller or Buyer that hasbeen or may hereafter be disclosed in any form, whether in writing, orally,electronically or otherwise, or otherwise made available by observation,inspection or otherwise by either party (Buyer on the one hand or Seller on theother hand) or its Representatives (collectively, a “**Disclosing Party**”) to the other party or its Representatives(collectively, a “**Receiving Party**”):

 

(i)            all information that is a tradesecret under applicable trade secret or other law;

 

(ii)           all information concerning productspecifications, data, know-how, formulae, compositions, processes, designs,sketches, photographs, graphs, drawings, samples, inventions and ideas, past,current and planned research and development, current and planned manufacturingor distribution methods and processes, customer lists, current and anticipatedcustomer requirements, price lists, market studies, business plans, computerhardware, Software and computer software and database technologies, systems, structuresand architectures;

 

(iii)          all information concerning thebusiness and affairs of the Disclosing Party (which includes historical andcurrent financial statements, financial projections and budgets, tax returnsand accountants’ materials, historical, current and projected sales, capitalspending budgets and plans, business plans, strategic plans, marketing and 

 

 

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advertising plans,publications, client and customer lists and files, contracts, the names andbackgrounds of key personnel and personnel training techniques and materials,however documented), and all information obtained from review of the DisclosingParty’s documents or property or discussions with the Disclosing Partyregardless of the form of the communication; and

 

(iv)          all notes, analyses, compilations,studies, summaries and other material prepared by the Receiving Party to theextent containing or based, in whole or in part, upon any information includedin the foregoing.

 

(b)           Any trade secrets of a DisclosingParty shall also be entitled to all of the protections and benefits underapplicable trade secret law and any other applicable law. If any informationthat a Disclosing Party deems to be a trade secret is found by a court of competentjurisdiction not to be a trade secret for purposes of this Article 12, suchinformation shall still be considered Confidential Information of thatDisclosing Party for purposes of this Article 12 to the extent included withinthe definition. In the case of trade secrets, each of Buyer and Seller herebywaives any requirement that the other party submit proof of the economic valueof any trade secret or post a bond or other security.

 

                12.2         Restricted Use of ConfidentialInformation.

 

(a)           Each Receiving Party acknowledges theconfidential and proprietary nature of the Confidential Information of theDisclosing Party and agrees that such Confidential Information (i) shall bekept confidential by the Receiving Party; (ii) shall not be used for any reasonor purpose other than to evaluate and consummate the Contemplated Transactions;and (iii) without limiting the foregoing, shall not be disclosed by theReceiving Party to any Person, except in each case as otherwise expresslypermitted by the terms of this Agreement or with the prior written consent ofan authorized representative of Seller with respect to Confidential Informationof Seller (each, a “**Seller Contact**”)or an authorized representative of Buyer with respect to ConfidentialInformation of Buyer (each, a “**Buyer Contact**”).Each of Buyer and Seller shall disclose the Confidential Information of theother party only to its Representatives who require such material for thepurpose of evaluating the Contemplated Transactions and are informed by Buyeror Seller, as the case may be, of the obligations of this Article 12 withrespect to such information. Each of Buyer and Seller shall (iv) enforce theterms of this Article 12 as to its respective Representatives; (v) take suchaction to the extent necessary to cause its Representatives to comply with theterms and conditions of this Article 12; and (vi) be responsible and liable forany breach of the provisions of this Article 12 by it or its Representatives.

 

(b)           Unless and until this Agreement isterminated, Seller shall maintain as confidential any Confidential Information(including for this purpose any information of Seller of the type referred toin Sections 12.1(a)(i), (ii) and (iii), whether or not disclosed to Buyer) ofthe Seller  relating to any of theAssets or the Assumed Liabilities. Notwithstanding the preceding sentence,Seller may use any Confidential Information of Seller before the Closing in theOrdinary Course of Business in connection with the transactions permitted bySection 5.2.

 

(c)           From and after the Closing, theprovisions of Section 12.2(a) above shall not apply to or restrict in anymanner Buyer’s use of any Confidential Information of the Seller relating toany of the Assets or the Assumed Liabilities.

 

 

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                12.3         Exceptions.  Sections 12.2(a) and (b) do not apply tothat part of the Confidential Information of a Disclosing Party that aReceiving Party demonstrates (a) was, is or becomes generally available to thepublic other than as a result of a breach of this Article 12 or theConfidentiality Agreement by the Receiving Party or its Representatives; (b)was or is developed by the Receiving Party independently of and withoutreference to any Confidential Information of the Disclosing Party; or (c) was,is or becomes available to the Receiving Party on a nonconfidential basis froma Third Party not bound by a confidentiality agreement or any legal, fiduciaryor other obligation restricting disclosure. Seller shall not disclose anyConfidential Information of Seller relating to any of the Assets or the AssumedLiabilities in reliance on the exceptions in clauses (b) or (c) above.

 

                12.4         Legal Proceedings.  If a Receiving Party becomes compelled inany Proceeding or is requested by a Governmental Body having regulatoryjurisdiction over the Contemplated Transactions to make any disclosure that isprohibited or otherwise constrained by this Article 12, that Receiving Partyshall provide the Disclosing Party with prompt notice of such compulsion orrequest so that it may seek an appropriate protective order or otherappropriate remedy or waive compliance with the provisions of this Article 12.In the absence of a protective order or other remedy, the Receiving Party maydisclose that portion (and only that portion) of the Confidential Informationof the Disclosing Party that, based upon advice of the Receiving Party’scounsel, the Receiving Party is legally compelled to disclose or that has beenrequested by such Governmental Body, provided, however, that the ReceivingParty shall use reasonable efforts to obtain reliable assurance thatconfidential treatment will be accorded by any Person to whom any ConfidentialInformation is so disclosed. The provisions of this Section 12.4 do not applyto any Proceedings between the parties to this Agreement.

 

                12.5         Return or Destruction ofConfidential Information.  If thisAgreement is terminated, each Receiving Party shall (a) destroy allConfidential Information of the Disclosing Party prepared or generated by theReceiving Party without retaining a copy of any such material; (b) promptlydeliver to the Disclosing Party all other Confidential Information of theDisclosing Party, together with all copies thereof, in the possession, custodyor control of the Receiving Party or, alternatively, with the written consentof a Seller Contact or a Buyer Contact (whichever represents the DisclosingParty) destroy all such Confidential Information; and (c) certify all suchdestruction in writing to the Disclosing Party, provided, however, that theReceiving Party may retain a list that contains general descriptions of theinformation it has returned or destroyed to facilitate the resolution of anycontroversies after the Disclosing Party’s Confidential Information isreturned.

 

                12.6         Attorney-Client Privilege.  The Disclosing Party is not waiving, andwill not be deemed to have waived or diminished, any of its attorney workproduct protections, attorney-client privileges or similar protections andprivileges as a result of disclosing its Confidential Information (includingConfidential Information related to pending or threatened litigation) to theReceiving Party, regardless of whether the Disclosing Party has asserted, or isor may be entitled to assert, such privileges and protections. The parties (a)share a common legal and commercial interest in all of the Disclosing Party’sConfidential Information that is subject to such privileges and protections;(b) are or may become joint defendants in Proceedings to which the DisclosingParty’s Confidential Information covered by such protections and privilegesrelates; (c) intend that such privileges and protections remain intact shouldeither party become subject to any actual or threatened Proceeding to which theDisclosing Party’s Confidential Information covered by such protections andprivileges relates; and (d) intend that after the Closing the Receiving Partyshall have the right to assert such protections and privileges. No ReceivingParty shall admit, claim or contend, in Proceedings involving either party orotherwise, that any Disclosing Party waived any of its attorney work-productprotections, attorney-client privileges or similar protections and privilegeswith respect to any information, documents or other material not disclosed to a

 

 

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Receiving Party due to the Disclosing Partydisclosing its Confidential Information (including Confidential Informationrelated to pending or threatened litigation) to the Receiving Party.

 

 

13. GENERAL PROVISIONS

 

                13.1         Expenses.  Except as otherwise provided in thisAgreement, each party to this Agreement will bear its respective fees andexpenses incurred in connection with the preparation, negotiation, executionand performance of this Agreement and the Contemplated Transactions, includingall fees and expense of its Representatives. If this Agreement is terminated,the obligation of each party to pay its own fees and expenses will be subjectto any rights of such party arising from a Breach of this Agreement by anotherparty.

 

                13.2         Public Announcements.  Any public announcement, press release orsimilar publicity with respect to this Agreement or the ContemplatedTransactions will be issued, if at all, at such time and in such manner asmutually agreed by Buyer and Seller. Seller and Buyer will consult with eachother concerning the means by which Seller’s employees, customers, suppliersand others having dealings with Seller will be informed of the ContemplatedTransactions, and Buyer will have the right to be present for any suchcommunication.

 

                13.3         Notices.  All notices, Consents, waivers and othercommunications required or permitted by this Agreement shall be in writing andshall be deemed given to a party when (a) delivered to the appropriate addressby hand or by nationally recognized overnight courier service (costs prepaid);(b) sent by facsimile or e-mail with confirmation of transmission by thetransmitting equipment; or (c) received or rejected by the addressee, if sentby certified mail, return receipt requested, in each case to the followingaddresses, facsimile numbers or e-mail addresses and marked to the attention ofthe person (by name or title) designated below (or to such other address,facsimile number, e-mail address or person as a party may designate by noticeto the other parties):

 

| *Seller:*          |   | OneLink, Inc.  Paul F. Lidsky, Chief Executive Officer  10340 Viking Drive  Eden Prairie, MN  55344  Fax no.: (952) 942-9424  E-mail: plidsky@onelink.com                                                |
|--------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|               |   |                                                                                                                                                                                                          |
| *with a  copy to:* |   | Terri Krivosha, Esq.  Maslon Edelman Borman & Brand, LLP  3300 Wells Fargo Center  90 South Seventh Street  Minneapolis, MN  55402  Fax no.: (612) 642-8340  E-mail:  terri.krivosha@maslon.com |
|               |   |                                                                                                                                                                                                          |
| *Buyer:*           |   | CallVision, Inc.  Derek Edwards, President  1080 West Ewing Place, Suite 200  Seattle, WA 98119  Fax no.: (206) 352-3059  E-mail: dedwards@callvision.com                                                     |

 

 

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| *with a  copy to:* |   | Bradley Furber  Holland & Knight LLP  520 Pike Street  2600 Pike Tower  Seattle, WA  98101  Fax no.: (206) 623-4363  E-mail: Bradley.furber@hklaw.com |
|--------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

                13.5         Arbitration.  Any controversy or claim arising out of orrelating to this Agreement or any related agreement shall be settled byarbitration in accordance with the following provisions:

 

(a)           Disputes Covered. Theagreement of the parties to arbitrate covers all disputes of every kindrelating to or arising out of this Agreement, any related agreement or any ofthe Contemplated Transactions. Disputes include actions for breach of contractwith respect to this Agreement or the related agreement, as well as any claimbased upon tort or any other causes of action relating to the ContemplatedTransactions, such as claims based upon an allegation of fraud ormisrepresentation and claims based upon a federal or state statute. Inaddition, the arbitrators selected according to procedures set forth belowshall determine the arbitrability of any matter brought to them, and theirdecision shall be final and binding on the parties.

 

(b)           Forum. The forum for thearbitration shall be Seattle, Washington.

 

(c)           Law. The governing law for thearbitration shall be the law of the State of Washington, without reference toits conflicts of laws provisions.

 

(d)           Selection. There shall bethree arbitrators, unless the parties are able to agree on a single arbitrator.In the absence of such agreement within ten (10) days after the initiation ofan arbitration proceeding, Seller shall select one arbitrator and Buyer shallselect one arbitrator, and those two arbitrators shall then select, within ten(10) days, a third arbitrator. If those two arbitrators are unable to select athird arbitrator within such ten (10)-day period, a third arbitrator shall beappointed by the commercial panel of the American Arbitration Association. Thedecision in writing of at least two of the three arbitrators shall be final andbinding upon the parties.

 

(e)           Administration. Thearbitration shall be administered by the American Arbitration Association.

 

(f)            Rules. The rules of arbitrationshall be the Commercial Arbitration Rules of the American ArbitrationAssociation, as modified by any other instructions that the parties may agreeupon at the time, except that each party shall have the right to conductdiscovery in any manner and to the extent authorized by the Federal Rules ofCivil Procedure as interpreted by the federal courts. If there is any conflictbetween those Rules and the provisions of this section, the provisions of thissection shall prevail.

 

(g)           Substantive Law. The arbitratorsshall be bound by and shall strictly enforce the terms of this Agreement andmay not limit, expand or otherwise modify its terms. The arbitrators shall makea good faith effort to apply substantive applicable law, but an arbitrationdecision shall not be subject to review because of errors of law. Thearbitrators shall be bound to honor claims of privilege or work-productdoctrine recognized at law, but the arbitrators shall have the discretion todetermine whether any such claim of privilege or work product doctrine applies.

 

 

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(h)           Decision. The arbitrators-’’decision shall provide a reasoned basis for the resolution of each dispute andfor any award. The arbitrators shall not have power to award damages inconnection with any dispute in excess of actual compensatory damages and shallnot multiply actual damages or award consequential or punitive damages or awardany other damages that are excluded under the provisions of Article 11 of thisAgreement.

 

(i)            Expenses. Each party shallbear its own fees and expenses with respect to the arbitration and anyproceeding related thereto and the parties shall share equally the fees andexpenses of the American Arbitration Association and the arbitrators.

 

(j)            Remedies; Award. Thearbitrators shall have power and authority to award any remedy or judgment thatcould be awarded by a court of law in Washington or Minnesota. The awardrendered by arbitration shall be final and binding upon the parties, and judgmentupon the award may be entered in any court of competent jurisdiction in theUnited States.

 

                13.5         Enforcement of Agreement.  Seller acknowledges and agrees that Buyerwould be irreparably damaged if any of the provisions of this Agreement are notperformed in accordance with their specific terms and that any Breach of thisAgreement by Seller could not be adequately compensated in all cases bymonetary damages alone. Accordingly, in addition to any other right or remedyto which Buyer may be entitled, at law or in equity, it shall be entitled toenforce any provision of this Agreement by a decree of specific performance andto temporary, preliminary and permanent injunctive relief to prevent Breachesor threatened Breaches of any of the provisions of this Agreement, withoutposting any bond or other undertaking.

 

                13.6         Waiver; Remedies Cumulative.  The rights and remedies of the parties tothis Agreement are cumulative and not alternative. Neither any failure nor anydelay by any party in exercising any right, power or privilege under thisAgreement or any of the documents referred to in this Agreement will operate asa waiver of such right, power or privilege, and no single or partial exerciseof any such right, power or privilege will preclude any other or furtherexercise of such right, power or privilege or the exercise of any other right,power or privilege. To the maximum extent permitted by applicable law, (a) noclaim or right arising out of this Agreement or any of the documents referredto in this Agreement can be discharged by one party, in whole or in part, by awaiver or renunciation of the claim or right unless in writing signed by theother party; (b) no waiver that may be given by a party will be applicableexcept in the specific instance for which it is given; and (c) no notice to ordemand on one party will be deemed to be a waiver of any obligation of thatparty or of the right of the party giving such notice or demand to take furtheraction without notice or demand as provided in this Agreement or the documentsreferred to in this Agreement.

 

                13.7         Entire Agreement and Modification.  This Agreement supersedes all prioragreements, whether written or oral, between the parties with respect to itssubject matter (including any letter of intent and any confidentialityagreement between Buyer and Seller) and constitutes (along with the Exhibitsand other documents delivered pursuant to this Agreement) a complete andexclusive statement of the terms of the agreement between the parties with respectto its subject matter. This Agreement may not be amended, supplemented, orotherwise modified except by a written agreement executed by the party to becharged with the amendment.

 

                13.8         Disclosure Letter.

 

 

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(a)           The information in the DisclosureLetter constitutes (i) exceptions to particular representations, warranties,covenants and obligations of Seller as set forth in this Agreement or (ii)descriptions or lists of assets and liabilities and other items referred to inthis Agreement. If there is any inconsistency between the statements in thisAgreement and those in the Disclosure Letter (other than an exception expresslyset forth as such in the Disclosure Letter with respect to a specifically identifiedrepresentation or warranty), the statements in this Agreement will control.

 

(b)           The statements in the DisclosureLetter, and those in any supplement thereto, relate only to the provisions inthe Section of this Agreement to which they expressly relate and not to anyother provision in this Agreement.

 

                13.9         Assignments, Successors and NoThird-Party Rights.  No party mayassign any of its rights or delegate any of its obligations under thisAgreement without the prior written consent of the other parties, except thatBuyer may assign any of its rights and delegate any of its obligations underthis Agreement to any Subsidiary of Buyer and may collaterally assign itsrights hereunder to any financial institution providing financing in connectionwith the Contemplated Transactions, so long as no such assignment or delegationimpairs Buyer’s ability to perform its obligations under this Agreement and tocomplete the Contemplated Transactions. Subject to the preceding sentence, this Agreement will apply to, bebinding in all respects upon and inure to the benefit of the successors andpermitted assigns of the parties. Nothing expressed or referred to in thisAgreement will be construed to give any Person other than the parties to thisAgreement any legal or equitable right, remedy or claim under or with respectto this Agreement or any provision of this Agreement, except such rights asshall inure to a successor or permitted assignee pursuant to this Section 13.9.

 

                13.10       Severability.  If any provision of this Agreement is heldinvalid or unenforceable by any court of competent jurisdiction, the otherprovisions of this Agreement will remain in full force and effect. Anyprovision of this Agreement held invalid or unenforceable only in part ordegree will remain in full force and effect to the extent not held invalid orunenforceable.

 

                13.11       Construction.  The headings of Articles and Sections inthis Agreement are provided for convenience only and will not affect itsconstruction or interpretation. All references to “Articles,” “Sections” and“Parts” refer to the corresponding Articles, Sections and Parts of thisAgreement and the Disclosure Letter.

 

                13.12       Time Of Essence.  With regard to all dates and time periodsset forth or referred to in this Agreement, time is of the essence.

 

                13.13       Governing Law.  This Agreement will be governed by andconstrued under the laws of the State of Washington without regard toconflicts-of-laws principles that would require the application of any otherlaw.

 

                13.14       Execution of Agreement.  This Agreement may be executed in one ormore counterparts, each of which will be deemed to be an original copy of thisAgreement and all of which, when taken together, will be deemed to constituteone and the same agreement. The exchange of copies of this Agreement and ofsignature pages by facsimile transmission shall constitute effective executionand delivery of this Agreement as to the parties and may be used in lieu of theoriginal Agreement for all purposes. Signatures of the parties transmitted byfacsimile shall be deemed to be their original signatures for all purposes.

 

 

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                INWITNESS WHEREOF, the parties have executed this Agreement as of the date firstwritten above.

 

 

| **CALLVISION,  INC:** |   | **ONELINK,  INC:** |
|-----------------------|--------|--------------------|
|                  |   |               |
| By:                   |   | By:                |
| Its:                  |   | Its:               |
| Name:                 |   | Name:              |

 

 

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