Document:

Exhibit
            10.15

            
             

            

            
            AGREEMENT AND PLAN OF MERGER

            

            
                 THIS
            AGREEMENT AND PLAN OF MERGER (the “Agreement”) is entered into
            effective
            this
            31st
            day of
            August
            , 2007 (the “Effective
            Date”) by and among IPtimize, Inc., a
            Minnesota
            corporation with its principal place
            of business at 2135 S. Cherry Street, Suite 200, Denver, Colorado 80222
            (“IPtimize”), IP Solutions,
            Inc.
            , a Colorado
            corporation
            with its principal place of business
            at 2135 S. Cherry Street, Suite 200, Denver, Colorado 80222 (the
            “Subsidiary”), WTI, L.L.C., a Washington limited liability company that has
            elected to be taxed as a corporation, with its principal place of business at 22722
            29th
            Drive SE, Suite 120, Bothell,
            Washington 98021 (“WTI”), and the members of WTI listed on the signature
            page hereof (individually, “Owner” and collectively the
            “Owners”). IPtimize, the Subsidiary, WTI and the Owners are sometimes
            individually referred to as a “Party” and collectively as the
            “Parties.”

            

            
            ARTICLE I

            PRELIMINARY STATEMENT

            

            
                 Both
            WTI and IPtimize are engaged in complementary businesses involving the sale of voice
            over Internet protocol (VOIP) communications services. References herein to the
            “WTI Business” shall mean the business of WTI as it is now conducted
            including but not limited to WTI’s assets and financial condition. References
            herein to the “IPtimize Business” shall mean the business of IPtimize as it
            is now conducted including but not limited to IPtimize’s assets and financial
            condition. WTI, IPtimize and the Owners have determined that a merger of their
            businesses would be mutually advantageous, would provide synergism and economies of
            scale, and would provide a platform for further growth and creation of value. The
            Parties have further determined that such a merger of their businesses can best
            be accomplished by a merger
            of Subsidiary with and
            into WTI
            and, accordingly, IPtimize has
            caused the formation of the Subsidiary as the merger partner for WTI. Such merger is
            intended to qualify as a tax-free
            reorganization
            in accordance with the provisions
            of Section 368(a)(1)(A) of
            the Internal Revenue
            Code of 1986, as amended (the
            “Code”) as well as, potentially, a tax-free contribution under Section 351
            of the Code. Notwithstanding anything in this Agreement to the contrary, WTI reserves
            the right to approve the final merger structure prior to Closing.
            The Owners constitute all of the
            owners of WTI, and all of such Owners have agreed to participate in the merger and to
            enter into and comply with the terms of this Agreement. The “Surviving
            Entity” is sometimes used to refer to the
            entity
            which will exist as the result of
            the merger of WTI and the Subsidiary. The effective time of the merger is the date on
            which the Articles of Merger and the Statement of Merger are filed with and accepted by
            the Secretaries of State of the States of Colorado and Washington (the “Effective
            Time”).

            
             

            
            1

            
             

            
            

            

            
             

            

            
            ARTICLE II

            MERGER

            

            
            2.01     
            Merger
            .  
            Upon the terms and subject to the conditions of this
            Agreement, as of the Effective Time,
            Subsidiary
            shall merge with and
            into
            WTI
            and the separate existence of
            Subsidiary
            shall thereafter cease (the
            “Merger”). WTI
            shall be the
            surviving entity
            of the Merger (sometimes referred to as the
            “ Surviving Entity”) and shall
            continue to be governed by the laws of the State of
            Washington
            , under separate existence, with all its rights,
            privileges, immunities, powers and franchises continuing unaffected by the Merger,
            except as otherwise set forth in this Article II. As a result of the Merger of
            Subsidiary
            with and into
            WTI, the
            historic assets of WTI will effectively be
            owned 100% by IPtimize through its ownership
            of WTI and the Owners will become
            shareholders of IPtimize. Upon the first to
            occur of the following IPtimize shall cause WTI to be merged with and into IPtimize or
            a domestic single-member limited liability company wholly-owned by IPtimize ("Merger
            Sub"): (a) the receipt by WTI of any regulatory or other consents necessary to transfer
            to IPtimize or Merger Sub, as the case may be, the licenses and certificates of
            authority necessary to conduct the WTI Business; or (b) one year from the Effective
            Date.

            

            
                  
            2.02     Closing
            of the Merger.

             

                       
            (a)
                 The
            closing of all transactions provided for herein shall occur at the offices of Dufford
            & Brown, P.C., 1700 Broadway, Suite 2100, Denver, Colorado 80290, or such other
            places as the parties mutually agree, within three (3) days after all of the conditions
            to closing set forth in Article VII have been met(the “Closing”).

             

                       
            (b)     
            The Closing may be extended by
            mutual consent of all Parties.
            Documents may be exchanged by email
            and facsimile transmission. Documents so executed and delivered will be legally
            effective, but each Party hereto agrees to confirm such documents by subsequent
            delivery of signed originals. All transactions provided for at the Closing shall be
            deemed to have occurred simultaneously, and no such transactions shall be effected
            until all have been completed.

            

            
                 2.03     
            Articles of
            Organization.  
            The
            Articles of Organization of
            WTI shall be the
            Articles of Organization
            of the
            Surviving Entity
            until and unless duly amended
            further in accordance with the terms hereof and the
            Washington Limited Liability Company
            Act (the "Washington Act").

            

            
                 2.04     
            Operating
            Agreement.  
            The Operating Agreement of WTI shall
            be the Operating Agreement of the Surviving Entity,
            until and unless duly
            amended.

            

            
                 2.05     Manager
            and
            Officers.  
            The
            managers
            and officers of
            WTI
            shall be the
            managers
            and officers of the
            Surviving Entity
            from and after the Effective Time
            until the consummation of the
            merger between WTI and Merger Sub or until
            their respective successors shall
            have been duly elected and qualified.

            
             

            
            2

            
            

            

            
             

            

            
            ARTICLE III

            PAYMENT OF PURCHASE PRICE

            
             

            

            
            

            
            3.01     
            Manner of
            Converting WTI Membership Units.  
            At the Closing, each of the
            following transactions shall be deemed to occur simultaneously:

            

            
            (a)     WTI
            Membership Units. By
            virtue of the Merger, and without any further action on the part of the Parties, all
            issued and outstanding membership units of WTI (the “WTI Membership Units”)
            shall be cancelled and each Owner of the WTI Membership Units registered in such
            Owner’s name on the books and records of WTI shall be entitled to receive his or
            her pro rata portion of the following consideration: (i) an aggregate of 20,000,000
            shares of common stock, no par value per share, of IPtimize, subject, however to the
            provisions of Sections 3.03 and 3.04 of this Agreement (the “IPtimize Common
            Stock”); (ii) three year warrants in the form annexed hereto as
            Exhibit A
            and hereby incorporated herein by
            reference (the “Warrants”) authorizing the holders to purchase an aggregate
            of 300,000 shares of IPtimize Common Stock, no par value per share, at the lower of
            $.75 per Warrant Share
            (calculated following any stock
            split) or the price per share
            offered to investors in IPtimize’s presently proposed PIPE financing in an amount
            of not less than $6,000,000 (the “Permanent Financing”), subject, however
            to the provisions of Section 3.04 below (the “Warrant Shares”);
            (iii) five hundred fifty
            thousand dollars
            ($550,000.00 ) in cash, two
            hundred fifty thousand dollars ($250,000.00) of which has already been paid as earnest
            money to WTI and which WTI
            has no obligation to repay, the receipt and sufficiency of which is hereby acknowledged
            and accepted; and (iv) a promissory note
            issued by IPtimize
            in the principal amount of
            two
            million
            four hundred fifty thousand
            dollars ($2,450,000.00
            ) bearing interest at a rate of
            eight percent (8%) per annum,
            with interest payable on a monthly
            basis, a maturity date
            two
            year
            s
            after execution, and principal
            reduction payments according to the following schedule: (1) $300,000.00 due six months
            after Closing Date, (2) $600,000.00 due nine months after the Closing Date, and (3) the
            remaining balance due upon maturity, all
            in the form attached hereto
            as Exhibit
            B and hereby
            incorporated herein by reference (the “Promissory Note”).
            IPtimize agrees that within ten (10)
            business days of the closing of the presently proposed pipe financing regardless of
            whether it is a Permanent Financing described above, 20% of the net proceeds from such
            financing shall be paid to Owners to reduce the principal amount outstanding on the
            Promissory Note. The
            foregoing items (i) through (iv) are hereinafter collectively referred to as the
            “Owners’ Consideration”, the sufficiency of which is hereby
            acknowledged and accepted by the Owners.

            

            
            (b)     Payment
            of Debt. In addition to
            the foregoing Section 3.01(a),
            at or before Closing
            I
            Ptimize will
            (i)
            refinance or pay
            one million dollars ($1,000,000)
            toward the outstanding balance of
            the Whidbey Debt,
            and
            (ii) pay nine hundred twenty eight
            thousand fifty six dollars ($928,056) toward the outstanding balance of the
            Wescom Capital Debt
            and Members' Notes
            as those terms are defined in
            Sections 7.02
            (i) and (j).
            The foregoing items (i) and (ii) are
            hereinafter collectively referred to as the "Owners Debt." For purposes of this
            Agreement, the "Purchase Price" shall refer to the total of the Owners' Consideration
            (as valued at the time of Closing) plus the Owners' Debt.

            
             

            
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            3.02     
            IPtimize Common Stock
            Certificates.  
            Until the WTI Membership Units are
            surrendered at the Closing, the WTI Membership Units shall be deemed to represent for
            all purposes the right to receive a pro rata share of the Owners’ Consideration,
            into which they shall be converted at Closing as a result of the Merger in accordance
            with the terms hereof.

            

            
            3.03     Lock-Up
            Letters.

            

            
            (a)     Each
            share of IPtimize Common Stock issuable to the Owners at the Closing shall be subject
            to the terms and conditions of a lock-up letter in the form attached hereto as
            Exhibit C
            and hereby incorporated herein by
            reference, providing among other things, that
            (subject to the terms of the
            letter): (i) the Owners agree that the shares of IPtimize Common Stock issued to them
            may not be sold, transferred or hypothecated for a period of 12 months from the earlier
            of: (a) the date the first registration statement filed by IPtimize after the Closing
            is declared effective by the Securities and Exchange Commission (the
            “Registration Statement”); or (b) December 15, 2008; and (ii) the
            certificates representing the IPtimize Common Stock will be imprinted with a separate
            restrictive legend reflecting the foregoing (the “Lock-Up Letter”).
            Notwithstanding the foregoing, the Owners shall not be subject to any Lock-Up Letter
            that does not apply equally to all other holders of
            1% or more of the
            IPtimize Common Stock
            and the officers and directors of
            IPtimize.

            

            
            (b)   In the event,
            subsequent to the Closing Date, IPtimize shall file a Registration Statement for the
            purpose of registering the resale of any shares owned by IPtimize shareholders,
            IPtimize agrees to include the IPtimize Common Stock and any Warrant Shares acquired by
            the Owners as part of this transaction in such registration. IPtimize shall keep the
            Registration Statement effective for so long as it may determine in its reasonable
            discretion.

            

            
                 
            3.04     Reverse Stock
            Split. The IPtimize
            Common Stock and the Warrant Shares to be issued to the Owners at the Closing shall be
            subject to a reverse stock split at a ratio of up to 1-for-12 (the “Reverse
            Split”). Subject to the 1-for-12 maximum, the ratio of the Reverse Split shall be
            determined by the IPtimize Board of Directors in its sole discretion.

            

            
            ARTICLE IV

            REPRESENTATIONS AND WARRANTIES OF WTI AND THE OWNERS

            

            
                 Except
            as set forth in the disclosure schedules, WTI and the Owners
            hereby
            severally represent and warrant to
            the Subsidiary and IPtimize that the following shall be true and accurate as of the
            Closing:

            
             

            
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            4.01     
            Organization
            . 
            WTI is a limited liability company
            duly organized and
            validly
            existing
            under the laws of the State of
            Washington, with the power and authority to own or lease its properties, carry on its
            business as now conducted, enter into this Agreement and the instruments, documents and
            agreements ancillary hereto and identified herein (the “Other Agreements”)
            and to perform its obligations hereunder and thereunder.

            

            
                  
            4.02     Authorization and
            Enforceability.  
            This Agreement and each of the Other
            Agreements to which the Owners or WTI, or any of them, is a party when duly executed
            and delivered, shall constitute the legal, valid and binding obligations of such Party,
            enforceable in accordance with their respective terms. All actions contemplated by this
            Agreement have been duly and validly authorized by all necessary proceedings of the
            Owners and by WTI, including adoption and approval by the Mana
            gers and Members of WTI and all the
            Owners in accordance with the Washington Act.

            

            
                
              4.03     
            T
            he WTI
            Units:   The
            WTI Membership Units are the only issued and outstanding membership interests or
            securities of WTI and there exists no derivative securities convertible into WTI
            Membership Units. All of the WTI Membership Units are owned of record by the respective
            Owners as set forth on
            Schedule 4.03
            hereto. All the WTI Membership Units
            shown on Schedule
            4.03 as owned by the
            Owners are owned legally, beneficially and exclusively by such Owner, free and clear of
            any pledge, encumbrance, or other third party claim; and the Owners have good and
            marketable title to the WTI Membership Units.

            

            
                 
             4.04     Subsidiaries and
            Investments.  
            Except as set forth on
            Schedule 4.04
            hereto WTI
            does not own, nor has it ever owned, any shares of capital stock of, or other equity
            interest in, any corporation, partnership, joint venture, or other entity.

            

            
                  
            4.05     Qualification
            .  
            WTI is duly qualified and in good
            standing to do business in the State of Washington. WTI is qualified as a foreign
            limited liability company in each jurisdiction in which the character of the properties
            occupied, owned or leased, or
            the nature of the business conducted makes such qualification necessary, except where
            failing to so qualify would
            not have any material adverse effect on the WTI Business.

            

            
                  
            4.06     No Violation of Laws or Agreements;
            Approvals.  
            Except as set forth in
            Schedule
            4.06, the execution,
            delivery and performance of this Agreement or any Other Agreement by WTI and/or the
            Owners: (i) will not materially
            contraven
            e
            any agreement to which WTI and/or
            Owners, respectively, are parties; (ii) contravene any law, regulation, or other legal
            authority to which WTI and/or Owners are subject; and (iii) cause any acceleration,
            default, penalty, or other material change pursuant to any agreement or obligation
            binding upon WTI and/or Owners. No consent, approval, order or authorization of, or
            registration, declaration or filing with, any court, administrative agency or
            commission or other governmental authority or instrumentality, domestic or foreign
            (collectively a “Governmental Entity”) is required by or with respect to
            WTI in connection with the execution and delivery of this Agreement by WTI, or the
            consummation by WTI of the transactions contemplated hereby, the failure to obtain
            which would have a material adverse effect on WTI, taken as a whole, except for (i) the
            filing of such documents with, and the obtaining of such orders from, public utilities
            commissions of Washington,
            Oregon and Idaho, that are required in connection with the transactions contemplated by
            this Agreement; (ii) the filing of the Articles of Merger and the Statement of Merger
            with the Secretaries of State of Washington and Colorado; and (iii) and as otherwise
            set forth on Schedule
            4.06.

            
             

            
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                 4.07     Financial
            Information.

            
             

            
                            
            (a)        Financial Statements. Attached as
            Schedule 4.07(a) are the audited consolidated and consolidating balance sheets,
            income statements, and statements of cash flow for WTI as of December 31, 2006 and for
            the two years then ended (“WTI Audited Financial Statements”) and the
            interim unaudited financial statements of WTI as of March 31, 2007 and for the three
            month period then ended (“WTI Unaudited Financial Statements”). Both the
            WTI Audited Financial Statements and the WTI Unaudited Financial Statements
            (collectively the “WTI Financial Statements”) have been prepared in
            accordance with general accepted accounting principles consistently applied (except
            that the WTI Unaudited Financial Statements do not contain footnotes and are subject to
            normal and recurring year-end audit adjustments, which will not, individually or in the
            aggregate, be material in magnitude) and are accurate, correct, and complete in all
            material respects and present fairly the consolidated financial condition, assets, and
            liabilities and results of operations of WTI for the relevant periods. There has been
            no material adverse change in (i) the financial condition of WTI, or (ii) the results
            of WTI operations since March 31, 2007.

            

            
                           
            (b)        Undisclosed Liabilities.
            Except as set forth on Schedule 4.07(b) and as of the Effective Date of this
            Agreement and as of the time of Closing, WTI has no material debt, obligation, or
            liability, absolute, fixed, contingent or otherwise, of any nature whatsoever except as
            shown on the WTI Financial Statements and except for liabilities arising in the
            ordinary course of business from and after the date of the most recent of the WTI
            Financial Statements. Except as set forth on Schedule 4.07(b), all such
            liabilities arising from and after the date of the most recent of the WTI Financial
            Statements are of similar kind and amount to those shown on the financial statements
            and have arisen in the ordinary course of business.

            

            
                 4.08     
            Taxes
            .  
            WTI has timely and correctly, in all
            material respects, prepared
            and filed all tax returns as and when due, including federal and state income tax
            returns, and WTI has paid or
            properly accrued all taxes
            due pursuant to such tax returns as well as any other taxes, including real and
            personal property taxes, franchise taxes, sales and use taxes, for which WTI is liable.
            WTI has not filed and is not now subject to any extension of time with respect to the
            filing of any tax return. WTI has provided to IPtimize and to the Subsidiary true and
            correct copies of all of its federal and state income tax returns filed
            tax years ending on or after
            December 31, 2005. WTI is not aware of any actual or threatened tax audit of
            WTI. WTI has paid all payroll
            taxes as and when due, maintains all required payroll trust accounts, and has timely
            paid all employee and employer withholding taxes into such accounts.

            
             

            
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                 4.09     
            Receivables
            .  
            Schedule 4.09
            lists all trade and other accounts
            receivable of WTI outstanding as of April 30, 2007, presented on an aged basis. All
            receivables, whether reflected on the WTI Financial Statements or created after the
            date of the WTI Financial Statements, arose from bona fide transactions of WTI in the
            ordinary course of its business. Except to the extent of the recorded reserve, no
            doubtful accounts exist on the WTI Unaudited Financial Statements, and all of the WTI
            receivables are collectable in the ordinary course of business.

            

            
                 4.10     Litigation
            and Contingencies.  
            Except as disclosed on
            Schedule
            4.10, no action, suit, investigation,
            claim or proceeding of any nature or kind whatsoever whether civil, criminal, or
            administrative, is pending
            or, to the knowledge of WTI or the Owners, threatened, against or affecting WTI or any
            of its assets or any of the WTI Membership Units. WTI does not have any pending
            litigation against any third party. Neither WTI nor the Owners are aware of any
            threatened litigation against WTI or any of its assets, nor are they aware of any facts
            or circumstances likely to give rise to any
            such litigation. When used in this Agreement,
            phrases similar to "to the knowledge of WTI and/or the Owners" shall mean to the actual
            knowledge of Gary Keister, Robert Manning and Marcos Melendez without inquiry or
            investigation.

            

            
                 4.11     Contracts
            .  
            Set forth on
            Schedule 4.11
            attached hereto is a list of all of the material
            contracts of WTI as of the
            Effective Date. Except as indicated on
            Schedule
            4.11, (a)
            WTI is not in material breach of any
            of such contracts or Other Agreements, and (b) to WTI's knowledge, no third party is in
            material breach of any of such contracts or Other
            Agreements.
            All of such contracts have been
            entered into in the ordinary course of the WTI Business and, to the best knowledge of
            WTI, all of the material contracts are in full force and effect, and are valid,
            binding, and enforceable in accordance with their terms, except to the extent that the
            enforceability thereof may be affected by bankruptcy, insolvency, or similar laws
            affecting creditors’ rights generally or by court-applied equitable principles.
            Subject to Section 6.01(b), at the Closing WTI shall furnish IPtimize copies of any and
            all material contracts entered into between the Effective Date and the
            Closing.

             

            
                 4.12     Compliance
            with Law.  
            To the knowledge of WTI and the Owners,
            WTI holds all material licenses, permits, and other
            legal authority necessary to conduct the WTI Business.
            From and after the Closing, IPtimize and the
            Subsidiary will have the legal authority to continue operating the WTI Business as it
            is currently conducted, subject to changes in applicable laws and regulations and
            subject to any applicable renewal filings due after the Closing and subject to any
            requirements listed on Schedule 4.12.

            
             

            
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                 4.13     Affiliated
            Transactions.  
            No manager or member is, or has been during the past
            three (3) years, a party (directly or indirectly) to any transaction, agreement, or
            other understanding with WTI except pursuant to agreements or arrangements disclosed
            on Schedule 4.13
            attached hereto.
            To the Owners' knowledge, no
            such affiliated party has or will have any claim
            against the Surviving Entity
            as a result of transactions contemplated
            herein.

            

            
                 4.14     Employees
            and Benefits.

            

            
            

            

            

            
                       
            (a)        Employees.
              Attached hereto as Schedule 4.14(a) is a list of all of the WTI
            employees including the date of first hire, social security number, rate of
            compensation, and any accrued rights (including vacation accruals) to which such
            employee is entitled or will be entitled as of the Closing. None of WTI’s
            employees are parties to any employment agreement or other contract with WTI, nor are
            any of such employees entitled to any fringe benefits or other compensations from WTI
            except as reflected on Schedule 4.14(a). None of the WTI employees is subject to
            any collective bargaining agreement or other union agreement, and to the knowledge of
            WTI and Owner there isn't currently any effort to organize the work force at WTI. To
            the knowledge of WTI, no material disputes or claims against WTI exist on behalf of any
            of its present or former employees including, but not limited to, claims for
            unemployment compensation, workers’ compensation, violation of wage and hour
            laws, claims relating to past compensation, or claims relating to unjust termination.
            WTI is in compliance in all material respects with the Occupational Safety and Health
            Act and all rules and regulations promulgated thereunder, and WTI has complied in all
            material respect with all other applicable domestic statutes, rules and regulations
            relating to the employment of its employees including the Americans With Disabilities
            Act, the Family and Medical Leave Act, and all other federal, state, and local rules
            and regulations. To the knowledge of WTI, none of WTI, its managers, members or
            employees has discriminated on the basis of gender, age, national origin, religious
            preference, sexual orientation, or on any other basis, nor has WTI to its knowledge,
            engaged in or permitted any sexual harassment of any nature whatsoever to affect its
            employees. WTI is current in all of its material obligations to employees with respect
            to those benefits and plans which it does maintain.

            

            
                       
            (b)        Benefit Arrangements.
              Schedule 4.14(b) contains a true, complete and accurate list of all
            written or oral benefit plans, arrangements or agreements, including all employment
            manuals or policies that cover or relate to employees, sponsored, maintained or
            contributed to by WTI for the benefit of its current or former employees (the "WTI
            Benefit Plans"). WTI has provided to the Subsidiary and IPtimize true, complete and
            accurate copies of the WTI Benefit Plans as currently in effect or, with respect to any
            WTI Benefit Plans that are not in writing, true and accurate written descriptions of
            the material terms of such WTI Benefit Plans. To the extent applicable and to the
            knowledge of WTI and the Owners, each WTI Benefit Plan is in compliance in all material
            respects with the requirements of the Employee Retirement Income Security Act of 1974
            as amended(“ERISA”) and any equivalent state laws, and with the
            Code.

            8

            
            

            

            
                 4.15     Insurance
            .  
            Schedule 4.15
            discloses all insurance policies with respect to
            which WTI is the owner, insured, or beneficiary, or for which it has any obligation to
            make any premium payments. To the knowledge
            of WTI, such policies are reasonable, in both scope
            and amount, in light of the known, foreseeable risks attendant to the WTI Business and
            are comparable in coverage to policies customarily maintained by like businesses. All
            such insurance policies will remain in effect from and after the Closing, subject to
            payment of premiums and applicable renewal periods.

            

            
                 4.16     Intellectual
            Property Rights.  
            Schedule 4.16
            attached hereto discloses all the trademark and
            service mark rights, applications and registrations, trade names, fictitious
            names, service marks, logos
            and brand names, copyrights, copyright applications, letters patent, patent
            applications, and licenses to any of the foregoing owned or used by WTI in or
            applicable to the WTI Business which are material to such WTI Business (collectively
            the “Proprietary Assets”). Except as disclosed in
            Schedule
            4.16, to the
            knowledge of WTI and the Owners
            WTI has the entire right, title and interest in and
            to, or has a valid and binding license to use, the
            intellectual property rights disclosed on
            Schedule 4.16
            and all processes, know how, show how, formulae,
            trade secrets, inventions, discoveries, improvements, and other proprietary rights,
            specifically including rights to all of the computer software utilized by WTI in the
            course of the WTI Business, other than off the shelf, commercially available
            products. Schedule 4.16
            separately discloses all intellectual property
            material to the WTI Business under license. To WTI’s knowledge, all of its
            intellectual property rights in the Proprietary Assets are valid and not subject to any
            interference, opposition, reexamination or cancellation. To the knowledge of WTI and
            the Owners, no third party is infringing upon, nor has any such person misappropriated,
            any intellectual property rights of WTI in the Proprietary Assets. WTI has no knowledge
            of any facts or circumstances that may constitute infringement by WTI of the
            intellectual property rights of any other party.

            

            
                 4.17     Environmental
            Matters. 
            To the knowledge of WTI and the Owners,
            WTI is in full compliance with all applicable
            federal, state and local laws, rules, and regulations relating to environmental
            regulations and to the disposal of waste products, including but not limited to those
            products defined as hazardous waste under applicable laws except where the failure to
            be in compliance would not have a material adverse effect on the financial condition of
            WTI. To the knowledge of WTI and the Owners,
            WTI does not lease, own, or operate a facility on, and has not leased, owned or
            operated a facility on, any land or real property subject to any environmental
            contamination, violation, or requirement for cleanup or any environmental
            remediation. To the knowledge of WTI and the
            Owners, WTI is not subject to any claim for
            environmental cleanup or remediation.

            
             

            
            9

            
            

            

            
             

            

            
                 4.18     Customer
            Relationships.  
            To the knowledge of WTI and the
            Owners, none of WTI’s
            customers or suppliers will cease to do business with the
            Surviving Entity
            after the Closing, or will alter
            their present volume or terms of business. There are no material disagreements or
            controversies pending, nor to the knowledge of WTI and the Owners, threatened by any
            customer, supplier or independent contractor that does business with WTI, nor has any
            such customer or third party made any claims
            or complaints regarding the services or products provided by WTI. All suppliers and
            contractors have been timely paid by WTI. Except as set forth on
            Schedule
            4.18, there are no special relations
            (personal or otherwise, such as payment in kind arrangements, rebates or other
            incentives) between WTI and any third party. Neither WTI nor any manager,
            member or
            other affiliate of WTI has any ownership
            interest in any competitor, customer, or supplier of WTI.
            As used in this Agreement, the term "affiliate"
            shall mean any entity that, controls or is under the control of or is under common
            control with, WTI.

            

            
                 4.19     Obligations
            to Brokers. 
            Neither WTI nor any of the Owners have incurred any
            obligation for the payment of any brokerage commission, finder’s fee, or other
            compensation relating to this Agreement or to the consummation of the transactions
            provided for herein.

             

            
                 4.20     Investment
            Representations. 
            The Owners represent and warrant
            that they have received all information which they have requested or which they believe
            is necessary or appropriate, for an evaluation of IPtimize and/or the Owners’
            Consideration. The Owners are familiar with the IPtimize Business and believe that they
            are fully qualified to make a knowledgeable investment decision with respect to
            accepting the Owners’ Consideration in exchange for the WTI Membership Units. In
            addition, the Owners acknowledge and accept: (i) the IPtimize Common Stock issuable at
            the Closing will be “restricted securities” as that term is defined under
            the Securities Act of 1933 as amended (the "Securities Act"); (ii) the Owners will be
            acquiring the IPtimize Common Stock solely for each Owner’s own account, for
            investment purposes and not with a view towards the resale or distribution thereof;
            (iii) the IPtimize Common Stock will be the subject of stop transfer orders on the
            books and records of IPtimize’s transfer agent and shall be imprinted with a
            restrictive legend as well as a second special legend reflecting the lock up provisions
            set forth in Section 3.03 above;
            and
            (iv) any transfer or sale of the
            IPtimize Common Stock may only be accomplished in accordance with the Securities Act
            and the rules and regulations of the Securities and Exchange Commission adopted
            thereunder.

            
                 4.21.     Assets
               Except as set forth on
            Schedu
            le 4.21,
            WTI has good and marketable title to all its real
            and personal property and assets reflected in the WTI Financial Statements, free and
            clear of all mortgages, liens, pledges, charges or encumbrances or other third party
            interests of any nature whatsoever, except (i) the lien of current taxes not yet due
            and payable; (ii) properties, interests, and assets disposed of by WTI in the ordinary
            course of business; (iii) such imperfections of title, easements and encumbrances, if
            any, as are not substantial in character, amount or extent and do not materially
            detract from the value, or interfere with the present or proposed use, of the
            properties subject thereto.

            
            10

            
            

            

            
                 
            4.22 
                 
            Disclosure Schedules.  
            Notwithstanding anything herein to the contrary,
            after the Closing, IPtimize and Subsidiary
            shall be deemed to have waived any right to object
            to or otherwise assert a claim related to
            anything disclosed in the disclosure
            schedules in the form
            delivered
            at Closing.

            
                 4.23
                 
            Complete Disclosure.  
            This Agreement and the Other Agreements do not
            contain any untrue statement of a material fact by WTI or the Owners.

            

            
            ARTICLE V

            REPRESENTATIONS AND WARRANTIES OF IPTIMIZE AND SUBSIDIARY

            

            
                 IPt
            imize and the Subsidiary hereby
            jointly and severally represent and warrant to WTI and the Owners that the following
            shall be true and accurate as of the Closing
            except as otherwise set forth in the
            disclosure schedules:

            

            
            5.01     Organization
            .

            
            

            

            
                 (a)
                 IPtimize
            is a corporation duly organized, validly existing and in good standing under the laws
            of the State of
            Minnesota
            , and has the corporate power and
            authority to own or lease its properties, carry on its business as now conducted, enter
            into this Agreement and the Other Agreements and perform its obligations hereunder and
            thereunder.

            

            
                 
            (b) 
                The
            Subsidiary is a
            corporation
            duly organized, validly existing and
            in good standing under the laws of the State of Colorado, and has the respective
            limited liability company
            power and authority to own or lease
            its properties, carry on its business as now conducted, enter into this Agreement and
            the Other Agreements and perform its obligations hereunder and thereunder.

            

            
            5.02     Authorization;
            Enforceability.  
            This Agreement and each of the Other
            Agreements to which IPtimize and the Subsidiary, or either of them, is a party when
            duly executed and delivered, shall constitute the legal, valid and binding obligations
            of such Party, enforceable in accordance with their respective terms. All actions
            contemplated by this Agreement have been duly and validly authorized by all necessary
            corporate proceedings, including adoption and approval by the Boards
            of Directors of IPtimize and
            Subsidiary in accordance with the Minnesota Business Corporation Act (the
            “Minnesota Act”) and the
            Colorado Business Corporation Act
            (the "Colorado Act").

            

            
            5.03     
            The IPtimize
            Capitalization.  
            The authorized capital stock of
            IPtimize consists solely of (i) 70,000,000 shares of Common Stock, no par value
            per share, of which
            33,909,056
            shares are issued and
            outstanding, with warrants to
            purchase an additional
            3,037,789
            shares of Common Stock; and (ii)
            30,000,000 shares of Preferred Stock, no par value per share, of which
            1,316,716
            shares are issued and outstanding as
            Series A Preferred Stock and 475,000 shares are issued and outstanding as Series B
            Preferred Stock. IPtimize has no other shares authorized or issued.
            A table reflecting the true and correct
            capitalization of IPtimize
            immediately
            following
            the Closing is attached hereto as
            Schedule
            5.03.

            
             

            
            11

            
            

            

            
             

            

            
            5.04     Qualification
            .

            
            

            

            
                 (a)
                 
            I
            Ptimize is duly qualified and in
            good standing in the States of Minnesota and Colorado. IPtimize is not required to
            qualify as a foreign corporation in any other state where the failure to so qualify
            would have a material adverse effect on its
            business.

            

            
                 (b)
                 Subsidiary
            is duly qualified and in good
            standing in the State of Colorado.
            Subsidiary
            is not required to qualify as a
            foreign corporation
            in any other state where the failure
            to so qualify would have a material adverse
            effect on its business.

            

            
            5.05     
            No Violation of Laws or
            Agreements.  
            Except as set forth in
            Schedule
            5.05, the execution
            and delivery of this Agreement or any Other Agreement by IPtimize and/or the
            Subsidiary, will not materially contravene any agreement to which either of them,
            respectively, are parties, contravene any law, regulation, or other legal authority to
            which either of them is subject, nor cause any acceleration, penalty, or other material
            change pursuant to any agreement or obligation binding upon IPtimize and/or the
            Subsidiary. No consent,
            approval, order or authorization of, or registration, declaration or filing with, any
            Governmental Entity is required by or with respect to
            IPtimize or the Subsidiary
            in connection with the execution and
            delivery of this Agreement by
            IPtimize and Subsidiary, or the
            consummation by IPtimize and
            Subsidiary of the
            transactions contemplated hereby, the failure to obtain which would have a material
            adverse effect on IPtimize
            and Subsidiary, taken as a whole, except for
            (i)
            the filing of the Articles of Merger
            and the Statement of Merger with the Secretaries of State of Washington and Colorado;
            and (ii) and as otherwise set forth on
            Schedule
            5
            .05
            .

            

            
            5.06     Financial
            Information.

            

            

            
            

            

            

            
                               
            (a)        Financial
            Statements. Attached as Schedule 5.06(a) are the
            audited consolidated and consolidating balance sheets, income statements, and
            statements of cash flow for IPtimize as of December 31, 2006 and for the two years then
            ended (“IPtimize Audited Financial Statements”) and the unaudited interim
            financial statements of IPtimize as of March 31, 2007 and for the three months then
            ended (“IPtimize Unaudited Financial Statements”). Both the IPtimize
            Audited Financial Statements and the IPtimize Unaudited Financial Statements
            (collectively the “IPtimize Financial Statements”) have been prepared in
            accordance with general accepted accounting principals consistently applied (except
            that the IPtimize Unaudited Financial Statements do not contain footnotes and are
            subject to normal and recurring year-end audit adjustments, which will not individually
            or in the aggregate, be material in magnitude) and are accurate, correct, and complete
            in all material respects and present fairly the consolidated financial condition,
            assets, and liabilities in results of operations of IPtimize for the relevant
            periods.

            12

            
            

            

            
                               
            (b)        Undisclosed
            Liabilities. Except as set forth on Schedule 5.06(b)
            and as of the Effective Date of this Agreement and as of the time of Closing, IPtimize
            neither has nor will have any material debt, obligation, or liability, absolute, fixed,
            contingent or otherwise, of any nature whatsoever except as shown on the IPtimize
            Financial Statements and except for assets and liabilities arising in the ordinary
            course of business from and after the date of the most recent of the IPtimize Financial
            Statements. All such liabilities and assets arising from and after the date of the most
            recent of the IPtimize Financial Statements are of similar kind and amount to those
            shown on the financial statements and have arisen in the ordinary course of
            business.

            

            
            5.07     Receivables
            . 
            Schedule 5.07
            lists all trade and other accounts
            receivable of IPtimize outstanding as of April 30, 2007 presented on an aged basis. All
            receivables, whether reflected on the IPtimize Financial Statements or created after
            the date of the IPtimize Financial Statements, arose from bona fide transactions of
            IPtimize. Except to the extent of the recorded reserve, no doubtful accounts exist on
            the Internal Financial Statements; all of the IPtimize receivables are collectable in
            the ordinary course of business and will be substantially collected in all material
            respects within 90 days after having been created.

            

            
                 5.08     Litigation
            and
            Contingencies. 
            No action, suit, investigation,
            claim or proceeding of any nature or kind whatsoever whether civil, criminal, or
            administrative, is pending or, to the knowledge of IPtimize, threatened, against or
            affecting IPtimize or any of its assets or any of the outstanding IPtimize Common
            Stock. IPtimize does not have any pending litigation against any third party. Except as
            set forth on Schedule
            5.08, IPtimize is not
            aware of any threatened litigation against it (or the Subsidiary) or any of their
            assets, nor is it aware of any facts or circumstances likely to give rise to any such
            litigation.

            

            
                 5.09     Compliance
            with Law. 
            IPtimize holds all licenses,
            permits, and other legal authority necessary to conduct the IPtimize Business, subject
            to changes in applicable laws and regulations and subject to any applicable renewal
            filings due after the Closing.

            

            
                 5.10     Affiliated
            Transactions. 
            No officer, director, shareholder,
            or other party affiliated with IPtimize is, or has been during the past three (3)
            years, a party (directly or indirectly) to any transaction, agreement, or other
            understanding with IPtimize except pursuant to agreements or arrangements fully
            disclosed on Schedule
            5.10 attached hereto.
            No such affiliated party has or will have any claim against the
            Surviving Entity
            as a result of transactions
            contemplated herein.

            
                 5.11     Employee
            Benefits.  
            Schedule 5.11
            contains a true, complete and
            accurate list of all written or oral benefit plans, arrangements or agreements,
            including all employment manuals or
            policies that cover or relate to employees, sponsored,
            maintained or contributed to by
            IPtimize for the benefit of its current
            or former employees
            (the "IPtimize
            Benefit Plans"). IPtimize has
            provided to WTI and the Owners true, complete and accurate copies of
            the IPtimize Benefit Plans as
            currently in effect or, with respect to any IPtimize Benefit Plans that are not in
            writing, true
            and
            written descriptions
            of
            the material terms of such IPtimize
            Benefit Plans. To the extent
            applicable, each IPtimize
            Benefit Plan is in
            compliance in all material
            respects with the
            requirements of ERISA
            and any equivalent state laws, and
            with the Code.

            
            13

            
            

            

            
             

            
                 5.12     Employees
            .   No material disputes
            or claims against IPtimize exist on behalf of any of its present or former employees
            including, but not limited to, claims for workers’ compensation, violation of
            wage and hour laws, claims relating to past compensation, or claims relating to unjust
            termination. IPtimize is in compliance in all material respects with the Occupational
            Safety and Health Act and all rules and regulations promulgated thereunder, and
            IPtimize has complied in all material respect with all other applicable domestic
            statutes, rules and regulations relating to the employment of its employees including
            the Americans With Disabilities Act, the Family and Medical Leave Act, and all other
            federal, state, and local rules and regulations. To the best knowledge of IPtimize,
            none of IPtimize, its officers, directors or employees has discriminated on the basis
            of gender, age, national origin, religious preference, sexual orientation, or on any
            other basis, nor has IPtimize to its best knowledge, engaged in or permitted any sexual
            harassment of any nature whatsoever to affect its employees. IPtimize is current in all
            of its material obligations to employees with respect to those benefits and plans which
            it does maintain.

            

            
                 5.13     Environmental
            Matters. 
            IPtimize is in full compliance with
            all applicable federal, state and local laws, rules, and regulations relating to
            environmental regulations and to the disposal of waste products, including but not
            limited to those products defined as hazardous waste under applicable laws. IPtimize
            does not lease, own, or operate a facility on, and has not leased, owned or operated a
            facility on, any land or real property subject to any environmental contamination,
            violation, or requirement for cleanup or any environmental remediation. IPtimize is
            not, to the best of its knowledge, subject to any claim for environmental cleanup or
            remediation.

            

            
                 5.14     Obligations
            to Brokers. 
            Neither IPtimize nor the Subsidiary
            has incurred any obligation for the payment of any brokerage commission, finder’s
            fee, or other compensation relating to this Agreement or to the consummation of the
            transactions provided for herein.

            

            
                 5.15     Complete
            Disclosure. 
            This Agreement and the Other
            Agreements do not contain any untrue statement of a material fact by IPtimize or the
            Subsidiary.

            

            
                 5.16     
            Taxes
            . 
             As of the Closing, IPtimize
            and the Subsidiary will have
            timely and correctly, in all
            material respects, prepared
            and filed all tax returns as and when due, including federal and state income tax
            returns, and
            all taxes
            of IPtimize and/or the
            Subsidiary due pursuant to
            such tax returns as well as any other taxes, including real and personal property
            taxes, franchise taxes, sales and use taxes, for which
            IPtimize and/or the Subsidiary may
            be liable, as the case may be,
            have been paid.
            Neither IPtimize nor the Subsidiary
            has filed
            , nor
            is now subject to,
            any extension of time with respect
            to the filing of any tax return.
            IPtimize and the Subsidiary
            have provided to
            WTI
            true and correct copies of all
            of their respective
            federal and state income tax returns
            filed for tax years ending on
            or after December 31, 2004.
            Neither IPtimize nor the
            Subsidiary is aware of any
            actual or threatened tax audit of
            IPtimize or the Subsidiary.
            Each of IPtimize and the Subsidiary
            has paid all payroll
            taxes with respect to
            it as and when due, maintains
            all required payroll trust accounts, and has timely paid all employee and employer
            withholding taxes into such accounts.

            
             

            
            14

            
            

            

            
            

                 
            5.17     
            Intellectual Property
            Rights. 
            Schedule
            5
            .17
            attached hereto discloses all the trademark and
            service mark rights, applications and registrations, trade names, fictitious
            names, service marks, logos
            and brand names, copyrights, copyright applications, letters patent, patent
            applications, and licenses to any of the foregoing owned or used by
            IPtimize
            in or applicable to the
            IPtimize
            Business which are material to
            such IPtimize
            Business (collectively the
            “IPtimize Proprietary
            Assets”). Except as disclosed in
            Schedule
            5
            .17
            , to the best of its
            knowledge,
            IPtimize
            has the entire right, title and interest in and to,
            or has a valid and binding license to use, the
            IPtimize
            Proprietary Assets.
            Schedule
            5
            .17
            separately discloses all intellectual property
            material to the IPtimize
            Business under license. To
            IPtimize’s knowledge, all of its intellectual
            property rights in the IPtimize
            Proprietary Assets are valid and not subject to any
            interference, opposition, reexamination or cancellation. To the knowledge of
            IPtimize, no third party is infringing upon, nor has
            any such person misappropriated, any intellectual property rights of
            IPtimize
            in the
            IPtimize
            Proprietary Assets.
            IPtimize
            has no knowledge of any facts or circumstances that
            may constitute infringement by
            IPtimize
            of the intellectual property rights of any other
            party.

            

            
            ARTICLE VI

            COVENANTS OF THE PARTIES

            

            
            6.01     Conduct
            of Business Pending
            Closing. 
            From and after the Effective Date
            and until the Closing, except as required by this Agreement or except as IPtimize
            and/or the Subsidiary shall otherwise consent in writing, WTI shall do the
            following:

            

            

            
                         
            (a)        Affirmative Obligations.
            WTI shall: (i) conduct the WTI Business in the ordinary course and consistent with past
            practice; (ii) maintain its property, equipment and other assets consistent with past
            practice; (iii) timely comply with the provisions of all agreements, permits and
            licenses; (iv) use its reasonable best efforts to maintain the WTI Business, keep its
            business organization intact, keep available the services of its present employees and
            contractors, and preserve the goodwill of its customers and other third parties; (v)
            maintain in full force and effect all policies of insurance disclosed in Schedule
            4.15; (vi) use its reasonable best efforts to assist IPtimize or its Merger Sub
            to obtain all licenses, permissions and certificates necessary for IPtimize or Merger
            Sub to conduct the WTI Business.

            15

            
            

            

            
                        
            (b)        Negative Covenants. WTI
            shall not: (i) amend its Articles of Organization or Operating Agreement; (ii) change
            its authorized or issued membership units; (iii) enter into any contract or commitment,
            the performance of which might extend beyond the closing except for obligations made in
            the ordinary course of business; (iv) sell, transfer or assign any of its assets,
            except in the ordinary course of business, (v) incur any liability, except in the
            ordinary course of business, (vi) enter into any employment contract or arrangement
            which is not terminable at will and without penalty or other obligations; (vii) fail to
            pay any tax or other liability when due; (viii) make, change or revoke any tax election
            or make any agreement or settlement with any taxing authority; (ix) take any action or
            omit to take any action that is outside of the ordinary course of business that will
            cause a breach or termination of any agreement to which it is a party or a breach of
            any representation or warranty contained herein; or (x) increase any
            employee&#65533;s compensation or benefits or hire any additional
            employees.

            

            
            6.02     Conduct
            of Business Pending
            Closing. 
            From and after the Effective Date
            and until the Closing, except as required by this Agreement or except as WTI shall
            otherwise consent in writing, IPtimize shall do the following:

            

            
                        
            (a)     Affirmative
            Obligations. IPtimize
            shall: (i) conduct the IPtimize Business in the ordinary course and consistent with
            past practice; (ii) maintain its property, equipment and other assets consistent with
            past practice; (iii) timely comply with the provisions of all agreements permits and
            licenses; (iv) use its reasonable best efforts to maintain the IPtimize Business, keep
            its business organization intact, keep available the services of its present employees
            and contractors, and preserve the goodwill of its customers and other third parties;
            and (v) use its reasonable best efforts to obtain for itself or its Merger Sub all
            licenses, permissions and certificates necessary to conduct the WTI
            Business.

            

            
                        
            (b)     Negative
            Covenants. IPtimize shall
            not: (i) amend its Articles of Incorporation or By-laws; or (ii) change its authorized
            or issued capital stock or issue any stock or rights with respect to any shares of its
            capital stock. Notwithstanding the foregoing and prior to the Closing, IPtimize may:
            (i) reincorporate in Delaware; (ii) consummate the Reverse Split; (iii) create 2007
            Equity Incentive Plan and reserve two million shares for issuance thereunder; (iv)
            consummate its presently proposed pre-bridge and Permanent Financings; and (v) enter
            into an After Market Support Agreement with Keating After Market Support, LLC and issue
            shares of Common Stock thereunder.

            
            6.03     WTI’s
            Capital
            Expenditures. 
            From and after the Effective Date
            and until the Closing, WTI shall not make capital expenditures in an aggregate amount
            in excess of $50,000 except as set forth on
            Schedule 6.03
            and except as consented to in
            writing by IPtimize, which consent shall not be unreasonably withheld or
            delayed.

            
            16

            
            

            

            
             

            

            
            6.04     Access
            to Information and
            Documents. 
            During normal business hours and on
            reasonable advance written notice, WTI shall give to IPtimize, the Subsidiary and to
            the employees and representatives (including accountants, attorneys, and consultants)
            of IPtimize and the Subsidiary, and IPt
            imize and the Subsidiary shall give
            to WTI and its employees and representatives (including accountants, attorney and
            consultants) access to all
            the properties, books, tax returns, contracts, files, records, officers, personnel and
            accountants (including independent public accountants and their audit work papers) and
            shall furnish to the
            requesting party all such
            documents and copies of documents as
            it
            may reasonably request.

            
            6.05     Financial
            Reports. Upon reasonable
            advance request, and during the three year period following the Closing, IPtimize will
            deliver to each Owner, annual unaudited financial statements (or audited statements if
            prepared) as such statements are available to IPtimize. In addition, and following the
            effective date of the Registration Statement, IPtimize will deliver to each Owner such
            quarterly unaudited financial statements as IPtimize shall have filed with the
            Securities and Exchange Commission. This right to receive financial statements shall be
            an addition to, and not substitution for, any right which Owners have to examine the
            books and records of IPtimize.

            
            6.06     Legal
            Expenses. 
            From the Effective Date to the Closing,
            each
            Party hereto shall be responsible for its own
            legal expenses. All such costs that accrue
            following the Closing shall be born by
            IPtimize and
            the Subsidiary.

            
            6.07
                
            Investment
            Letter.  At the
            Closing the Owners shall execute and deliver to IPtimize the investment letter in the
            form attached hereto as
            Exhibit D
            confirming and elaborating on the
            provisions of paragraph 4.20 and hereby incorporated herein by reference.

            
            6.08     No
            Solicitation. WTI shall
            not, nor shall it authorize or permit any of its officers, directors or employees or
            any investment banker, financial advisor, attorney, accountant or other representative
            retained by it to, solicit or encourage (including by way of furnishing information),
            or take any other action to facilitate, any inquiries or the making of any proposal
            which constitutes, or may reasonably be expected to lead to, any takeover proposal, or
            agree to or endorse any takeover proposal. WTI shall promptly advise IPtimize orally
            and in writing of any such inquiries or proposals. As used in this Agreement, "takeover
            proposal" shall mean any tender or exchange offer, proposal for an exchange,
            consolidation or other business combination involving WTI or any proposal or offer to
            acquire in any manner a substantial equity interest in, or a substantial portion of the
            assets of, WTI other than the transactions contemplated by this Agreement.

            
            6.09     Tax
            Matters.

            
                 (a)     For
            any tax periods ending on or before the
            Effective Time, the
            Owner
            s shall prepare or cause to be
            prepared, all income and franchise tax returns for
            WTI
            which are filed after the
            Effective Time
            with respect to such periods.
            Subject to the requirements of applicable law, each such
            tax return
            shall be prepared in a manner
            consistent with past practices of
            WTI
            .

            
            17

            
            

            

            
             

            
                 (b)
                 The Owners shall control any audits, disputes,
            administrative, judicial or other proceedings related to the
            tax returns described in Section
            6.09(a); provided, however, that the
            Owners
            shall allow
            IPtimize
            and its counsel to participate in
            any such proceeding; and provided further, that the
            Owner
            s shall not enter into any
            settlement of any contest or otherwise compromise any issue
            that affects or may affect the tax
            liability of IPtimize or the
            Subsidiary for any period
            beginning after the Effective
            Time without the prior
            written consent of
            IPtimize
            , which shall not be unreasonably
            withheld. The Owner
            s shall keep
            IPtimize
            fully and timely informed with
            respect to the commencement, status and nature of any
            such
            administrative or judicial
            proceedings.

            
                 (c)
                 Subject to Section 6.09(b),
            IPtimize
            shall control any audits, disputes,
            administrative, judicial or other proceedings related to taxes and with respect to
            which any party
            to this Agreement
            may incur liability, except that (i)
            in the event an adverse determination may result in the
            Owne
            rs having responsibility for an
            amount of taxes under this
            Agreement
            , the
            Owners
            shall be entitled to participate in
            that portion of the
            proceeding relating to taxes with respect to which
            Owners
            may incur liability hereunder; and
            (ii) IPtimize
            may not compromise or settle any
            such proceeding in any manner which could result in any liability of
            the Owners
            without the express prior written
            consent of the Owners, which
            shall not be unreasonably withheld.
            IPtimize
            shall keep the
            Owners
            fully and timely informed with
            respect to the commencement, status and nature of any administrative or judicial
            proceedings involving any tax liability
            for which the
            Owners
            may incur liability
            hereunder.

            
                 (d)     The
            Owners and
            IPtimize
            shall (i) each provide the
            other with such assistance as
            may reasonably be requested by any of them in connection with the preparation of any
            tax return, audit or other examination by any taxing authority or judicial or
            administrative proceedings relating to liability for taxes, (ii) each retain
            and provide the other
            with any records or other
            information which may be relevant to such tax return, audit or examination, proceeding
            or determination, and (iii) each provide the other with any final determination of any
            such audit or examination, proceeding or determination that affects any amount required
            to be shown on any tax return of the other for any period. Without limiting the
            generality of the foregoing,
            IPtimize
            shall retain, and
            Owners
            shall retain, until the applicable
            statutes of limitations (including any extensions) have expired, copies of all tax
            returns, supporting work schedules and other records or information
            which may be relevant to such tax
            returns for all tax periods or portions thereof ending before or including the
            date that includes the
            Effective Time and shall not
            destroy or otherwise dispose of any such records without first providing the other
            party with a reasonable opportunity to review and copy the same.

            
                 (e)     IPtimize
            will, and will cause WTI and/or Merger Sub, as the case may be,
            to continue at least one significant
            historical business line of
            WTI
            , or use at least a significant
            portion of WTI
            's historic business assets in a
            business, in each case within the meaning of Treasury Regulations Section 1.368-1(d).
            Neither IPtimize, WTI
            nor
            Merger Sub, as the case may
            be, shall take
            a position on any tax return or any
            other action to the extent such position or action is or would be inconsistent with the
            treatment of the Merger as a reorganization within the meaning of Section 368(a)(1)(A)
            of the Code, including without limitation the filing of any election under Treasury
            Regulations § 301.7701-3 with respect to WTI.

            
            18

            
            

            

            
             

            

            
                          
             (f)   The covenants set forth in this Section 6.09 shall survive
            the Closing.

            
                 
            6.10     
            Amendment of Disclosure Schedules.

            
                      (a)     
            WTI Disclosure Schedules. The Parties agree that, with respect to the
            representations and warranties of WTI contained in Article IV hereof, WTI shall
            have the continuing obligation until the Closing to supplement, modify or amend
            promptly its Disclosure Schedules with respect to: (i) any matter occurring after the
            date hereof that, if existing or occurring on or before the date of this Agreement,
            would have been required to be set forth or described in its Disclosure Schedules (the
            “WTI New Matters”), and (ii) other matters which are not WTI
            New Matters but should have been set forth or described in the WTI Disclosure Schedules
            as of the date hereof (the “WTI Other Matters”). Any such
            supplement, modification or amendment (i) that reflects a WTI New Matter shall qualify
            WTI’s representations and warranties for all purposes of this Agreement, except
            for purposes of determining whether the conditions set forth in Article VII
            hereof have been fulfilled and (ii) that reflects one or more WTI Other Matters shall
            not qualify any of WTI’s representations or warranties for any purpose under this
            Agreement, and shall be provided solely for informational purposes. On or before the
            Closing, WTI will prepare and deliver to IPtimize a copy of the WTI Disclosure
            Schedules revised to reflect any supplement, modification or amendment required
            pursuant to this Section 6.10(a). WTI shall use commercially reasonable efforts
            to deliver any such supplemented, modified or amended Disclosure Schedules to IPtimize
            at least five (5) calendar days before the Closing. If no supplemented, modified or
            amended WTI Disclosure Schedule satisfying the foregoing requirements is provided by
            WTI, the WTI Disclosure Schedules as delivered upon the execution of this Agreement
            shall continue to apply. WTI’s failure to give notice pursuant to this
            Section 6.10(a) will not be a breach unless IPtimize is materially prejudiced.

            
            

                      (b)   
            IPtimize Disclosure Schedules. The Parties agree that, with respect to
            the representations and warranties of IPtimize and Subsidiary contained in Article
            V hereof, IPtimize and Subsidiary shall have the continuing obligation until the
            Closing to supplement, modify or amend promptly their Disclosure Schedules with respect
            to: (i) any matter occurring after the date hereof that, if existing or occurring on or
            before the date of this Agreement, would have been required to be set forth or
            described in their Disclosure Schedules (the "IPtimize New Matters"), and
            (ii) other matters which are not IPtimize New Matters but should have been set forth or
            described in the IPtimize Disclosure Schedules as of the date hereof (the
            “IPtimize Other Matters”). Any such supplement, modification
            or amendment (i) that reflects an IPtimize New Matter shall qualify the representations
            and warranties of IPtimize and Subsidiary for all purposes of this Agreement, except
            for purposes of determining whether the conditions set forth in Article VII
            hereof have been fulfilled and (ii) that reflects one or more IPtimize Other Matters
            shall not qualify any of the representations or warranties of IPtimize and Subsidiary
            for any purpose under this Agreement, and shall be provided solely for informational
            purposes. On or before the Closing, IPtimize and Subsidiary will prepare and deliver to
            the Owners a copy of the IPtimize Disclosure Schedules revised to reflect any
            supplement, modification or amendment required pursuant to this Section 6.10(b).
            IPtimize and the Subsidiary shall use commercially reasonable efforts to deliver any
            such supplemented, modified or amended Disclosure Schedule to the Owners at least five
            (5) calendar days before the Closing. If no supplemented, modified or amended
            Disclosure Schedule satisfying the foregoing requirements is provided by IPtimize and
            Subsidiary, the Disclosure Schedules as delivered upon the execution of this Agreement
            shall continue to apply. The failure of IPtimize or Subsidiary to give notice pursuant
            to this Section 6.10(b) will not be a breach unless WTI or the Owners is
            materially prejudiced,

            
            19

            
            

            

            
             

            

            
            ARTICLE VII

            CONDITIONS TO CLOSING

            

            
            7.01     
            Conditions Precedent to
            Obligations of the Subsidiary and
            IPtimize.

            
            The obligations of the Subsidiary
            and IPtimize to proceed with the Closing under this Agreement shall be subject to the
            fulfillment prior to or at Closing of the following conditions, any one or more of
            which may be waived in writing in-whole or in-part by the Subsidiary and IPtimize at
            their sole option.

            

            

            

            
                    
             (a)        No Material Changes. The
            business, assets, financial conditions, operations, results of operations, and
            prospects of WTI and the WTI Business shall be substantially as have been represented
            herein and no material adverse change shall have occurred.

            

            

            
                    
             (b)        Final Agreements. This
            Agreement and all Other Agreements shall have been agreed to and duly executed by WTI
            and the Owners.

            

            
                      (
            c
            )       Entity
            Approval. The members and
            managers of WTI shall have approved the execution and performance of the Agreement, the
            Other Agreements and the consummation of the Merger.

            

            
                      (
            d
            )       Compliance
            Certificate. IPtimize
            shall have received an officer’s certificate from WTI, in form reasonably
            satisfactory to the Subsidiary and IPtimize: (i) confirming the identity of all current
            managers, members and Owners of WTI; (ii) attesting as to the authenticity and current
            status of WTI’s Articles of Organization and Operating Agreement; (iii) attesting
            to the managers and members action approving the transactions contemplated hereby,
            copies of which shall be attached, and (iv) attesting that all representations and
            warranties are true and correct, and that WTI has complied with all covenants contained
            in this Agreement.

            
             

            
            20

            
            

            

            
             

            

            
                 
                 (
            e
            )       Employment Agreements.
            Gary Keister and Robert P. Manning,
            both of whom are Owners, shall have
            entered into mutually acceptable
            employment agreements with the Subsidiary.

            

            
                    
             (
            f) 
              
            Owner’s Investment
            Letters. Each of the
            Owners shall have executed an investment letter in the form attached as
            Exhibit D
            and incorporated herein by reference
            and delivered the same to IPtimize.

            
                    
            (
            g)
                 
            Organizational
            Documents. WTI shall have
            delivered true and correct copies of its Articles of Organization
            and
            Operating Agreement to
            IPtimize.

            
                     
            (
            h)
              
               
            Resignations
            . Each of the officers and managers
            of WTI shall have submitted his executed resignation to
            WTI
            .

            
                      (
            i
            )         Private Financing.

             

            
            (1)     
            IPtimize shall have arranged to
            refinance or shall payoff
            the
            Whidbey Debt
            (as hereinafter defined) to the
            extent agreed to herein.

            

            
            (2)
                 IPtimize
            shall have arranged to refinance or pay off the Wescom Capital Debt
            and Members' Notes (as hereinafter
            defined) to the extent agreed to herein.

            

            
            (3)
                 IPtimize
            shall have secured financing
            in a sufficient amount
            in order to pay the cash portion of
            the Owners’ Consideration at the Closing.

            

            
                      (
            j
            )     Leases.
            WTI shall have received and
            delivered to IPtimize the written consent from (1) the landlord on the lease of
            WTI’s Bothell, Washington offices; and (2) Varilease on the equipment lease to
            assign said leases to the
            Surviving Entity.

            

            
                    
            (
            k)     Consents.
            WTI shall have obtained the consent or approval of
            each person whose consent or approval shall be required in connection with the
            transactions contemplated hereby under any loan or credit agreement, note, mortgage,
            indenture, lease or other agreement or instrument, except those for which failure to
            obtain such consents and approvals would not, in the reasonable opinion of IPtimize,
            individually or in the aggregate, have a material adverse effect on
            IPtimize and the
            Subsidiary taken as a whole upon the
            consummation of the transactions contemplated
            hereby. 

             

                     
            (
            l)     
            Governmental Approvals.
            All authorizations, consents, orders or approvals
            of, or declarations or filings with, or expirations of waiting periods imposed by, any
            Governmental Entity, the failure to obtain which would have a material adverse effect
            on IPtimize, the Subsidiary,
            or WTI, taken as a whole, shall have been filed, occurred or been
            obtained, including, but not limited to,
            approval of the transaction and transfer of
            the necessary licenses and or certificates of authority
            by the applicable public utilities
            commissions and the Federal Communications
            Commission. IPtimize shall have received all state securities or “Blue Sky”
            permits and other authorizations necessary to issue the IPtimize Common Stock and to
            consummate the Merger.

            21

            
            

            

               

            

            
            7.02     
            Conditions Precedent to
            Obligations of WTI and the
            Owners.  
            The obligations of the Owners and
            WTI to proceed with the Closing under this Agreement are subject to the fulfillment
            prior to or at C
            losing of the following conditions,
            any one or more of which may be waived in writing in whole or in part by WTI and each
            of the Owners (but only for itself and not the other Owners) at
            their sole option.

            

            

            
                     
            (a)     No Material Changes. The business,
            assets, financial conditions, operations, and results of operations of IPtimize shall
            be substantially as have been represented herein and no material adverse change shall
            have occurred.

            

            
                    
            (b)     Final Agreements. This Agreement and all
            Other Agreements shall have been agreed to and duly executed by IPtimize and the
            Subsidiary.

            

            
                      (c)     Board
            Approval
            . The Board of Directors of IPtimize
            and the Manager of
            Subsidiary shall have approved the
            execution and performance of the Agreement, the Other Agreements and the consummation
            of the Merger.

             

            
                      (d)    
            Compliance
            Certificate. WTI and the
            Owners shall have received from IPtimize an officer’s certificate, in form
            reasonably satisfactory to them: (i) confirming the identity of all current officers,
            directors and principal (holders of 5% or more) stockholders of IPtimize and
            all members, managers and officers
            of the Subsidiary; (ii)
            attesting as to the authenticity and current status of IPtimize’s Articles of
            Incorporation and By-laws and
            Subsidiary's Articles of Organization and Operating Agreement; and (iii) attesting to
            the Board of Director action of IPtimize and the
            Manager action of
            Subsidiary approving the
            transactions contemplated hereby, copies of which shall be
            attached.

            

            
                      (e)     
            Promissory
            Note. IPtimize shall have
            executed and delivered the Promissory Note to the Owners.

             

            
                      
            (f) 
                
            Cash Payment.
            IPtimize shall have delivered cash
            in the aggregate
            amount of
            three hundred
            thousand dollars ($300,000.00
            ) to the Owners,
            a pro rata portion of such amount to
            be distributed to each based on his
            respective
            ownership interest in WTI
            as set forth on
            Schedule
            4.03.

            
                     
            (g)     IPtimize
            Common Stock
            Certificates. IPtimize
            shall have delivered to each Owner a certificate or certificates representing the
            Owner’s pro rata number of shares of IPtimize Common Stock registered in such
            name or names as the Owner’s shall have specified to IPtimize in writing not less
            than ten (10) days prior to the Closing.

            
             

            
            22

            
            

            

            
             

            
             

            
            

                     
            (h)     Warrant
            Certificates. IPtimize
            shall have delivered to each Owner a Warrant certificate or certificates exercisable
            into the Owner’s pro rata number of Warrant Shares registered in such name or
            names as the Owner’s shall have specified to IPtimize in writing not less than
            ten (10) days prior to the Closing.

            
            

                   
            (i)     The
            Whidbey Debt. IPtimize
            shall have paid off up
            to one million dollars
            ($1,000,000.00)
            of debt currently owed by WTI to
            Whidbey Island Bank as more
            specifically described on
            Schedule
            7.02(i) at
            Closing (“Whidbey
            Debt”) or executed an agreement with a lender to replace the Whidbey Debt,
            IPtimize shall indemnify and hold the Owners harmless, and the Owners shall have no
            further liability with respect to the Whidbey Debt except with respect to any balance
            of the Whidbey Debt over said $1,000,000.

            
             

            
                     
            (j)     The
            Wescom Capital Debt
            and Members'
            Notes.
            IPtimize shall have
            paid off nine hundred twenty eight
            thousand fifty six dollars ($928,056.00)
            of
            the
            debt
            s that are (in the aggregate)
            currently owed by WTI
            to
            the Owners, individually,
            and
            to Wescom Capital, Inc, as more
            specifically described on
            Schedule
            7.02(j) at
            Closing (the “Wescom
            Capital Debt and Member's
            Notes”).

            
            ARTICLE VIII

            
            TERMINATION

            

            
                 This
            Agreement may be terminated at any time prior to
            C
            losing by: (i) the mutual and
            written consent of the Parties; (ii) IPtimize and Subsidiary, if any of the conditions
            specified in Section 7.01 have not been fulfilled by
            September 30, 2007, provided that
            IPtimize or Subsidiary has not taken any action, or omitted to take any action, that
            results in the failure of any such condition; or (iii) WTI and the Owners, if any of
            the conditions specified in Section 7.02 have not been fulfilled by
            September 30, 2007, provided that
            WTI or the Owners have not taken any action, or omitted to take any action, that
            results in the failure of any such condition. In the event of termination of this
            Agreement by either Party as provided herein, this Agreement shall forthwith become
            void and there shall be no liability or obligation on the part of any Party hereto;
            provided, however, that nothing in this Section shall relieve any party to this
            Agreement of liability for any willful or intentional breach of this
            Agreement.

            
             

            
            23

            
            

            

            
             

            

            
            ARTICLE IX

            MUTUAL INDEMNIFICATION

            

            
            9.01     Owners’
            Indemnity.  
            The Owners severally but not jointly
            hereby covenant and agree to indemnify and hold harmless IPtimize, the Subsidiary, and
            their respective representatives, officers, directors, members, employees, agents,
            affiliates, predecessors, successors, and assigns (the “IPtimize Indemnified
            Parties”) from and against any and all out of pocket costs, losses, liabilities,
            damages, litigation, claims, costs, and expenses, including reasonable attorneys’
            fees and other expenses of investigation in defense, (collectively, the
            “Damages”) to which the IPtimize Indemnified Parties may become subject or
            which are incurred in connection with, arise out of, result from, or are attributable
            to (i) 
            any material breach of
            any representation or warranty, or
            (ii) any material breach of any covenant or agreement, contained in
            the terms of this Agreement, any
            Other Agreements, or any certificate or other document delivered hereunder or pursuant
            hereto by WTI, or any of the Owners (but in the case of a breach by an Owner, only the
            breaching Owner shall be liable) including any material breach of any representation or
            warranty made by WTI or the Owners, or the failure of WTI or any Owner to perform
            materially any of the covenants or obligations contained herein or in any certificate
            or other document delivered hereunder or pursuant hereto.
            Without limiting the generality of
            the foregoing and subject to Section 10.5 of this Agreement, the Owners expressly agree
            to indemnify and hold harmless the IPtimize Indemnified Parties for any Damages to
            which the IPtimize Indemnified Parties may become subject and which are incurred in
            connection with, arise out of, result from or are attributable to any fraud or
            intentional misrepresentation on the part of WTI.

            
            In addition to any other remedies
            the IPtimize Indemnified Parties may have at law or in equity against WTI or Owners for
            the indemnification obligations contained in this section, the
            IPtimize Indemnified Parties shall
            have the
            right to offset any payments due
            under the Promissory Note against any monetary damages incurred by the IPtimize
            Indemnified Parties.

            
            9.02     IPtimize’s
            Indemnity. 
            IPtimize covenants and agrees that
            it will indemnify and hold harmless the Owners from and against any and all Damages to
            which the Owners, and their respective representatives, employees, agents, affiliates,
            predecessors, successors, and assigns (“Owner Indemnified Parties”) or any
            of them, may become subject or which are incurred in connection with, arise out of,
            result from, or are attributable to any material breach of the terms of this Agreement
            or any Other Agreement, certificate or other document delivered hereunder by IPtimize
            or the Subsidiary, including any material breach of any representation or warranty made
            by IPtimize or the Subsidiary, or the failure of IPtimize and/or the Subsidiary to
            perform materially any of the covenants or obligations contained herein or any
            certificate or other document delivered hereunder or pursuant hereto.

            

            
                 9.03     General
            .  

            
                   
            (a)     
            No claim for indemnification for breach of any
            representation or warranty hereunder may be brought more than one year following the
            Effective Date. The Party entitled to
            indemnification shall be referred to as the “Indemnified Party,” and the
            Party obligated to provide such indemnification shall be referred to as the
            “Indemnifying Party.” The Indemnified Party shall advise the Indemnifying
            Party in writing of any claim for indemnification (whether or not such claim involves a
            person or entity that is not a party to this Agreement) although the failure to provide
            such written notice shall not discharge the obligation of the indemnifying party
            hereunder.

            
            24

            
            

            

            
             

            
                   
             (b)     
            Claims by any third party
            (“Third Party”) shall be governed by the following provisions, provided
            that any claims relating to taxes shall be governed by the provisions of Section
            6.09. The Indemnified Party
            shall immediately notify the Indemnifying Party in writing of any
            claim by a Third Party for which the
            Indemnifying Party has indemnification obligations hereunder and shall acknowledge its
            indemnification obligation for such claim in writing. After the Indemnifying Party has
            received such notice of a claim by a Third Party from the Indemnified Party, the
            Indemnified Party shall allow the Indemnifying Party an opportunity to undertake the
            prompt and diligent defense, settlement, or other resolution of the claim. In the event
            the Indemnifying Party assumes the defense as provided above, the Indemnified Party
            shall have the right to participate in the defense at its own expense, shall cooperate
            with the Indemnifying Party in such defense and will attempt to make available to it on
            a reasonable basis all such witnesses, records, materials, and information in its
            possession or under its control relating thereto as is reasonably requested by the
            Indemnifying Party. Without
            the written consent of the Indemnified Party, which consent shall not be unreasonably
            withheld or delayed, the Indemnifying Party shall not, consent to the entry of any
            judgment or enter into any settlement with respect to a matter for which the
            Indemnified Party is
            conducting the defense. Any
            settlement of a Third Party claim shall include, as to the Indemnified Party as an
            unconditional term thereof, a release by the Third Party of the Indemnified Party from
            any and all liability in respect of such claim or litigation, unless the Indemnified
            Party agrees otherwise in writing.
            In the event that the Indemnifying
            Party elects not to assume the defense, is unwilling to acknowledge its indemnification
            obligations to the Indemnified Party in writing as required by Section 9.03(a) or does
            not perform or reasonably appears to be incapable of performing such obligations, then,
            except as set forth below, the Indemnified Party may defend, settle, or otherwise
            resolve the claim as the Indemnified Party determines to be appropriate. In such case,
            the Indemnifying Party shall be responsible for all costs incurred, including
            settlement or other amounts paid to third parties, by the Indemnified Party in
            connection therewith and shall cooperate with the Indemnified Party in such defense and
            attempt to make available to it all such witnesses, records, materials, and information
            in its possession or under its control relating thereto as is requested by the
            Indemnified Party. Without
            the written consent of the Indemnifying Party, which consent shall not be unreasonably
            withheld or delayed, the Indemnified Party shall not consent to the entry of any
            judgment or enter into any settlement with respect to a matter for which the
            Indemnifying Party is
            conducting the defense. Any
            settlement of a Third Party claim shall include, as to the Indemnifying Party as an
            unconditional term thereof, a release by the Third Party of the Indemnifying Party from
            any and all liability in respect of such claim or litigation, unless the Indemnifying
            Party agrees otherwise in writing.

            
                    
            (c)     
            Limitations on Indemnification
            Liability.
            Notwithstanding any other provision of this Agreement, the Owners shall have no
            liability for Damages (either direct or by way of a claim for indemnification) under
            this Article unless and until Damages reach, in the aggregate at least $50,000 (the
            "Threshold Amount"). In the event a claim for Damages exceeds the Threshold Amount, the
            Owners will be liable for all Damages up to the Cap. In no event will the Owners
            collectively be liable for Damages that are in excess of ten percent (10%) of the
            Purchase Price (the "Cap"). Notwithstanding any other provision of this Agreement, the
            Owners shall have no liability for consequential damages, and any claim for
            consequential damages shall not count toward the Threshold Amount.

            
            25

            
            

            

            
             

            

            
            9.04     Remedies. 
            Subject to the limits set forth in
            this Article IX, the Indemnifying Party shall promptly reimburse the Indemnified Party
            for the amount of any judgment rendered against and actually paid by the Indemnified
            Party with respect to any Third Party claim in litigation or upon request by the
            Indemnified Party for any other Damages arising out of any claim not involving a Third
            Party. To the extent that the Indemnifying Party refuses to pay in full the Damages
            owed to the Indemnified Party (subject to the limits set forth above), the Indemnified
            Party may: (i) offset the Damages against any payments the Indemnified Party may
            owe the Indemnifying Party; and (ii) utilize any legal or equitable remedy to
            collect from the Indemnifying Party the amount of such Damages.

            

            
            9.05     Exclusive
            Remedy.     This
            Article IX shall be the exclusive remedy for breaches of this Agreement (including any
            covenant, obligation, representation or warranty contained in this Agreement, the Other
            Agreements or in any certificate delivered pursuant to this agreement or otherwise in
            respect to the transaction contemplated thereby.

            

            
            ARTICLE X

            GENERAL PROVISIONS

            

            
            10.01     Survival
            of
            Agreement. 
            The representations and warranties
            set forth in this Agreement
            will survive the Closing for a period of one (1) year, except as otherwise expressly
            provided herein, except
            the representations and
            warranties in Sections
            4.07(b),
            4.08 and 5.06(b), which
            shall survive until the expiration
            of the applicable statute of limitations.
            The covenants and agreements
            contained herein shall survive until they are performed in accordance with their
            terms.

            

            
            10.02     Notices
            .

            
             

            
            All Notices required or permitted
            hereunder or under any of the Other Agreements (unless such Other Agreement otherwise
            provides) will be deemed delivered when delivered personally, mailed with proper
            postage, or sent by a nationally recognized overnight courier to the respective parties
            at the following addresses or to such other addresses as each respective party may
            hereafter designate:

            

            

            	
                    	
                        
                        (a)     

                    	
                        
                        To IPtimize and the
                        Subsidiary:

                    

            
            c/o Clinton J. Wilson

            
                        2135
            S. Cherry Street, Suite 200

                        Denver, CO
            80222

             

            26

            
            

            

             

            
            

                        With a copy
            sent at the same time and in the same manner to:

            

            
                         
            John R. Heronimus

                          Dufford &
            Brown, P.C.

                         
            1700 Broadway, Suite 2100

                          Denver, CO
            80290-2101

             

            

            

            	
                    	
                        
                        (b)     

                    	
                        
                        To WTI and the
                        Owners

                    

            
                    
                 C/o Gary Keister

                          22722
            29th
            Drive SE, Suite 120

                          Bothell,
            Washington 98021

                 

                           With a
            copy sent at the same time and in the same manner to:

            
              Benjamin Straughan

              Perkins Coie LLP

              1201 Third Avenue

              Suite 4800

              Seattle, Washington 98101-3099

            

            
                 10.03     Successors
            and Assigns. 
            This Agreement will be binding upon
            the Parties hereto and their respective successors, personal representatives, heirs,
            and assigns. However, no party hereto will have any right to assign any of its
            obligations pursuant to this Agreement without the prior written consent of all the
            other Parties.

            
             

            
               
            10.04     Modification,
            Waiver and Amendment. 
             A modification or waiver of
            any of the provisions of this Agreement shall be effective only if made in writing and
            executed with the same formality as this Agreement. The failure of any Party to insist
            upon strict performance of any of the provisions of this Agreement shall not be
            construed as a waiver of any subsequent default of the same or similar nature or of any
            other nature. No Party may or shall amend this Agreement, in whole or in part,
            verbally, by reliance, by course of conduct or otherwise, unless expressly and
            specifically acknowledged in writing and signed by all of the other Parties.

            
             

            
                
            10.05       Entire
            Agreement.  
            Each Party hereby covenants that
            this Agreement is intended to and does contain and embody all of the understandings and
            agreements, both written or oral, of the Parties with respect to the subject matter of
            this Agreement, and that there exists no oral agreement or understanding, expressed or
            implied, whereby the absolute, final and unconditional character and nature of this
            Agreement shall be in any way invalidated or affected. There are no representations,
            warranties or covenants other than those set forth in this Agreement.

            

            

            
                 
            10.06  
               
            Publicity
            . Except as otherwise required by
            law, so long as this Agreement is in effect, no Party shall issue or cause the
            publication of any press release or other public announcement with respect to the
            transactions contemplated by this Agreement without the written consent of the other
            Parties, which consent shall not be unreasonably withheld.

            
             

            
            27

            
            

            

            
             

            
                 
            10.07   
            Recommendation of Legal
            Counsel. The Parties
            acknowledge that they have had ample opportunity to consult with legal counsel and tax
            advisors before entering into this Agreement and have been recommended to do
            so.

            

            

            
                
             10.08     Governing
            Law. 
            This Agreement is entered into in
            the City and County of Denver, State of Colorado, will be performed primarily within
            such state, and, except to the extent governed by the Minnesota Act, the Colorado Act
            or the Washington Act, all issues arising hereunder shall be governed in all respects
            with the laws of the State of
            Colorado without regard to its
            conflict of laws provisions.
            The parties hereto consent to the
            jurisdiction of the state and federal courts located in King County Washington and the
            City and County of Denver Colorado for any disputes arising out of or related to this
            Agreement.

            

            
                  
            10.09     Counterparts
            .  
            This Agreement may be executed in
            two or more counterparts, each of which shall be deemed to be an original but all of
            which together shall be deemed to be one and the same instrument.

            

            
                  
            10.10     Arbitration
            . 
            In the event of any dispute arising
            under this Agreement or any of the Other Agreements (except to the extent specifically
            otherwise provided in any Other Agreement), such dispute will be resolved by
            arbitration in accordance with the commercial arbitration rules of the American
            Arbitration Association or any other arbitration body which is mutually acceptable to
            the Parties participating in the arbitration. The arbitrator shall be given authority
            to award attorneys’ fees and arbitration costs, in addition to any other relief,
            in connection with any such arbitration.

            

            
                 
            10.11     Further
            Assurances. Each Party agrees to execute
            and deliver such Other Agreements and documents as the other Parties hereto may
            reasonably request to effect the transactions contemplated hereby.

            

            
            [signature page follows]

            
             

            
             

            
             

            
            28

            
             

            
            

            

            

            
            In witness whereof the parties have entered into
            this Agreement as of the date
            first written above.

             

            	
                    	
                    
	
                    OWNERS:

                                                

                     /s/ Gary Keister

                    Gary Keister 	IPTIMIZE,
                    INC.,

                    A Minnesota corporation

                    

                    

                    By: /s/ Clinton J. Wilson

                          Clinton J. Wilson, President 
	  	
                    
	/s/ Marcos
                    Melendez

                    Marcos Melendez

                    

                                                

                                                 
                    	IP SOLUTIONS, Inc., a
                    Colorado

                    corporation

                    

                    By: /s/ Clinton J. Wilson

                         Clinton J. Wilson, President 
	  	
                    
	/s/ Robert P.
                    Manning

                    Robert P. Manning

                                                

                    

                                                 
                    	
                        WTI, LLC, a
Washington limited

liability company

By: /s/ Robert P. Manning

       Robert P. Manning, CEO  

                    

            

            

            

            

            

            

            
            [signature page to Merger
            Agreement]

            
             

            
             

            
            1

            
            

            

            

            
            

            
            

            

            LIST OF EXHIBITS

             

            

            

            
                 Exhibit
            A          
            Warrants

            
                 Exhibit
            B          
            Promissory Note

                 Exhibit
            C          
            Lock-Up Letters

            
                 Exhibit
            D          
            Investor Letter

                 

             

             

            
            

            

            
            

            

            

            	
                    LIST OF
                    SCHEDULES	
                    	
                    

            	ARTICLE IV.
                    REPRESENTATIONS AND WARRANTIES OF OWNERS AND WTI	
                    	
                    
	
                      	
                    	
                    
	
                    	4.03

                    4.04

                    4.06

                    4.07(a)

                    4.07(b)

                    4.09

                    4.10

                    4.11

                    4.13

                    4.14(a)

                    4.14(b)

                    4.15

                    4.16

                    4.18

                    4.21 	WTI Membership Units

                    Subsidiaries and Investments

                    No Violation of Laws or Agreements

                    WTI Financial Statements

                    Undisclosed Liabilities

                    Receivables

                    Litigation and Contingencies

                    Contracts

                    Affiliated Transactions

                    Employees

                    Benefit Arrangements

                    Insurance

                    Intellectual Property Rights

                    Customer Relationships

                    Assets 	
                    	
                    
	  	
                    	
                    	
                    	
                    

            	ARTICLE
                    V. REPRESENTATIONS AND WARRANTIES OF SUBSIDIARY AND IPTIMIZE	
                    	
                    
	
                      	
                    	
                    
	
                    	5.03

                    5.05

                    5.06(a)

                    5.06(b)

                    5.07

                    5.08

                    5.10

                    5.11

                    5.17 	The IPtimize
                    Capitalization

                    No Violation of Laws or Agreements

                    IPtimize Financial Statements

                    Undisclosed Liabilities

                    Receivables

                    Litigation and Contingencies

                    Affiliated Transactions

                    Employee Benefits

                    Intellectual Property Rights 	
                    	
                    
	  	
                    	
                    	
                    	
                    

            	ARTICLE
                    VII. CONDITIONS TO CLOSING	
                    	
                    
	
                      	
                    	
                    
	
                    	7.02(i)

                    7.02(j) 	Whidbey Debt

                    Wescom Capital Debt and Members' NotesExhibit 4.1
 

 

SUPPLEMENTAL INDENTURE NO. 12

by and between

HOSPITALITY PROPERTIES TRUST

and

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

 

 

as of September 28, 2007

 

SUPPLEMENTAL TO THE INDENTURE DATED AS OF FEBRUARY 25, 1998

 

 

HOSPITALITY PROPERTIES TRUST

6.70% Senior Notes due 2018

 

 

 

   
 

 

This SUPPLEMENTAL INDENTURE
NO. 12 (this “Supplemental Indenture”)
made and entered into as of September 28, 2007 between HOSPITALITY
PROPERTIES TRUST, a Maryland real estate investment trust (the “Company”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, as Trustee (the “Trustee”).

WITNESSETH THAT:

WHEREAS, the Company and the
Trustee are parties to an Indenture, dated as of February 25, 1998 (the “Indenture”), relating to the Company’s
issuance, from time to time, of various series of debt securities;

WHEREAS, the Company has
determined to issue debt securities known as its 6.70% Senior Notes due 2018;
and

WHEREAS, the Indenture provides
that certain terms and conditions for each series of debt securities issued by
the Company thereunder may be set forth in an indenture supplemental to the
Indenture;

NOW, THEREFORE, THIS
SUPPLEMENTAL INDENTURE WITNESSETH:

ARTICLE
1

DEFINED
TERMS

Section 1.1             Terms Defined in Indenture.  Capitalized terms used herein and not defined
herein have the meanings ascribed to such terms in the Indenture.

Section 1.2             Supplemental Definitions.  The following definitions supplement, and, to
the extent inconsistent with, replace the definitions in Section 101 of
the Indenture:

“Acquired Debt” means Debt of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Debt incurred
in connection with, or in contemplation of, such Person becoming a Subsidiary or
such acquisition.  Acquired Debt shall be
deemed to be incurred on the date of the related acquisition of assets from any
Person or the date the acquired Person becomes a Subsidiary.

“Additional Notes” has the meaning provided in
Section 2.1(b) hereof.

“Adjusted Total Assets” has the meaning provided in
clause (i) of Section 3.1(a) hereof.

“Annual Debt Service” as of any date means the maximum amount
which is expensed in any 12-month period for interest on Debt of the Company
and its Subsidiaries.

“Business Day” means any day other than a Saturday or Sunday
or a day on which banking institutions in The City of New York or in the city
in which the Corporate Trust Office of the Trustee is located are required or
authorized to close.

 

“Capital Stock” means, with respect to any Person, any
capital stock (including preferred stock), shares, interests, participation or
other ownership interests (however designated) of such Person and any rights
(other than debt securities convertible into or exchangeable for capital
stock), warrants or options to purchase any thereof.

“Consolidated Income Available for Debt Service” for any
period means Earnings from Operations of the Company and its Subsidiaries plus
amounts which have been deducted, and minus amounts which have been added, for
the following (without duplication): (i) interest on Debt of the Company and
its Subsidiaries, (ii) cash reserves made by lessees as required by the Company’s
leases for periodic replacement and refurbishment of the Company’s assets,
(iii) provision for taxes of the Company and its Subsidiaries based on income,
(iv) amortization of debt discount and deferred financing costs, (v) provisions
for gains and losses on properties and property depreciation and amortization,
(vi) the effect of any noncash charge resulting from a change in accounting
principles in determining Earnings from Operations for such period and (vii)
amortization of deferred charges.

“Corporate Trust Office” means One Federal Street, 3rd  Floor, Boston, Massachusetts 02110, or such other
address as may be designated from time to time by the Trustee by providing
written notice to the Company.

“Debt” of the Company or any Subsidiary means, without
duplication, any indebtedness of the Company or any Subsidiary, whether or not
contingent, in respect of (i) borrowed money or evidenced by bonds, notes,
debentures or similar instruments, (ii) indebtedness for borrowed money secured
by any Encumbrance existing on property owned by the Company or any Subsidiary,
to the extent of the lesser of (x) the amount of indebtedness so secured and
(y) the fair market value of the property subject to such Encumbrance, (iii)
the reimbursement obligations, contingent or otherwise, in connection with any
letters of credit actually issued (other than letters of credit issued to
provide credit enhancement or support with respect to other indebtedness of the
Company or any Subsidiary otherwise reflected as Debt hereunder) or amounts
representing the balance deferred and unpaid of the purchase price of any property
or services, except any such balance that constitutes an accrued expense or
trade payable, or all conditional sale obligations or obligations under any
title retention agreement, (iv) the principal amount of all obligations of the
Company or any Subsidiary with respect to redemption, repayment or other
repurchase of any Disqualified Stock, or (v) any lease of property by the
Company or any Subsidiary as lessee which is reflected on the Company’s
consolidated balance sheet as a capitalized lease in accordance with GAAP, to
the extent, in the case of items of indebtedness under (i) through (iii) above,
that any such items (other than letters of credit) would appear as a liability
on the Company’s consolidated balance sheet in accordance with GAAP, and also
includes, to the extent not otherwise included, any obligation by the Company
or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), Debt of another Person (other than the Company or any Subsidiary)
(it being understood that Debt shall be deemed to be incurred by the Company or
any Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).

“Depositary” has the meaning provided in Section 2.1(d)
hereof.

 2
 

 

“Disqualified Stock” means, with respect to any Person, any
Capital Stock of such Person which by the terms of such Capital Stock (or by
the terms of any security into which it is convertible or for which it is
exchangeable or exercisable), upon the happening of any event or otherwise (i)
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise (other than Capital Stock which is redeemable solely in exchange for
common stock or shares), (ii) is convertible into or exchangeable or
exercisable for Debt or Disqualified Stock, or (iii) is redeemable at the
option of the Holder thereof, in whole or in part (other than Capital Stock
which is redeemable solely in exchange for common stock or shares), in each
case on or prior to the stated maturity of the Notes.

“Earnings from Operations” for any period means net earnings
excluding gains and losses on sales of investments, extraordinary items, gains
and losses from early extinguishment of debt and property valuation losses, as
reflected in the financial statements of the Company and its Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP.

“Encumbrance” means any mortgage, lien, charge, pledge or
security interest of any kind.

“Interest Payment Date” has the meaning provided in
Section 2.1(e) hereof.

“Make-Whole Amount”
means, in connection with any optional
redemption or accelerated payment of any Notes prior to July 15, 2017, the
excess, if any, of (i) the aggregate present value as of the date of such
redemption or accelerated payment of each dollar of principal being redeemed or
paid and the amount of interest (exclusive of interest accrued to the date of
redemption or accelerated payment) that would have been payable in respect of
such dollar if such redemption or accelerated payment had been made on
July 15, 2017, determined by discounting, on a semiannual basis, such
principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or
accelerated payment had been made on July 15, 2017, over (ii) the
aggregate principal amount of the Notes being redeemed or paid.  In the case of any redemption or accelerated
payment of notes on or after July 15, 2017, the Make-Whole Amount means
zero. For purposes of this Supplemental Indenture and the Notes,
references in the Indenture to the payment of the principal (and premium, if
any) and interest on the Notes shall be deemed to include the payment of the
Make-Whole Amount, if any, due upon redemption with respect to the Notes.  The Make-Whole Amount shall be calculated by
the Company and set forth in an Officer’s Certificate delivered to the Trustee,
and the Trustee shall be entitled to rely on said Officer’s Certificate.

“Notes” means the Company’s 6.70% Senior Notes due 2018,
issued under this Supplemental Indenture and the Indenture, as amended or
supplemented from time to time.  (For the
avoidance of doubt, the term “Notes” shall include any Additional Notes so
issued.)

“Regular Record Date” has the meaning provided in
Section 2.1(e) hereof.

“Reinvestment Rate” means a rate per annum equal to the sum
of 0.35% (thirty-five hundredths of one percent) plus the yield on treasury
securities at constant maturity under the 

 3
 

 

heading
“Week Ending” published in the Statistical Release under the caption “Treasury
Constant Maturities” for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity (which, in the case of
maturities corresponding to the principal and interest due on the notes at
their maturity, shall be deemed to be July 15, 2017), as of the payment
date of the principal being redeemed or paid. 
If no maturity exactly corresponds to such maturity, yields for the two
published maturities most closely corresponding to such maturity shall be
calculated pursuant to the immediately preceding sentence and the Reinvestment
Rate shall be interpolated or extrapolated from such yields on a straight-line
basis, rounding in each of such relevant periods to the nearest month.  For purposes of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.

“Secured Debt” means Debt secured by any mortgage, lien,
charge, pledge or security interest of any kind.

“Statistical Release” means the statistical release
designated “H.15(519)” or any successor publication which is published weekly
by the Federal Reserve System and which establishes yields on actively traded
United States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination under
this Supplemental Indenture, then any publicly available source of similar
market data which shall be designated by the Company.

“Subsidiary” means any corporation or other entity of which a
majority of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests of which are owned, directly or indirectly, by the
Company or one or more other Subsidiaries of the Company.  For the purposes of this definition, “voting
equity securities” means equity securities having voting power for the election
of directors, whether at all times or only so long as no senior class of
security has such voting power by reason of any contingency.

“Total Assets” as of any date means the sum of (i) the
Undepreciated Real Estate Assets and (ii) all other assets of the Company and
its Subsidiaries determined in accordance with GAAP (but excluding accounts
receivable and intangibles).

“Total Unencumbered Assets” means the sum of (i) those
Undepreciated Real Estate Assets not subject to an Encumbrance for borrowed
money and (ii) all other assets of the Company and its Subsidiaries not subject
to an Encumbrance for borrowed money determined in accordance with GAAP (but
excluding accounts receivable and intangibles).

“Undepreciated Real Estate Assets” as of any date means the
cost (original cost plus capital improvements) of, real estate assets of the
Company and its Subsidiaries on such date, before depreciation and amortization
determined on a consolidated basis in accordance with GAAP.

“Unsecured Debt” means Debt which is not secured by any of
the properties of the Company or any Subsidiary.

 4
 

 

ARTICLE
2

TERMS
OF THE NOTES

Section 2.1             Terms of the Notes.  Pursuant to Section 301 of the
Indenture, the Notes shall have the following terms and conditions:

(a)           Title.  The
Notes shall be Registered Securities under the Indenture and shall be known as
the Company’s “6.70% Senior Notes due 2018.”

(b)           Aggregate Principal Amount.  The aggregate principal amount of Notes to be
authenticated and delivered under this Supplemental Indenture shall initially
be limited to $350,000,000, except as otherwise permitted by the provisions of
the Indenture; provided that the Company may from time to time,
without the consent of the Holders of the Notes, increase the principal amount
of the Notes by issuing additional Securities in the future (the “Additional Notes”)
having the same terms and ranking equally and ratably with the Notes in all
respects and with the same CUSIP number as the Notes, except for the difference
in the issue price and interest accrued prior to the issue date of such
Additional Notes, provided that such Additional Notes constitute part of the
same issue as the Notes for U.S. federal income tax purposes.  Any Additional Notes will be treated as a
single series with the Notes under the Indenture and shall have the same terms
as to status, redemption and otherwise as the Notes, and references herein to
the Notes shall include any Additional Notes.

(c)           Form of Notes. 
The Notes (together with the Trustee’s certificate of authentication)
shall be substantially in the form of Exhibit A hereto, which is hereby
incorporated in and made a part of this Supplemental Indenture.  Any of the Notes may have such
letters, numbers or other marks of identification and such notations, legends,
endorsements or changes as the officers executing the same may approve
(execution  thereof to be conclusive
evidence of such approval) and as are not inconsistent with the provisions of
the Indenture, or as may be required by the Depositary or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any securities exchange or automated
quotation system on which the Notes may be listed, or to conform to usage, or
to indicate any special limitations or restrictions to which any particular
Notes are subject.

(d)           Registered Securities in Book Entry Form.   The Notes shall be issuable in the form of
one or more global Securities registered in the name of The Depository Trust
Company’s nominee, and shall be deposited with, or on behalf of, The Depository
Trust Company, New York, New York (including any successor depositary appointed
hereunder, the “Depositary”).  The Notes may be surrendered for registration
of transfer at the office or agency of the Company (including the Corporate
Trust Office of the Trustee) maintained for such purpose, or at any other
office or agency maintained by the Company for such purpose.

So
long as the Depositary or its nominee is the registered owner of a Global Note,
the Depositary or its nominee, as the case may be, will be considered the sole
Holder of the Notes represented by such Global Note for all purposes under the
Indenture and this Supplemental Indenture, and the beneficial owners of the
Notes will be entitled only to those 

 5
 

 

rights
and benefits afforded to them in accordance with the Depositary’s regular
operating procedures.  Except as provided
below, owners of beneficial interests in a Global Note will not be entitled to
have Notes registered in their names, will not receive or be entitled to
receive physical delivery of Notes in certificated form and will not be
considered the registered owners or Holders thereof under the Indenture or this
Supplemental Indenture.

If
(i) the Depositary is at any time unwilling or unable to continue as depository
or if at any time the Depositary ceases to be a clearing agency registered
under the Exchange Act and a successor depository is not appointed by the
Company within 90 days, (ii) an Event of Default relating to the Notes has
occurred and is continuing and the beneficial owners representing a majority in
principal amount of Notes advise the Depository to cease acting as depository
for the Note, or (iii) the Company, in its sole discretion, determines at any
time that the Notes shall no longer be represented by a Global Note, the
Company will in accordance with the Indenture issue individual Notes in
certificated form of the same series and like tenor and in the applicable
principal amount in exchange for the Notes represented by the Global Note.  In any such instance, an owner of a
beneficial interest in a Global Note will be entitled to physical delivery of
individual Notes in certificated form of the same series and like tenor, equal
in principal amount to such beneficial interest and to have the Notes in
certificated form registered in its name. 
Notes so issued in certificated form will be issued in denominations of
$1,000 or any integral multiple thereof and will be issued in registered form
only, without coupons.

(e)           Interest and Interest Rate.  The Notes will bear interest at a rate of
6.70% per annum, from September 28, 2007 (or, in the case of Additional
Notes, as provided in Section 2.1(b) above) or from the immediately
preceding Interest Payment Date to which interest has been paid or duly
provided for, payable semi-annually in arrears on January 15 and
July 15 of each year, commencing January 15, 2008, or if such day is
not a Business Day, on the next succeeding Business Day (each of which shall be
an “Interest Payment Date”), to
the Persons in whose names the Notes are registered in the Security Register at
the close of business on the day falling 14 calendar days immediately preceding
the applicable Interest Payment Date (whether or not a Business Day), as the
case may be (each, a “Regular Record Date”).

(f)            Principal Repayment; Currency.  The stated maturity of the Notes is January 15,
2018; provided, however, the Notes may be earlier redeemed at the option of the
Company as provided in paragraph (g) below. 
The principal of each Note payable on its maturity date shall be paid
against presentation and surrender thereof at the Corporate Trust Office of the
Trustee, in such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public or private
debts.  The Company will not pay
Additional Amounts (as defined in the Indenture) on the Notes.

(g)           Redemption at the Option of the Company. The Notes will be subject to redemption
at any time at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days’ notice to each Holder of Notes to be redeemed at
its address appearing in the Security Register, at a price equal to the sum of
(i) the principal amount of the Notes being redeemed, plus accrued and unpaid
interest to but excluding the applicable Redemption Date, plus (ii) the
Make-Whole Amount, if any (it being understood that if the notes are redeemed
on or after July 15, 2017, the Make-Whole Amount equals zero).

(h)           Notices.  All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard 

 6
 

 

form of telecommunication. Notices to the
Company shall be directed to it at 400 Centre Street, Newton, Massachusetts
02458, Attention:  President; notices to
the Trustee shall be directed to it at One Federal Street, 3rd Floor, Boston,
Massachusetts 02110, Attention: Corporate Trust Department, Re: Hospitality
Properties Trust 6.70% Senior Notes due 2018, or as to either party, at such
other address as shall be designated by such party in a written notice to the
other party.

(i)            Global Note Legend.  Each Global Note shall bear the following
legend on the face thereto and any other appropriate legends specified in an
Officers’ Certificate:

UNLESS
THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS AND UNTIL THIS
NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A
NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE
TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.

ARTICLE
3

ADDITIONAL
COVENANTS

Section 3.1             Additional Covenants of the
Company.  In addition to the
covenants of the Company set forth in Article Ten of the Indenture, for the
benefit of the Holders of the Notes:

(a)           Limitations on Incurrence of Debt.

(i)            The
Company will not, and will not permit any Subsidiary to, incur any Debt if,
immediately after giving effect to the incurrence of such additional Debt and
the application of the proceeds thereof, the aggregate principal amount of all
outstanding Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP is greater than 60% of the sum (“Adjusted Total Assets”) of (without
duplication) (A) the Total Assets of the Company and its Subsidiaries as of the
end of the calendar quarter covered in the Company’s Annual Report on Form
10-K, or the Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Securities and Exchange Commission (or, if such filing is not
permitted under the 

 7
 

 

Securities Exchange Act of 1934, as amended, with the Trustee) prior to
the incurrence of such additional Debt and (B) the purchase price of any real
estate assets or mortgages receivable acquired, and the amount of any
securities offering proceeds received (to the extent that such proceeds were
not used to acquire real estate assets or mortgages receivable or used to
reduce Debt), by the Company or any Subsidiary since the end of such calendar
quarter, including those proceeds obtained in connection with the incurrence of
such additional Debt.

(ii)           In addition to the
foregoing limitation on the incurrence of Debt, the Company will not, and will
not permit any Subsidiary to, incur any Secured Debt if, immediately after
giving effect to the incurrence of such additional Secured Debt and the
application of the proceeds thereof, the aggregate principal amount of all
outstanding Secured Debt of the Company and its Subsidiaries on a consolidated basis
is greater than 40% of Adjusted Total Assets.

(iii)          In addition to the
foregoing limitations on the incurrence of Debt, the Company will not, and will
not permit any Subsidiary to, incur any Debt if the ratio of Consolidated
Income Available for Debt Service to the Annual Debt Service for the four
consecutive fiscal quarters most recently ended prior to the date on which such
additional Debt is to be incurred shall have been less than 1.5 to 1.0, on a
pro forma basis after giving effect thereto and to the application of the
proceeds therefrom, and calculated on the assumption that (A) such Debt and any
other Debt incurred by the Company and its Subsidiaries since the first day of
such four-quarter period and the application of the proceeds therefrom, including
to refinance other Debt, had occurred at the beginning of such period; (B) the
repayment or retirement of any other Debt by the Company and its Subsidiaries
since the first date of such four-quarter period had been repaid or retired at
the beginning of such period (except that, in making such computation, the
amount of Debt under any revolving credit facility shall be computed based upon
the average daily balance of such Debt during such period); (C) in the case of
Acquired Debt or Debt incurred in connection with any acquisition since the
first day of such four-quarter period, the related acquisition had occurred as
of the first day of such period with appropriate adjustments with respect to
such acquisition being included in such pro forma calculation; and (D) in the
case of any acquisition or disposition by the Company or its Subsidiaries of
any asset or group of assets since the first day of such four-quarter period,
whether by merger, stock purchase or sale, or asset purchase or sale, such
acquisition or disposition or any related repayment of Debt had occurred as of
the first day of such period with the appropriate adjustments with respect to
such acquisition or disposition being included in such pro forma calculation.
If the Debt giving rise to the need to make the foregoing calculation or any
other Debt incurred after the first day of the relevant four-quarter period
bears interest at a floating rate then, for purposes of calculating the Annual
Debt Service, the interest rate on such Debt shall be computed on a pro forma
basis as if the average interest rate which would have been in effect during
the entire such four-quarter period had been the applicable rate for the entire
such period.

(b)           Maintenance of Total Unencumbered Assets.  The Company and its Subsidiaries will
maintain at all times Total Unencumbered Assets of not less than 150% of the 

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aggregate outstanding principal amount of the
Unsecured Debt of the Company and its Subsidiaries on a consolidated basis.

ARTICLE
4

OTHER
PROVISIONS

Section 4.1             Additional Event of Default.  For purposes of this Supplemental Indenture
and the Notes, in addition to the Events of Default set forth in
Section 501 of the Indenture, it shall also constitute an “Event of
Default” if a default under any bond, debenture, note or other evidence of
indebtedness of the Company (including a default with respect to any other
series of securities), or under any mortgage, indenture or other instrument of
the Company under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company (or by any
Subsidiary, the repayment of which the Company has guaranteed or for which the
Company is directly responsible or liable as obligor or guarantor) having an
aggregate principal amount outstanding of at least $20,000,000, whether such
indebtedness now exists or shall hereafter be incurred or created, which
default shall have resulted in such indebtedness becoming or being declared due
and payable prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged or such acceleration
having been rescinded or annulled within a period of ten days after there shall
have been given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in principal
amount of the outstanding Notes, a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice is a “Notice
of Default” hereunder.

Section 4.2             Make-Whole Amount Upon
Acceleration.  Notwithstanding any
provisions to the contrary in the Indenture, upon any acceleration of the Notes
under Section 502 of the Indenture, the amount immediately due and payable
in respect of the Notes shall equal the Outstanding principal amount thereof,
plus accrued and unpaid interest thereon, plus, if such acceleration occurs
prior to July 15, 2017, the Make-Whole Amount.

Section 4.3             Applicability
of Discharge, Defeasance and Covenant Defeasance Provisions.  The Discharge, Defeasance and Covenant
Defeasance provisions in Article Fourteen of the Indenture will apply to the
Notes.

ARTICLE
5

EFFECTIVENESS

This Supplemental Indenture
shall be effective for all purposes as of the date and time this Supplemental
Indenture has been executed and delivered by the Company and the Trustee in
accordance with Article Nine of the Indenture. 
As supplemented hereby, the Indenture is hereby confirmed as being in
full force and effect.

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ARTICLE
6

MISCELLANEOUS

Section 6.1             Separability  In the event any provision of this
Supplemental Indenture shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof or any provision of the Indenture.

Section 6.2             Construction of Terms.  To the extent that any terms of this
Supplemental Indenture or the Notes are inconsistent with the terms of the
Indenture, the terms of this Supplemental Indenture or the Notes shall govern
and supersede such inconsistent terms.

Section 6.3             Effect
of Headings. The Section
headings herein are for convenience only and shall not affect the construction
hereof.

Section 6.4             Governing Law.  This Supplemental Indenture shall be governed
by and construed in accordance with the laws of The Commonwealth of
Massachusetts.

Section 6.5             Counterparts.  This Supplemental Indenture may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company
and the Trustee have caused this Supplemental Indenture to be executed as an
instrument under seal in their respective corporate names as of the date first
above written.

	
  

  	
  HOSPITALITY PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION, as

  
	
   

  	
   

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

 

 

 

[Signature Page to
Supplemental Indenture No. 12]

 

 

EXHIBIT A

[Face of Note]

[Include only for Global Notes]

[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

UNLESS AND UNTIL
THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS
NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY
A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH
NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.]

6.70% Senior Note due 2018

No.                                                                                                                                                                     $_______________

HOSPITALITY PROPERTIES TRUST

promises to pay to _______________________________________ or registered
assigns, the principal sum of ______________________ ($_______) on January 15, 2018, subject to the
terms set forth on the reverse of this Note and the terms of the Indenture
referred to therein.

Interest Payment Dates:  Each
January 15 and July 15 (or if such day is not a Business Day, the
next succeeding Business Day), commencing January 15, 2008.

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Record Dates:  The
day falling 14 calendar days prior to any Interest Payment Date.

[CUSIP No: 
_____________]

[ISIN No: _______________]

	
  

  	
   

  	
  HOSPITALITY PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

CERTIFICATE
OF AUTHENTICATION

Dated:

This is one of the Notes referred to in the within-mentioned Indenture:

U.S. BANK NATIONAL ASSOCIATION, as Trustee

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  

 

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[THE FOLLOWING CONSTITUTES THE REVERSE OF THE SECURITY]

HOSPITALITY PROPERTIES TRUST

6.70% Senior Note due 2018

Capitalized terms used herein
have the meanings assigned to them in the Indenture (as defined below) unless
otherwise indicated.

1.             Interest.  Hospitality Properties Trust, a Maryland real
estate investment trust (the “Company”), promises to pay
interest on the principal amount of this Note at the rate and in the manner
specified below.

The Company shall pay in cash
interest on the principal amount of this Note at the rate per annum of
6.70%.  The Company will pay interest
semi-annually in arrears on January 15 and July 15 of each year,
beginning on January 15, 2008, or if any such day is not a Business Day
(as defined in the Indenture), on the next succeeding Business Day (each an “Interest Payment Date”), to Holders of
record on the day falling 14 calendar days immediately preceding such Interest
Payment Date (whether or not a Business Day).

Interest will be computed on the
basis of a 360-day year consisting of twelve 30-day months.  Interest shall accrue from the most recent
date to which interest on the Notes has been paid or, if no interest has been
paid, from September 28, 2007.

2.             Method
of Payment.  The Company will pay
interest on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the record date next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date.  The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts.  The
Company, however, may pay principal, premium, if any, and interest by check
payable in such money.  It may mail an
interest check to a Holder’s registered address.

3.             Indenture.  The Company issued the Notes under an
Indenture dated as of February 25, 1998 and Supplemental Indenture
No. 12 dated as of September 28, 2007 (collectively, the “Indenture”)
between the Company and the Trustee.  The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as in effect on
the date of the Indenture and Holders of the Notes are referred to the
Indenture and such Act for a statement of such terms.  The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes.  The Notes are senior unsecured general
obligations of the Company initially issued in an aggregate principal amount of
$350,000,000.

4.             Optional
Redemption.  The Notes will be
subject to redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days’ notice, at a redemption
price equal to the sum of (i) the principal amount of the Notes being redeemed,

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plus accrued and unpaid interest to but excluding the applicable
Redemption Date and (ii) the Make-Whole Amount, if any.

As used herein the term “Make-Whole Amount” means, in
connection with any optional redemption or accelerated payment of any Notes
prior to July 15, 2017, the excess, if any, of (i) the aggregate present value as of the date of such redemption or
accelerated payment of each dollar of principal being redeemed or paid and the
amount of interest (exclusive of interest accrued to the date of redemption or
accelerated payment) that would have been payable in respect of such dollar if
such redemption or accelerated payment had been made on July 15,
2017, determined by discounting, on a
semiannual basis, such principal and interest at the Reinvestment Rate (determined
on the third Business Day preceding the date such notice of redemption is given
or declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or
accelerated payment had been made on July 15, 2017, over (ii) the aggregate principal amount of the
Notes being redeemed or paid.  In the
case of any redemption or accelerated payment of notes on or after
July 15, 2017, the Make-Whole Amount means zero.  For purposes of the Indenture and the Notes,
references in the Indenture to the payment of the principal (and premium, if
any) and interest on the Notes shall be deemed to include the payment of the
Make-Whole Amount, if any, due upon redemption with respect to the Notes.  The Make-Whole Amount shall be calculated by
the Company and set forth in an Officer’s Certificate delivered to the Trustee,
and the Trustee shall be entitled to rely on said Officer’s Certificate.

As used herein the term “Reinvestment
Rate” means a rate per annum equal to the sum of 0.35% (thirty-five hundredths
of one percent) plus the yield on treasury securities at constant maturity
under the heading “Week Ending” published in the Statistical Release (as
defined herein) under the caption “Treasury Constant Maturities” for the
maturity (rounded to the nearest month) corresponding to the remaining life to
maturity (which, in the case of maturities corresponding to the principal and
interest due on the Notes at their maturity, shall be deemed to be July 15,
2017), as of the payment date of the
principal being redeemed or paid.  If no
maturity exactly corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Reinvestment Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month.  For purposes of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.

As used herein the term “Statistical
Release” means the statistical release designated “H.15(519)” or any successor
publication which is published weekly by the Federal Reserve System and which
establishes yields on actively traded United States government securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination under the Indenture, then any
publicly available source of similar market data which shall be designated by
the Company.

5.             Mandatory
Redemption.  The Company shall not be
required to make sinking fund or redemption payments with respect to the Notes.

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6.             Notice
of Redemption.  Notice of redemption
shall be mailed at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at its registered
address.  Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed.  On and after the
Redemption Date, interest ceases to accrue on Notes or portions of them called
for redemption.

7.             Denominations,
Transfer, Exchange.  The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. 
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture.  The Security
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. 
The Security Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for redemption.  Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before the mailing of a notice of
redemption of Notes, or during the period between a record date and the
corresponding Interest Payment Date.

8.             Defaults
and Remedies.  In case an Event of
Default (as defined in the Indenture) with respect to the Notes shall have
occurred and be continuing, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the provisions provided in the Indenture.

9.             Actions
of Holders.  The Indenture contains
provisions permitting the Holders of not less than a majority of the aggregate
principal amount of the outstanding Notes, subject to certain exceptions as
provided in the Indenture, on behalf of the Holders of all such Notes at a
meeting duly called and held as provided in the Indenture, to make, give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action provided in the Indenture to be made, given or taken by the
Holders of the Notes, including without limitation, waiving (a) compliance by
the Company with certain provisions of the Indenture, and (b) certain past
defaults under the Indenture and their consequences.  Any resolution passed or decision taken at
any meeting of the Holders of the Notes in accordance with the provisions of
the Indenture shall be conclusive and binding upon such Holders and upon all
future Holders of this Note and other Notes issued upon the registration of
transfer hereof or in exchange heretofore or in lieu hereof.

10.           Persons
Deemed Owners.  The Company, the
Trustee, and any agent of the Company or the Trustee may deem and treat the
Person in whose name this Note is registered on the Security Register as its
absolute owner for all purposes.

11.           Authentication.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

12.           Governing
Law.  THE INTERNAL LAW OF THE
COMMONWEALTH OF MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE
INDENTURE AND THE NOTES.

13.           No
Personal Liability.  THE DECLARATION
OF TRUST OF THE COMPANY, AMENDED AND RESTATED ON AUGUST 21, 1995, A COPY OF
WHICH, TOGETHER 

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WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO (THE “DECLARATION”), IS
DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
MARYLAND, PROVIDES THAT THE NAME “HOSPITALITY PROPERTIES TRUST” REFERS TO THE
TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY
OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF
THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR
ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY.  ALL PERSONS DEALING WITH THE COMPANY, IN ANY
WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR
THE PERFORMANCE OF ANY OBLIGATION.

The Company will furnish to any
Holder upon written request and without charge a copy of the Indenture.  Requests may be made to:

Hospitality Properties Trust

400 Centre Street

Newton, MA 02458

Telecopier No.:  (617) 964-8389

Attention: President

or such other
address as the Company may specify pursuant to the Indenture.

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

[I] [We] assign and transfer this Note to
__________________________________________ __________________________________ [Print or type assignee’s name, address and zip code]
__________________________________ [Insert assignee’s soc.
sec. or tax I.D. no.] and irrevocably
appoint_________________________________________________________ to transfer
this Note on the books of the Company. 
The agent may substitute another to act for him.

Date:  _______________

 

	
  Signature Guaranteed

   

  	
   

  	
   

  
	
  NOTICE: Signature must be guaranteed by an eligible
  Guarantor Institution (banks, stockbrokers, savings and loan associations and
  credit unions) with membership in an approved signature guarantee medallion
  program pursuant to Securities and Exchange Commission Rule 17Ad-15.

  	
   

  	
  NOTICE: The signature to this Assignment must
  correspond with the name as written upon the face of the within Note in every
  particular, without alteration or enlargement or any change whatever.

  

 

 A-7

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