Document:

EX-10.2

Exhibit 10.2

CONSULTING AGREEMENT

This Agreement is being made and entered into this 15th day of March, 2005, by and between Memory
Pharmaceuticals Corp. (the “Company”), and Axel J. Unterbeck, Ph.D. (“Consultant”).

WITNESSETH

WHEREAS, Consultant will no longer be an employee of the Company effective as of April 1,
2005;

WHEREAS, the Company desires to secure services from Consultant to perform those duties
described herein and Consultant desires to provide such services;

WHEREAS, the Company desires to engage Consultant as an independent contractor to perform the
services described herein; and

WHEREAS, the parties desire to state the terms and conditions of Consultant’s services,
effective as of the date of this Agreement, as set forth below.

NOW THEREFORE, in consideration of the mutual promises contained herein, and intending to be
legally bound, the parties hereto hereby declare and agree as follows:

1. CONDITIONED UPON CONSULTANT EXECUTING SEPARATION AGREEMENT. Consultant agrees that this
Consulting Agreement is conditioned upon Consultant’s executing and delivering in a timely manner
and not exercising his right to revoke, the Separation Agreement dated March 15, 2005 (the
“Separation Agreement”). If Consultant fails to do so, then this Consulting Agreement, even if
signed by Consultant and/or Company, shall be null and void.

2. TERM; TERMINATION.

2.1. The term of this Agreement shall commence on April 1, 2005 and shall continue for a
period of six (6) months until September 30, 2005 (the “Term”) or until earlier terminated
by the Company or Consultant as described herein.

2.2. The Company may terminate this Agreement prior to the end of the Term, but only for
“Cause”. For purposes of this Agreement, “Cause” shall have the same meaning as is set forth in
Section 7(b) of Consultant’s January 5, 1998 Employment Agreement. Consultant shall not
be eligible for any further compensation, bonus opportunity or paid benefit continuation if the
consultancy is terminated by the Company for Cause prior to the conclusion of the Term.
Notwithstanding any termination under this paragraph, Consultant shall continue to remain subject
to paragraph 6 herein.

2.3. Consultant may terminate the Consultant Agreement by giving the Company thirty (30)
days’ prior written notice, in which case the Company will pay Consultant any amounts owed to date
plus a bonus of five thousand dollars ($5,000.00), subject to paragraph 4.3. Consultant shall not
be eligible for any further compensation, bonus opportunity or paid benefit continuation if the
consultancy is terminated by Consultant prior to the conclusion of the Term. Notwithstanding any
termination under this paragraph, Consultant shall continue to remain subject to paragraph 6
herein.

3. CONSULTING SERVICES.

3.1. During the Term, Consultant shall use his reasonable best efforts to assist with
projects identified by the CSO or CEO from time to time in areas related to the Company’s R&D
strategy and communications (the “Consulting Services”). Consultant shall be available to
the Company for at least ten (10) hours per week.

3.2. Consultant may work for another person or entity during the Term, provided that
Consultant issue such request in advance and in writing to the CEO and CSO, who shall provide the
Company’s consent to such request if such other person or entity is not in competition with the
Company, but who may provide or withhold such consent in their sole discretion if such other person
or entity is in competition with the Company, in each case within the meaning of Section 4(b) of
the January 5, 1998 Employment Agreement. In any event, Consultant shall remain subject
to the restrictions set forth in paragraph 6.

4. COMPENSATION AND REIMBURSEMENT.

4.1. The Company shall pay Consultant a fee of twelve thousand dollars ($12,000.00) per
month, which shall be payable on a monthly basis. If the consultancy is terminated prior to the
conclusion of the Term, Consultant shall be paid on a pro-rata basis for any work performed through
such last date. The Company shall issue a Form 1099 in connection with the compensation paid to
Consultant pursuant to this Agreement.

4.2. In each case subject to paragraph 4.3, (i) if the Consultant shall voluntarily terminate
this Agreement prior to the end of the Term pursuant to Section 2.3, Consultant shall receive a
bonus of five thousand dollars ($5,000.00) upon such termination; or (ii) if this Agreement is not
terminated by either the Company pursuant to Section 2.2 or the Consultant pursuant to Section 2.3
prior to the expiration of the Term, then at the conclusion of the Term, Consultant shall receive a
bonus of twenty-five thousand dollars ($25,000.00).

4.3. Consultant agrees that at the conclusion of the Term (or sooner if the Consulting
Agreement is terminated prior to the Term’s conclusion), Consultant shall execute and deliver a
General Release in the form annexed hereto as Exhibit 1. The payment of the bonus amount(s)
described in paragraph 4.2 shall be consideration for and conditioned upon Consultant’s execution
and delivery of the General Release.

4.4. The Company will reimburse Consultant for all reasonable home office expenses incurred
by him in the course of the performance of the Consulting Services hereunder. Consultant shall not
have an office at the Company or secretarial support during the Term. The Company will continue to
pay his cell phone and blackberry charges, and his membership dues in those professional societies
of which he is currently a member, during the Term

4.5. The Company will allow Consultant to continue to be a member of its group medical and
dental insurance plans for the benefit continuation period required by applicable law, which shall
be at the Company’s expense during the Term, and, thereafter at the Consultant’s expense for the
remainder of the benefit continuation period required by applicable law. In addition, the Company
will allow Consultant to remain covered by its portable executive disability insurance plan, at the
Company’s expense, during the Term. If Consultant obtains alternate group medical or dental or
alternate executive disability coverage during the Term, Consultant agrees to notify the Company in
writing within two (2) days thereof, in such event, the Company will discontinue immediately its
payments. In addition, if the Term is terminated prior to September 30, 2005 by either party, the
Company shall immediately discontinue its payment of Consultant’s benefit continuation expenses.

4.6. Consultant may continue use of the Company leased car during the Term. Consultant
agrees to inform Company in writing thirty (30) days prior to the end of Term whether he intends to
take over the lease personally after the Term. If the Term is terminated prior to September 30,
2005 by either party, Consultant shall inform the Company within two (2) days of providing or
receiving notice of termination whether he intends to take over the lease personally.

5. INDEPENDENT CONTRACTOR. During the Term of this Agreement, Consultant is an independent
contractor, not an employee or agent of the Company. In performance of this Agreement, Consultant
will be acting as an independent contractor including, without limitation, for federal (including
social security and unemployment), state and local tax purposes. Consultant acknowledges that
Consultant shall have responsibility for payment of all taxes, social security (FICA), withholding,
unemployment insurance tax (FUTA) or other amounts due or becoming due to any taxing authority, and
Consultant further agrees to hold the Company harmless from any and all claims and liability for
such taxes and penalties, and will indemnify the Company for any damages and losses, including
reasonable attorneys’ fees that the Company may incur in defense or payment of any such claim for
taxes or penalties levied against the Company on Consultant’s account by any services covered under
this Agreement. Except as may otherwise be set forth in the Separation Agreement entered between
Consultant and the Company, the only monetary or economic obligation of the Company to Consultant
under the terms of this Agreement is to provide the payments and benefits set forth in paragraph 4
of this Agreement. Consultant acknowledges and agrees that Consultant shall not be entitled to
participate in any pension, group life, health and disability insurance or other employee benefit
plans that may from time to time be offered to employees of the Company, except as otherwise stated
herein Neither party shall have authority to, expressly or impliedly, bind or attempt to bind the
other in contract, debt or otherwise.

6. CONFIDENTIALITY AND NONCOMPETITION AGREEMENT. During the Term, Consultant agrees to
continue to abide by the terms of paragraphs 4, 5, 6, 8 and 9 of the January 5, 1998 Employment
Agreement, as amended, between Consultant and Company (the “January 5, 1998 Employment Agreement”),
which is incorporated herein by reference, and the terms of which shall survive the Term.
Consultant further agrees that the time period referenced in paragraph 4(b) of the January 5, 1998
Employment Agreement shall be extended from one year to eighteen (18) months, commencing on April
1, 2005 and ending on September 30, 2006.

7. MISCELLANEOUS.

7.1. Until and unless this Agreement is publicly disclosed by the Company, Consultant
understands and agrees that this Agreement, and the matters discussed in negotiating its terms, are
entirely confidential. It is therefore expressly understood and agreed that, until such time as
the Company publicly discloses this Agreement, Consultant will not reveal, discuss, publish or in
any way communicate any of the terms, amounts or facts of this Agreement to any person,
organization or other entity, with the exception of disclosure (i) to his immediate family members
and professional representatives (including financial, tax and legal), (ii) to any prospective
employer, but only to the extent necessary to inform such employer concerning any restrictions
relating to confidentiality and non-competition regarding Consultant’s ability to perform services
for such employer; (iii) required by law or by any court, arbitrator, mediator or administrative or
legislative body (including any committee thereof) who has ordered or required Consultant to
disclose or make accessible such information, provided that Consultant will provide the Company
with prompt notice of such order so that it may seek an appropriate protective order or other
appropriate relief; or (iv) with respect to any litigation, arbitration or mediation involving this
Agreement.

7.2. This Agreement constitutes the entire agreement between the parties with respect to the
subject matter hereof, except for the Separation Agreement, the January 5, 1998 Employment
Agreement (as amended, and as modified herein) and the General Release to be executed. This
Agreement may not be assigned by Consultant, and may not be amended or modified, except by the
written consent of both parties hereto. No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder shall operate as a waiver thereof. Headings to
Sections herein are for the convenience of the parties only, and are not intended to be or to
affect the meaning or interpretation of this Agreement. The validity, interpretation and
performance of this Agreement shall be governed by, and construed in accordance with, the internal
law of the State of New Jersey, without giving effect to conflict of law principles. Both parties
agree that the exclusive venue for any action, demand, claim or counterclaim relating to the terms
and provision of this Agreement, or to their breach, shall be in the State or Federal courts
located in the State of New Jersey. All notices required to be delivered under this Agreement
shall be effective only if in writing and shall be deemed given when received by the party to whom
notice is required to be given and shall be delivered personally, or by registered mail if to
Consultant, to his home address as listed in the Company’s records and if to the Company, to the
CEO at the Company’s headquarters.

7.3. Consultant will comply with all applicable laws and regulations in regard to all of
Consultant’s activities relating to this Agreement and the performance of Consultant’s services
hereunder.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

MEMORY PHARMACEUTICALS CORP.

	 	 	 
	/S/ Tony Scullion

	 	March 15, 2005
	 

	 	 
	Tony Scullion, Chief Executive Officer

	 	Date
	 
	 	 
	AXEL J. UNTERBECK, PH.D.

	 	

	 
	 	 
	/S/ Axel J. Unterbeck, Ph.D.

	 	March 15, 2005
	 

	 	 
	
 
	 	Date

1

EXHIBIT 1 to CONSULTING AGREEMENT

GENERAL RELEASE

1. In exchange for Memory Pharmaceuticals Corp. providing Axel J. Unterbeck, Ph.D. with
good and sufficient consideration as recited in the Separation Agreement dated      , 2005
(the “Separation Agreement”) and the Consulting Agreement dated      , 2005 (the “Consulting
Agreement”), Axel J. Unterbeck, Ph.D., his heirs, executors, administrators, successors and assigns
(“Unterbeck”) hereby waives all claims against Memory Pharmaceuticals Corp., including its present
or former parent, subsidiaries, divisions, affiliates, successors, assigns, representatives,
agents, shareholders, officers, directors and employees (collectively the “Company”) and releases
and discharges the Company from liability for any claims or damages Unterbeck may have against it
as of the date of this General Release, including but not limited to any claim relating to the
performance of services pursuant to the Consulting Agreement, whether known or unknown, including,
but not limited to (and to the extent applicable), any alleged violation of the Age Discrimination
in Employment Act, as amended, the Older Worker Benefits Protection Act; Title VII of the Civil
Rights of 1964, as amended; Sections 1981 through 1988 of Title 42 of the United States Code; the
Civil Rights Act of 1991; the Equal Pay Act; the Americans with Disabilities Act; the
Rehabilitation Act; the Family and Medical Leave Act; the Fair Labor Standards Act; the Employee
Retirement Income Security Act of 1974, as amended; the Worker Adjustment and Retraining
Notification Act; the National Labor Relations Act; the Fair Credit Reporting Act; the Occupational
Safety and Health Act; the Uniformed Services Employment and Reemployment Act; the Employee
Polygraph Protection Act; the Immigration Reform Control Act; the retaliation provisions of the
Sarbanes-Oxley Act of 2002; the Federal False Claims Act; the New Jersey Law Against
Discrimination; the New Jersey Domestic Partnership Act; the New Jersey Conscientious Employee
Protection Act; the New Jersey Family Leave Act; the New Jersey Wage and Hour Law; the New Jersey
Equal Pay Law; the New Jersey Occupational Safety and Health Law; the New Jersey Smokers’ Rights
Law; the New Jersey Genetic Privacy Act; the New Jersey Fair Credit Reporting Act; the retaliation
provisions of the New Jersey Workers’ Compensation Law (and including any and all amendments to the
above) and/or any other alleged violation of any federal, state or local law, regulation or
ordinance, and/or contract or implied contract or tort law or public policy or whistleblower claim,
having any bearing whatsoever on his performance of services for the Company, including, but not
limited to, any claim for attorneys’ fees and costs.

2. The terms of the previously executed Separation Agreement are hereby reaffirmed, remain in
full force and effect and are not in any way diminished by the terms of this General Release.

3. This General Release shall be interpreted for all purposes consistent with the laws of the
State of New Jersey, without regard to its conflicts of law provisions. If any clause of this
General Release should ever be determined to be unenforceable, it is agreed that this will not
affect the enforceability of any other clause or the remainder of this General Release or the
Separation Agreement.

4. Unterbeck’s signature below indicates that he is entering into this General Release freely,
knowingly and voluntarily, with a full understanding of its terms. Unterbeck also acknowledges
that he has had a period of at least twenty-one (21) days in which to consider the terms of this
General Release and that he will have seven (7) days from the date he signs this General Release to
revoke it as it pertains to his release of claims under the Age Discrimination of Employment Act,
as amended, by notifying the Chief Executive Officer of Memory Pharmaceuticals Corp. in writing
prior to the expiration of the seven (7) day period.

This General Release may be executed by facsimile signature, which shall be deemed an original.

IN WITNESS WHEREOF, Unterbeck has hereunto set his hand and seal on the      day of      ,
2005.

	 
	 

	AXEL J. UNTERBECK, PH.D.

Subscribed to and Sworn before me

This            day of 2005

     

Notary Public

2Wirespeed Asset Purchase Agreement

Exhibit
10-s

ASSET
PURCHASE AGREEMENT

THIS
ASSET PURCHASE AGREEMENT (this “Agreement”) is
entered into as of January 6, 2005 by and among (i) Analysts International
Corp., a Minnesota corporation (“Buyer”); (ii)
WireSpeed Networks LLC, an Ohio limited liability company (“Seller”); and
(iii) Mark Handermann and Greg Paulson (the “Principals”).

INTRODUCTION:

A. Seller
operates a technology solutions services business (the “Business”)
principally engaged in the delivery of services and sale of products with
respect to the IP telephony and wireless systems of Cisco Systems, Inc.
(“Cisco”).

B. Buyer
desires to purchase substantially all of the assets (other than the Excluded
Assets, as defined below) used in the operation of the Business, and to assume
certain liabilities in connection therewith, and Seller desires to sell and
transfer all of such assets and liabilities to Buyer, upon the terms and subject
to the conditions hereinafter set forth.

C. The
Principals own a majority of the issued and outstanding equity interests of
Seller, and each such Principal owns his Intangible Assets (as defined
below).

D. Buyer
desires to purchase the Intangible Assets from each Principal, and each
Principal desires to sell and transfer the Intangible Assets, upon the terms and
subject to the conditions hereinafter set forth.

AGREEMENTS:

In
consideration for the mutual agreements and covenants set forth below, the
parties hereto agree as follows:

ARTICLE
1.

DEFINITIONS

1.1 Certain
Definitions.
Capitalized terms not defined elsewhere in this Agreement, in Annex
A or in
the Schedules attached to this Agreement have the meanings set forth
below:

(a) “Acquired
Business Revenues” means
any revenues from any company, business or business unit acquired by Buyer or
its Subsidiaries after the Closing Date.

(b) “Acquiring
Company Business Revenues” means
any revenues from any company that acquires Buyer, the Subsidiaries of such
acquiring company, or any company, business or business unit that such acquiring
company or its Subsidiaries acquires after the Closing Date.

 

(c) “Applicable
Percentage” for
each of the Principals means 100%, provided, however, that if a Principal’s
employment with Buyer or its Subsidiaries is terminated for any reason other
than a termination for the convenience by Buyer or it Subsidiaries in accordance
with Section
4.2(d) of such
Principal's Employment Agreement, then for the first day of the Computation
Period in which such termination occurs and thereafter, such Principal’s
Applicable Percentage will be zero percent (0%). 

(d) “Assets” means
the Purchased Assets and the Intangible Assets. 

(e) “Assigned
Contracts” means
those Contracts identified on Schedule
A or the
attachments thereto.

(f) “Closing
Date Adjusted Balance Sheet” means
an unaudited balance sheet of the Business with respect to the Purchased Assets
and Assumed Liabilities as of the Closing Date. The Closing Date Adjusted
Balance Sheet shall be prepared on the basis of accrual accounting and GAAP;
provided, however, that the Closing Date Adjusted Balance Sheet shall not
include any asset not included in the Purchased Assets or any Liability not
included in the Assumed Liabilities, even if such other assets or Liabilities
were reflected in the Financial Statements.

(g) “Computation
Period” means
each twelve fiscal month period ending on Buyer’s fiscal year end, provided,
however, that the first Computation Period shall commence immediately after the
Closing Date and end on Buyer’s 2005 fiscal year end.

(h) “Computation
Statement” means
any written statement substantially in the form attached as Exhibit
B prepared
by Buyer and delivered to Principals, in the case of a Contingent Payments, or
to Seller, in the case of Purchased Assets Purchase Price Adjustment, or by
Seller to Buyer in accordance with Section
3.4(a),
computing in reasonable detail a Contingent Payment or a Purchased Asset
Purchase Price Adjustment in accordance with the terms of this Agreement and
Exhibit
B.

(i) “Contingent
Payment Period” means a
period commencing after the Closing Date and continuing through the end of the
Buyer’s 2008 fiscal year end.

(j) “Cumulative
Distributions” means
the total, cumulative amounts paid (i) under Section
3.5(b) in prior
Computation Periods plus (ii) under Sections
3.4 or
3.5(d) in the
current or prior Computation Periods.

 

(k) “Cumulative
Qualified Earnings” means
the total, cumulative Qualified Earnings during the Contingent Payment
Period.

(l) “Disagreement
Notice” means
any written statement substantially in the form attached hereto as Exhibit
C prepared
by a party (or both Principals in the case of Contingent Payments) receiving a
Computation Statement setting forth in reasonable detail such recipient’s or
recipients’ disagreement with a Computation Statement, or any other disagreement
regarding any claim that any Contingent Payment is due and owing to any of the
Principals, that a Purchased Assets Purchase Price Adjustment is not proper. As
contemplated by Exhibit
C, such
Disagreement Notice shall identify
the specific items 

2

 

involved
and the dollar amount of each such disagreement and provide reasonable
supporting documentation for each such disagreement.

(m) “Independent
Accountant” means
any independent accountant that shall be a firm of independent accountants
mutually agreed to by Seller and the Buyer that is not and has not been within
the prior three years a regular auditor of Seller or Buyer.

(n) “Net
Asset Value” means
an amount equal to (i) the aggregate book value of the Purchased Assets
reflected on the Closing Date Adjusted Balance Sheet, less (ii) the
aggregate book value of the Assumed Liabilities reflected on the Closing Date
Adjusted Balance Sheet.

(o) “Net
Asset Value Adjustment” means
an amount equal to (i) the Net Asset Value as reflected on the Closing Date
Adjusted Balance Sheet less (ii)
$250,000.

(p) 
“Qualified
Earnings” means
for each Computation Period during the Contingent Payment Period, an amount
equal to (i) all Qualified Revenues during such Computation Period, less (ii) all
Qualified Expenses during such Computation Period.

(q) “Qualified
Expenses” means
the following costs paid or accrued: (i) all costs of all personnel of Buyer or
its Subsidiaries performing the Qualified Services, including, without
limitation, all compensation, benefits, and incidental expenses allocable to
performance of the Qualified Services; (ii) all amounts paid or payable to
subcontractors performing the Qualified Services; (iii) fully-loaded costs of
goods sold of any Qualified Product Sales; (iv) Recruiting Charges; and (v) any
and all expenses associated with the creation or anticipated creation of revenue
including, but not limited to, advertising, marketing, facility expenses, office
and office products costs and salaries of managers and other administrative
sales and recruiting resources dedicated in whole or in part to the generation
of Qualified Revenues, but excluding corporate overhead and acquisition costs,
if any. If personnel are partially dedicated to the performance of Qualified
Services, the Controller of Buyer and Seller shall negotiate to determine the
appropriate percentage of that expense to be included in Qualified Expenses. The
Controller of Buyer shall determine whether or not an expense is a Qualified
Expense, subject to the rights of the Seller under Section
3.6 of this
Agreement.

(r) “Qualified
Product Sales” means
all (i) products, except Storage Related Products, sold by Cisco and resold by
Buyer; and (ii) products, except Storage Related Products, of Cisco and other
manufacturers sold by Buyer in connection with an engagement to install IP
telephony, basic switch routing, security, wireless infrastructure or to provide
consulting services in these areas, in each case during the Contingent Payment
Period.

(s) “Qualified
Revenues” means
(i) each item of revenue actually collected by Buyer or its Subsidiaries from
the rendition of Qualified Services, and (ii) each item of revenue actually
collected from Qualified Product Sales. Qualified Revenues includes all Acquired
Business Revenues, but does not include
Acquiring Company Business Revenues.

3

 

(t) “Qualified
Services” means
all Cisco product, except Cisco Storage Related Products, IP telephony and
wireless related services provided to Buyer’s clients and performed by personnel
of or subcontractors to Buyer, or its Subsidiaries, in each case during the
Contingent Payment Period.

(u) “Recruiting
Charges” means,
unless otherwise negotiated and agreed in writing by Seller and Buyer, an amount
equal to $4,000 per hire. When special recruiting programs are created by the
Buyer or its Subsidiaries to recruit its or their resources required to deliver
Qualified Services, the Buyer and the Principals will negotiate the Recruiting
Charges appropriate prior to commencement of such special recruiting
programs.

(v) 
“Storage
Related Products”
includes hard disk, optical and tape drivers, flash memory, SAN, FAS and NAS
systems, tape libraries, fiber channel switches and components, SCSI over IP,
and backup and recovery related products.

 

 

ARTICLE
2.

PURCHASE
OF ASSETS

2.1 Purchase
of Purchased Assets. 

(a) Purchased
Assets. Subject
to the terms and conditions of this Agreement, Seller hereby agrees at Closing
to assign, sell, transfer, convey, and deliver to Buyer, and Buyer hereby agrees
to purchase from Seller at Closing, all of Seller’s rights, title and interest
in and to all of its assets, including, but not limited to, those Assigned
Contracts and all other assets listed on the attached Schedule
A, but
excluding the Excluded Assets (the “Purchased
Assets”), free
and clear of all Liens.

(b) Excluded
Assets.
Notwithstanding anything herein to the contrary, Seller shall retain all of its
rights, title and interest in and to, and there shall be excluded from sale,
assignment or transfer to Buyer hereunder, only those assets set forth on the
attached Schedule
B (the
“Excluded
Assets”). 

 

2.2 Assumption
of Assumed Liabilities. 

 

(a) Assumed
Liabilities. At
Closing, Buyer hereby agrees to assume and fully perform, pay, and
discharge when due, in
accordance with the terms thereof, only those Liabilities of Seller set forth on
Schedule
C (the
“Assumed
Liabilities”).

(b) No
Assumption of Excluded Liabilities. Except
as expressly set forth in Section
2.2(a), Buyer
shall not assume any Liabilities of the Seller or the Principals of any kind or
nature whatsoever, whether fixed or contingent, known or unknown, determined or
determinable, due or not yet due (collectively, the “Excluded
Liabilities”).
Without limiting the generality of the foregoing sentence, Buyer specifically
disclaims assumption of any Liabilities with respect to claims asserted with
regard to Seller’s operation of its business prior to or after the date of this
Agreement, or any Liabilities out of or relating to relationships and dealings
of the Seller or the Principals with third 

4

 

parties,
whether under contract or otherwise, or with its employees, customers, vendors,
business partners or Principals.

2.3 Purchase
of Intangible Assets.

 

(a) Acknowledgments. It is
acknowledged that each Principal owns individually certain intangible assets
that are based on and related to each such Principal’s long-standing
relationship with key personnel at Cisco and with customers of the Business
which have resulted in the generation of a significant amount of ongoing
business revenues for Seller (the “Intangible
Assets”) and
that the Intangible Assets that have been developed by each Principal are
personal to each Principal. 

(b) Purchase. Subject
to the terms and conditions of this Agreement, the Principals hereby agree at
Closing to assign, sell, transfer, convey, and deliver to Buyer, and Buyer
hereby agrees to purchase from the Principals at Closing, all of the Principal’s
rights, title and interest in and to all of the Intangible Assets.

2.4 Cisco
and Other Customers. The
parties acknowledge that Buyer has or will enter into a new agreement with Cisco
in connection with the conduct of the Business by Buyer after Closing, and that
Buyer is not assuming Seller’s existing agreement with Cisco. Buyer is assuming
certain, but not all of, Seller’s contracts with other customers of Seller.
Seller and the Principals covenant and agree (a) to use their best efforts to
cause Cisco, as soon as possible after Closing, to enter into new statements of
work with Buyer under Buyer’s new agreement with Cisco with respect to all Cisco
statements of work with Seller which are pending as of Closing, and (b) to
transfer Seller’s and the Principal’s relationships and work flow with Cisco and
other customers to Buyer and to cooperate with and assist Buyer in all matters
related thereto.

 

 

ARTICLE
3.

PURCHASE
PRICE AND PAYMENT TERMS

3.1 Purchased
Assets Purchase Price. The
purchase price (the “Purchased
Assets Purchase Price”) for
the Purchased Assets shall be an amount equal to the sum of the following,
subject to adjustments after Closing as set forth in Section
3.4:

(a) Cash
Closing Payment.
$1,750,000 (the “Cash
Closing Payment”) which
shall be paid at Closing pursuant to a wire transfer to a Seller bank account
designated by Seller.

(b) Escrow
Amount.
$650,000 (the “Escrow
Amount”), of
which:

(i) Cash
Escrow Amount.
$250,000 (the “Cash
Escrow Amount”) shall
be paid at Closing pursuant to a wire transfer to the Escrow Agent,
and 

(ii) Share
Escrow Amount.
$400,000 (the “Share
Escrow Amount”) shall
be paid in shares (the “Shares”) of
Common Stock of Buyer pursuant
to the delivery to the Escrow Agent promptly after Closing of a stock
certificate duly registered in Escrow Agent’s name for a number of shares of
Buyer Common

5

 

Stock
equal to the Share Escrow Amount divided by the Average Market Price. At or
promptly after Closing, Buyer agrees to instruct its transfer agent to deliver a
stock certificate to the Escrow Agent.

(c) Assumed
Liabilities. An
amount equal to the Assumed Liabilities.

3.2 Intangible
Asset Purchase Price. The
purchase price for the Intangible Assets payable to each Principal (the
“Intangible
Assets Purchase Price,” and
together with the Purchased Asset Purchase Price, the “Purchase
Price”) shall
be an amount equal to the Contingent Payments, if any, payable to such Principal
in accordance with Section
3.3.

 

3.3 Contingent
Payments. As the
Intangible Asset Purchase Price, Buyer agrees to pay to each Principal the
Contingent Payments owing, if any, pursuant to the following terms:

 

(a) Contingent
Payments. If at
the end of any Computation Period, the Cumulative Qualified Earnings from the
Closing Date through the end of such Computation Period exceeds the target set
forth below (the “Cumulative
Qualified Earnings Target”), then
for such Computation Period, each Principal shall be entitled to be paid in
accordance with Section
3.3(b) an
amount equal to (i) (A) each such Principal’s Applicable Percentage times (B)
the Cumulative Qualified Earnings in excess of the applicable Cumulative
Qualified Earnings Target times (C) 16.5%, less (ii) any
Contingent Payments made in prior Computation Periods to such Principal. Each
payment made under this Section
3.3(a), a
“Contingent
Payment”). The
total amount of Contingent Payments paid under this Section 3.3(a) shall not
exceed $2,800,000.

	
      Computation
      Period
	Cumulative
      Qualified Earnings Target

	
      Buyer
      2005 Fiscal Year End
	$3,880,000

	
      Buyer
      2006 Fiscal Year End
	$6,130,000

	
      Buyer
      2007 Fiscal Year End
	$9,580,000

	
      Buyer
      2008 Fiscal Year End
	$14,800,000

(b) Computation
and Payment. Within
ninety days after the end of each Computation Period, Buyer shall provide the
Principals with a Computation Statement setting forth the Contingent Payments
then due and owing for such Computation Period. Within ten business days after
acceptance or finalization of the Computation Statement with respect thereto,
Buyer shall pay the Contingent Payments then due and owing to the Principals for
such Computation Period. 

(c) Subordination.
Reference is hereby made to that certain Credit Agreement dated as of April 11,
2002, by and among General Electric Capital Corporation, a Delaware corporation,
individually as a lender and as agent (“Agent”) and security trustee for the
lenders, the other credit parties signatory from time to time thereto, and
Buyer, as amended or otherwise modified from time to time (the “Credit
Agreement”). The
rights of the Principals hereunder are subordinated and subject in right of
payment, as set forth below, to the prior payment in full in cash of the
Obligations (as defined in the Credit Agreement).

6

 

(i) Notwithstanding
the terms of the foregoing Section
3.3, the
Buyer hereby agrees that it may not make, and each Principal hereby agrees that
he will not accept, any payment with respect to the Contingent Payments at any
time an Event of Default (as defined in the Credit Agreement) exists under the
Credit Agreement or would exist after giving effect to the making of such
payment. The Buyer may resume such payments (and may make any such payment
missed due to the application of this paragraph) upon a cure or waiver of such
Event of Default. 

(ii) Until the
prior payment in full in cash of the Obligations, (A) each Principal shall have
no right for a period of 90 days after written notice to Agent (at the addresses
set forth in the Credit Agreement) of the occurrence of a breach or default
under this Agreement, to sue for payment of, or to initiate or participate with
others in any suit, action or proceeding against Buyer to (1) enforce payment of
or to collect the whole or any part of any amount owing or claimed owing to such
Principal under Section
3.3 of this
Agreement or (2) commence judicial enforcement of any of the rights and remedies
under this Agreement or applicable law with respect thereto, and (B) each
Principal shall have no right to initiate or participate with others in any
action under the provisions of any state or federal law with respect to Buyer,
including, without limitation, Title 11 of the United States Code, 11 U.S.C.
§§ 101 et seq. or other applicable bankruptcy, insolvency or similar
laws.

(iii) In the
event a Principal receives any payment in contravention of the terms hereof,
such Principal shall hold such funds in trust and promptly turn such funds over
to Agent. Each Principal hereby acknowledges and agrees that Agent and Lenders
(as defined in the Credit Agreement) are relying on the subordination provisions
set forth herein and are third party beneficiaries of such provisions with the
right to enforce the terms hereof. The terms of such subordination provisions
may not be amended or otherwise modified without the prior written consent of
Agent in each instance.

 

3.4 Adjustments
to the Purchased Assets Purchase Price. The
Purchased Assets Purchase Price shall be subject to the following adjustments
(the “Purchase
Asset Purchase Price Adjustments”):

 

(a) Net
Asset Value Adjustment. The
Purchased Assets Purchase Price shall be increased or decreased, as the case may
be, by an aggregate amount equal to the Net Asset Value Adjustment.

(i) Net
Asset Value Adjustment. If the
Net Asset Value Adjustment is positive, then the Purchased Assets Purchase Price
shall be increased by the amount of the Net Asset Value Adjustment. If the Net
Asset Value Adjustment is negative, then the Purchased Assets Purchase Price
shall be decreased by the amount of the Net Asset Value Adjustment.

7

 

(ii) Computation
and Payment. Within
thirty days after the Closing Date, Seller shall provide the Buyer with a
Closing Date Adjusted Balance Sheet and a Computation Statement setting forth
the Net Asset Value Adjustment. Buyer shall have thirty days following the
provision of a Closing Date Adjusted Balance Sheet and Computation Statement to
review, audit and accept the same. Within ten business days after acceptance of
such Computation Statement, (A) Buyer shall pay to Seller the Net Asset Value
Adjustment if it is positive, and (B) Buyer shall instruct the Escrow Agent to
pay to Buyer the Net Asset Value Adjustment if it is negative.

 

(iii) Preliminary
Net Asset Value Adjustment.
Notwithstanding anything to the contrary in this Article, at or before Closing
and by mutual written agreement of Seller and Buyer, Seller and Buyer may make
an estimate of the Net Asset Value Adjustment, and may make a preliminary
adjustment to the Cash Closing Payment based thereon, in which case the
computations and payments under this Section
3.4(a)(ii) shall
take into account such preliminary adjustment.

 

(b) Uncollected
Receivables Adjustment. The
Purchased Assets Purchase Price shall be decreased, if applicable, by an
aggregate amount equal to the Uncollected Receivables Adjustment.

(i) Uncollected
Receivables Adjustment. If any
accounts receivable included in the Purchased Assets are not collected in full
within 180 days after the Closing Date (the “Collection
Date”), the
Purchased Assets Purchase Price shall be reduced by the amount thereof plus any
collection costs incurred by Buyer in connection therewith (the “Uncollected
Receivable Adjustment”) and
any remaining accounts receivable shall be assigned and returned ”as is” and
without any representation or warranty to Seller for collection. Buyer agrees to
use the same efforts that it customarily uses for its other receivables to
collect such accounts receivable prior to the Collection Date.

(ii) Computation
and Payment. After
the Collection Date, Buyer may provide Seller with a Computation Statement of
the Uncollected Receivables Adjustment and Seller shall have ten days to review,
audit and accept such Computation Statement. Within ten business days after
acceptance of such Computation Statement, Buyer shall direct the Escrow Agent to
pay the entire Uncollected Receivables Adjustment to Buyer. 

 

(c) Minimum
Qualified Revenues Adjustment. The
Purchased Assets Purchase Price shall be decreased, if applicable, by an
aggregate amount equal to the Minimum Qualified Revenues
Adjustments.

(i) Minimum
Qualified Revenues Adjustment.
Starting with the Computation Period ending on Buyer’s 2005 fiscal year end, for
each such Computation Period during the Contingent Payment Period if the total
amount of Qualified Revenue during the twelve fiscal months prior thereto is
less than the revenues of Buyer and Seller for 2004 in total that would
otherwise meet the 

8

 

definition
of Qualified Revenues (which the parties estimate as of the date hereof to be
approximately $12,000,000), then the amount of the Purchased Assets Purchase
Price shall be reduced by an amount equal to the amount of the Scheduled
Periodic Release of the Escrow amount for such Computation Period in which such
Qualified Revenues are less than such amount (each such adjustment, a
“Minimum
Qualified Revenues Adjustment”).

(ii) Computation
and Payment. Buyer
may provide Seller with a Computation Statement of each Minimum Qualified
Revenues Adjustment as part of the Computation Statement to be delivered under
Section
3.5(c), which
adjustment shall be paid as set forth therein. 

 

3.5 Escrow
Amount.

(a) Escrow
Agent. At
Closing, Seller and Buyer shall enter into an escrow agreement (the
“Escrow
Agreement”) with a
third party escrow agent selected by Buyer (the “Escrow
Agent”), whose
fees shall be paid by Buyer. The form of such Escrow Agreement, once finalized,
shall be attached hereto as Exhibit
A. As will
be further described in the Escrow Agreement, distributions of the Escrow
Amount, with any interest earned thereon, shall be disbursed by the Escrow Agent
to Seller or Buyer, as the case may be, within ten days after written
instructions provided by Buyer to the Escrow Agent along with a copy thereof to
Seller, provided Seller has not timely delivered its Objection Notice (as
defined therein). Buyer agrees to issue instructions when and as required under
this Agreement. 

 

(b) Periodic
Releases. As of
the end of each Computation Period commencing for the Computation Period ending
on Buyer’s 2005 fiscal year end, Seller shall be entitled to receive from the
Escrow Amount an amount equal to the following (the “Scheduled
Periodic Releases”),
provided that the following is subject to Section
3.4(c):

 

	
      Computation
      Period
	
      Cash
      Escrow Amount
	
      Share
      Escrow Amount

	
      Buyer
      2005 Fiscal Year End
	
      $125,000
      less Cumulative Distributions from the Cash Escrow Amount.
	
      $133,333
      less Cumulative Distributions from the Share Escrow
  Amount.

	
      Buyer
      2006 Fiscal Year End
	
      $250,000
      less Cumulative Distributions from the Cash Escrow Amount.
	
      $266,666
      less Cumulative Distributions from the Share Escrow
  Amount.

	
      Buyer
      2007 Fiscal Year End
	
      N/A
	
      $400,000
      less Cumulative Distributions from the Share Escrow
  Amount.

	
      End
      of Contingent Payment Period
	
      N/A
	
      N/A

(c) Computation
of Periodic Release; Disbursement. Within
ninety days after the end of each Computation Period, Buyer shall deliver to
Seller a Computation Statement showing the Minimum Qualified Revenues
Adjustment, if any, and the amount 

9

 

of the
Scheduled Periodic Releases to be released to Seller in accordance with
Section
3.5(b) (subject
to Section
3.4(c)). Seller
shall have thirty days to review and accept such Computation Statement. Within
ten business days after acceptance or finalization of such Computation Statement
by Seller, Buyer shall instruct the Escrow Agent to disburse to Seller the
amount required by Section
3.5(b) or to
Buyer pursuant to Section
3.4(c).

 

(d) Indemnifiable
Loss. In the
event any Indemnifiable Loss is not paid by Seller or any Principals when due,
Buyer shall be entitled to be paid the amount thereof from the Escrow Amount. If
such Indemnifiable Losses are not paid when due, and such failure continues for
a period of ten days after demand by Buyer to Seller, Buyer may instruct the
Escrow Agent to disburse to Buyer the amount of any such unpaid Indemnifiable
Losses.

(e) Cash;
Shares. Unless
otherwise agreed in writing by Seller and Buyer, any disbursements of the Escrow
Amount under Section
3.4 or 3.5
shall be allocated on a pro rata basis between the Cash Escrow Amount and the
Share Escrow Amount based on the original amounts thereof, and any shares of
Buyer Common Stock shall be valued for purposes of such disbursement based on
the price used for purposes of Section
3.1(b)(ii) (as
equitably adjusted for stock splits and the like after the Closing
Date).

(f) Excess
Purchased Assets Purchase Price Adjustments and Indemnifiable
Losses. In the
event any Purchased Asset Purchase Price Adjustments or Indemnifiable Losses are
not able to be paid from the Escrow Account due to lack of available escrowed
funds, Seller and the Principals shall pay to Buyer such amounts within ten days
after written demand.

 

3.6 Acceptance
or Finalization of Computation Statements;
Disagreements. The sole
and exclusive manner for resolution of any disagreements or other disputes
regarding the amount of any Contingent Payments due and owing, if any, and/or
the amount of any Purchased Assets Purchase Price Adjustments, if any, or the
inclusion or exclusion of any item affecting the computation thereof, shall be
as follows, and the parties hereby waive any right to bring any claim based
thereon in any court (other than to enforce the provisions of this Section
3.6 or to
enforce its or their rights as a result of a determination in accordance with
the following):

(a) Actual
Results of Operations. The
Contingent Payments due and owing, if any, to the Principals and the amount of
any Purchased Assets Purchase Price Adjustments, if any, shall be computable and
payable solely based on actual results of operation by Buyer and its
Subsidiaries of their businesses, including the Business. Buyer and their
Subsidiaries shall have sole and absolute discretion to operate their businesses
in the manner they deem appropriate, and without limiting the generality of the
foregoing, they will not have any duty to operate their businesses in any manner
to increase any Contingent Payments otherwise payable, or to take any action to
avoid a Purchased Assets Purchase Price Adjustment. Buyer makes no
representations or warranties regarding the amount, if any, that may be payable
in connection with the Contingent Payment, or the amount of any Purchased Assets
Purchase Price Adjustment. Seller and the Principals irrevocably waive, and
covenant not to assert, any claim that the Seller and/or the Principals would or
may have realized greater Contingent Payments, or 

10

 

would
have suffered less of a reduction in the Purchased Assets Purchase Price, or
realized other benefits, or avoided other detriments, had Buyer or its
Subsidiaries managed their businesses differently or taken, or failed to take,
other actions or inactions. 

(b) Unique
Nature. Seller
and the Principals understand and acknowledge the unique nature of the
transactions contemplated by this Agreement, and that Buyer’s and its
Subsidiaries’ operation of the Business as a new business unit of Buyer requires
an analysis of profitability that is different from those of Buyer’s other
business units. Seller’s, the Principals’ and the Independent Accountant’s
review of the decisions made by Buyer and its representative, including its
Chief Financial Officer, in determining any Computation Statement or any item
affecting such Computation Statements shall not consider Buyer’s policies or
procedures in other business units of Buyer in determining the appropriateness
of those decisions. The sole purpose of the reviewer is to determine whether or
not the decision of the representatives of Buyer, including its Chief Financial
Officer, in determining a Computation Statement or any item
affecting such Computation Statements not based upon any fact and is without any
reasonable judgment.

(c) Acceptance. At any
time Buyer and Seller may agree in writing upon a Computation Statement with
respect to a Purchased Assets Purchase Price Adjustment, and at any time Buyer
and both of the Principals may agree in writing upon a Computation Statement
with respect to any Contingent Payments, and when so agreed, such Computation
Statement shall be final and binding upon the parties.

 

(d) Notice
Period; Disagreement Notice. A
Computation Statement shall become final and binding upon the parties thirty
days (or if less, the periods set forth above) after delivery by the party
providing such Computation Statement to the party or parties to receive such
Computation Statement, unless such party or parties (both of the Principals in
the case of a Contingent Payment) deliver to the party providing such
Computation Statement a Disagreement Notice with respect to such Computation
Statement within such thirty day period (of if less, the periods set forth
above). After delivery of such a Disagreement Notice, the party or parties
providing such Disagreement Notice may not introduce additional disagreements
with respect to any item in such Computation Statement or increase the amount of
any disagreement identified in the Disagreement Notice, and any item not
identified in the Disagreement Notice shall be deemed to be agreed to by the
party or parties receiving such Computation Statement. If the
party or parties receiving the Computation Statement timely provides a
Disagreement Notice in the proscribed form, during the thirty-day period
following receipt of the Disagreement Notice, Buyer and Seller or the
Principals, as the case may be, will negotiate in good faith to resolve their
disagreement in writing. If Buyer and Seller or the Principals, as the case may
be, shall so resolve their disagreement, the Computation Statement shall become
final as so agreed. Failing such resolution, the issues that remain in dispute
shall be resolved as set forth below.

 

(e) Elevation
to Senior Management. Failing
resolution of such disagreements during the thirty days period contemplated by
set forth in Section
3.6(d), the
issues that remain in dispute shall referred to one or more members of senior
management. For a period of ten days after expiration of such thirty day period,
such 

11

 

member or
members of senior management and Seller or the Principals, as the case may be,
will negotiate in good faith to resolve their disagreement. Failing such
resolution, either party at the end of such additional ten day period may refer
the matter to the Independent Accountant for resolution as set forth below by
providing written notice of such disagreement and submission to the Independent
Accountant and to the other party. 

 

(f) Independent
Accountant Resolution. The
resolution by the Independent Accountant shall not constitute or entail an
audit. The Independent Accountant shall make its resolution based solely on
presentations and supporting material provided by the parties and not pursuant
to any independent review. The Independent Accountant will only consider those
items and amounts set forth in the Computation Statement as to which Buyer and
Seller or the Principals, as the case may be, have disagreed within the time
periods and on the terms specified above. The decision of the Independent
Accountant shall be limited to whether the Computation Statement and the
calculation of any Contingent Payments and adjustments to the Purchased Assets
Purchase Price was done in accordance with this Agreement. The Independent
Accountant shall not have any authority to decide any other matter. Buyer and
Seller shall make readily available to the Independent Accountant all relevant
information, books and records and any work papers relating to such matters and
all other items reasonably requested by the Independent Accountant. The
Independent Accountant shall be instructed to submit the results of its
examination within thirty calendar days. Any amounts so recalculated shall be
final and binding on the parties, and the Computation Statement, and the
resulting Contingent Payments, Supplemental Payments or adjustments to the
Purchased Assets Purchase Price, or determination of the Accelerated Escrow
Release Amount, as applicable, shall become final as adjusted to reflect such
recalculated amounts. The Independent Accountant shall make a ratable allocation
of its charges for such work as a part of its determination based on the
proportion by which the amount in dispute was determined in favor of one party
or the other.

 

(g) Minor
Disagreements.
Notwithstanding Sections 3.6(e) and 3.6(f), if following the thirty day period
set forth in Section
3.6(d), the
amount of the disagreement set forth in the Disagreement Notice impacts the
amount due to or from Seller or the Principals by in total $2,500, the Chief
Executive Officer of Seller and the Controller of Buyer shall meet and confer to
resolve the disagreement. If they are unable to resolve their disagreements, the
amount in disagreement (but in no event more than $2,500 in total) shall be
split equally. Further, this Section
3.6(g) shall no
longer apply once the total cumulative amount of all disagreements to which this
Section
3.6(g) applies
equals or exceeds $10,000.

(h) Failure
to Deliver Computation Statement. If
Buyer or Seller has not delivered a Computation Statement but Seller, the
Principals or Buyer, as the case may be, in good faith and reasonably believes
that Buyer or Seller, as the case may be, should have delivered a Computation
Statement, Seller, the Principals or Buyer, as the case may be, may deliver a
Disagreement Notice with respect to such failure. Within thirty days thereafter,
Buyer or Seller, as the case may be, shall deliver a Computation Statement
(which may indicate, among other things, that no amounts are due and owing).
Such 

12

 

Computation
Statement shall be subject to the dispute resolution procedures set forth
above.

3.7 Certain
Tax Matters.

(a) Allocation
of Purchase Price.
Following Closing, Buyer shall allocate the Purchase Price among the Assets in
accordance with Section 1060 of the Code and other applicable Laws, and once
such allocation is made, shall provide a copy thereof to the Seller. The parties
will, to the extent permitted by applicable Law, adopt and utilize the amounts
allocated to each asset or class of assets, as such allocations may be adjusted
pursuant to this Agreement, for purposes of all federal, state, local and other
tax returns or reports, in any claim for refund, or otherwise with respect to
such tax returns or reports. Each party agrees to timely file an IRS Form 8594
reflecting the allocation of the Purchase Price and the Assumed Liabilities
among the Assets for the taxable year that includes the Closing and to timely
file any comparable or similar forms required by applicable state, local, and
foreign tax laws. In the event of any adjustments to the Purchase Price, the
parties shall prepare and timely file a supplemental asset acquisition statement
on IRS Form 8594 in accordance with the rules under Section 1060 of the Code and
the Treasury regulations issued thereunder and shall prepare and timely file any
comparable or similar form required by applicable state, local, and foreign tax
laws. No party
shall, after filing any IRS Form 8594 (or comparable or similar form), or any
supplement thereto, revoke or amend such form without the prior written consent
of the other. 

(b) Contingent
Payments. Any
Contingent Payment shall be treated for tax purposes as the total consideration
paid for the Intangible Assets under this Agreement to the extent such
characterization is proper and permissible under relevant tax
authorities.

(c) Adjustments. Any
Purchased Assets Purchase Price Adjustments under this Article shall be treated
for tax purposes as an adjustment of the total consideration paid for the
Purchased Assets under this Agreement to the extent such characterization is
proper and permissible under relevant tax authorities.

(d) Transfer
Taxes. Seller
shall pay any Transfer Taxes, if any, arising out of the sale or transfer of the
Assets contemplated by this Agreement.

 

 

ARTICLE
4.

REPRESENTATIONS
AND WARRANTIES OF SELLER AND THE PRINCIPALS

Except as
expressly set forth in the Seller
Disclosure Schedule (with
references to Sections of the Seller Disclosure Schedule referencing Sections of
this Article
4 as
applicable), Seller and the Principals, jointly and severally, represent and
warrant to Buyer as of the date hereof and as of the Closing Date as follows,
with the intention that Buyer may rely upon the same, and acknowledge that the
same shall survive the consummation of this transaction: 

13

 

4.1 Organization
of Seller. Seller
is a
limited liability company duly
organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Seller is
duly qualified as a foreign limited liability company in all jurisdictions where
required by applicable Law to be so qualified. All of the outstanding equity
interests in the Seller are owned directly by the Principals. Complete
and correct copies of Seller’s organizational documents, each as amended to
date, have been made available to Buyer.

 

4.2 Authority.
Seller
has full limited liability company power and authority to own,
lease and operate its property and assets constituting the Business and to
conduct the Business as it is currently being conducted. The execution, delivery
and performance by Seller of this Agreement and the other Transaction Documents
and the consummation by Seller of the
transactions contemplated hereby and
thereby have been duly authorized and approved by the members of Seller, and no
other limited
liability company, equity
owner or other action is necessary for the authorization, execution, delivery
and performance by Seller of this Agreement and the Transaction Documents or the
consummation of the transactions contemplated hereby or thereby. This
Agreement has been, and at
the Closing each of the Transaction Documents will be, duly
executed and
delivered by Seller and the
Principals, as applicable, and
this Agreement is, and at the Closing each of the Transaction Documents will
be,
a legal,
valid and binding obligation of
Seller and the Principals, as applicable, enforceable in accordance with its and
their terms, subject to Enforcement Exceptions.

 

4.3 Consents.
Except
for those consents, approvals or notices set forth in Section
4.3 of the
Seller Disclosure Schedule (the “Required
Consents”),
neither
the execution, delivery or performance by Seller or the Principals of this
Agreement or the other Transaction Documents or the consummation by Seller and
the Principals of the transactions contemplated hereby or thereby does not and
will not (a) violate or conflict with any provision of the governing
documents of Seller, (b) require any consent, approval or notice under, conflict
with or result in the breach, lapse, cancellation or termination of, or
constitute a default under, or result in the acceleration (in each case, with or
without the giving of notice or the lapse of time or both) of any right or
obligation of, or the performance by, Seller under, or result in a loss of any
benefit to which Seller is entitled or result in any penalty or adverse
consequence under, any Assigned Contract or any plan, permit, authorization or
approval which is a Purchased Asset, (c) result in the creation or imposition of
any Lien on any of the Assets, or (d) with or without the giving of notice or
the lapse of time or both, violate, result in the breach of or require any
consent, approval, filing or notice under any provision of any Law or
Governmental Order to which Seller, the Business or any of the Assets is
subject. 

 

4.4 Financial
Information.

 

(a) Financial
Statements. Set
forth as Section
4.4(a) of the
Seller Disclosure Schedule is the unaudited balance sheet (the “Interim
Balance Sheet”) of
Seller as of the date indicated therein (the “Interim
Balance Sheet Date”) and
the related unaudited profit and loss statement for the interim period therein
as of the date indicated therein (collectively, the “Financial
Statements”). The
Financial Statements (i) are true, correct and complete in all material respects
and have been prepared in accor-dance with the books and records regularly
maintained by Seller as consis-tently applied and maintained through-out the
periods indicated, and (ii) fairly present in all material respects the

14

financial
condition and the results of operations, changes in members' equity and cash
flow of Seller as of the Interim Balance Sheet Date and for the periods
indicated therein in accordance
with GAAP, subject to normal recurring year-end adjustments (the effect of which
will not, individually or in the aggregate, be adverse to the financial
condition of Seller in any material respect) and the absence of notes. The
Financial Statements reflect the consistent application of such accounting
principles throughout the periods involved.

(b) Undisclosed
Liabilities. Except
to the extent reflected in the Financial Statements, Seller does not have any
Liabilities, other than (i) accounts payable and accrued Liabilities incurred in
the ordinary course of business and consistent with past practice since the date
of the Financial Statements, (ii) Liabilities incurred in connection with the
consummation of the transactions contemplated hereby, and (iii) executory
obligations under Contracts which GAAP does not require to be reflected on
balance sheets.

 

4.5 Absence
of Certain Changes or Events.  Since the
date of the Financial Statements, the Business has been conducted in the
ordinary course consistent with past practice and: (a) Seller has not disposed
of or otherwise transferred any assets other than in the ordinary course of
business; (b)
Seller has paid account payables and other debt, and has collected receivables,
in the ordinary course of business; (c) there has been no change in the
condition and repair of the Equipment such that such condition and repair are
inconsistent with the uses in which such Equipment are employed in the Business,
ordinary wear and tear excepted; (d) there has been no purchase commitment with
respect to the Business inconsistent with past practice or in excess of the
normal, ordinary and usual requirements; (e) there has been no material increase
or decrease in the Business’s advertising or other expenditures; and (f) there
has been no event that has had or would reasonably be expected to have a
Material Adverse Effect.

 

4.6 Governmental
Authorizations. Seller
currently holds all Governmental
Authorizations used
primarily in and
necessary for the conduct of the
Business as currently conducted
by Seller. Such Governmental Authorizations are valid and in full force and
effect, and Seller is in compliance with Governmental
Authorizations. Seller
has made available to Buyer true, correct and complete copies of all of such
Governmental Authorizations.

 

4.7 Compliance
with Laws.
The Business
is being conducted and at
all times has been conducted, in
compliance with all
Laws applicable thereto and to
the Assets, and
Seller has not received any written
notice within the two years prior to date hereof to the effect that the Business
is not in compliance with any applicable Law. 

 

4.8 Litigation. There is
no
Proceeding by any
Person or
Governmental Authority,
currently outstanding or pending or, to the
knowledge of Seller,
threatened, nor has
there been since inception of Seller, in any case that relates
to or
involves Seller,
the Assets, the Business, the
Principals or the transactions contemplated hereby. There are no
unsatisfied Judgments that
relate to
Seller, any of the Purchased Assets, the
Business or the
Principals. 

 

4.9 Title
and Sufficiency of Assets.

15

 

(a) Title. Seller
is the true and lawful owner, and has good title to, all of the assets (tangible
or intangible), including, without limitation, the Purchased Assets, purported
to be owned by Seller, free and clear of all Liens. Each Principal is the true
and lawful owner, and has good title to, such Principal’s Intangible Assets,
free and clear of all Liens. Upon consummation of the transactions contemplated
hereby, Seller will convey to Buyer good and valid title to the Purchased
Assets, and the Principals will convey to Buyer good and valid title to the
Intangible Assets, in each free and clear of all Liens and
without Buyer being legally obligated to incur any material penalty, other fees
or loss of benefits imposed solely as a result of, or arising solely from, the
consummation of the transactions contemplated by this Agreement or any of the
Transaction Documents. With
respect to the property and assets Seller leases, Seller is in compliance with
such leases and holds a valid leasehold interest free of all Liens.

(b) Sufficiency. The
Assets constitute all of the material assets used to conduct the Business. Each
tangible asset included in the Purchased Assets is free from material defects,
has been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used.

 

4.10 Assigned
Contracts.
Section
4.10 of the
Seller Disclosure Schedule sets forth all material Contracts, including, without
limitation, all Assigned Contracts, to which Seller is a party or by which its
assets are bound. The Assigned Contracts are all of the Contracts used in and
necessary for the Business to which Seller is a party or by which Seller is or
has any rights or obligations. Each
Assigned Contract is valid and subsisting and is in full force and effect
and
enforceable against
Seller in
accordance with its terms, subject to
Enforcement Exceptions. There is
no material
breach or default
by Seller or claim of material
breach
or default
by Seller, or, to the knowledge of Seller, any other party thereto, under any
Assigned
Contract, nor has
there been any alleged material breach or default or, to Seller's knowledge, any
event which would (with the passage of time, notice or both) constitute a
material breach or default under any Assigned Contract by Seller any other party
or obligor with respect thereto. Seller
has made available to Buyer true, correct and complete copies of all of the
Assigned
Contracts, including, without limitation, all amendments and supplements
thereto. 

 

4.11 Accounts
Receivable. All
accounts receivable of Seller reflected on the Interim Balance Sheet (other than
those paid since such date), and all receivables reflected on the Closing Date
Adjusted Balance Sheet are valid receivable and, to Seller's knowledge, are not
subject to any contest, claim or setoff by such account debtor. Seller
does not have any notes or accounts receivable due to Seller from any Principal
or employee of Seller, or any Affiliate thereof.

 

4.12 Taxes.
Seller
has timely filed all Tax
Returns that may
be required by any Law to be
filed by or on behalf of Seller with
respect to the
Purchased Assets, and all such Tax
Returns are
true, correct and complete in all material respects. Seller
has duly paid all
Taxes due and
owing.
No Liens
for Taxes exist with respect to the Assets. All Taxes required to be withheld,
collected or deposited by or with respect to any of the Assets or with respect
to amounts paid to any employee of Seller have been withheld, collected or
deposited by Seller and to the extent required have been timely paid to the
appropriate Governmental Authority.

16

4.13 Environmental. Seller is
in material
compliance
with the Environmental Requirements applicable to the Business
and the Purchased
Assets. Hazardous
Materials have not been released, and are not otherwise present, at or about any
of the facilities used by Seller in the operation of the Business.

4.14 Intellectual
Property. 

(a) Intellectual
Property.
Section
4.14 of the
Seller Disclosure Schedule identifies all owned or licensed software and other
Intellectual Property currently used in the Business. Seller is the registered
owner of the Domain Names on the records of the applicable domain name
registrar. Seller has not transferred and will not transfer any such rights to
any entity other than Buyer. Seller’s account with the registrar of each of the
Domain Names is up to date and paid in full. Seller owns or possesses sufficient
legal rights to use all Intellectual Property currently used by Seller to
operate the Business, without any conflict with, or infringement or
misappropriation of, the rights of others. Seller has taken reasonable measures
to protect the proprietary nature of each item of Assigned Intellectual
Property, and to maintain in confidence all trade secrets and confidential
information, that it owns or uses in the operation of the Business, and to
comply with its confidentiality obligations owed to other Persons. No other
person or entity has any rights to any of the Assigned Intellectual Property
owned by Seller, and, to the knowledge of Seller, no other person or entity is
infringing, violating or misappropriating any of the Assigned Intellectual
Property.

(b) Non-Infringement.
Seller’s conduct of the Business prior to Closing did not, and will not when
conducted in the same manner following the Closing, infringe or violate, or
constitute a misappropriation of, any Intellectual Property rights of any person
or entity. There are no pending or, to Seller’s knowledge, threatened
Proceedings by any Person against Seller regarding the use of the Assigned
Intellectual Property, or challenging or otherwise questioning the ownership,
validity, enforceability, scope or effectiveness of the Assigned Intellectual
Property, or regarding any contract relating thereto, nor has there been since
inception of the Business. No Proceedings have been threatened or asserted by
Seller against any person or entity regarding the use of the Assigned
Intellectual Property by such person or entity.

(c) Copyrightable
Materials. All of
the copyrightable materials (including Acquired Software) created by or on
behalf of Seller and material to, and used by Seller in, the operation of the
Business have been created by employees of Seller within the scope of their
employment by Seller or by independent contractors of Seller, in each case who
have executed agreements expressly designating all such copyrightable materials
as “work made for hire” or otherwise assigning all right, title and interest in
such copyrightable materials to Seller. 

4.15 Employees. 

(a) Employment
Agreements; Severance. Except
as set forth in Section
4.15 of the
Seller Disclosure Schedule, Seller is
not a party to any employment agreement or consulting agreement with any Person,
nor is any such contract or agreement presently

 

17

 

being
negotiated, and Seller is not liable for any severance pay or other payments to
any employee or former employee arising from the termination of employment, nor
will Seller have any liability under any benefit or severance policy, practice,
agreement, plan, or program which exists or arises, or may be deemed to exist or
arise, under any applicable Law or otherwise, as a result of or in connection
with the transactions contemplated hereunder or as a result of the termination
of any Persons employed by Seller on or prior to the Closing Date. It is
acknowledged that Seller’s obligations under any such employment agreement,
severance plan or other obligation thereunder are not Assumed Liabilities even
if identified in the Seller Disclosure Schedule.

(b) Compliance
with Laws; Etc. To the
knowledge of Seller and the Principals, Seller is in compliance with all
applicable Laws, agreements, contracts, and policies relating to
employment,
employment
practices, wages,
hours, terms and conditions of employment. Seller is
not
a party to
or bound by any collective bargaining agreement or other
contract or agreement with any labor organization or other representative of any
employees, nor is any such contract or agreement presently being negotiated.
There is no unfair labor practice charge or complaint pending or, to the
knowledge of Seller, threatened against or otherwise affecting Seller. There is
no labor strike, slowdown, work stoppage, dispute, lockout or other labor
controversy in effect, threatened against or otherwise affecting Seller, and
Seller has not experienced any such labor controversy within the past five
years. No Proceeding by or before any Governmental Authority brought by or on
behalf of any employee, prospective employee, former employee, retiree or other
representative of the employees of Seller is pending or, to the knowledge of
Seller, threatened against Seller. No grievance is pending or, to the knowledge
of the parties, threatened. Seller is not a party to, or otherwise bound by, any
consent decree with, or citation by, any Governmental Authority relating to
employees or employment practices. Seller has paid in full to all employees all
wages, salaries, commissions, bonuses, benefits and other compensation due to
such employees or otherwise arising under any policy, practice, agreement, plan,
program, statute or other Law. Each individual who is treated by Seller as an
independent contractor is properly so treated under applicable Law. No
employee
of Seller is in violation of any prior employee contract, proprietary
information agreement, or noncompetition agreement. Seller is not aware that any
key employee or key consultant, or that any group of key employees or
consultants, intends to terminate their employment with Seller (other than in
connection with the consummation of the transactions contemplated hereby.
Seller is
in compliance with its obligations pursuant to the WARN, and all other
notification and bargaining obligations arising under any collective bargaining
agreement, statute or otherwise. No
current or former employee currently has an outstanding worker’s compensation
claim. 

 

4.16 Relations
with Cisco and Customers.
Seller
has not received any notice that Cisco will not continue to do such business
related to the Business after the Closing Date and the consummation of the
transactions contemplated by this Agreement. Seller
has not received notice
from any customer that accounted for more than 5% of the revenues of the
Business during the last full fiscal year or six
months ending August 31, 2004 to the
effect that such customer has
or intends
to materially decrease the amount of business it does with the
Business (other
than in the ordinary course of Seller’s Business). 

18

 

4.17 Employee
Plans.
Each
Employee Plan of Seller has been established and administered in accordance with
its terms, and in compliance with the applicable provisions of ERISA, the Code
and other applicable Laws. 

 

4.18 Brokers’
Fees. No
broker, finder, investment bank or similar agent is entitled to any brokerage or
finder’s fee in connection with the transactions contemplated by this Agreement
based upon agreements or arrangements made by or on behalf of Seller or
any Principal.

 

4.19 Insurance. All
material properties and risks of Seller in respect of the Business are covered
by valid and currently effective insurance policies or binders of insurance or
programs of self-insurance in such types and amounts as are consistent with
customary practices and standards of companies engaged in businesses and
operations similar to the Business and in such amounts and types as are adequate
and reasonable in view of the loss experience of the Business, the pending
claims, threatened claims known to Seller and occurrences known to Seller that
could lead to claims against the Business. Seller has paid all premiums due
under such policies and is not in default in any material respect with respect
to its obligations under any such policies.

4.20 Related
Party Transactions. Except
for agreements disclosed in the Seller Disclosure Schedule, there are no
business relationships, agreements, understandings, or proposed transactions
between Seller and any of the Principals or other employee of Seller or any
family members of any of the foregoing. There are no obligations of Seller to
employees of Seller other than for payment of salary for services rendered,
reimbursement for reasonable expenses incurred on behalf of Seller, and for
other standard employee benefits made generally available to all employees. No
employee of Seller or member of his or her family has any direct or indirect
ownership interest in any firm with which Seller has a business relationship, or
any firm that competes with Seller.

4.21 Disclosure. Neither
this Agreement, nor any other Transaction Documents or other agreements,
statements, or certificates made or delivered in connection herewith or
therewith contains any untrue statement of a material fact or, when taken
together, omits to state a material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading. There is no fact which Seller has not disclosed to Buyer in writing
and of which Seller or any Principal is aware which could have a Material
Adverse Effect on the Business or the Purchased Assets. 

 

4.22 The
Shares. Seller
was not organized for the specific purpose of acquiring the Shares. Seller has
sufficient knowledge and experience so as to be able to evaluate the risks and
merits of acquiring the Shares and Seller is able financially to bear the risks
thereof. The Shares are being acquired for Seller’s own account for the purpose
of investment and not with a present view toward their public sale or
distribution; provided, however, that by making the representation herein,
Seller does not agree to hold any of the Purchased Securities for any minimum or
other specific term, except as set forth in Article
3 of this
Agreement, and after release from escrow reserves the right to dispose of the
Shares at any time in accordance with or pursuant to a registration statement or
an exemption under the Securities Act. Seller understands that (a) the Shares
have not been registered under the Securities Act by reason of their
issuance

19

 

in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) thereof or Rule 505 or 506 promulgated thereunder, (b)
the Shares must be held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or is exempt from such registration, (c) the
Shares will bear a legend to such effect and (d) Buyer or its transfer agent
will make a notation on its transfer books to such effect.

 

 

ARTICLE
5.

REPRESENTATIONS
AND WARRANTIES OF BUYER

Buyer
makes the following representations and warranties to Seller and the Principals
with the intention that Seller and the Principals may rely upon the same, and
acknowledges that the same shall survive the consummation of this
transaction.

5.1 Organization. Buyer
is a corporation, duly organized, validly existing in good standing under the
laws of the State of Minnesota, and has all requisite corporate power and
authority, corporate and otherwise, to own its properties and conduct the
business in which it is presently engaged.

5.2 Authority. Buyer
has all requisite power and authority to execute, perform and carry out the
provisions of this Agreement and the other Transaction Documents to which it is
a party. Buyer has taken all requisite corporate action authorizing and
empowering Buyer to enter into this Agreement and the other Transaction
Documents and to consummate the transactions contemplated herein and
therein.

5.3 Breaches
of Contracts; Required Consents. Neither
the execution and delivery of this Agreement by Buyer, nor compliance by Buyer
with the terms and provisions of this Agreement, will (a) conflict with or
result in a breach of: (i) any of the terms, conditions or provisions of the
governing instruments of Buyer, (ii) any judgment, order, decree or ruling to
which the Buyer is a party or (iii) any injunction of any court or governmental
authority to which it is subject; or (b) require the affirmative consent or
approval of any third party.

5.4 Binding
Obligation. This
Agreement constitutes the legal, valid and binding obligation of Buyer in
accordance with the terms hereof. Buyer is not subject to any charter, mortgage,
lien, lease, agreement, contract, instrument, law, rule, regulation, order,
judgment or decree, or any other restriction of any kind or character, which
would prevent the consummation of the transactions contemplated in this
Agreement.

ARTICLE
6.

CLOSING;
CLOSING DELIVERIES

6.1 Closing;
Closing Date

(a) In
General. The
consummation of the purchase and sale of the Purchased Assets and the assumption
of the Assumed Liabilities provided for herein (the “Closing”) shall
take place simultaneously with the execution and delivery of this Agreement by
the 

20

 

parties
(the “Closing
Date”).
The
Closing shall take place by
delivery via facsimile transmission (with originals sent via overnight courier
service) of the documents to be delivered at the Closing and wire transfer of
the payments to be made in accordance with this Agreement, or at such other
place or in such other manner as the parties hereto may agree.

(b) Targeted
Closing Date. The
parties anticipate as of the date hereof that Closing will occur on or after
January 3, 2005 and on or before January 7, 2005. If all of Buyer’s conditions
to closing set forth in Section
7.1 are
satisfied (or are waived in writing by Buyer, in its sole discretion) on or
before January 6, 2005 (other those conditions that, by their terms, cannot be
satisfied by Seller or the Principals until Closing concurrent with the other
parties’ compliance therewith, and Seller the Principals provide reasonable
evidence that they are ready, able and willing to satisfy all such conditions at
Closing), Seller may give written notice thereof by January 6, 2005 to Buyer,
which notice shall expressly state that there may be an adjustment to the
Purchase Price if the Closing does not occur by January 7, 2005. If such written
notice is duly and timely given, and if the foregoing requirements regarding
conditions are met, and if the Closing does not occur by January 7, 2005 (other
than for reasons beyond Buyer’s reasonable control), then the Cash Purchase
Price otherwise payable under Section
3.1(a) shall be
increased by $100,000.

 

6.2 Items
to Be Delivered by Seller and the Principals at Closing. On the
Closing Date, Seller and the Principals shall deliver the following to
Buyer:

(a) Bill
of Sale and Assignment. A bill
of sale and any other necessary or desirable assignment documents transferring
and assigning good title to the Purchased Assets to Buyer, free and clear of all
Liens of whatever nature.

(b) Resolutions. Duly
adopted resolutions of Seller authorizing this Agreement and other Transaction
Documents and the transactions contemplated hereby and thereby.

(c) Employment
Agreements.
Employment agreements with each of the Principals in form and content
satisfactory to Buyer or its Affiliates.

(d) Other. Such
other documents, instruments, opinions of counsel and agreements as are required
by this Agreement or that Buyer may reasonably request.

 

6.3 Items
to Be Delivered by Buyer at Closing. On the
Closing Date, Buyer shall deliver the following:

(a) Payment.
Payments as required by Section
3.1 to be
delivered at Closing.

 

(b) Employment
Agreements.
Employment agreements with each of the Principals in form and content
satisfactory to each of the Principals.

(c) Other. Such
other documents, instruments and agreements as are required by this Agreement or
that the Seller may reasonably request.

 

21

 

ARTICLE
7.

CONDITIONS
TO CLOSING

7.1 Buyer’s
Conditions. The
obligations of Buyer under this Agreement shall, at its option, be subject to
the satisfaction, on or prior to the Closing Date, of all of the following
conditions:

(a) Representations,
Warranties and Covenants. The
representations and warranties of Seller and the Principals herein shall be true
in all material respects on the Closing Date with the same effect as though made
at such time. Seller and the Principals shall have performed all of their
respective obligations and complied with all of their respective covenants
herein prior to or as of the Closing Date (except those obligations and
covenants that can only be complied with at Closing concurrent with the other
parties’ compliance therewith).

(b) Approvals;
Consents. All
permissions, releases, consents or approvals, governmental or otherwise,
including, without limitation, the Required Consents, necessary on the part of
Seller or the Principals to consummate the transactions contemplated hereunder
shall have been obtained.

(c) Litigation
Affecting Closing. No
suit, action or other proceeding shall be pending or threatened by any third
party or by or before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated by this
Agreement, and no investigation that might result in any such suit, action or
other proceeding shall be pending or threatened.

(d) Deliveries. Buyer
shall have received delivery of all documents, instruments and agreements
referenced in Section
6.2.

7.2 Seller’s
Conditions. The
obligations of Seller under this Agreement shall, at its option, be subject to
the satisfaction, on or prior to the Closing Date, of all of the following
conditions:

(a) Representations,
Warranties and Covenants. The
representations and warranties of Buyer herein shall be true on the Closing Date
in all material respects with the same effect as though made at such time. Buyer
shall have performed all of its obligations and complied with all of its
covenants herein prior to or as of the Closing Date (except those obligations
and covenants that can only be complied with at Closing concurrent with the
other parties’ compliance therewith).

(b) Approvals;
Consents. All
permissions, releases, consents or approvals, governmental or otherwise,
necessary on the part of Buyer to consummate the transactions contemplated
hereunder shall have been obtained.

(c) Litigation
Affecting Closing. No
suit, action or other proceeding shall be pending or threatened by any third
party or by or before any court or governmental agency in which it is sought to
restrain or prohibit or to obtain damages or other relief in 

22

 

connection
with this Agreement or the consummation of the transactions contemplated by this
Agreement, and no investigation that might result in any such suit, action or
other proceeding shall be pending or threatened.

(d) Deliveries. Seller
and the Principals, as applicable, shall have received delivery of all
documents, instruments and agreements referenced in Section
6.3.

 

 

ARTICLE
8.

INDEMNIFICATION

8.1 Indemnification
by Seller and the Principals. Seller
and the Principals, jointly and severally, shall indemnify and hold the Buyer
Indemnified Parties harmless at all times from and after the date of this
Agreement, against and in respect of all Indemnifiable Losses which the Buyer
Indemnified Parties may suffer or incur in connection with any of the following
(collectively, “Indemnifiable
Claims”):

(a) Excluded
Liabilities. All
Excluded Liabilities, including, without limitation, any claim, demand, action
or proceeding asserted by a creditor or obligee of Seller or any Principal with
respect thereto.

(b) Breaches. The
material breach by Seller or any Principal of any of Seller’s or any Principal’s
representations, warranties or covenants in this Agreement, or any of the other
Transaction Documents, documents, instruments or agreements referenced herein or
executed and delivered in connection with the consummation of the transactions
contemplated hereby or thereby.

(c) Proceedings. Any and
all claims or other Proceedings directly resulting or arising from any of the
foregoing

8.2 Third
Party Claims. If a
claim by a third party is made against any Buyer Indemnified Party, and if the
Buyer Indemnified Party intends to seek indemnity with respect thereto under
this Article, such Buyer Indemnified Party shall promptly notify Seller of such
claim; provided, however, that failure to give timely notice shall not affect
the rights of the Buyer Indemnified Party. The Buyer Indemnifying Party shall be
entitled to settle or assume the defense of such claim, including the employment
of counsel satisfactory to the Buyer Indemnified Party, unless Buyer and Seller
agree that Seller or the Principals shall assume the settlement and defense of
such claim. Regardless of which party is controlling the settlement or defense
of any claim, (i) both the Buyer Indemnified Party and indemnifying parties
shall act in good faith, (ii) the indemnifying parties shall not thereby
permit to exist any Lien upon any asset of any Buyer Indemnified Party,
(iii) the indemnifying parties shall permit the Buyer Indemnified Party to
participate in such settlement or defense through counsel chosen by the Buyer
Indemnified Party, (iv) no entry of judgment or settlement of a claim may
be agreed to without the written consent of both Seller and Buyer, which
consents shall not be unreasonably withheld, and (v) the indemnifying
parties shall agree promptly to reimburse the Buyer Indemnified Party for the
full amount of such claim pursuant to this Article. So long as the indemnifying
party is reasonably contesting any such claim in good faith as permitted herein,
the Buyer Indemnified Party shall not pay or settle any such claim. The
controlling party shall

23

 

deliver,
or cause to be delivered, to the other party copies of all correspondence,
pleadings, motions, briefs, appeals or other written statements relating to or
submitted in connection with the settlement or defense of any such claim, and
timely notices of, and the right to participate pursuant to (iii) above in any
hearing or other court proceeding relating to such claim. 

8.3 Offset. In
addition to and not in lieu of Buyer’s other rights or remedies, in the event
Seller and the Principals shall fail to pay to a Buyer Indemnified Party when
due any amount under this Article
8, Buyer
shall have the right to offset such amount against any amount then owing or
thereafter becoming due by Buyer to Seller or any Principal.

8.4 Limitation
on Indemnity Obligations.

(a) Basket.
Notwithstanding the provisions of Section
8.1 to the
contrary, and except with respect to Excluded Liabilities and the covenants and
agreements set forth herein, Seller and the Principals shall have no liability
or obligation to the Buyer Indemnified Parties, and no claim shall be asserted
against Seller or Principals, for an Indemnifiable Loss resulting from the
breach of the representations and warranties of Seller, unless and until such
Indemnifiable Losses, in the aggregate, exceed $5,000 (“Basket”) and
then, only for such Indemnifiable Losses in excess of the Basket. 

(b) Cap. In no
event shall Seller or Principals be obligated to indemnify the Buyer Indemnified
Parties for any Indemnifiable Loss for a breach of a representation or warranty
by Seller or any Principal in an amount to exceed the sum of the Purchased
Assets Purchase Price and the Intangible Assets Purchase Price paid, provided,
however, that if the amount of Indemnifiable Losses would exceed such amount,
Seller may offset the excess against any Intangible Assets Purchase Price
thereafter otherwise payable.

(c) Survival
of Representations and Warranties. All
representations and warranties made by the parties in this Agreement or in any
schedule or certificate furnished hereunder, shall survive the Closing and
remain in effect for a period of two years after the Closing, provided that the
representations and warranties set forth in Section
4.2, 4.9 and
4.22 shall survive indefinitely and those set forth in Sections
4.12 and 4.17
shall remain in effect until the expiration of the applicable statute of
limitations. 

ARTICLE
9.

ADDITIONAL
AGREEMENTS AND COVENANTS

9.1 Conduct
of Business. Prior
to the Closing or earlier termination of this Agreement, and except as otherwise
contemplated by this Agreement or consented to or approved by Buyer, Seller and
the Principals covenant and agree that: 

(a) In
General. Seller
shall operate the Business only in the ordinary and usual course consistent with
past practice in compliance with all applicable Laws and use commercially
reasonable efforts to preserve its business and relationships with key
employees, customers and vendors and other Persons who have significant business

24

 

relationships
with the Business and keep available the services of present employees, if the
failure to do would reasonably be likely to have a Material Adverse
Effect.

(b) Specific
Matters. Without
limiting the foregoing, Seller shall not in connection with the Business (i)
acquire, license, sub-license, dispose of, lease, sub-lease, transfer or subject
to a Lien any properties or assets, other than (1) in the ordinary course of
business or (2) properties or assets which in the aggregate are not material to
the Business; (ii) waive any claims or rights, except (1) claims or rights which
in the aggregate are not material to the Business or (2) for cancellation and
waivers of intercompany indebtedness or claims not assigned to or assumed by
Buyer hereunder; (iii) (1) not grant any increase in the rate of compensation or
benefits of its employees (including any such increase pursuant to any deferred
compensation, severance, bonus, pension, profit-sharing or other plan or
commitment), except in the ordinary course of business and consistent with past
practice, or (2) terminate, modify, amend, recognize, establish, enter into or
adopt any Employee Plan with respect to employees; (iv) make any capital
expenditure, other than in the ordinary course of business; (v) terminate, amend
or modify the terms of or waive any rights under any Assigned Contract or enter
into any material Contract to be used in and necessary for the Business, except
in the ordinary course of business; (vi) fail to maintain insurance or
self-insurance coverage with respect to the Business at levels consistent with
presently existing levels; (vii) incur or assume any Liabilities or guarantee
Liabilities, other than in the ordinary course of business and consistent with
past practice; (viii) make any Tax elections that have a continuing effect upon
the Business after the Closing; (ix) enter into any Contract or agreement, or
engage in any other type of transaction, with any of its Affiliates other than
in the ordinary course of business and consistent with past practice; (x) make
any material change in inventory policies and procedures, credit policies, or
advertising policies and procedures, in each case other than in the ordinary
course of business; (xi) intentionally do any other act which would cause any
representation or warranty of Seller in this Agreement to be or become untrue in
any material respect; (xii) revalue any of the Purchased Assets except as
required by GAAP; or (xiii) agree, whether in writing or otherwise, to do any of
the foregoing.

9.2 Employee
Matters. Buyer and
its Affiliates shall have the right to offer employment to any or all of
Seller’s employees.  The
parties acknowledge and agree that Buyer and its Affiliates are under no
obligation to offer employment to or enter into any employment relationship with
any Employee.
“Hired
Employees” means
those Employees who are hired by Buyer or an Affiliate of Buyer as an Employee
or otherwise engaged by Buyer or an Affiliate of Buyer as a consultant, advisor,
director, officer or pursuant to any other compensatory arrangement. Effective
upon the Closing, all Hired Employees shall be and hereby are released from any
non-competition or confidentiality obligations owed by such Hired Employees to
Seller.

 

9.3 Noncompetition
and Nonsolicitation.  

(a) Noncompetition
and Nonsolicitation. After
the Closing, and for a period of four (4) years thereafter, Seller and the
Principals shall not directly or indirectly 

25

 

anywhere
in the United States or anywhere else in where Buyer or its Subsidiaries
conducts business (the “Restricted
Territory”):

(i) acquire
an ownership interest in or engage in any business in the Restricted Territory
that competes directly with the Restricted Business.

 

(ii) knowingly
contact, solicit or entice, or attempt to contact, solicit or entice, any
customers or suppliers of the Restricted Business as conducted by Buyer or its
Affiliates so as to cause, or attempt to cause, any of such customers or
suppliers not to do business, reduce their business or no longer do business at
a competitive price with Buyer or its Affiliates; or

 

(iii) induce or
attempt to persuade any employee or agent of Buyer or its Affiliates to
terminate such employment, agency or business relationship with Buyer or its
Affiliates.

(b) Restricted
Business.
“Restricted
Business” means
the business of the delivery of services and sale of products with respect to IP
telephony and wireless systems. Restricted Business shall not be deemed to apply
to the Principals' equity interest in Business
Communications by Design, LLC so long
a Business
Communications by Design, LLC does not
engage in the services offered by the Restricted Business as defined
herein.

(c) Severability. If the
final judgment of a court of competent jurisdiction declares that any term or
provision of this Section
9.3 is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified.

(d) Equitable
Relief. Each of
the parties hereto acknowledges and agrees that the remedy at Law for any breach
of the requirements of this Section
9.3 would be
inadequate, and agrees and consents that without intending to limit any
additional remedies that may be available, temporary and permanent injunctive
and other equitable relief may be granted without proof of actual damage or
inadequacy of legal remedy in any proceeding which may be brought to enforce any
provision of this Section
9.3.

9.4 Change
of LLC Name. If
requested by Buyer after Closing, Seller and each of the Principals agree to
take all action (at their expense) that is necessary to amend each Seller’s
governing documents to change the limited liability company name of the Seller
to a name which is not similar to “WireSpeed,” and to cause such amendment to be
filed with the appropriate filing office in Ohio. 

 

9.5 Notification
of Certain Matters. Prior
to Closing or earlier termination of this Agreement, Seller shall give prompt
notice to Buyer, and Buyer shall give prompt notice to Seller, as the case may
be, of (a) any knowledge of or discovery by the notifying party of the

26

 

inaccuracy
of any representation or warranty by the non-notifying party contained in this
Agreement or any material failure of the notifying party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder (and each party shall use commercially reasonable efforts to remedy
such failure), and (b) the receipt of any notice or other communication from any
Governmental Authority or any third party that would be reasonably expected to
cause the notifying party to fail to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such party under this
Agreement; provided that the delivery of any notice pursuant to this Section
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.

9.6 Release. From
and after the Closing, Seller and the Principals hereby releases the Assets from
any claims or demands that Seller or any Principal may have against such Assets
to the extent arising from, out of or in connection with any circumstances, acts
or omissions or contracts entered into prior to the Closing.

 

 

ARTICLE
10.

TERMINATION

10.1 Termination
Prior to Closing.
Notwithstanding any contrary provisions of this Agreement, the respective
obligations of the parties hereto to consummate the Closing may be terminated
and abandoned at any time at or before the Closing only as set forth below.
Nothing contained in this Section shall be construed as a release or waiver by
any party hereto of any of its rights against any other party arising out of any
breach of this Agreement by the other party.

(a) Outside
Date. By and
at the option of Seller or Buyer if the Closing shall not have occurred by
January 15, 2005 (the “Outside
Date”);
provided that the party giving such termination notice shall have not breached
in any material respect its obligations under this Agreement in any manner that
shall have been the proximate cause of, or resulted in, the failure to
consummate the Closing.

(b) Mutual
Consent. At any
time, without liability of any party to the others, upon the mutual written
consent of Seller and Buyer.

(c) Conditions. By
Buyer or Seller, if any condition set forth in Article
7
applicable to such party shall become incapable of being satisfied by the
Outside Date and is not waived; provided, that such termination right shall not
be available to such party if it (or in the case of Seller, Seller or any of the
Principals) has not used its commercially reasonable efforts to cause such
condition to be satisfied.

10.2 Effect
of Termination. In the
event of the termination of this Agreement pursuant to Section
10.1, all
obligations of the parties hereunder (except under Sections 4.18 (Brokers’
Fees), and 10.2 (Effect of Termination) and Article
11
(Miscellaneous)) and all representations and warranties shall terminate without
any Liability of any party to any other party, and all expenses incurred by any
party hereto shall be for its own account, except that nothing herein shall
relieve any party from any Liability with respect to breaches on or prior to
such date of termination by any party of covenants or agreements contained
herein. Except as 

27

 

specifically
provided otherwise in this Agreement the provisions of this Agreement shall
survive the Closing.

 

 

ARTICLE
11.

GENERAL

11.1 Counterparts. This
Agreement may be executed in counterparts and by different parties on different
counterparts with the same effect as if the signatures thereto were on the same
instrument. This Agreement shall be effective and binding upon all parties to
this Agreement at such time as all parties have executed a counterpart of this
Agreement.

 

11.2 Further
Assurances.
At any
time after the Closing, Buyer, Seller and the Principals shall promptly execute,
acknowledge and deliver any further deeds, assignments, conveyances and other
assurances and documents and instruments of transfer reasonably requested by
Buyer, on the one hand, and Seller and the Principals, on the other, and
necessary for such party to comply with its representations, warranties, and
covenants contained herein and will take any action consistent with the terms of
this Agreement that may reasonably be requested by Buyer, on the one hand, and
Seller and the Principals, on the other, for the purpose of assigning,
transferring, granting, conveying, vesting and confirming ownership in or to
Buyer, or reducing to Buyer’s possession, any or all of the Assets. Each of
Seller and Buyer further agree to promptly satisfy when due each Liability that,
pursuant to the terms hereof, it is obligated to satisfy. If
requested by Buyer, Seller and the Principals further agree to prosecute or
otherwise enforce in their own respective names for the benefit of Buyer, any
claim, right or benefit transferred by this Agreement that may require
prosecution or enforcement in such Seller’s or Principal’s name.

11.3 Notices. All
notices hereunder shall be deemed given if in writing and delivered personally
or sent by certified mail (return receipt requested) or reputable courier
service to the parties at the following addresses (or at such other addresses as
shall be specified by like notice):

 

If to
Buyer, to:

Analysts
International Corporation

3601 West
76th Street

Edina, MN
55435-3050

Attn:
Chief Financial Officer

and

Attn:
General Counsel

 

with a
separate copy addressed to:

 

Fredrikson
& Byron, P.A.

200 South
Sixth Street, Suite 4000

Minneapolis,
MN 55402

Attn:
Thomas King, Daniel Yarano or Simon Root 

 

28

 

If to
Seller or any Principal:

 

WireSpeed
Networks, LLC 

161
Northland Boulevard, Suite C

Cincinnati,
Ohio 45246

with a
separate copy addressed to:

Jeffrey
L. Stainton, Esq.

Graydon
Head & Ritchey, LLP

511
Walnut Street, Suite 1900

Cincinnati,
OH 45213

Any party
may change the above specified recipient and/or mailing address by notice to all
other parties given in the manner herein prescribed. All notices shall be deemed
given on the day when actually delivered as provided above (if delivered
personally, by telecopy or by reputable courier service) or on the date shown on
the return receipt (if delivered by mail).

11.4 Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their successors or assigns.

11.5 Expenses. Each
party hereto shall each bear and pay for its own costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereby,
including, without limitation, all fees and disbursements of lawyers,
accountants, financial consultants, brokers or finders. All such expenses
incurred by Seller or the Principals shall be solely the Seller’s and the
Principal’s responsibility.

11.6 Headings
and Construction. The
descriptive headings of the several Articles and Sections of this Agreement and
of the several Exhibits and Schedules to this Agreement are inserted for
convenience only and do not constitute a part of this Agreement. This Agreement
shall not be construed against either party since each party has negotiated its
provisions and contributed to its drafting.

11.7 Entire
Agreement; Modification and Waiver. This
Agreement, together with the Annexes, Schedules and Exhibits and the related
written agreements specifically referred to herein, represents the only
agreement among the parties concerning the subject matter hereof and supersedes
all prior agreements, whether written or oral, relating thereto. No purported
amendment, modification or waiver of any provision hereof shall be binding
unless set forth in a written document signed by all Seller and Buyer (in the
case of amendments or modifications) or by Seller, in the case of Seller or any
Principal, or Buyer, if it or they are to be charged thereby (in the case of
waivers). It is specifically acknowledged and agreed that the separate consent
or waiver by any Principal is not required. Any waiver shall be limited to the
provision hereof and the circumstance or event specifically made subject thereto
and shall not be deemed a waiver of any other term hereof or of the same
circumstance or event upon any recurrence thereof.

29

 

11.8 Benefit. Nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties to this Agreement or their respective successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.

11.9 Public
Disclosure. Each of
the parties to this Agreement hereby agrees with the other parties hereto that,
except as may be required to comply with the requirements of applicable law and
stock exchanges, no press release or similar public announcement or
communication will be made or caused to be made concerning the execution or
performance of this Agreement unless specifically approved in advance by all
parties hereto (which approval shall not be unreasonably withheld). The
foregoing shall not restrict a party’s communications with its employees or
customers. If in the judgment of a party’s legal counsel such a news release or
public announcement is required by law, the party intending to make such release
or announcement shall provide prior notice to the other parties of the contents
of such release or announcement and shall consult with the other parties with
respect thereto.

11.10 Governing
Law. This
Agreement and the legal relations among the parties hereto shall be governed by
and construed in accordance with the internal substantive laws of the State of
Minnesota (without regard to the laws of conflict that might otherwise apply) as
to all matters, including without limitation, matters of validity, construction,
effect, performance and remedies. Each
party consents the exclusive jurisdiction and venue of the courts located in
Minnesota. EACH OF
THE PARTIES HERETO WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE,
DEFEND, INTERPRET OR OTHERWISE CONCERNING THIS AGREEMENT.

11.11 Successors
and Assigns. The
rights or obligations of Seller and Principals may not be assigned without the
prior written consent of Buyer. Subject to the foregoing, the provisions of this
Agreement shall inure to the benefit of, and be binding upon, the permitted
successors and assigns of the parties hereto. 

11.12 Severability. In case
any provision in this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

30

Each of
the parties hereto has caused this Asset Purchase Agreement to be executed in
the manner appropriate to each, all as of the day and year first above
written.

	
      ANALYSTS
      INTERNATIONAL CORP.

	 	 
	 	 
	
      By
	 
	
      Its
	 

	
      WIRESPEED
      NETWORKS LLC

	 	 
	 	 
	
      By
	 
	
      Its
	 
	 	 
	 	 
	 	
      Mark
      Handermann

	 	 
	 	 
	 	
      Greg
      Paulson

 

31

 

SCHEDULE
A

Purchased
Assets

The
Purchased Asset include all of the Seller’s assets other than the Excluded
Assets, without limitation:

1. Receivables. All
accounts receivable, notes receivable and other rights to receive money
(“Receivables”),
including, without limitation, the Receivables identified on Schedule
A-1, all
security related thereto, deposits, prepaid charges, sums and fees, offset
credit balances, refunds and causes of action, and any claim, remedy or other
right related to any of the foregoing.

2. Assigned
Contracts. All of
Seller’s rights, powers and/or remedies under the Contracts identified on
Schedule
A-2.

3. Inventory. All of
Seller’s inventory and supplies.

4. Equipment. All of
Seller’s equipment, computers and other tangible personal property, including
without limitation those items reflected on the Interim Balance
Sheet.

5. Prepaids;
Deposits. All
prepaid assets and deposits.

6. Software. All
software owned by Seller, all data and databases owned by Seller and associated
with such software, and all related documentation owned by Seller and reasonably
necessary for the use of such software, including without limitation the
proprietary and custom-developed software (whether developed by Seller or any
third party) owned by Seller and used by Seller on the date hereof to operate
the Business.

7. Assigned
Intellectual Property. All
Intellectual Property owned by Seller and used by Seller in the operation of the
Business and the goodwill associated therewith (the “Assigned
Intellectual Property”),
including without limitation the name “WireSpeed Networks” and the other
Intellectual Property set forth on Schedule
A-7. 

8. Domain
Names. All of
Seller’s rights in all domain names used by Seller in the operation of the
Business, and the goodwill associated therewith (collectively, the “Domain
Names”),
including without limitation the Domain Names set forth on Schedule
A-8.

9. Telephone
Numbers. All of
Seller’s rights in all telephone numbers used by Seller in the operation of the
Business.

10. Governmental
Authorizations. The
Governmental Authorizations set forth on Schedule
A-10. 

11. Business
Records. All
books and records pertaining to or used in the Business.

12. Claims. All
rights, claims and causes of action arising out or relating to the Purchased
Assets.

13. Insurance. All
rights of every nature (including proceeds) of Seller under or arising out of
insurance policies covering the Business.

 

SCHEDULE
B

 

Excluded
Assets

 

The
Excluded Asset include only the following assets:

 

1. Cash. All of
Seller’s cash and cash equivalents and investments, and all bank accounts and
brokerage accounts.

 

2. Excluded
Contracts. All
Contracts other than the Assumed Contracts (the “Excluded
Contracts”),
including, without limitation, those set forth on Schedule
B-2

 

3. Automobiles. All of
Seller’s automobiles.

 

 

4. Minute
Book.
Seller’s limited liability company minute book.

 

 

SCHEDULE C

Assumed
Liabilities

The
Assumed Liabilities shall include only the following Liabilities:

1. Accounts
Payable. All
accounts payable of Seller reflected on the Interim Balance Sheet or incurred in
the ordinary course of business since the date of the Interim Balance Sheet,
less amounts paid with respect thereto since the date thereof.

2. Assumed
Contracts. All
executory Contract obligations of Seller under the Assigned Contracts arising
from and after the Closing, excluding any Liabilities resulting from a breach by
Seller thereunder or as a result of consummation of the transactions
contemplated hereby to the extent that they constitute a breach
thereof.

 

 

ANNEX
A

 

Certain
Defined Terms

 

“Affiliate” of any
entity means any other entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the first entity. Control means owning more than fifty percent (50%) of the
total voting power of the entity.

“Agreement” means
this Asset Purchase Agreement, including all Annexes, Schedules and Exhibits
hereto.

“Average
Market Price” as of
the Closing Date means the average of the Closing Market Price of Buyer Common
Stock for the five consecutive trading days preceding the Closing Date
appropriately adjusted for any stock splits or stock dividends during such
period. The “Closing
Market Price” shall
be equal to the closing sale price of Buyer Common Stock for each such trading
day as reported by the NASDAQ National Market, as reported in the Wall Street
Journal.

“Buyer
Indemnified Parties” means
Buyer, its Affiliates and their officers, directors, employees, Principals and
agents. 

“Contract” means
any contract or binding arrangements, including, without limitation, any sales
order, purchase order, purchase
commitment, license, advertising or promotional agreement, lease, sublease,
shipping agreement, employment agreement, collective bargaining agreement,
license, sublicense, option (other than employee stock option),
agreement, commitment and any other contract or binding arrangement.

 

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

“Employee
Plans” means
each
“employee benefit plan” (within the meaning of Section 3(3) of ERISA, including,
without limitation, multiemployer plans within the meaning of Section 3(37) of
ERISA), and all health
care, life insurance, death benefit, deferred compensation, pension,
retirement, stock option, phantom stock, stock
purchase, restricted stock, bonus,
incentive,
severance, change of control, early
retirement,
employment, executive compensation, vacation, fringe benefit, collective
bargaining, employee loan and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefore now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written.

“Enforcement
Exceptions” means
applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles

“Environmental
Requirements” shall
mean all Laws
concerning pollution, human
exposure to Hazardous Materials or
protection of the environment or
natural resources,
including, without
limitation, all
those relating to the presence, use, production, generation, 

 

handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Hazardous Materials, substances or wastes, in each case as amended.

“GAAP” means
United States generally accepted accounting principles, consistently
applied.

“Governmental
Authority” means
any
foreign, federal,
national, state or local judicial, legislative, executive or regulatory
authority or
organization, or any entity, authority or body exercising governmental,
judicial, legislative, executive, regulatory or administrative functions of any
such authority or organization.

 

“Governmental
Authorization” means
any consent, license, registration, authorization,
franchise, approval, waiver, agreement, qualification, certificate, exemption,
order, registration, declaration, filing, notice or permit made, issued,
granted, given or otherwise made available to,
by or
under the authority of any Governmental Authority or pursuant to any
Law.

 

“Governmental
Order” shall
mean an order, writ, judgment, injunction, decree, stipulation, decision,
determination, award, ruling or other official action of a
Governmental
Authority.

“Hazardous
Material” means
any substance, material or waste that is regulated by or could
form the
basis of liability under any Environmental Requirements, including, without
limitation, any
material or substance that is (a) defined
as a “solid waste,” “hazardous waste,” “hazardous material,” “hazardous
substance,” “extremely hazardous waste,” “restricted hazardous waste,”
“pollutant,” “contaminant,” “hazardous constituent,” “special waste,” “toxic
substance” or other similar term or phrase under any Environmental Requirements,
(b)  polychlorinated
biphenyls (PCB’s) ,(c)
asbestos,
or (d) any
radioactive substance.

 

“Indemnifiable
Losses” means
any and
all losses, damages, awards, assessments, judgments, fines, Liabilities,
charges, deficiencies, interest, fines, settlements, penalties, costs and
expenses (including, without limitation, costs of collection, attorneys’ fees
and other costs of defense and expenses of investigation). 

“Intellectual
Property” means
any and all U.S. and foreign intellectual property rights, including without
limitation, (a) all unexpired patents and patent applications and all rights
therein, and any continuations, divisionals, extensions, reissues,
reexaminations or substitutions thereof, any subsequent filings in any country
claiming priority therefrom and any and all discoveries or inventions whether or
not embodied within the foregoing, and any right (whether by license or
otherwise) to use or exploit any of the foregoing; (b) (A) all registered and
unregistered unexpired domestic and foreign trademarks, trademark registrations,
trademark applications, trade names, domain names, certification marks and
service marks; and (B) all state trademark registrations and applications
therefore, including, without limitation, any renewal of any such registrations
or applications and all common law rights in such trademarks, and any right
(whether by license or otherwise) to use or exploit any of the foregoing, in
each case 

Annex
A-2

 

including,
without limitations, any goodwill associated therewith; all original works of
authorship, including, but not limited to, all copyrights and registrations or
applications for registration of copyrights in any jurisdiction, including
without limitation, any renewals or extensions thereof, advertising materials,
publications, technical papers and computer software, and any right (whether by
license or otherwise) to use or exploit any of the foregoing; and
(d)
all data
and information that is maintained in confidence, including know-how, customer
and vendor lists, computer programs.

“IRS” means
the Internal Revenue Service of the United States.

“Judgments” means
any judgments or outstanding orders, injunctions, decrees,
stipulations,
determinations or
awards (whether rendered by a Governmental
Authority, court or
administrative agency or by arbitration).

“Laws” means
any foreign,
federal,
national, state or local statute, law, ordinance, regulation, rule, code, order
or other requirement or rule of law of any
Governmental Authority.

 

“Liability” or
“Liabilities” means
any and all debts, liabilities and obligations, whether accrued or fixed, known
or unknown, absolute or contingent, matured or unmatured or determined or
determinable and
whether or not required to be disclosed on a balance sheet prepared in
accordance with GAAP.

“Liens”
means claims,
license, liens, mortgages, title
defects, pledges,
charges,
easements, encumbrances, security
interests,
restrictions, options or other legal or equitable encumbrances.

“Material
Adverse Effect” means
any
change, circumstance, event or effect
that,
individually or in the aggregate with related changes, circumstances, events or
effects, is, or is reasonably likely to be,
materially adverse to (a)
the
business, assets,
liabilities, results
or financial condition of the Business taken as a whole, excluding effects
to the
extent related
to or resulting from (a)
events
affecting the economy generally which do
not disproportionately affect the Business, (b) general
changes in conditions in the industries in which Seller or its customers or
suppliers conduct business which do
not disproportionately affect the Business, or (c) changes
in general economic or political conditions or resulting from or arising out of
developments in credit, financial, securities markets, including, without
limitation, caused by acts of terrorism or war (whether or not declared),
which do
not disproportionately affect the Business.

“Person” means
any individual, partnership, firm, corporation, business trust, joint stock
company, limited liability company, association, unincorporated association,
joint venture, trust, unincorporated organization, Governmental Authority or
other entity of whatever nature.

“Proceeding” means
any, civil, criminal or administrative claim, action,
suit, proceeding,
litigation,
investigation, audit or arbitration

Annex
A-3

 

“Securities
Act” means
the Securities Act of 1933, as amended, and all rules and regulations
promulgated thereunder.

“Subsidiary” or
“Subsidiaries” means
any corporation, partnership, joint venture or other legal entity of which
Buyer, Seller or any other Person (either alone or through or together with any
other subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.

“Taxes” means
all taxes, additions to tax, penalties, interest, fines, duties, withholdings,
assessments, and charges assessed or imposed by any governmental authority,
including but not limited to all federal, state, county, local and foreign
income, profits, gross receipts, import, ad valorem, real and personal property,
franchise, license, sales, use, value added, stamp, transfer, withholding,
payroll, employment, excise, custom, duty, and any other taxes, obligations and
assessments of any kind whatsoever; the foregoing shall include, but not be
limited to, any liability arising as a result of being (or ceasing to be)
or having
been a member
of any affiliated, consolidated, combined, or unitary group as well as any
liability under any tax allocation, tax sharing, tax indemnity or similar
agreement.

“Tax
Return” means
any return, declaration, report, claim for refund or information return or
statement relating to Taxes, including any schedule or attachment
thereto.

“Transaction
Documents” means
this Agreement, the Employment Agreements of the Principals and any other
agreement, document or instrument delivered in connection with the consummation
of the transactions contemplated hereby.

“Transfer
Taxes” means
all sales taxes, use taxes, stamp taxes, conveyance taxes, transfer taxes,
filing fees, recording fees, reporting fees and other similar duties, taxes and
fees, if any, imposed upon, or resulting from, the transfer of the Assets
hereunder.

“WARN” means
Worker Adjustment and Retraining Notification Act of 1988.

 

Annex
A-4

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