Document:

Exhibit

4.1

 

CERTIFICATE

OF DESIGNATION FOR

SERIES A PREFERRED STOCK

OF

ONELINK, INC.

 

 

Pursuant to Section

302A.401 of the

Business Corporation Act

of the State of Minnesota

 

 

OneLink, Inc., a corporation organized and existing

under the Minnesota Business Corporation Act (the “Company”), hereby certifies

that the following resolutions were adopted by the Company’s Board of Directors

on February 21, 2001 pursuant to authority of the Board of Directors as

required by Section 302A.401, Subdivision 3 of the Minnesota Business

Corporation Act:

 

RESOLVED, that the relative rights and preferences of

the Series A Preferred Stock shall be as set forth in the Certificate of

Designation for Series A Preferred Stock as presented to the Board; and that

the officers of the Company are authorized and directed to file such

Certificate of Designation in the manner required and contemplated by the

Minnesota Business Corporations Act:

 

Series A Preferred

Stock:

 

Section 1.               Series

A Preferred Stock.

 

One Million Four

Hundred Thousand (1,400,000) of the Ten Million undesignated shares that are

authorized by Article III of this corporation’s articles of incorporation are

hereby designated Series A Preferred shares, $.01 par value (hereinafter

referred to as “Series A Preferred Stock”), and the rights and preferences of

such Series A Preferred Stock shall be set forth in Section 2 below.

 

Section 2.               Description

of Series A Preferred Stock.

 

The rights, preferences,

privileges and restrictions granted to or imposed upon Series A Preferred Stock

or the holders thereof are as follows:

 

(A)          Voting Rights.

 

Each holder of

Series A Preferred Stock shall have one vote on all matters submitted to the

shareholders for each share of common stock which such holder of Series A

Preferred Stock would be entitled to receive upon the conversion of such

holder’s Series A Preferred Stock pursuant to the conversion provisions of

Subsection 2(C)(3) below.

 

 

 

(B)           No Preemptive Rights.

 

No holders of

Series A Preferred Stock shall be entitled as such, as a matter of right, to

subscribe for, purchase, or receive any part of any stock of this corporation

of any class whatsoever, or of securities convertible into or exchangeable for

any stock of any class whatsoever, whether now or hereafter authorized and

whether issued for cash or other consideration or by way of dividend.

 

(C)                                Other Rights, Preferences, Privileges and

Restrictions.

 

(1)           Dividends.             Dividends shall be payable on

Series A Preferred Stock out of funds legally available for the declaration of

dividends only if and when declared by this corporation’s Board of

Directors.  Although no dividends shall

be required with respect to the Series A Preferred Stock, in no event shall any

dividend be paid on any shares of common stock unless comparable dividends are

paid on the Series A Preferred Stock. 

Series A Preferred Stock shall be counted on an as-if-converted basis in

determining whether dividends on Series A Preferred Stock and the shares of

common stock are comparable.

 

(2)           Liquidation Right and Preference.  In the event of the liquidation,

dissolution, or winding up of this corporation (each a “Liquidating Event”),

whether voluntary or involuntary, the holders of Series A Preferred Stock shall

be entitled to receive in cash, out of the assets of this corporation, an

amount equal to $.50 per share for each outstanding share of Series A Preferred

Stock, plus all declared or accrued but unpaid dividends (the “Liquidation

Preference”), before any payment shall be made or any assets distributed to the

holders of common stock or any other class of shares of this corporation

ranking junior to Series A Preferred Stock.  

If, upon any Liquidating Event, the assets of this corporation are

insufficient to pay the Liquidation Preference, then the holders of Preferred

Shares shall share pro rata in any distribution in proportion

to the full amounts to which they would otherwise be respectively

entitled.  Upon a Liquidating Event, if

there are assets available for distribution after the holders of Preferred Shares

have received an amount equal to the Liquidation Preference, then the holders

of the Preferred Shares will share ratably with the holders of common stock in

the remaining assets.  For purposes of

this joint distribution of assets to the holders of common stock and the

holders of Preferred Shares, each holder of Preferred Shares should be regarded

as owning that number of common stock into which such Preferred Shares would

then be convertible.

 

The merger or

consolidation of this corporation into or with another corporation, or the

merger or consolidation of any other corporation into or with this corporation

(in which consolidation or merger the shareholders of this corporation receive

distribution of cash or securities or other property as a result of such

consolidation or merger), or the sale, transfer, or other disposition of all or

substantially all of the assets of this corporation, shall be deemed to be a

liquidation or dissolution of this corporation for purposes of this subsection

2(C)(2), and therefore a Liquidating Event.

 

 

2

 

(3)           Conversion Rights.

 

(a)           General.  Each Series A Preferred Share shall be

convertible at the option of the holder thereof into Common Stock of this

corporation in accordance with the provisions and subject to the adjustments

provided for in subsection 2(C)(3)(b). 

In order to exercise the conversion privilege, a holder of Series A

Preferred Stock shall surrender the certificate evidencing such Series A

Preferred Stock to this corporation at its principal office, duly endorsed to

this corporation and accompanied by written notice to this corporation that the

holder elects to convert a specified portion or all of such shares.  Series A Preferred Stock converted at the

option of the holder shall be deemed to have been converted on the day of

surrender of the certificate representing such shares for conversion in

accordance with the foregoing provisions, and at such time the rights of the

holder of such Series A Preferred Stock, as such holder, shall cease and such

holder shall be treated for all purposes as the record holder of Common Stock

issuable upon conversion.

 

                As promptly as practicable on or

after the conversion date, this corporation shall issue and mail or deliver to

such holder a certificate or certificates for the number of shares of Common

Stock issuable upon conversion, computed to the nearest full share, and a

certificate or certificates for the balance of Series A Preferred Stock

surrendered, if any, not so converted into Common Stock.

 

(b)           Conversion Price and Adjustments.  The number of shares of Common Stock

issuable in exchange for Series A Preferred Stock upon optional conversion

shall be equal to Fifty Cents ($.50), divided by the conversion price then in

effect (the “Conversion Price”).  The

Conversion Price shall initially be $.50, but shall be subject to adjustment

from time to time as hereinafter provided:

 

(i)                In case this corporation shall

at any time subdivide or split its outstanding Common Stock into a greater

number of shares or declare any dividend payable in Common Stock, the

Conversion Price in effect immediately prior to such subdivision or split or

dividend shall be proportionately decreased; and conversely, in case the

outstanding Common Stock of this corporation shall be combined into a smaller

number of shares, the Conversion Price in effect immediately prior to such

combination shall be proportionately increased.

 

(ii)               Except for (x) Common Stock

issued upon exercise of options, warrants, and convertible securities that are

outstanding as of the date of filing of this Certificate of Designation, (y)

warrants or rights to acquire Common Stock, and Common Stock issued upon

conversion thereof, issued in connection with indebtedness for borrowed money

from financial or institutional lenders, or (z) shares of Common Stock issued

upon the exercise of options that may be granted under the option or

employee-benefit plans approved by the shareholders of this corporation

(collectively, the “Excluded Issuances”), if this corporation shall issue or

sell any Common Shares for a consideration per share less than the 

 

 

3

 

Conversion Price

then in effect (other than dividends payable in Common Shares), or shall issue

any options, warrants, or other rights for the purchase of such shares at a

consideration per share of less than the Conversion Price then in effect, the

Conversion Price in effect immediately prior to such issuance or sale shall be

adjusted and shall be equal to (i) the Conversion Price then in effect,

multiplied by (ii) a fraction, the numerator of which shall be an amount equal

to the sum of (a) the number of Common Shares outstanding immediately prior to

such issuance or sale multiplied by the Conversion Price then in effect, and

(b) the total consideration payable to this corporation upon such issuance or

sale of such shares and such purchase rights and upon the exercise of such

purchase rights; and the denominator of which shall be the amount determined by

multiplying (aa) the number of Common Shares outstanding immediately after such

issuance or sale plus the number of the Common Shares issuable upon the

exercise of any purchase rights thus issued, by (bb) the Conversion Price then

in effect.  If any options or purchase

rights that are taken into account in any such adjustment of the Conversion

Price subsequently expire without exercise, the Conversion Price shall be

recomputed by deleting such options or purchase rights.  If the Conversion Price is adjusted as the

result of the issuance of any options, warrants, or other purchase rights, no

further adjustment of the Conversion Price shall be made at the time of the

exercise of such options, warrants or other purchase rights.

 

(c)           Notice of Conversion Price

Adjustment.  Upon any adjustment of

the Conversion Price, then and in each such case the corporation shall give

written notice thereof, by first-class mail, postage prepaid, addressed to the

registered holders of Series A Preferred Stock at the addresses of such holders

as shown on the books of this corporation, which notice shall state the

Conversion Price resulting from such adjustment and the increase or decrease,

if any, in the number of shares receivable at such price upon the conversion of

Series A Preferred Stock, setting forth in reasonable detail the method of

calculation and the facts upon which such calculation is based.

 

(d)           Rights to Preconversion

Distributions.  Subject to the

provisions of Subsection 2(C)(2) regarding liquidation rights, if any capital

reorganization or reclassification of the capital stock of this corporation, or

consolidation or merger of this corporation with another corporation, or the

sale of all or substantially all of its assets to another corporation shall be

effected in such a way that holders of Common Stock shall be entitled to

receive stock, securities, or assets with respect to or in exchange for Common

Stock, then (as a condition of such reorganization, reclassification,

consolidation, merger or sale), lawful and adequate provision shall be made

whereby the holders of Series A Preferred Stock shall thereafter have the right

to receive, in lieu of Common Stock of this corporation immediately theretofore

receivable upon the conversion of such Series A Preferred Stock, such shares of

stock, securities, or assets as may be issued or payable with respect to or in

exchange for a number of outstanding Common Stock equal to the number of shares

of Common Stock immediately theretofore receivable upon the conversion or such

Series A Preferred Stock had such 

 

 

4

 

reorganization,

reclassification, consolidation, merger or sale not taken place, and in any

such case appropriate provision shall be made with respect to the rights and

interests of the holders of the Series A Preferred Stock to the end that the

provisions hereof (including without limitation provisions for adjustments of

the Conversion Price and of the number of shares receivable upon the conversion

of such Series A Preferred Stock) shall thereafter be applicable, as nearly as

may be, in relation to any shares of stock, securities or assets thereafter

receivable upon the conversion of such Series A Preferred Stock.  This corporation shall not effect any such

reorganization, reclassification, consolidation, merger or sale, unless prior

to the consummation thereof the surviving corporation (if other than this

corporation), the corporation resulting from such consolidation or the

corporation purchasing such assets shall assume by written instrument executed

and mailed to the registered holders of the Series A Preferred Stock at the

last address of such holders appearing on the books of the corporation the

obligation to deliver to such holders such shares of stock, securities or

assets as, in accordance with the foregoing provisions, such holders may be

entitled to receive.

 

(e)                                  Notice of Certain Events. 

If at any time:

 

                (i)            this

corporation shall pay any dividend payable in stock upon Common Stock or make

any distribution (other than regular cash dividends) to the holders of Common

Stock; or

 

                (ii)           this corporation shall offer for subscription pro rata

to the holders of Common Stock any additional shares of stock of any class or

other rights; or

 

                (iii)          there shall be any capital reorganization, reclassification

of the capital stock of this corporation, or consolidation or merger of this

corporation with, or sale of all or substantially all of its assets to, another

corporation; provided, however, that this provision shall not be

applicable to the merger or consolidation of this corporation with or into

another corporation if following such merger or consolidation the shareholders

of this corporation immediately prior to such merger or consolidation own at

least 80 percent of the equity of the combined entity; or

 

                (iv)          there shall be a voluntary or involuntary dissolution,

liquidation, or winding up of this corporation;

 

then, this

corporation shall give written notice, by first-class mail, postage prepaid,

addressed to the holders of Series A Preferred Stock at the addresses of such

holders as shown on the books of this corporation, of the date on which (A) the

books of this corporation shall close or a record shall be taken for such

dividend, distribution, or subscription rights, or (B) such reorganization,

reclassification, consolidation, merger, sale, dissolution, liquidation, or

winding up shall take place, as the case may be.  Such notice shall also specify the date as of which the holders

of Common Stock of record shall participate in such dividend, distribution, or

subscription rights, 

 

 

5

 

or shall be

entitled to exchange their Common Stock for securities or other property

deliverable upon such reorganization, reclassification, consolidation, merger,

sale, dissolution, liquidation, or winding up, as the case may be.  Such written notice shall be given at least

20 days prior to the action in question and not less than 20 days prior to the

record date or the date on which this corporation’s transfer books are closed

in respect thereto.

 

(f)          Definition of Common Stock.  As used in this subsection 2(C)(3) the term

“Common Stock” shall mean and include this corporation’s presently authorized

Common Stock and shall also include any capital stock of any class of this

corporation hereafter authorized which shall have the right to vote on all

matters submitted to the shareholders of this corporation and shall not be

limited to a fixed sum or percentage in respect of the rights of the holders

thereof to participate in dividends or in the distribution of assets upon the

voluntary or involuntary liquidation, dissolution or winding up of this

corporation; provided, however, that the shares receivable pursuant to

conversion of Series A Preferred Stock shall include shares designated as

Common Stock of this corporation as of the date of issuance of such Series A

Preferred Stock, or, in case of any reclassification of the outstanding shares

thereof, the stock, securities, or assets provided for in subsection 2(C)(3)(d)

above.

 

                IN WITNESS WHEREOF, the

Company has caused this Certificate of Designation to be executed by its duly

authorized officer on June 5, 2001.

 

 

	

   

  	

   

  	

  /s/  Paul F.

  Lidsky

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Paul F. Lidsky, Chief Executive Officer

  

 

 

6Exhibit 10.1

 

 

ASSET PURCHASE AGREEMENT

 

                This

Asset Purchase Agreement (the “Agreement”)

is dated June 28, 2002, by and between CallVision, Inc., a Washington

corporation (the “Buyer”), and

OneLink, Inc., a Minnesota corporation (the “Seller”).

 

                Seller

desires to sell, and Buyer desires to purchase, the Assets of Seller for the

consideration and on the terms set forth in this Agreement.  Accordingly, the parties, intending to be

legally bound, hereby agree as follows:

 

1.

DEFINITIONS AND USAGE

 

                1.1           Definitions.  For purposes of this Agreement, the

following terms and variations thereof have the meanings specified or referred

to in this Section 1.1:

 

                “Accounts Receivable” (a) all trade accounts

receivable and other rights to payment from customers of Seller and the full

benefit of all security for such accounts or rights to payment, including all

trade accounts receivable representing amounts receivable in respect of goods

shipped or products sold or services rendered to customers of Seller, (b) all

other accounts or notes receivable of Seller and the full benefit of all

security for such accounts or notes, and (c) any claim, remedy or other right

related to any of the foregoing.

 

                “Active Employees”  means Jon Anderson, Andrew Armstrong, Steve Taylor, Mike Feckler,

Jon Schleifer, Paul Lidsky and Brenda Groff.

 

                “Adjustment Amount”  as defined in Section 2.8.

 

                “Assets” 

as defined in Section 2.1.

 

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

 

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

 

                “Best Efforts”  the efforts that a prudent Person desirous of achieving a result

would use in similar circumstances to achieve that result as expeditiously as

possible, provided, however, that a Person required to use Best Efforts under

this Agreement will not be thereby required to take actions that would result

in a material adverse change in the benefits to such Person of this Agreement

and the Contemplated Transactions or to dispose of or make any change to its

business, expend any material funds or incur any other material burden.

 

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

 

                “Breach” 

any breach of, or any inaccuracy in, any representation or warranty or

any breach of, or failure to perform or comply with, any covenant or obligation,

in or of this Agreement or any other Contract, or any event which with the

passing of time or the giving of notice, or both, would constitute such a

breach, inaccuracy or failure.

 

 

 

                “Business Day”  any day other than (a) Saturday or Sunday or (b) any other day on

which banks in Washington are permitted or required to be closed.

 

                “Buyer” 

as defined in the first paragraph of this Agreement.

 

                “Buyer Indemnified Persons”  as defined in Section 11.2.

 

                “Closing” 

as defined in Section 2.6.

 

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

 

                “COBRA” 

as defined in Section 10.1.

 

                “Code” 

the Internal Revenue Code of 1986, as amended.

 

                “Confidential Information”  as defined in Section 12.1.

 

                “Consent” 

any approval, consent, ratification, waiver or other authorization.

 

                “Contemplated Transactions”  all of the transactions contemplated by this

Agreement.

 

                “Contract” 

any agreement, contract or lease related to the Products.

 

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

 

                “Damages” 

as defined in Section 11.2.

 

                “Disclosure Letter”  the disclosure letter delivered by Seller to

Buyer concurrently with the execution and delivery of this Agreement.

 

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

 

                “Encumbrance”  any charge, claim, community or other marital property interest,

condition, equitable interest, lien, option, pledge, security interest,

mortgage, right of way, easement, encroachment, servitude, right of first option,

right of first refusal or similar restriction, including any restriction on

use, voting (in the case of any security or equity interest), transfer, receipt

of income or exercise of any other attribute of ownership.

 

                “ERISA” 

the Employee Retirement Income Security Act of 1974.

 

                “Exchange Act”  the Securities Exchange Act of 1934.

 

                “Excluded Assets”  as defined in Section 2.2.

 

                “Facilities”  any real property, leasehold or other interest in real property

currently owned or operated by Seller, including the Tangible Personal Property

used or operated by Seller at such locations.

 

                “GAAP” 

generally accepted accounting principles for financial reporting in the

United States.

 

 

2

 

                “Governing Documents”  with respect to any particular entity, (a)

if a corporation, the articles or certificate of incorporation and the bylaws;

(b) if a general partnership, the partnership agreement and any statement of

partnership; (c) if a limited partnership, 

the limited partnership agreement and the certificate of limited

partnership; (d) if a limited liability company, the articles of organization

and operating agreement; (e) if another type of Person, any other charter or

similar document adopted or filed in connection with the creation, formation or

organization of the Person; (f) all shareholders’ agreements, voting

agreements, voting trust agreements, joint venture agreements; and (g) any

amendment or supplement to any of the foregoing.

 

                “Governmental Authorization”  any Consent, license, registration or permit

issued, granted, given or otherwise made available by or under the authority of

any Governmental Body or pursuant to any Legal Requirement.

 

                “Governmental Body”  any:

 

(a)           nation, state, county, city, town,

borough, village, district or other jurisdiction;

(b)           federal, state, local, municipal,

foreign or other government;

(c)           governmental or quasi-governmental

authority of any nature (including any agency, branch, department, board,

commission, court, tribunal or other entity exercising governmental or

quasi-governmental powers);

(d)           multinational organization or body;

(e)           body exercising, or entitled or

purporting to exercise, any administrative, executive, judicial, legislative,

police, regulatory or taxing authority or power; or

(f)            official of any of the foregoing.

 

                “Indemnified Person”  as defined in Section 11.7.

 

                “Indemnifying Person”  as defined in Section 11.7.

 

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

 

                “Inventories”  all inventories of Seller, wherever located, including all

finished goods, work in process, raw materials, spare parts and all other

materials and supplies to be used or consumed by Seller in the production of

finished goods.

 

                “IRS” 

the United States Internal Revenue Service and, to the extent relevant,

the United States Department of the Treasury.

 

                “Knowledge”—an individual will be deemed to

have Knowledge of a particular fact or other matter if:

 

                (a)           that individual is actually aware of

that fact or matter; or

                (b)           a prudent individual could be

expected to discover or otherwise become aware of that fact or matter in the

course of conducting a reasonably comprehensive investigation regarding the

accuracy of any representation or warranty contained in this Agreement.

 

Seller will be deemed to have Knowledge of a

particular fact or other matter if Paul Lidsky or Brenda Groff has, or at any

time had, Knowledge of that fact or other matter (as set forth in (a) and (b)

above).

 

 

3

 

A Person (other than an individual or Seller)

will be deemed to have Knowledge of a particular fact or other matter if any

individual who is serving, or who has at any time served, as a director,

officer, partner, executor or trustee of that Person (or in any similar capacity)

has, or at any time had, Knowledge of that fact or other matter (as set forth

in (a) and (b) above), and any such individual (and any individual party to

this Agreement) will be deemed to have conducted a reasonably comprehensive

investigation regarding the accuracy of the representations and warranties made

herein by that Person or individual.

 

                “Legal Requirement”  any federal, state, local, municipal,

foreign, international, multinational or other constitution, law, ordinance,

principle of common law, code, regulation, statute or treaty.

 

                “Liability” 

with respect to any Person, any liability or obligation of such Person

of any kind, character or description, whether known or unknown, absolute or

contingent, accrued or unaccrued, disputed or undisputed, liquidated or

unliquidated, secured or unsecured, joint or several, due or to become due,

vested or unvested, executory, determined, determinable or otherwise, and

whether or not the same is required to be accrued on the financial statements

of such Person.

 

                “Marks” 

as defined in Section 3.12(a)(i).

 

                “Material Consents”  as defined in Section 7.3.

 

                “Note” 

as defined in Section 2.3.

 

                “Occupational Safety and Health Law”  any Legal Requirement designed to provide

safe and healthful working conditions and to reduce occupational safety and

health hazards, including the Occupational Safety and Health Act, and any

program, whether governmental or private (such as those promulgated or

sponsored by industry associations and insurance companies), designed to provide

safe and healthful working conditions.

 

                “Order” 

any order, injunction, judgment, decree, ruling, assessment or

arbitration award of any Governmental Body or arbitrator.

 

                “Ordinary Course of Business”  an action taken by a Person will be deemed to

have been taken in the Ordinary Course of Business only if that action:

 

(a)           is consistent in nature, scope and

magnitude with the past practices of such Person and is taken in the ordinary

course of the normal, day-to-day operations of such Person;

(b)           does not require authorization by the

board of directors or shareholders of such Person (or by any Person or group of

Persons exercising similar authority) and does not require any other separate

or special authorization of any nature; and

(c)           is similar in nature, scope and

magnitude to actions customarily taken, without any separate or special

authorization, in the ordinary course of the normal, day-to-day operations of

other Persons that are in the same line of business as such Person.

 

                “Part” 

a part or section of the Disclosure Letter.

 

                “Patents” 

as defined in Section 3.12(a)(ii).

 

 

4

 

                “Person” 

an individual, partnership, corporation, business trust, limited

liability company, limited liability partnership, joint stock company, trust,

unincorporated association, joint venture or other entity or a Governmental

Body.

 

                “Proceeding”  any action, arbitration, audit, hearing, investigation,

litigation or suit (whether civil, criminal, administrative, judicial or

investigative, whether formal or informal, whether public or private)

commenced, brought, conducted or heard by or before, or otherwise involving,

any Governmental Body or arbitrator.

 

                “Purchase Price”  as defined in Section 2.3.

 

                “Record” 

information that is inscribed on a tangible medium or that is stored in

an electronic or other medium and is retrievable in perceivable form.

 

                “Related Person”  With respect to a particular individual: (a)  each other member of such individual’s

Family; (b)  any Person that is directly

or indirectly controlled by any one or more members of such individual’s

Family; (c)  any Person in which members

of such individual’s Family hold (individually or in the aggregate) a Material

Interest; and (d)  any Person with respect

to which one or more members of such individual’s Family serves as a director,

officer, partner, executor or trustee (or in a similar capacity).

 

                With

respect to a specified Person other than an individual: (a)  any Person that directly or indirectly

controls, is directly or indirectly controlled by or is directly or indirectly

under common control with such specified Person; (b)  any Person that holds a Material Interest in such specified

Person; (c)  each Person that serves as

a director, officer, partner, executor or trustee of such specified Person (or

in a similar capacity); (d)  any Person

in which such specified Person holds a Material Interest; and (e)  any Person with respect to which such

specified Person serves as a general partner or a trustee (or in a similar

capacity).

 

                For

purposes of this definition, (a) “control” (including “controlling,”

“controlled by,” and “under common control with”) means the possession, direct

or indirect, of the power to direct or cause the direction of the management

and policies of a Person, whether through the ownership of voting securities,

by contract or otherwise, and shall be construed as such term is used in the

rules promulgated under the Securities Act; (b) the “Family” of an individual

includes (i) the individual, (ii) the individual’s spouse, (iii) any other

natural person who is related to the individual or the individual’s spouse

within the second degree and (iv) any other natural person who resides with

such individual; and (c) “Material Interest” means direct or indirect

beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of

voting securities or other voting interests representing at least ten percent

(10%) of the outstanding voting power of a Person or equity securities or other

equity interests representing at least ten percent (10%) of the outstanding

equity securities or equity interests in a Person.

 

                “Representative”  with respect to a particular Person, any director, officer,

manager, employee, agent, consultant, advisor, accountant, financial advisor,

legal counsel or other representative of that Person.

 

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

 

                “Securities Act” the Securities Act of 1933,

as amended.

 

 

5

 

                “Seller” 

as defined in the first paragraph of this Agreement.

 

                “Seller Contract”  any Contract (a) under which Seller has or may acquire any rights

or benefits; (b) under which Seller has or may become subject to any obligation

or liability; or (c) by which Seller or any of the assets owned or used by

Seller is or may become bound.

 

                “Seller’s Closing Representations and Warranties”  all representations and warranties in

Article III, other than those set forth in Sections 3.3, 3.5 and 3.10(c)(i); provided, however, that for purposes of

this definition only the representations and warranties set forth in Section

3.14 shall not include the representations and warranties set forth in Sections

3.3, 3.5 and 3.10(c)(i).

 

                “Software” 

all computer software and subsequent versions thereof, including source

code, object, executable or binary code, objects, comments, screens, user

interfaces, report formats, schema, templates, menus, buttons and icons and all

files, data, materials, manuals, design notes and other items and documentation

related thereto or associated therewith.

 

                “Subsidiary”  with respect to any Person (the “Owner”), any corporation or

other Person of which securities or other interests having the power to elect a

majority of that corporation’s or other Person’s board of directors or similar

governing body, or otherwise having the power to direct the business and

policies of that corporation or other Person (other than securities or other

interests having such power only upon the happening of a contingency that has

not occurred), are held by the Owner or one or more of its Subsidiaries.

 

                “Tangible Personal Property”  all machinery, equipment, tools, furniture,

office equipment, computer hardware, supplies, materials, vehicles and other

items of tangible personal property (other than Inventories) of every kind

owned or leased by Seller (wherever located and whether or not carried on

Seller’s books), together with any express or implied warranty by the

manufacturers or sellers or lessors of any item or component part thereof and

all maintenance records and other documents relating thereto.

 

                “Tax” 

any income, gross receipts, license, payroll, employment, excise,

severance, stamp, occupation, premium, property, environmental, windfall

profit, customs, vehicle, airplane, boat, vessel or other title or

registration, capital stock, franchise, employees’ income withholding, foreign

or domestic withholding, social security, unemployment, disability, real

property, personal property, sales, use, transfer, value added, alternative,

add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty of

any kind whatsoever and any interest, penalty, addition or additional amount

thereon imposed, assessed or collected by or under the authority of any

Governmental Body or payable under any tax-sharing agreement or any other

Contract.

 

                “Tax Return”  any return (including any information return), report, statement,

schedule, notice, form, declaration, claim for refund or other document or

information filed with or submitted to, or required to be filed with or

submitted to, any Governmental Body in connection with the determination,

assessment, collection or payment of any Tax or in connection with the

administration, implementation or enforcement of or compliance with any Legal

Requirement relating to any Tax.

 

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

 

                “Third-Party Claim”  any claim against any Indemnified Person by

a Third Party, whether or not involving a Proceeding.

 

 

6

 

                1.2           Usage & Interpretation.  In this Agreement, unless a clear contrary

intention appears:

 

(a)           the singular number includes the

plural number and vice versa;

 

(b)           reference to any Person includes such

Person’s successors and assigns but, if applicable, only if such successors and

assigns are not prohibited by this Agreement, and reference to a Person in a

particular capacity excludes such Person in any other capacity or individually;

 

(c)           reference to any gender includes each

other gender;

 

(d)           reference to any agreement, document

or instrument means such agreement, document or instrument as amended or

modified and in effect from time to time in accordance with the terms thereof;

 

(e)           reference to any Legal Requirement

means such Legal Requirement as amended, modified, codified, replaced or

reenacted, in whole or in part, and in effect from time to time, including

rules and regulations promulgated thereunder, and reference to any section or

other provision of any Legal Requirement means that provision of such Legal

Requirement from time to time in effect and constituting the substantive

amendment, modification, codification, replacement or reenactment of such

section or other provision;

 

(f)            “hereunder,” “hereof,”

“hereto,”  and words of similar import

shall be deemed references to this Agreement as a whole and not to any

particular Article, Section or other provision hereof;

 

(g)           “including” (and with correlative

meaning “include”) means including without limiting the generality of any

description preceding such term;

 

(h)           “or” is used in the inclusive sense

of “and/or”;

 

(i)            with respect to the determination of

any period of time, “from” means “from and including” and “to” means “to but

excluding”; and

 

(j)            references to documents, instruments

or agreements shall be deemed to refer as well to all addenda, exhibits,

schedules or amendments thereto.

 

                1.3           Accounting Terms and

Determinations. Unless otherwise specified herein, all accounting terms

used herein shall be interpreted and all accounting determinations hereunder

shall be made in accordance with GAAP.

 

                1.4           Legal Representation of the

Parties. This Agreement was negotiated by the parties with the benefit of

legal representation, and any rule of construction or interpretation otherwise

requiring this Agreement to be construed or interpreted against any party shall

not apply to any construction or interpretation hereof.

 

 

2. 

SALE AND TRANSFER OF ASSETS; CLOSING

 

 

7

 

                2.1           Assets to be Sold.  Upon the terms and subject to the conditions

set forth in this Agreement, at the Closing, but effective as of the Effective

Time, Seller shall sell, convey, assign, transfer and deliver to Buyer, and

Buyer shall purchase and acquire from Seller, free and clear of any

Encumbrances, all of Seller’s right, title and interest in all of Seller’s

assets related to Seller’s TeleSmart and TeleMetrics products (the

“Products”).  Such assets include any

and all hardware, proprietary Software, third party Software, know-how and

documentation related to the operation and service of the Products, all

Contracts and revenue streams related to the Products, all Intellectual

Property Assets, proprietary information and other intellectual property or

Records related to the Products, and any other tangible or intangible rights

related, directly or indirectly, to the Products, including, without

limitation, those assets described on Schedule 2.1 attached hereto and

incorporated herein by this reference. 

Without limiting the generality of the foregoing, the Assets shall

include:

 

(a)           all Accounts Receivable related to

the Products that arise on and after June 8, 2002;

 

(b)           all Seller Contracts related to the

Products, and all outstanding offers or solicitations made by or to Seller to

enter into any Contract related to the Products;

 

(c)           all Governmental Authorizations

related to the Products and all pending applications therefor or renewals

thereof, in each case to the extent transferable to Buyer;

 

(d)           all data and Records related to the

Products, including client and customer lists and Records, referral sources,

research and development reports and Records, production reports and Records,

service and warranty Records, equipment logs, operating guides and manuals, financial

Records and receipts, creative materials, advertising materials, promotional

materials, studies, reports, correspondence and other similar documents and

Records;

 

(e)           all of the intangible rights and

property of Seller related to the Products, including Intellectual Property

Assets, going concern value, goodwill, telephone, telecopy and e-mail addresses

and listings;

 

(f)            all insurance benefits, including

rights and proceeds, arising from or relating to the Assets or the Assumed

Liabilities prior to the Effective Time, unless expended in accordance with

this Agreement;

 

(g)           all claims of Seller against third

parties relating to the Assets, whether choate or inchoate, known or unknown,

contingent or noncontingent, including all such claims listed in Part 2.1(g);

and

 

(h)           all rights of Seller relating to

deposits and prepaid expenses, claims for refunds and rights to offset in

respect thereof with respect to the Products.

 

All of the property and assets to be

transferred to Buyer hereunder are herein referred to collectively as the “Assets.”

 

Notwithstanding the foregoing, the transfer

of the Assets pursuant to this Agreement shall not include the assumption of

any Liability related to the Assets unless Buyer expressly assumes that

Liability pursuant to Section 2.4(a).

 

 

8

 

                2.2           Excluded Assets.  All assets of Seller other than the Assets

are not part of the sale and purchase contemplated hereunder, are excluded from

the Assets and shall remain the property of Seller after the Closing

(collectively, the “Excluded Assets”).

 

                2.3           Consideration.  The consideration for the Assets will be (a)

up to two hundred fourteen thousand three hundred and no dollars  ($214,300) (which includes the Adjustment

Amount as determined pursuant to Section 2.8) (the “Purchase Price”), (b) the assumption of the Assumed

Liabilities, and (c) payment of an amount equal to fifteen percent (15%) of any

revenue (i.e., set-up or recurring revenue) generated from the sale of current

or future versions of the Products to any customers other than Qwest (as

hereinafter defined) pursuant to the Qwest Contract (as hereinafter defined)

during the period from the date hereof through December 31, 2003.  Revenue generated on or prior to December 31,

2003, but collected after such time shall be included in the obligations under

this Section 2.3.  Buyer will use its

commercially reasonable Best Efforts to collect such revenues,; however, Seller

acknowledges that Buyer’s obligations pursuant to this Section 2.3 are for

revenue generated and collected, not just for revenue generated.  Buyer will compute and remit such payments

on a quarterly basis to Seller within fifteen (15) days after the end of each

calendar quarter.  Seller shall have the

right to inspect Buyer’s computations relating to the generated revenue and

records underlying such computations.

 

                The

Purchase Price shall be paid as follows:

 

(a)           upon the signing of this Agreement,

Seller shall deliver to Buyer by wire transfer the sum of one hundred thousand

and no dollars ($100,000) plus the Adjustment Amount (such aggregate sum not to

exceed one hundred fourteen thousand three hundred and no dollars ($114,300);

in exchange for a Secured Promissory Note of Seller (the “Note”) in the form of

Exhibit 2.3 hereto in an amount equal to one hundred thousand ($100,000) plus

the Adjustment Amount, which Note shall be cancelled  and the security interest released at Closing; and

 

(b)           at the Closing, Seller shall deliver

to Buyer by wire transfer one hundred thousand and no dollars ($100,000).

 

                2.4           Liabilities.

 

(a)           Assumed Liabilities. On the

Closing Date, but effective as of the Effective Time, Buyer shall assume and

agree to discharge only the following Liabilities of Seller (the “Assumed Liabilities”):

 

(i)            Seller’s obligations under the

Software Development and License Agreement between US West Communications,

Inc., a Colorado corporation (n/k/a “Qwest Communications, Inc.” and referred

to herein as “Qwest”) and Seller

dated November 11, 1997, as amended on March 5, 1998, and on January 25, 2000

(as amended, the “Qwest Contract”);

and

 

(ii)           Seller’s obligations to provide

services under the Qwest Contract in consideration of a $50,000 prepayment from

Qwest to Seller on January 10, 2002.

 

(iii)          Seller’s obligations under the

specific Seller Contracts identified in Part 3.10(a) that are listed on

Schedule A to Exhibit 2.7(a)(ii) at Closing.

 

 

9

 

(b)           Retained Liabilities. The

Retained Liabilities shall remain the sole responsibility of and shall be

retained, paid, performed and discharged solely by Seller. “Retained Liabilities” shall mean every

Liability of Seller other than the Assumed Liabilities.

 

                2.5           Allocation.  The Purchase Price shall be allocated in

accordance with a schedule mutually agreed upon between the parties prior to

the Closing.  After the Closing, the

parties shall make consistent use of the allocation, fair market value and

useful lives specified in Exhibit 2.5 for all Tax purposes and in all filings,

declarations and reports with the IRS in respect thereof, including the reports

required to be filed under Section 1060 of the Code.  Buyer shall prepare and deliver IRS Form 8594 to Seller, within

forty-five (45) days after the Closing Date, to be filed with the IRS.  In any Proceeding related to the

determination of any Tax, neither Buyer nor Seller shall contend or represent

that such allocation is not a correct allocation.

 

                2.6           Closing.  The purchase and sale provided for in this

Agreement (the “Closing”) will

take place by the release of the Closing documents by each of the parties to

the other after delivery thereof by overnight courier on or prior to the date

that is two (2) Business Days following the approval of the transaction contemplated

hereby by Seller’s shareholders, or by such other means or later date as is

mutually agreeable to Buyer and Seller. 

Subject to the provisions of Article 9, failure to consummate the

Contemplated Transactions on the date and time determined pursuant to this

Section 2.6 will not result in this Agreement’s termination and will not

relieve any party of any obligation under this Agreement.  In such a situation, the Closing will occur

as soon as practicable, subject to Article 9.

 

                2.7           Closing Obligations.  At the Closing:

 

(a)           Seller shall deliver to Buyer:

 

(i)            an executed bill of sale in the form

of Exhibit 2.7(a)(i) (the “Bill of Sale”);

 

(ii)           an executed assignment in the form of

Exhibit 2.7(a)(ii), which assignment shall also contain Buyer’s undertaking and

assumption of the Assumed Liabilities (the “Assignment  and Assumption Agreement”);

 

(iii)          separate assignments of all registered

Marks, Patents and Copyrights in the form of Exhibit 2.7(a)(iii);

 

(iv)          such other deeds, bills of sale,

assignments, certificates of title, documents 

and other instruments of transfer and conveyance as may reasonably be

requested by Buyer, each in form and substance satisfactory to Buyer and its

legal counsel and executed by Seller;

 

(v)           evidence that Seller shall have received

the approval of its shareholders necessary to consummate the Contemplated

Transactions;

 

(vi)          an officer’s certificate certifying

the accuracy of each of Seller’s representations and warranties as of the date

of this Agreement and Seller’s Closing Representations and Warranties as of the

Closing in accordance with Section 7.1, and 

 

 

10

 

Seller’s compliance with and

performance of its covenants and obligations to be performed or complied with

at or before the Closing in accordance with Section 7.2; and

 

(vii)         a Secretary’s certificate certifying

and attaching, as of the Closing, complete and accurate copies of Seller’s

Governing Documents, all requisite resolutions or actions of Seller’s board of

directors and shareholders authorizing and approving the execution and delivery

of this Agreement and the consummation of the Contemplated Transactions, and

certifying to the incumbency and signatures of the officers of Seller executing

this Agreement and any other document relating to the Contemplated

Transactions.

 

(b)           Buyer shall deliver to Seller:

 

(i)            The sum of one hundred thousand

dollars ($100,000) by wire transfer to an account specified by Seller in

writing delivered to Buyer at least two (2) business days prior to the Closing

Date;

 

(ii)           The Assignment and Assumption

Agreement executed by Buyer;

 

(iii)          a certificate certifying the accuracy

of Buyer’s representations and warranties as of the date of this Agreement and

as of the Closing in accordance with Section 8.1, and Buyer’s compliance with

and performance of its covenants and obligations to be performed or complied

with at or before the Closing in accordance with Section 8.2; and

 

(iv)          a Secretary’s certificate certifying

and attaching, as of the Closing, complete and accurate copies of Buyer’s

Governing Documents all, requisite resolutions or actions of Buyer’s board of

directors approving the execution and delivery of this Agreement and the

consummation of the Contemplated Transactions and certifying to the incumbency

and signatures of the officers of Buyer executing this Agreement and any other

document relating to the Contemplated Transactions.

 

(v)           the cancelled Note.

 

                2.8           Adjustment Amount and Payment.  The “Adjustment

Amount” will be equal to the amount paid by Seller for office rent

for the period from June 8, 2002 through June 30, 2002, pursuant to the

Industrial Space Lease by and between Thomas S. Schreier and Seller, dated

December 6, 1994, as amended on May 12, 1998, and the fee paid by Seller for

T-1 bandwith pursuant to the Worldcom/OneLink agreement dated September 25,

2001 for the period from June 8, 2002 through June 30, 2002; provided, however, that the Adjustment

Amount shall not exceed fourteen thousand three hundred and no dollars

($14,300).

 

 

3. 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer as

follows:

 

                3.1           Organization and Good Standing.

 

 

11

 

(a)           Part 3.1(a) contains a complete and

accurate list of Seller’s jurisdiction of incorporation and any other

jurisdictions in which it is qualified to do business as a foreign corporation.

Seller is a corporation duly organized, validly existing and in good standing

under the laws of its jurisdiction of incorporation, with full corporate power

and authority to conduct its business as it is now being conducted, to own or

use the properties and assets that it purports to own or use, and to perform

all its obligations under the Seller Contracts.    Seller is qualified to do business as a foreign corporation in

every jurisdiction in which the nature of its business or its ownership of

property requires it to be so qualified except for those jurisdictions in which

the failure to be so qualified would not, individually or in the aggregate,

have a material adverse effect on the Seller’s business, assets, properties,

financial condition or results of operations.

 

(b)           Complete and accurate copies of the

Governing Documents of Seller, as currently in effect, are attached to Part

3.1(b).  Part 3.1(b) also contains an

accurate listing of outstanding options, warrants or other securities

convertible into common stock of Seller.

 

3.2           Enforceability;

Authority; No Conflict.

 

(a)           This Agreement constitutes the legal,

valid and binding obligation of Seller, enforceable against it in accordance

with its terms.  Upon the execution and

delivery by Seller of any other agreement to be executed or delivered by Seller

at the Closing (collectively, the “Seller’s

Closing Documents”), each of Seller’s Closing Documents will

constitute the legal, valid and binding obligation of Seller, enforceable

against it in accordance with its terms. 

Seller has the absolute and unrestricted right, power and authority to

execute and deliver this Agreement and the Seller’s Closing Documents to which

it is a party and to perform its obligations under this Agreement and the

Seller’s Closing Documents, and such action has been duly authorized by all

necessary action by Seller’s board of directors and, prior to Closing, will

have been authorized by Seller’s shareholders.

 

(b)           Except as set forth in Part 3.2(b),

neither the execution and delivery of this Agreement nor the consummation or

performance of any of the Contemplated Transactions will, directly or indirectly

(with or without notice or lapse of time):

 

(i)            Breach (A) any provision of any of

the Governing Documents of Seller or (B) any resolution adopted by the board of

directors or the shareholders of Seller;

 

(ii)           Breach or give any Governmental Body

or other Person the right to challenge any of the Contemplated Transactions or

to exercise any remedy or obtain any relief under any Legal Requirement or any

Order to which Seller or any of the Assets may be subject;

 

(iii)          contravene, conflict with or result in

a violation or breach of any of the terms or requirements of, or give any

Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or

modify, any Governmental Authorization that is held by Seller or that otherwise

relates to the Assets or to the business of Seller;

 

(iv)          cause Buyer to become subject to, or

to become liable for the payment of, any Tax that may be imposed by any

Governmental Body in the State of Minnesota;

 

 

12

 

(v)           Breach any provision of, or give any

Person the right to declare a default or exercise any remedy under, or to

accelerate the maturity or performance of, or payment under, or to cancel,

terminate or modify, any Seller Contract; or

 

(vi)          result in the imposition or creation

of any Encumbrance upon or with respect to any of the Assets.

 

(c)           Except as set forth in Part 3.2(c),

and except for the approval of Seller’s shareholders, Seller is not required to

give any notice to or obtain any Consent from any Person in connection with the

execution and delivery of this Agreement or the consummation or performance of

any of the Contemplated Transactions.

 

                3.3

          Sufficiency of Assets.  Except as set forth in Part 3.3, the Assets

constitute all of the assets, tangible and intangible, of any nature

whatsoever, related to the Products.

 

                3.4           Title to Assets.  Seller owns good and transferable title to

all of the Assets free and clear of any Encumbrances other than those described

in Part 3.4.  Seller warrants to Buyer

that, at the time of Closing, all 

Assets shall be free and clear of all Encumbrances.

 

                3.5           Condition of Assets.  Each item of Tangible Personal Property

included in the Assets is in good repair and good operating condition, ordinary

wear and tear excepted, is suitable for immediate use in the Ordinary Course of

Business and to Seller’s Knowledge is free from latent and patent defects.  No item of Tangible Personal Property is in

need of repair or replacement other than as part of routine maintenance in the

Ordinary Course of Business.  All

Tangible Personal Property included in the Assets is in the possession of

Seller.

 

                3.6

          Taxes.  Except as listed in Part 3.6, Seller has

filed or caused to be filed on a timely basis all Tax Returns and all reports

with respect to Taxes related to the Assets that are or were required to be

filed pursuant to applicable Legal Requirements.  All Tax Returns and reports filed by Seller are true, correct and

complete.  Seller has paid, or made

provision for the payment of, all Taxes that have or may have become due for

all periods covered by the Tax Returns or otherwise, or pursuant to any

assessment received by Seller, except such Taxes, if any, as are listed in Part

3.6 and are being contested in good faith. 

Except as provided in Part 3.6, Seller currently is not the beneficiary

of any extension of time within which to file any Tax Return.  No claim has ever been made or is expected

to be made by any Governmental Body in a jurisdiction where Seller does not

file Tax Returns that it is or may be subject to taxation by that

jurisdiction.  There are no Encumbrances

on any of the Assets that arose in connection with any failure (or alleged

failure) to pay any Tax, and Seller has no Knowledge of any basis for assertion

of any claims attributable to Taxes which, if adversely determined, would

result in any such Encumbrance.

 

                3.7           Employee Benefits.  Except as set forth on Part 3.7, neither

Seller nor any ERISA Affiliate has any employee benefit plans that are (i) a

“defined benefit plan” (as defined in Section 414(l) of the Code); (ii) a plan

intended to meet the requirements of Section 401(a) of the Code; (iii) a

“multiemployer plan” (as defined in Section 3(37) of ERISA); or (iv) a plan

subject to Title IV of ERISA, other than a multiemployer plan.  As used herein, “ERISA Affiliate” shall mean

or any other corporation or trade or business controlled by, controlling or

under common control with Seller (within the meaning of Section 414 of the Code

or Section 4001(a)(14) or 4001(b) of ERISA). 

With respect to any plan disclosed or required to be disclosed on Part

3.7, Seller has made full payment of all amounts that are required to be paid

as contributions, premiums, or other payments under the terms of any such plan

or of such amounts as the Seller may be statutorily obligated to make under

ERISA with respect to 

 

 

13

 

all periods prior to the date hereof, and no

accumulated funding deficiency, underfunding, or liquidity shortfall (as those

terms are defined in Section 302 of ERISA and Section 412 of the Code) has been

incurred with respect to any such plan, whether or not waived.

 

                3.8           Compliance with Legal

Requirements; Governmental Authorizations. 

With respect to the Assets, except as set forth in Part 3.8:

 

(a)            Seller is, and at all times since

January 1, 2000, has been, in full compliance with each Legal Requirement

relating to the Assets that is or was applicable to it, or to the conduct or

operation of its business as it relates to the Assets, or the ownership or use

of the Assets;

 

(b)           Seller has not received, at any time

since January 1, 2000, any notice or other communication (whether oral or

written) from any Governmental Body or any other Person regarding (A) any

actual, alleged, possible or potential violation of, or failure to comply with,

any Legal Requirement related to the Assets, or (B) any actual, alleged,

possible or potential obligation on the part of Seller to undertake, or to bear

all or any portion of the cost of, any remedial action of any nature; and

 

(c)           to Seller’s Knowledge, no event has

occurred or circumstance exists that (with or without notice or lapse of time)

(A) may constitute or result in a violation by Seller of, or a failure on the

part of Seller to comply with, any Legal Requirement or (B) may give rise to

any obligation on the part of Seller to undertake, or to bear all or any

portion of the cost of, any remedial action of any nature.

 

                3.9           Legal Proceedings; Orders.

 

(a)           Except as set forth in Part 3.9(a),

there is no pending or, to Seller’s Knowledge, threatened Proceeding relating

to or affecting the Assets.  To Seller’s

Knowledge, no event has occurred or circumstance exists that is reasonably

likely to give rise to or serve as a basis for the commencement of any such

Proceeding.

 

(b)           With respect to the Assets, except as

set forth in Part 3.9(b): there is no Order to which Seller or any of the

Assets is subject.  To Seller’s

Knowledge, no event has occurred or circumstance exists that is reasonably likely

to constitute or result in (with or without notice or lapse of time) a

violation of or failure to comply with any term or requirement of any Order to

which Seller or any of the Assets is subject.

 

                3.10         Contracts; No Defaults.

 

(a)           Part 3.10(a) contains an accurate and

complete list, and Seller has delivered to Buyer accurate and complete copies,

of: (i)  each Seller Contract relating

to the Products or the Assets currently in effect; (ii)  each written warranty, guaranty and/or other

similar undertaking that relates to the Products with respect to contractual

performance extended by Seller other than in the Ordinary Course of Business;

and (iii)  each amendment, supplement

and modification (whether oral or written) in respect of any of the foregoing.

 

(b)           Except as set forth in Part 3.10(b):

(i)  each Contract identified or

required to be identified in Part 3.10(a) and which is to be assigned to or

assumed by Buyer under this Agreement is in full force and effect and is valid

and enforceable against Seller and, to Seller’s 

 

 

14

 

Knowledge, against the other

party or parties thereto, in accordance with its terms; (ii)  each Contract identified or required to be

identified in Part 3.10(a) and which is being assigned to or assumed by Buyer

is assignable by Seller to Buyer without the consent of any other Person; and

(iii)  to the Knowledge of Seller, no

Contract identified or required to be identified in Part 3.10(a) and which is

to be assigned to or assumed by Buyer under this Agreement will upon completion

or performance thereof have an adverse effect on the Assets.

 

(c)           Except as set forth in Part 3.10(c):

(i)  Seller is in compliance with all

applicable terms and requirements of each Seller Contract which is being

assumed by Buyer; (ii) to Seller’s Knowledge, each other Person that has or had

any obligation or liability under any Seller Contract which is being assigned

to Buyer is in full compliance with all applicable terms and requirements of

such Contract; (iii) to Seller’s Knowledge, no event has occurred or

circumstance exists that (with or without notice or lapse of time) may

contravene, conflict with or result in a Breach of, or give Seller or other

Person the right to declare a default or exercise any remedy under, or to

accelerate the maturity or performance of, or payment under, or to cancel,

terminate or modify, any Seller Contract that is being assigned to or assumed

by Buyer; (iv)  no event has occurred or

circumstance exists under or by virtue of any Contract that (with or without

notice or lapse of time) would cause the creation of any Encumbrance affecting

any of the Assets; and (v)  Seller has

not given to or received from any other Person any notice or other

communication (whether oral or written) regarding any actual, alleged, possible

or potential violation or Breach of, or default under, any Contract which is

being assigned to or assumed by Buyer.

 

(d)           There are no renegotiations of,

attempts to renegotiate or, to Seller’s Knowledge, outstanding rights to

renegotiate any material amounts paid or payable to Seller under current

Contracts with any Person having the contractual or statutory right to demand

or require such renegotiation and no such Person has made written demand for

such renegotiation.

 

(e)           Each Contract has been entered into

without the commission of any act (alone or in concert with any other Person)

or any consideration having been paid or promised, that is or would be in

violation of any Legal Requirement.

 

(f)            Qwest has granted its Consent to

Seller’s assignment of the Qwest Contract to Buyer and to Buyer’s assumption of

the Qwest Contract.

 

                3.11

        Insurance.

 

(a)           Seller has delivered to Buyer:

(i)  an accurate and complete

certificate of insurance for policies of insurance pertaining to the Assets to

which Seller is a party or under which Seller is or has been covered at any

time since January 1, 2000 (a list of which is included in Part 3.11(a));

(ii)  accurate and complete copies of all

pending applications by Seller for policies of insurance; and (iii)  any statement by the auditor of Seller’s

financial statements or any consultant or risk management advisor with regard

to the adequacy of Seller’s coverage or of the reserves for claims.

 

(b)           Part 3.11(b) describes: (i)  any self-insurance arrangement by Seller

with respect to the Assets, including any reserves established thereunder;

(ii)  any Contract or arrangement, other

than a policy of insurance, for the transfer or sharing of any risk to which

Seller is a party or to which the Assets are subject; and (iii)  all obligations of Seller to provide

insurance 

 

 

15

 

coverage to Third Parties

(for example, under Contracts or service agreements) and identifies the policy

under which such coverage is provided.

 

(c)           Except as set forth in Part 3.11(c):

(i)  all policies of insurance

identified in Part 3.11(a) are valid, outstanding and enforceable, are issued

by a financially sound and reputable insurer, and taken together, provide adequate

insurance coverage for the Assets and the operations of Seller for all risks to

which Seller is normally exposed, and are sufficient for compliance with all

Legal Requirements and Seller Contracts; (ii) 

Seller has not received with respect to the Assets (A) any refusal of

coverage or any notice that a defense will be afforded with reservation of

rights, or (B) any notice of cancellation or any other indication that any

policy of insurance is no longer in full force or effect or that the issuer of any

policy of insurance is not willing or able to perform its obligations

thereunder; (iii)  Seller has paid all

premiums due with respect to the policies of insurance identified in Part

3.11(a), and has otherwise performed all of its obligations, under each policy

of insurance to which it is a party or that provides coverage to Seller; and

(iv)  Seller has given notice to the

insurer of all claims that may be insured thereby.

 

                3.12         Intellectual Property Assets.

 

(a)           The term “Intellectual Property Assets” means all intellectual property

related to the Products owned or licensed (as licensor or licensee) by Seller

in which Seller has a proprietary interest, including: (i)  all assumed fictional business names, trade names,

registered and unregistered trademarks, service marks and applications

(collectively, “Marks”); (ii)  all patents, patent applications and

inventions, improvements and discoveries that may be patentable (collectively,

“Patents”); (iii)  all registered and unregistered copyrights

in both published works and unpublished works (collectively, “Copyrights”); (iv)  all rights in mask works; (v)  all know-how, trade secrets, confidential or

proprietary information, development tools, customer lists, Software, technical

information, data, schema, process technology, documentation, plans, drawings

and blue prints (collectively, “Trade Secrets”);

and (vi)  all rights in internet web

sites and internet domain names presently used by Seller (collectively, “Net Names”).

 

(b)           Part 3.12(b) contains a complete and

accurate list and summary description, including any royalties paid or received

by Seller, and Seller has delivered to Buyer accurate and complete copies, of

all Seller Contracts relating to the Intellectual Property Assets. There are no

outstanding and, to Seller’s Knowledge, no threatened disputes or disagreements

with respect to any such Contract.

 

(c)           Except as set forth in Part 3.12(c),

the Intellectual Property Assets are all those necessary for the operation of

Seller’s business relating to the Products as it is currently conducted, and

Seller is the owner or licensee of all right, title and interest in and to each

of the Intellectual Property Assets, free and clear of all Encumbrances, and

has the right to use without payment to a Third Party all of the Intellectual

Property Assets, other than in respect of licenses listed in Part 3.12(c).

 

Except

as set forth in Part 3.12(c), all former and current employees, consultants and

contractors of Seller have executed written Contracts with Seller that assign

to Seller all rights to any Intellectual Property Assets relating to the

Products.

 

 

16

 

(d)           Part 3.12(d) contains a complete and

accurate list and summary description of all Patents pertaining to the

Products.  Except as set forth on Part

..12(d), all of the issued Patents are currently in compliance with formal legal

requirements (including payment of filing, examination and maintenance fees and

proofs of working or use), are valid and enforceable, and are not subject to

any maintenance fees or taxes or actions falling due within ninety (90) days

after the Closing Date.  No Patent has

been or is now involved in any interference, reissue, reexamination, or opposition

Proceeding. To Seller’s Knowledge, there is no potentially interfering patent

or patent application of any Third Party. 

Except as set forth in Part 3.12(d), (A) no Patent is infringed or, to

Seller’s Knowledge, has been challenged or threatened in any way and (B) none

of the products developed, manufactured or sold, nor any process or know-how

used, by Seller infringes or is alleged to infringe any patent or other

proprietary right of any other Person. 

All products made, used or sold under the Patents have been marked with

the appropriate patent notice as required by applicable law.

 

(e)           Part 3.12(e) contains a complete and

accurate list of all registered Marks. 

Except as set forth on Part 3.12(e), all Marks that have been registered

with the United States Patent and Trademark Office are currently in compliance

with all U.S. registration requirements (including the timely post-registration

filing of affidavits of use and incontestability and renewal applications), are

valid and enforceable and are not subject to any maintenance fees or taxes or

actions falling due within ninety (90) days after the Closing Date.  No registered Mark has been or is now

involved in any opposition, invalidation or cancellation Proceeding and, to

Seller’s Knowledge, no such action is threatened with respect to any of the

registered Marks.  To Seller’s

Knowledge, there is no potentially interfering trademark or trademark

application of any other Person.  No

registered Mark is infringed or, to Seller’s Knowledge, has been challenged or

threatened in any way.  None of the

registered Marks used by Seller infringes or is alleged to infringe any trade

name, trademark or service mark of any other Person.  All products and materials containing a registered Mark bear the

proper federal registration notice where permitted by law.

 

(f)            Part 3.12(f) contains a complete and

accurate list and summary description of all registered Copyrights.  All of the registered Copyrights are

currently in compliance with formal Legal Requirements, are valid and enforceable,

and are not subject to any maintenance fees or taxes or actions falling due

within ninety (90) days after the date of Closing.  No Copyright is infringed or, to Seller’s Knowledge, has been

challenged or threatened in any way. 

None of the subject matter of any of the Copyrights infringes or is

alleged to infringe any copyright of any Third Party or is a derivative work

based upon the work of any other Person. 

All works encompassed by the Copyrights have been marked with the proper

copyright notice.

 

(g)           Except as set forth in Part 3.12(g),

with respect to each Trade Secret, the documentation relating to such Trade

Secret is current, accurate and sufficient in detail and content to identify

and explain it and to allow its full and proper use without reliance on the

knowledge or memory of any individual. 

Seller has taken all commercially reasonable precautions to protect the

secrecy, confidentiality and value of all Trade Secrets (including the

enforcement by Seller of a policy requiring each employee, consultant or

contractor to execute proprietary information and confidentiality agreements

substantially in Seller’s standard form, and all current and former employees,

consultants and contractors of Seller have executed such an agreement). Seller

has good title to and an absolute right to use the Trade Secrets.  The Trade Secrets are not part of the public

knowledge or literature and, to Seller’s Knowledge, have not been used,

divulged or appropriated either for the benefit of any Person (other than

Seller) or to 

 

 

17

 

the detriment of

Seller.  No Trade Secret is subject to

any adverse claim or has been challenged or threatened in any way or infringes

any intellectual property right of any other Person.

 

(h)           Part 3.12(h) contains a complete and

accurate list and summary description of all Net Names.  All Net Names have been registered in the

name of Seller and are in compliance with all formal Legal Requirements.  No Net Name has been or is now involved in

any dispute, opposition, invalidation or cancellation Proceeding and, to

Seller’s Knowledge, no such action is threatened with respect to any Net

Name.  To Seller’s Knowledge, there is

no domain name application pending of any other person which would or would

potentially interfere with or infringe any Net Name.  No Net Name is infringed or, to Seller’s Knowledge, has been

challenged, interfered with or threatened in any way.  No Net Name infringes, interferes with or is alleged to interfere

with or infringe the trademark, copyright or domain name of any other Person.

 

(i)            Except as set forth in Part 3.12(i).

The Intellectual Property Assets do not contain any Open Source Software, and

no Open Source Software has been used in the course of creating or otherwise in

connection with or related to the Intellectual Property Assets.  As used in this Section 3.25(i), “Open Source Software” means Software that

is licensed under terms that grant or purport to grant any of Seller’s or

Buyer’s rights or immunities under any of Seller’s or Buyer’s intellectual

property or proprietary rights in the Intellectual Property Assets to a third

party or that create or purport to create any obligations for Seller or Buyer

regarding the Intellectual Property Assets, including but not limited to

Software distributed in source code form under a license that guarantees the

right to read, redistribute, modify, create derivative works, and use the

Software free of charge, such as Software certified by the Open Source

Initiative and Software subject to GNU’s General Public License (GPL) or

Lesser/Library GPL (LGPL), the Artistic License (e.g., PERL), the Mozilla

Public License, the Netscape Public License, the Sun Community Source License

(SCSL), the Sun Industry Standards License (SISL), the Apache Software License,

and the like.

 

                3.13         Brokers or Finders.  Neither Seller nor any of its

Representatives have incurred any obligation or liability, contingent or

otherwise, for brokerage or finders’ fees or agents’ commissions or other

similar payments in connection with the sale of the Assets or the Contemplated

Transactions.

 

                3.14         Disclosure.

 

(a)           No representation or warranty or

other statement made by Seller in this Agreement, the Disclosure Letter, any

supplement to the Disclosure Letter, or the certificates delivered pursuant to

Section 2.7(a) in connection with the Contemplated Transactions contains any

untrue statement of a material fact regarding the Assets or omits to state a

material fact regarding the Assets necessary to make any of them, in light of

the circumstances in which it was made, not misleading.

 

(b)           Seller does not have Knowledge of any

fact that has specific application to Seller (other than general economic or

industry conditions) and that may materially adversely affect the economic

value to the Buyer of the Assets that has not been set forth in this Agreement

or the Disclosure Letter.

 

 

4. 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

 

18

 

Buyer represents and warrants to Seller as

follows:

 

                4.1           Organization and Good Standing.  Buyer is a corporation duly organized,

validly existing and in good standing under the laws of the State of

Washington, with full corporate power and authority to conduct its business as

it is now conducted.

 

                4.2           Authority; No Conflict.

 

(a)           This Agreement constitutes the legal,

valid and binding obligation of Buyer, enforceable against Buyer in accordance

with its terms. Upon the execution and delivery by Buyer of the Assignment and

Assumption Agreement and each other agreement to be executed or delivered by

Buyer at Closing (collectively, the “Buyer’s

Closing Documents”), each of the Buyer’s Closing Documents will

constitute the legal, valid and binding obligation of Buyer, enforceable

against Buyer in accordance with its respective terms. Buyer has the absolute

and unrestricted right, power and authority to execute and deliver this

Agreement and the Buyer’s Closing Documents and to perform its obligations

under this Agreement and the Buyer’s Closing Documents, and such action has

been duly authorized by all necessary corporate action.

 

(b)           Neither the execution and delivery of

this Agreement by Buyer nor the consummation or performance of any of the

Contemplated Transactions by Buyer will give any Person the right to prevent, delay

or otherwise interfere with any of the Contemplated Transactions pursuant to:

(i)  any provision of Buyer’s Governing

Documents; (ii)  any resolution adopted

by the board of directors or the shareholders of Buyer; (iii)  any Legal Requirement or Order to which

Buyer may be subject; or (iv)  any

Contract to which Buyer is a party or by which Buyer may be bound.

 

Buyer

is not and will not be required to obtain any Consent from any Person in

connection with the execution and delivery of this Agreement or the

consummation or performance of any of the Contemplated Transactions.

 

                4.3           Certain Proceedings.  There is no pending Proceeding that has been

commenced against Buyer and that challenges, or may have the effect of

preventing, delaying, making illegal or otherwise interfering with, any of the

Contemplated Transactions. To Buyer’s Knowledge, no such Proceeding has been

threatened.

 

                4.4           Brokers or Finders.  Neither Buyer nor any of its Representatives

have incurred any obligation or liability, contingent or otherwise, for

brokerage or finders’ fees or agents’ commissions or other similar payment in

connection with the Contemplated Transactions.

 

                4.5           Financial Ability.  Buyer has sufficient cash or other liquid

financial resources to pay the Purchase Price to Seller as contemplated by

Section 2.3.

 

 

5. 

COVENANTS OF SELLER PRIOR TO CLOSING

 

                5.1           Access and Investigation.  Between the date of this Agreement and the

Closing Date, and upon reasonable advance notice received from Buyer, Seller

shall: (a) afford Buyer and its Representatives and prospective lenders and

their Representatives (collectively, “Buyer

Group”) full 

 

 

19

 

and free access, during regular business

hours, to Seller’s personnel, properties (including subsurface testing),

Contracts, Governmental Authorizations, books and Records and other documents

and data, such rights of access to be exercised in a manner that does not

unreasonably interfere with the operations of Seller; (b) furnish Buyer Group

with copies of all such Contracts, Governmental Authorizations, books and

Records and other existing documents and data as Buyer may reasonably request;

(c) furnish Buyer Group with such additional financial, operating and other

relevant data and information as Buyer may reasonably request; and (d)

otherwise cooperate and assist, to the extent reasonably requested by Buyer,

with Buyer’s investigation of the properties, assets and financial condition

related to Seller. In addition, Buyer shall have the right to have the Tangible

Personal Property inspected by Buyer Group, at Buyer’s sole cost and expense,

for purposes of determining the physical condition and legal characteristics of

the Tangible Personal Property.

 

                5.2           Operation of the Seller’s Business.

 

(a)           At 12:01 AM on the day following the

date hereof and upon receipt of the consideration set forth in Section 2.3(a),

Seller shall transfer possession of the Assets to Buyer.   Between the date of this Agreement and the

Closing, Seller shall cooperate fully to complete the orderly transfer of

possession of the Assets, shall allow Buyer reasonable access to its premises

and shall take no action which reduces the value of the Assets.

 

(b)           Seller acknowledges that, as an

accommodation to Seller, Buyer has agreed to insure the Assets for

$400,000.  Seller agrees that it shall

limit any claims it may have against Buyer for damage to or loss of the Assets

during the period from the date hereof through the Closing Date to the amount

of such insurance coverage.

 

(c)           Seller shall cooperate with Buyer and

assist Buyer in identifying the Governmental Authorizations (if any) required

by Buyer to operate the business related to the Assets from and after the date

hereof and either transferring existing Governmental Authorizations of Seller

to Buyer, where permissible, or obtaining new Governmental Authorizations for

Buyer;

 

(d)           Seller shall, upon request from time

to time, execute and deliver all documents, make all truthful oaths, testify in

any Proceedings and do all other acts that may be reasonably necessary or

desirable in the opinion of Buyer to consummate the Contemplated Transactions,

all without further consideration.

 

(e)           Before transferring possession of the

Assets, Seller shall make copies of all Intellectual Property Assets which

might be subject to modification by Buyer. 

At the Effective Time, Seller shall destroy all such copies.

 

(f)            Seller hereby grants Buyer a royalty

free worldwide license to use the Assets (including, without limitation, the

right to reverse-engineer Software and create derivative works as appropriate

in Buyer’s sole discretion) as necessary to perform Buyer’s covenants under

Section 6.3 hereof.

 

                5.3           Negative Covenant.  Except as otherwise expressly permitted

herein, between the date of this Agreement and the Closing Date, Seller shall

not, without the prior written Consent of Buyer, (a) make any modification to

any material Contract or Governmental Authorization; or (b) enter into any

compromise or settlement of any litigation, proceeding or governmental

investigation relating to the Assets or the Assumed Liabilities.

 

 

20

 

                5.4           Required Approvals.  As promptly as practicable after the date of

this Agreement, Seller shall make all filings required by Legal Requirements to

be made by it in order to consummate the Contemplated Transactions, including,

without limitation, the filings required to obtain the approval of Seller’s

shareholders.  Seller also shall

cooperate with Buyer and its Representatives with respect to all filings

pursuant to Legal Requirements that Buyer shall be required to make in

connection with the Contemplated Transactions. 

Seller also shall cooperate with Buyer and its Representatives in

obtaining all Material Consents.

 

                5.5           Notification.  Between the date hereof and the Closing

Date, Seller shall promptly notify Buyer in writing if it becomes aware of (a)

any fact or condition that causes or constitutes a Breach of any of Seller’s

representations and warranties made as of the date of this Agreement or (b) the

occurrence after the date of this Agreement of any fact or condition that is

reasonably likely to (except as expressly contemplated by this Agreement) cause

or constitute a Breach of any of Seller’s Closing Representations and

Warranties had that representation or warranty been made as of the time of the

occurrence of, or Seller’s discovery of, such fact or condition. Should any

such fact or condition require any change to the Disclosure Letter, Seller

shall promptly deliver to Buyer a supplement to the Disclosure Letter

specifying such change. Such delivery shall not affect any rights of Buyer

under Section 9.2 and Article 11. During the same period, Seller also shall

promptly notify Buyer of the occurrence of any Breach of any covenant of Seller

in this Article 5 or of the occurrence of any event that may make the

satisfaction of the conditions in Article 7 impossible or unlikely.

 

                5.6           No Negotiation.  Until such time as this Agreement shall be

terminated pursuant to Section 9.1:

 

(a)           Seller shall, and shall direct and

use reasonable efforts to cause its officers, directors, employees, investment

bankers, brokers and other representatives and agents to, immediately cease any

discussions or negotiations with any parties that may be ongoing with respect

to an Acquisition Proposal. Seller shall not, nor shall it authorize or permit

any of its officers, directors, employees, investment bankers, brokers or other

representatives and agents to directly or indirectly (i) take any action to

solicit, initiate or encourage (including by way of furnishing information), or

take any other action designed or reasonably likely to facilitate, any

inquiries or the making of any proposal which constitutes or may reasonably be

expected to lead to any Acquisition Proposal, or (ii) engage in negotiations

with, or disclose any information relating to Seller or afford access to

Seller’s properties, books, or records to any Person that may be considering

making, or has made, an Acquisition Proposal. 

For purposes of this Agreement, “Acquisition

Proposal” means any offer or proposal for the acquisition of the

Assets through purchase, merger, consolidation or otherwise (other than in

connection with the Contemplated Transactions or sales of inventory in the

ordinary course).

 

(b)           Neither Seller’s board of directors

nor any committee thereof shall (i) approve or recommend, or propose publicly

to approve or recommend, any Acquisition Proposal, or (ii) cause Seller to

enter into any letter of intent, agreement in principle, acquisition agreement

or other similar agreement (each a “Seller

Acquisition Agreement”) related to any Acquisition Proposal; provided, however, that if prior to the

Closing Seller’s board of directors determines in good faith that the failure

to do so could create a reasonable possibility of a breach of its fiduciary

duties to Seller’s shareholders under applicable law, the board of directors

may approve or recommend a Superior Proposal or terminate this Agreement (and

concurrently with or after such termination, if it so chooses, cause Seller to

enter into any Acquisition Agreement with 

 

 

21

 

respect to any Superior

Proposal).  For purposes of this

Agreement, a “Superior Proposal”

means any bona fide offer or

proposal for, or any indication of interest in, any merger, consolidation,

share exchange, business combination, recapitalization, liquidation,

dissolution or similar transaction involving Seller, or the acquisition of any

significant equity interest in, or a substantial portion of the assets of

Seller (including the Assets) which Seller’s board of directors determines in

good faith (and based on the advice of its advisors) to be more favorable to

Seller’s shareholders than the Contemplated Transactions (taking into account

all factors relating to such proposed transaction deemed relevant by the board

of directors of Seller, including without limitation the financing thereof and

all other conditions thereto).

 

(c)           Seller shall promptly notify Buyer in

writing after receipt of any Acquisition Proposal or any request for

information relating to Seller by any third party that may be considering

making, or has made, an Acquisition Proposal. 

The notification shall describe the material terms and conditions of

such request or Seller Acquisition Proposal and the identity of the third party

making such request or Seller Acquisition Proposal.

 

(d)           Notwithstanding the covenants

contained in this Section 5.6, Seller may furnish information concerning its

business to a third party making an unsolicited Acquisition Proposal and enter

into discussions, negotiations or agreements with such third party if Seller

concludes, after consultation with legal counsel and other advisors, that an

applicable fiduciary duty of any of Seller’s directors or officers requires

such actions.

 

                5.7           Best Efforts.  Seller shall use its Best Efforts to cause

the conditions in Article 7 and Section 8.3 to be satisfied.

 

                5.8           Payment of Liabilities.  Seller shall pay or otherwise satisfy in the

Ordinary Course of Business all of its Liabilities and obligations, provided, however, that Seller shall not

be obligated to do so if failure to do so does not materially adversely affect

the economic value to the Buyer of the Assets. Buyer and Seller hereby waive

compliance with the bulk-transfer provisions of the Uniform Commercial Code (or

any similar law) (“Bulk Sales Laws”) in connection with the Contemplated

Transactions.

 

 

6. 

COVENANTS OF BUYER PRIOR TO CLOSING

 

                6.1           Required Approvals.  As promptly as practicable after the date of

this Agreement, Buyer shall make, or cause to be made, all filings required by

Legal Requirements to be made by it to consummate the Contemplated

Transactions. Buyer also shall cooperate, and cause its Related Persons to

cooperate, with Seller (a) with respect to all filings Seller shall be required

by Legal Requirements to make and (b) in obtaining all Consents identified in

Part 3.2(c), provided, however, that Buyer shall not be required to dispose of

or make any change to its business, expend any material funds or incur any

other burden in order to comply with this Section 6.1.

 

                6.2           Best Efforts.  Buyer shall use its Best Efforts to cause

the conditions in Article 8 and Section 7.3 to be satisfied.

 

                6.3           Operation of Assets; Performance

of Qwest Contract.

 

(a)           As an accommodation to Seller due its

current distressed financial situation, and acting solely as Seller’s agent:

 

 

22

 

(i)            On and after the date hereof

(provided that Buyer has made the payment contemplated by Section 2.3(a)),

Buyer shall take possession of the Assets and shall operate the business as it

relates to the Products and the Assets. 

All revenue generated by such operation shall be for the account of

Buyer, including, without limitation, any revenue generated pursuant to the

terms of the Letter Agreement between Buyer and Seller dated June 7, 2002,

pursuant to which the parties agreed that all revenues from June 8, 2002

forward are for the account of Buyer.

 

(ii)           On and after the date hereof, Buyer

agrees to perform Seller’s obligations under the Qwest Contract and the other

Seller Contracts comprising part of the Assets.

 

(b)           On and after the date hereof, Buyer

will insure the Assets for $400,000 at Buyer’s sole cost and expense.

 

                6.4           Seller’s Information Statement.  Buyer agrees to cooperate with Seller in

Seller’s efforts to provide information in an information statement to be filed

with the United States Securities and Exchange Commission and transmitted to

shareholders pursuant to the Minnesota Business Corporation Act, Seller’s

bylaws, and the Exchange Act.

 

 

7.  CONDITIONS PRECEDENT TO BUYER’S OBLIGATION

TO CLOSE

 

Buyer’s obligation to take the actions

required to be taken by Buyer at the Closing is subject to the satisfaction, at

or prior to the Closing, of each of the following conditions (any of which may

be waived by Buyer, in whole or in part):

 

                7.1           Accuracy of Representations.

 

(a)           All of Seller’s representations and warranties

in this Agreement (considered collectively), and each of these representations

and warranties (considered individually), shall have been accurate in all

material respects as of the date of this Agreement and Seller’s Closing

Representations and Warranties shall be accurate in all material respects as of

the time of the Closing as if then made, without giving effect to any

supplement to the Disclosure Letter.

 

(b)           Each of the representations and

warranties in Section 3.2(a), and each of the representations and warranties in

this Agreement that contains an express materiality qualification, shall have

been accurate in all respects as of the date of this Agreement.  Any of Seller’s Closing Representations and Warranties

that contains an express materiality qualification shall be accurate in all

respects as of the time of the Closing as if then made, without giving effect

to any supplement to the Disclosure Letter.

 

                7.2           Seller’s Performance.  All of the covenants and obligations that

Seller is required to perform or to comply with pursuant to this Agreement at

or prior to the Closing (considered collectively), and each of these covenants

and obligations (considered individually), shall have been duly performed and

complied with in all material respects.

 

                7.3           Consents.  Each of the Consents identified in Exhibit

7.3 (the “Material Consents”)

shall have been obtained and shall be in full force and effect.

 

 

23

 

                7.4           Additional Documents.  Seller shall have caused the documents and

instruments required by Section 2.7(a) and the following documents to be

delivered (or tendered subject only to Closing) to Buyer:

 

(a)           an opinion of Maslon Edelman Borman

& Brand, LLP , dated the Closing Date, in the form of Exhibit 7.4(a);

 

(b)           articles of incorporation and all

amendments thereto of Seller, duly certified as of a recent date by the

Secretary of State of the jurisdiction of Seller’’s incorporation;

 

(c)           releases of all Encumbrances on the

Assets;

 

(d)           certificates dated as of a date not

earlier than the fifth business day prior to the Closing as to the good

standing of Seller and payment of all applicable state Taxes by Seller,

executed by the appropriate officials of the State of Minnesota; and

 

(e)           such other documents as Buyer may

reasonably request for the purpose of: (i) 

evidencing the accuracy of any of Seller’s representations and

warranties; (ii)  evidencing the

performance or compliance by Seller with any covenant or obligation required to

be performed or complied with by Seller; (iii) 

evidencing the satisfaction of any condition referred to in this Article

7; or (iv)  otherwise facilitating the

consummation or performance of any of the Contemplated Transactions.

 

                7.5           No Proceedings.  Since the date of this Agreement, (i) there

shall not have been commenced or threatened against Buyer any Proceeding which,

if adversely determined, would prevent the consummation of the Contemplated

Transactions, and (ii) there shall not have been any Order binding on Buyer and

Seller prohibiting Buyer and Seller from consummating the Contemplated

Transactions.

 

                7.6           Shareholder Approval.  Seller shall have received the approval of

its shareholders necessary to consummate the Contemplated Transactions in

accordance with all Legal Requirements.

 

                7.7           Ancillary Agreements.  The relevant Persons shall have entered into

ancillary agreements in form and substance as set forth in Exhibit 7.7 hereto.

 

 

8. 

CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

 

Seller’s obligation to sell the Assets and to

take the other actions required to be taken by Seller at the Closing is subject

to the satisfaction, at or prior to the Closing, of each of the following

conditions (any of which may be waived by Seller in whole or in part):

 

                8.1           Accuracy of Representations.  All of Buyer’s representations and

warranties in this Agreement (considered collectively), and each of these

representations and warranties (considered individually), shall have been

accurate in all material respects as of the date of this Agreement and shall be

accurate in all material respects as of the time of the Closing as if then

made.

 

                8.2           Buyer’s Performance.  All of the covenants and obligations that

Buyer is required to perform or to comply with pursuant to this Agreement at or

prior to the Closing (considered collectively), and each of these covenants and

obligations (considered individually), shall have been performed and complied

with in all material respects.

 

 

24

 

                8.3           Consents.  Each of the Consents identified in Exhibit

8.3 shall have been obtained and shall be in full force and effect.

 

                8.4           Additional Documents.  Buyer shall have caused the documents and

instruments required by Section 2.7(b), and such documents as Seller may

reasonably request for the purpose of (i) 

evidencing the accuracy of any representation or warranty of Buyer,

(ii)  evidencing the performance by

Buyer of, or the compliance by Buyer with, any covenant or obligation required

to be performed or complied with by Buyer, or (iii)  evidencing the satisfaction of any condition referred to in this

Article 8.

 

                8.5           No Injunction.  Since the date of this Agreement, (i) there

shall not have been commenced or threatened against Seller any Proceeding which,

if adversely determined, would prevent the consummation of Contemplated

Transactions, and (ii) there shall not have been any Order binding on Buyer and

Seller prohibiting Buyer and Seller from consummating the Contemplated

Transactions.

 

 

9.  TERMINATION

 

                9.1           Termination Events.  By notice given prior to or at the Closing,

subject to Section 9.2, this Agreement may be terminated as follows:

 

(a)           by Buyer if a material Breach of any

provision of this Agreement has been committed by Seller and such Breach has

not been waived by Buyer;

 

(b)           by Seller if a material Breach of any

provision of this Agreement has been committed by Buyer and such Breach has not

been waived by Seller;

 

(c)           by Buyer if any condition in Article

7 has not been satisfied as of the date specified for Closing in the first

sentence of Section 2.6 or if satisfaction of such a condition by such date is

or becomes impossible (other than through the failure of Buyer to comply with

its obligations under this Agreement), and Buyer has not waived such condition

on or before such date;

 

(d)           by Seller if any condition in Article

8 has not been satisfied as of the date specified for Closing in the first

sentence of Section 2.6 or if satisfaction of such a condition by such date is

or becomes impossible (other than through the failure of Seller to comply with

its obligations under this Agreement), and Seller has not waived such condition

on or before such date;

 

(e)           by mutual consent of Buyer and

Seller;

 

(f)            by Buyer if the Closing has not

occurred on or before December 31, 2002, or such later date as the parties may

agree upon, unless Buyer is in material Breach of this Agreement; or

 

(g)           by Seller if the Closing has not

occurred on or before December 31, 2002, or such later date as the parties may agree

upon, unless Seller is in material Breach of this Agreement.

 

                9.2           Effect of Termination.

 

 

25

 

(a)           Each party’s right of termination

under Section 9.1 is in addition to any other rights it may have under this

Agreement or otherwise, and the exercise of such right of termination will not

be an election of remedies. If this Agreement is terminated pursuant to Section

9.1, all obligations of the parties under this Agreement will terminate, except

that the obligations of the parties in Sections 9.2, 11.2 (c), 11.3(e) and (f)

and Articles 12 and 13 (except for those in Section 13.5) will survive; provided, however, that, if this Agreement

is terminated because of a Breach of this Agreement by the nonterminating party

or because one or more of the conditions to the terminating party’s obligations

under this Agreement is not satisfied as a result of the party’s failure to

comply with its obligations under this Agreement, the terminating party’s right

to pursue all legal remedies will survive such termination unimpaired.

 

(b)           If this Agreement is terminated:

 

(i)            Buyer shall return possession of the

Assets to Seller as soon as reasonably practicable;

 

(ii)           Seller shall immediately return the

payment specified in Section 2.3(a) hereof to Buyer;

 

(iii)          Buyer shall be entitled to retain all

revenues and Accounts Receivable associated with its operation of the Assets

from June 8, 2002 until the date this Agreement is terminated;

 

(iv)          if Seller has breached Section 5.6

hereof, Seller shall reimburse Buyer for all of its out-of-pocket costs

incurred by Buyer, directly or indirectly, in connection with the Contemplated

Transactions; and

 

(v)           due to a failure by Seller to satisfy

the condition set forth in Section 7.6 hereof by December 29, 2002, and Buyer

bids no more than the principal amount outstanding under the Note in a

foreclosure sale and is unsuccessful in purchasing the Assets for that

consideration in such sale, then Seller shall reimburse Buyer for all of its out-of-pocket

costs incurred by Buyer, directly or indirectly, in connection with the

Contemplated Transactions.

 

 

10. 

ADDITIONAL COVENANTS

 

                10.1         Employees and Employee Benefits.

 

(a)           It is understood and agreed that

Buyer’s hiring of any Active Employees shall not constitute any commitment,

Contract or understanding (expressed or implied) of any obligation on the part

of Buyer to an employment relationship of any fixed term or duration or upon

any terms or conditions other than those that Buyer may establish pursuant to

individual offers of employment, and employment offered by Buyer is “at will”

and may be terminated by Buyer or by an employee at any time for any reason.

 

(b)           Seller represents and warrants that

the definition of Active Employees includes all employees of Seller as of May

31, 2002.  Seller shall be responsible

for (and has paid or shall pay by Closing, to the extent that any such amounts

are due and payable on the date hereof, or become due and payable by the

Closing Date):

 

 

26

 

(i)            the payment of all wages and other

remuneration due to Active Employees with respect to their services as

employees of Seller through each employee’s date of termination (“Termination Date”), including pro rata bonus

payments and all vacation pay earned prior to each employee’s Termination Date;

 

(ii)           the payment of any termination or

severance payments and the provision of health plan continuation coverage in

accordance with the requirements of Section 4980B of the Code (as well as its

predecessor provision, Section 162(k) of the Code) and Sections 601 through

608, inclusive, of ERISA (which provisions are hereinafter referred to

collectively as “COBRA”); and

 

(iii)          any claims made or incurred by Active

Employees and their beneficiaries through such employee’s Termination Date

under any of Seller’s existing employee benefit plans (including, but not

limited to, any retirement, savings or pension plans).

 

(c)           Buyer shall not have any

responsibility, liability or obligation, whether to Active Employees, former

employees, their beneficiaries or to any other Person, with respect to any

employee benefit plans, practices, programs or arrangements (including the

establishment, operation or termination thereof and the notification and

provision of COBRA coverage extension) maintained by Seller.

 

                10.2         Payment of Retained Liabilities.  If Seller fails to pay the Retained

Liabilities and other Liabilities of Seller under this Agreement (other than

the Assumed Liabilities), and if Buyer reasonably determines that failure to

make any payments will impair Buyer’s use or enjoyment of the Assets, Buyer

may, at any time after the date hereof, elect to make all such payments

directly (but shall have no obligation to do so) and seek indemnification from

Seller.

 

                10.3         Restrictions on Seller Dissolution

and Distributions.  Seller shall not

dissolve or make any distributions to its shareholders until the lapse of more

than two years after the Closing Date, provided,

however, that Seller may make distributions to its shareholders if

it has first made adequate provision for the satisfaction in full of any and

all obligations of Seller to indemnify Buyer under this Agreement.

 

                10.4         Assistance in Proceedings.  Seller will cooperate with Buyer and its

counsel in the contest or defense of, and make available its then-current

personnel and provide any testimony and access to its books and Records in

connection with, any Proceeding involving or relating to (a) any Contemplated

Transaction or (b) any action, activity, circumstance, condition, conduct,

event, fact, failure to act, incident, occurrence, plan, practice, situation,

status or transaction by Seller on or before the Closing Date involving the

Assets.  Buyer will reimburse Seller for

its reasonable expenses in connection with any such assistance.

 

                10.5         Noncompetition, Nonsolicitation and

Nondisparagement.

 

(a)           Noncompetition. For a period

of one (1) year after the Closing Date, Seller shall not, anywhere in the

world, directly or indirectly invest in, own, manage, operate, finance,

control, advise, render services to or guarantee the obligations of any Person

engaged in or planning to become engaged in the analysis of telecommunications

usage data business; provided, however,

that Seller may purchase or otherwise acquire up to (but not more than) one 

 

 

27

 

percent (1%) of any class of

the securities of any Person (but may not otherwise participate in the

activities of such Person) if such securities are listed on any national or

regional securities exchange or have been registered under Section 12(g) of the

Exchange Act.

 

(b)           Nonsolicitation. For a period

of one (1) year after the Closing Date, Seller shall not, directly or

indirectly:

 

(i)            solicit the competing business of

any Person who is a customer of Buyer;

 

(ii)           cause, induce or attempt to cause or

induce any customer, supplier, licensee, licensor, franchisee, employee,

consultant or other business relation of Buyer to cease doing business with

Buyer, to deal with any competitor of Buyer or in any way interfere with its

relationship with Buyer;

 

(iii)          cause, induce or attempt to cause or

induce any customer, supplier, licensee, licensor, franchisee, employee,

consultant or other business relation of Seller on the Closing Date or within

the year preceding the Closing Date to cease doing business with Buyer, to deal

with any competitor of Buyer or in any way interfere with its relationship with

Buyer; or

 

(iv)          hire, retain or attempt to hire or

retain any employee or independent contractor of Buyer or in any way interfere

with the relationship between Buyer and any of its employees or independent

contractors.

 

(c)           Nondisparagement. After the

Closing Date, Seller will not disparage Buyer or any of Buyer’s shareholders,

directors, officers, employees or agents.

 

(d)           Modification of Covenant. If a

final judgment of a court or tribunal of competent jurisdiction determines that

any term or provision contained in Section 10.5(a) through (c) is invalid or

unenforceable, then the parties agree that the court or tribunal will have the

power to reduce the scope, duration or geographic 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. This Section 10.5 will be enforceable as so

modified after the expiration of the time within which the judgment may be

appealed. This Section 10.5 is reasonable and necessary to protect and preserve

Buyer’s legitimate business interests and the value of the Assets and to

prevent any unfair advantage conferred on Seller.

 

                10.6         Customer and Other Business

Relationships.  Neither Seller nor

any of its current officers, current directors or current employees shall take

any action that would tend to diminish the value of the Assets or that would

interfere with the business of Buyer to be engaged in after the date hereof,

including disparaging the name or business of Buyer.

 

                10.7         Retention of and Access to Records.  After the Closing Date until the second

anniversary of the date hereof, Seller shall provide Buyer and its

Representatives reasonable access to Records that are Excluded Assets, during

normal business hours and on at least three days’ prior written notice, for any

reasonable business purpose specified by Buyer in such notice.

 

 

28

 

                10.8         Further Assurances.  Subject to the proviso in Section 6.1, the

parties shall cooperate reasonably with each other and with their respective

Representatives in connection with any steps required to be taken as part of

their respective obligations under this Agreement, and shall (a) furnish upon

request to each other such further information; (b) execute and deliver to each

other such other documents; and (c) do such other acts and things, all as the

other party may reasonably request for the purpose of carrying out the intent

of this Agreement and the Contemplated Transactions.

 

 

11. 

INDEMNIFICATION; REMEDIES

 

                11.1         Survival.  All representations, warranties, covenants

and obligations in this Agreement, the Disclosure Letter, the supplements to

the Disclosure Letter, the certificates delivered pursuant to Section 2.7 and

any other certificate or document delivered pursuant to this Agreement shall

survive the Closing and the consummation of the Contemplated Transactions,

subject to Section 11.7.  The right to

indemnification, reimbursement or other remedy based upon such representations,

warranties, covenants and obligations shall not be affected by any

investigation or assessment) conducted with respect to, or any Knowledge

acquired (or capable of being acquired) at any time, whether before or after

the execution and delivery of this Agreement or the Closing Date, with respect

to the accuracy or inaccuracy of or compliance with any such representation,

warranty, covenant or obligation. The waiver of any condition based upon the

accuracy of any representation or warranty, or on the performance of or

compliance with any covenant or obligation, will not affect the right to

indemnification, reimbursement or other remedy based upon such representations,

warranties, covenants and obligations.

 

                11.2         Indemnification and Reimbursement by

Seller.  Seller will indemnify and

hold harmless Buyer, and its Representatives, shareholders, subsidiaries and

Related Persons (collectively, the “Buyer

Indemnified Persons”), and will reimburse the Buyer Indemnified

Persons for any loss, liability, claim, damage, expense (including costs of

investigation and defense and reasonable attorneys’ fees and expenses) or

diminution of value, whether or not involving a Third-Party Claim (collectively,

“Damages”), arising from or in

connection with:

 

(a)           any Breach of any representation or

warranty made by Seller in (i) this Agreement (without giving effect to any

supplement to the Disclosure Letter), (ii) the Disclosure Letter, (iii) the

supplements to the Disclosure Letter , (iv) the certificates delivered pursuant

to Section 2.7 (for this purpose, each such certificate will be deemed to have

stated that Seller’s Closing Representations and Warranties fulfill the

requirements of Section 7.1 as of the Closing Date as if made on the Closing

Date without giving effect to any supplement to the Disclosure Letter, unless

the certificate expressly states that the matters disclosed in a supplement

have caused a condition specified in Section 7.1 not to be satisfied), (v) any

transfer instrument or (vi) any other certificate, document, writing or

instrument delivered by Seller pursuant to this Agreement;

 

(b)           any Breach of any covenant or

obligation of Seller in this Agreement or in any other certificate, document,

writing or instrument delivered by Seller pursuant to this Agreement;

 

(c)           any Liability arising out of the

ownership or operation of the Assets prior to the Effective Time other than the

Assumed Liabilities; provided, however

that Seller shall not be responsible for any such Liability arising solely as a

result of Buyer’s action or failure to act during the period between the date

hereof and the Effective Time;

 

 

29

 

(d)           any brokerage or finder’s fees or commissions

or similar payments based upon any agreement or understanding made, or alleged

to have been made, by any Person with Seller (or any Person acting on its

behalf) in connection with any of the Contemplated Transactions; or

 

(e)           any Retained Liabilities.

 

                11.3         Indemnification and Reimbursement by

Buyer.  Buyer will indemnify and

hold harmless Seller, and will reimburse Seller, for any Damages arising from

or in connection with:

 

(a)           any Breach of any representation or

warranty made by Buyer in this Agreement or in any certificate, document,

writing or instrument delivered by Buyer pursuant to this Agreement;

 

(b)           any Breach of any covenant or

obligation of Buyer in this Agreement or in any other certificate, document,

writing or instrument delivered by Buyer pursuant to this Agreement;

 

(c)           any claim by any Person for brokerage

or finder’s fees or commissions or similar payments based upon any agreement or

understanding alleged to have been made by such Person with Buyer (or any

Person acting on Buyer’s behalf) in connection with any of the Contemplated

Transactions;

 

(d)           any Assumed Liabilities;

 

(e)           any Liability arising out of Buyer’s

ownership or operation of the Assets after the Effective Time, or any Liability

arising out of Buyer’s operation of the Assets during the period from the date

hereof through the Effective Time, to the extent that such Liability was caused

solely by Buyer’s action or failure to act; or

 

(f)            any Damages to Seller arising from

Buyer’s default under the Qwest Contract or other Seller Contracts, unless such

default was a result of an action or failure to act by Seller.

 

                11.4         Limitations on Amount—Seller.  Seller shall have no liability (for

indemnification or otherwise) with respect to claims under Section 11.2(a)

until the total of all Damages with respect to such matters exceeds twenty

thousand and no dollars ($20,000) and then only for the amount by which such

Damages exceed twenty thousand and no dollars ($20,000) (such limitations, the

“Seller Basket”).  However, the Seller Basket will not apply to

claims under Sections 11.2 (d) and (e) or to matters arising in respect of

Sections 3.4, 3.7 and 10.1 or to any intentional Breach by Seller of any

covenant or obligation hereunder, and Seller will be liable for all Damages with

respect to such Breaches.  In no event

shall the indemnification obligations of Seller exceed the Purchase Price.

 

                11.5         Limitations on Amount—Buyer.  Buyer will have no liability (for

indemnification or otherwise) with respect to claims under Section 11.4(a)

until the total of all Damages with respect to such matters exceeds twenty

thousand and no dollars ($20,000) and then only for the amount by which such

Damages exceed twenty thousand and no dollars ($20,000) (such limitation, the “Buyer Basket”).  However, the Buyer Basket will not apply to claims under Section

11.3(e) and (f) or to any intentional Breach by Buyer of any covenant or

obligation hereunder, and Buyer will be liable for all Damages with respect to

such Breaches.  In no event shall the indemnification

obligations of Buyer hereunder exceed the Purchase Price.

 

 

30

 

                11.6         Time Limitations.

 

(a)           If the Closing occurs, Seller will

have liability (for indemnification or otherwise) with respect to any Breach of

(i) a covenant or obligation to be performed or complied with prior to the

Closing Date (other than those in Sections 2.1 and 2.4(b) and Articles 10 and

12, as to which a claim may be made at any time), or (ii) a representation or

warranty only if Buyer notifies Seller of such a claim within one year from the

Closing, specifying the factual basis of the claim in reasonable detail to the

extent then known by Buyer (other than those in Section 3.4, as to which a

claim may be made at any time, those in Section 3.12, with respect to

representations and warranties about the existence of infringement actions or

infringing activities, as to which a claim may be made on or before the latest

expiration date of all statutes of limitations pertaining to infringement

claims by a third party), provided, however,

that Seller will have no liability if the infringement or infringing activity

arises from (1) Buyer’s interconnection, combination, operation or use of the

Products with other software, if such a claim would not have arisen except for

such a combination, or (2) Buyer’s use or operation of such Products in a

manner for which they were not designed or used by Seller.

 

(b)           If the Closing occurs, Buyer will

have liability (for indemnification or otherwise) with respect to any Breach of

(i) a covenant or obligation to be performed or complied with prior to the

Closing Date (other than those in Article 12, as to which a claim may be made

at any time), or (ii) a representation or warranty, only if Seller notifies

Buyer of a claim within one year from the Closing, specifying the factual basis

of the claim in reasonable detail to the extent then known by Seller.

 

                11.7         Third-Party Claims.

 

(a)           Promptly after receipt by a Person

entitled to indemnity under Section 11.2 or 11.3 (an “Indemnified Person”) of notice of the

assertion of a Third-Party Claim against it, such Indemnified Person shall give

notice to the Person obligated to indemnify under such Section (an “Indemnifying Person”) of the assertion of

such Third-Party Claim, provided that the failure to notify the Indemnifying

Person will not relieve the Indemnifying Person of any liability that it may

have to any Indemnified Person, except to the extent that the Indemnifying

Person demonstrates that the defense of such Third-Party Claim is prejudiced by

the Indemnified Person’s failure to give such notice.

 

(b)           If an Indemnified Person gives notice

to the Indemnifying Person pursuant to Section 11.7(a) of the assertion of a

Third-Party Claim, the Indemnifying Person shall be entitled to participate in

the defense of such Third-Party Claim and, to the extent that it wishes (unless

(i) the Indemnifying Person is also a Person against whom the Third-Party Claim

is made and the Indemnified Person determines in good faith that joint

representation would be inappropriate or (ii) the Indemnifying Person fails to

provide reasonable assurance to the Indemnified Person of its financial

capacity to defend such Third-Party Claim and provide indemnification with

respect to such Third-Party Claim), to assume the defense of such Third-Party

Claim with counsel satisfactory to the Indemnified Person. After notice from

the Indemnifying Person to the Indemnified Person of its election to assume the

defense of such Third-Party Claim, the Indemnifying Person shall not, so long

as it diligently conducts such defense, be liable to the Indemnified Person

under this Article 11 for any fees of other counsel or any other expenses with

respect to the defense of such Third-Party Claim, in each case subsequently

incurred by the Indemnified Person in connection with the defense of such

Third-Party Claim, other than 

 

 

31

 

reasonable costs of

investigation. If the Indemnifying Person assumes the defense of a Third-Party

Claim, (i) such assumption will conclusively establish for purposes of this

Agreement that the claims made in that Third-Party Claim are within the scope

of and subject to indemnification, and (ii) no compromise or settlement of such

Third-Party Claims may be effected by the Indemnifying Person without the

Indemnified Person’s Consent unless (A) there is no finding or admission of any

violation of Legal Requirement or any violation of the rights of any Person;

(B) the sole relief provided is monetary damages that are paid in full by the

Indemnifying Person; and (C) the Indemnified Person shall have no liability

with respect to any compromise or settlement of such Third-Party Claims

effected without its Consent. If notice is given to an Indemnifying Person of

the assertion of any Third-Party Claim and the Indemnifying Person does not,

within ten (10) days after the Indemnified Person’s notice is given, give

notice to the Indemnified Person of its election to assume the defense of such Third-Party

Claim, the Indemnifying Person will be bound by any determination made in such

Third-Party Claim or any compromise or settlement effected by the Indemnified

Person.

 

(c)           Notwithstanding the foregoing, if an

Indemnified Person determines in good faith that there is a reasonable

probability that a Third-Party Claim may adversely affect it or its Related

Persons other than as a result of monetary damages for which it would be

entitled to indemnification under this Agreement, the Indemnified Person may,

by notice to the Indemnifying Person, assume the exclusive right to defend,

compromise or settle such Third-Party Claim, but the Indemnifying Person will

not be bound by any determination of any Third-Party Claim so defended for the

purposes of this Agreement or any compromise or settlement effected without its

Consent (which may not be unreasonably withheld).

 

(d)           Notwithstanding the provisions of

Section 13.4, the parties hereby consent to the nonexclusive jurisdiction of

any court in which a Proceeding in respect of a Third-Party Claim is brought

against any Indemnified Person for purposes of any claim that an Indemnified

Person may have under this Agreement with respect to such Proceeding or the

matters alleged therein, and agree that process may be served on the

Indemnifying Person with respect to such a claim anywhere in the world.

 

(e)           With respect to any Third-Party Claim

subject to indemnification under this Article 11: (i) both the Indemnified

Person and the Indemnifying Person, as the case may be, shall keep the other

Person fully informed of the status of such Third-Party Claim and any related

Proceedings at all stages thereof where such Person is not represented by its

own counsel, and (ii) the parties agree (each at its own expense) to render to

each other such assistance as they may reasonably require of each other and to

cooperate in good faith with each other in order to ensure the proper and

adequate defense of any Third-Party Claim.

 

(f)            With respect to any Third-Party

Claim subject to indemnification under this Article 11, the parties agree to

cooperate in such a manner as to preserve in full (to the extent possible) the

confidentiality of all Confidential Information and the attorney-client and

work-product privileges. In connection therewith, each party agrees that: (i)

it will use its Best Efforts, in respect of any Third-Party Claim in which it

has assumed or participated in the defense, to avoid production of Confidential

Information (consistent with applicable law and rules of procedure), and (ii)

all communications between any party hereto and counsel responsible for or

participating in the defense of any Third-Party Claim shall, to the extent

possible, be made so as to preserve any applicable attorney-client or

work-product privilege.

 

 

32

 

                11.8         Other Claims.  A claim for indemnification for any matter

not involving a Third-Party Claim may be asserted by notice to the party from

whom indemnification is sought and shall be paid promptly after such notice.

 

                11.9         INDEMNIFICATION IN CASE OF STRICT

LIABILITY OR INDEMNITEE NEGLIGENCE

 

THE INDEMNIFICATION PROVISIONS IN THIS

ARTICLE 11 SHALL BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED

UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY

PAST, PRESENT OR FUTURE BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER

ACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR

OTHER LEGAL REQUIREMENT) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE

PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE,

CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING

INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE

PERSON SEEKING INDEMNIFICATION.

 

                11.10       Exclusive Remedy.  The rights of indemnification provided for

under this Article 11 shall be the parties’ sole and exclusive remedies for all

claims arising under this Agreement, other than claims for fraud.  Unless a representation by any party is

intentionally inaccurate, such representation shall not constitute fraud.

 

 

12. 

CONFIDENTIALITY

 

                12.1         Definition of Confidential

Information.

 

(a)           As used in this Article 12, the term

“Confidential Information”

includes any and all of the following information of Seller or Buyer that has

been or may hereafter be disclosed in any form, whether in writing, orally,

electronically or otherwise, or otherwise made available by observation,

inspection or otherwise by either party (Buyer on the one hand or Seller on the

other hand) or its Representatives (collectively, a “Disclosing Party”) to the other party or its Representatives

(collectively, a “Receiving Party”):

 

(i)            all information that is a trade

secret under applicable trade secret or other law;

 

(ii)           all information concerning product

specifications, data, know-how, formulae, compositions, processes, designs,

sketches, photographs, graphs, drawings, samples, inventions and ideas, past,

current and planned research and development, current and planned manufacturing

or distribution methods and processes, customer lists, current and anticipated

customer requirements, price lists, market studies, business plans, computer

hardware, Software and computer software and database technologies, systems, structures

and architectures;

 

(iii)          all information concerning the

business and affairs of the Disclosing Party (which includes historical and

current financial statements, financial projections and budgets, tax returns

and accountants’ materials, historical, current and projected sales, capital

spending budgets and plans, business plans, strategic plans, marketing and 

 

 

33

 

advertising plans,

publications, client and customer lists and files, contracts, the names and

backgrounds of key personnel and personnel training techniques and materials,

however documented), and all information obtained from review of the Disclosing

Party’s documents or property or discussions with the Disclosing Party

regardless of the form of the communication; and

 

(iv)          all notes, analyses, compilations,

studies, summaries and other material prepared by the Receiving Party to the

extent containing or based, in whole or in part, upon any information included

in the foregoing.

 

(b)           Any trade secrets of a Disclosing

Party shall also be entitled to all of the protections and benefits under

applicable trade secret law and any other applicable law. If any information

that a Disclosing Party deems to be a trade secret is found by a court of competent

jurisdiction not to be a trade secret for purposes of this Article 12, such

information shall still be considered Confidential Information of that

Disclosing Party for purposes of this Article 12 to the extent included within

the definition. In the case of trade secrets, each of Buyer and Seller hereby

waives any requirement that the other party submit proof of the economic value

of any trade secret or post a bond or other security.

 

                12.2         Restricted Use of Confidential

Information.

 

(a)           Each Receiving Party acknowledges the

confidential and proprietary nature of the Confidential Information of the

Disclosing Party and agrees that such Confidential Information (i) shall be

kept confidential by the Receiving Party; (ii) shall not be used for any reason

or purpose other than to evaluate and consummate the Contemplated Transactions;

and (iii) without limiting the foregoing, shall not be disclosed by the

Receiving Party to any Person, except in each case as otherwise expressly

permitted by the terms of this Agreement or with the prior written consent of

an authorized representative of Seller with respect to Confidential Information

of Seller (each, a “Seller Contact”)

or an authorized representative of Buyer with respect to Confidential

Information of Buyer (each, a “Buyer Contact”).

Each of Buyer and Seller shall disclose the Confidential Information of the

other party only to its Representatives who require such material for the

purpose of evaluating the Contemplated Transactions and are informed by Buyer

or Seller, as the case may be, of the obligations of this Article 12 with

respect to such information. Each of Buyer and Seller shall (iv) enforce the

terms of this Article 12 as to its respective Representatives; (v) take such

action to the extent necessary to cause its Representatives to comply with the

terms and conditions of this Article 12; and (vi) be responsible and liable for

any breach of the provisions of this Article 12 by it or its Representatives.

 

(b)           Unless and until this Agreement is

terminated, Seller shall maintain as confidential any Confidential Information

(including for this purpose any information of Seller of the type referred to

in Sections 12.1(a)(i), (ii) and (iii), whether or not disclosed to Buyer) of

the Seller  relating to any of the

Assets or the Assumed Liabilities. Notwithstanding the preceding sentence,

Seller may use any Confidential Information of Seller before the Closing in the

Ordinary Course of Business in connection with the transactions permitted by

Section 5.2.

 

(c)           From and after the Closing, the

provisions of Section 12.2(a) above shall not apply to or restrict in any

manner Buyer’s use of any Confidential Information of the Seller relating to

any of the Assets or the Assumed Liabilities.

 

 

34

 

                12.3         Exceptions.  Sections 12.2(a) and (b) do not apply to

that part of the Confidential Information of a Disclosing Party that a

Receiving Party demonstrates (a) was, is or becomes generally available to the

public other than as a result of a breach of this Article 12 or the

Confidentiality Agreement by the Receiving Party or its Representatives; (b)

was or is developed by the Receiving Party independently of and without

reference to any Confidential Information of the Disclosing Party; or (c) was,

is or becomes available to the Receiving Party on a nonconfidential basis from

a Third Party not bound by a confidentiality agreement or any legal, fiduciary

or other obligation restricting disclosure. Seller shall not disclose any

Confidential Information of Seller relating to any of the Assets or the Assumed

Liabilities in reliance on the exceptions in clauses (b) or (c) above.

 

                12.4         Legal Proceedings.  If a Receiving Party becomes compelled in

any Proceeding or is requested by a Governmental Body having regulatory

jurisdiction over the Contemplated Transactions to make any disclosure that is

prohibited or otherwise constrained by this Article 12, that Receiving Party

shall provide the Disclosing Party with prompt notice of such compulsion or

request so that it may seek an appropriate protective order or other

appropriate remedy or waive compliance with the provisions of this Article 12.

In the absence of a protective order or other remedy, the Receiving Party may

disclose that portion (and only that portion) of the Confidential Information

of the Disclosing Party that, based upon advice of the Receiving Party’s

counsel, the Receiving Party is legally compelled to disclose or that has been

requested by such Governmental Body, provided, however, that the Receiving

Party shall use reasonable efforts to obtain reliable assurance that

confidential treatment will be accorded by any Person to whom any Confidential

Information is so disclosed. The provisions of this Section 12.4 do not apply

to any Proceedings between the parties to this Agreement.

 

                12.5         Return or Destruction of

Confidential Information.  If this

Agreement is terminated, each Receiving Party shall (a) destroy all

Confidential Information of the Disclosing Party prepared or generated by the

Receiving Party without retaining a copy of any such material; (b) promptly

deliver to the Disclosing Party all other Confidential Information of the

Disclosing Party, together with all copies thereof, in the possession, custody

or control of the Receiving Party or, alternatively, with the written consent

of a Seller Contact or a Buyer Contact (whichever represents the Disclosing

Party) destroy all such Confidential Information; and (c) certify all such

destruction in writing to the Disclosing Party, provided, however, that the

Receiving Party may retain a list that contains general descriptions of the

information it has returned or destroyed to facilitate the resolution of any

controversies after the Disclosing Party’s Confidential Information is

returned.

 

                12.6         Attorney-Client Privilege.  The Disclosing Party is not waiving, and

will not be deemed to have waived or diminished, any of its attorney work

product protections, attorney-client privileges or similar protections and

privileges as a result of disclosing its Confidential Information (including

Confidential Information related to pending or threatened litigation) to the

Receiving Party, regardless of whether the Disclosing Party has asserted, or is

or may be entitled to assert, such privileges and protections. The parties (a)

share a common legal and commercial interest in all of the Disclosing Party’s

Confidential Information that is subject to such privileges and protections;

(b) are or may become joint defendants in Proceedings to which the Disclosing

Party’s Confidential Information covered by such protections and privileges

relates; (c) intend that such privileges and protections remain intact should

either party become subject to any actual or threatened Proceeding to which the

Disclosing Party’s Confidential Information covered by such protections and

privileges relates; and (d) intend that after the Closing the Receiving Party

shall have the right to assert such protections and privileges. No Receiving

Party shall admit, claim or contend, in Proceedings involving either party or

otherwise, that any Disclosing Party waived any of its attorney work-product

protections, attorney-client privileges or similar protections and privileges

with respect to any information, documents or other material not disclosed to a

 

 

35

 

Receiving Party due to the Disclosing Party

disclosing its Confidential Information (including Confidential Information

related to pending or threatened litigation) to the Receiving Party.

 

 

13. 

GENERAL PROVISIONS

 

                13.1         Expenses.  Except as otherwise provided in this

Agreement, each party to this Agreement will bear its respective fees and

expenses incurred in connection with the preparation, negotiation, execution

and performance of this Agreement and the Contemplated Transactions, including

all fees and expense of its Representatives. If this Agreement is terminated,

the obligation of each party to pay its own fees and expenses will be subject

to any rights of such party arising from a Breach of this Agreement by another

party.

 

                13.2         Public Announcements.  Any public announcement, press release or

similar publicity with respect to this Agreement or the Contemplated

Transactions will be issued, if at all, at such time and in such manner as

mutually agreed by Buyer and Seller. Seller and Buyer will consult with each

other concerning the means by which Seller’s employees, customers, suppliers

and others having dealings with Seller will be informed of the Contemplated

Transactions, and Buyer will have the right to be present for any such

communication.

 

                13.3         Notices.  All notices, Consents, waivers and other

communications required or permitted by this Agreement shall be in writing and

shall be deemed given to a party when (a) delivered to the appropriate address

by hand or by nationally recognized overnight courier service (costs prepaid);

(b) sent by facsimile or e-mail with confirmation of transmission by the

transmitting equipment; or (c) received or rejected by the addressee, if sent

by certified mail, return receipt requested, in each case to the following

addresses, facsimile numbers or e-mail addresses and marked to the attention of

the person (by name or title) designated below (or to such other address,

facsimile number, e-mail address or person as a party may designate by notice

to the other parties):

 

	

  Seller:

  	

   

  	

  OneLink, Inc.

  Paul F. Lidsky, Chief Executive Officer

  10340 Viking Drive

  Eden Prairie, MN  55344

  Fax no.: (952) 942-9424

  E-mail: plidsky@onelink.com

  
	

   

  	

   

  	

   

  
	

  with a

  copy to:

  	

   

  	

  Terri Krivosha, Esq.

  Maslon Edelman Borman & Brand, LLP

  3300 Wells Fargo Center

  90 South Seventh Street

  Minneapolis, MN  55402

  Fax no.: (612) 642-8340

  E-mail:  terri.krivosha@maslon.com

  
	

   

  	

   

  	

   

  
	

  Buyer:

  	

   

  	

  CallVision, Inc.

  Derek Edwards, President

  1080 West Ewing Place, Suite 200

  Seattle, WA 98119

  Fax no.: (206) 352-3059

  E-mail: dedwards@callvision.com

  

 

 

36

 

	

  with a

  copy to:

  	

   

  	

  Bradley Furber

  Holland & Knight LLP

  520 Pike Street

  2600 Pike Tower

  Seattle, WA  98101

  Fax no.: (206) 623-4363

  E-mail: Bradley.furber@hklaw.com

  

 

                13.5         Arbitration.  Any controversy or claim arising out of or

relating to this Agreement or any related agreement shall be settled by

arbitration in accordance with the following provisions:

 

(a)           Disputes Covered. The

agreement of the parties to arbitrate covers all disputes of every kind

relating to or arising out of this Agreement, any related agreement or any of

the Contemplated Transactions. Disputes include actions for breach of contract

with respect to this Agreement or the related agreement, as well as any claim

based upon tort or any other causes of action relating to the Contemplated

Transactions, such as claims based upon an allegation of fraud or

misrepresentation and claims based upon a federal or state statute. In

addition, the arbitrators selected according to procedures set forth below

shall determine the arbitrability of any matter brought to them, and their

decision shall be final and binding on the parties.

 

(b)           Forum. The forum for the

arbitration shall be Seattle, Washington.

 

(c)           Law. The governing law for the

arbitration shall be the law of the State of Washington, without reference to

its conflicts of laws provisions.

 

(d)           Selection. There shall be

three arbitrators, unless the parties are able to agree on a single arbitrator.

In the absence of such agreement within ten (10) days after the initiation of

an arbitration proceeding, Seller shall select one arbitrator and Buyer shall

select one arbitrator, and those two arbitrators shall then select, within ten

(10) days, a third arbitrator. If those two arbitrators are unable to select a

third arbitrator within such ten (10)-day period, a third arbitrator shall be

appointed by the commercial panel of the American Arbitration Association. The

decision in writing of at least two of the three arbitrators shall be final and

binding upon the parties.

 

(e)           Administration. The

arbitration shall be administered by the American Arbitration Association.

 

(f)            Rules. The rules of arbitration

shall be the Commercial Arbitration Rules of the American Arbitration

Association, as modified by any other instructions that the parties may agree

upon at the time, except that each party shall have the right to conduct

discovery in any manner and to the extent authorized by the Federal Rules of

Civil Procedure as interpreted by the federal courts. If there is any conflict

between those Rules and the provisions of this section, the provisions of this

section shall prevail.

 

(g)           Substantive Law. The arbitrators

shall be bound by and shall strictly enforce the terms of this Agreement and

may not limit, expand or otherwise modify its terms. The arbitrators shall make

a good faith effort to apply substantive applicable law, but an arbitration

decision shall not be subject to review because of errors of law. The

arbitrators shall be bound to honor claims of privilege or work-product

doctrine recognized at law, but the arbitrators shall have the discretion to

determine whether any such claim of privilege or work product doctrine applies.

 

 

37

 

(h)           Decision. The arbitrators-’’

decision shall provide a reasoned basis for the resolution of each dispute and

for any award. The arbitrators shall not have power to award damages in

connection with any dispute in excess of actual compensatory damages and shall

not multiply actual damages or award consequential or punitive damages or award

any other damages that are excluded under the provisions of Article 11 of this

Agreement.

 

(i)            Expenses. Each party shall

bear its own fees and expenses with respect to the arbitration and any

proceeding related thereto and the parties shall share equally the fees and

expenses of the American Arbitration Association and the arbitrators.

 

(j)            Remedies; Award. The

arbitrators shall have power and authority to award any remedy or judgment that

could be awarded by a court of law in Washington or Minnesota. The award

rendered by arbitration shall be final and binding upon the parties, and judgment

upon the award may be entered in any court of competent jurisdiction in the

United States.

 

                13.5         Enforcement of Agreement.  Seller acknowledges and agrees that Buyer

would be irreparably damaged if any of the provisions of this Agreement are not

performed in accordance with their specific terms and that any Breach of this

Agreement by Seller could not be adequately compensated in all cases by

monetary damages alone. Accordingly, in addition to any other right or remedy

to which Buyer may be entitled, at law or in equity, it shall be entitled to

enforce any provision of this Agreement by a decree of specific performance and

to temporary, preliminary and permanent injunctive relief to prevent Breaches

or threatened Breaches of any of the provisions of this Agreement, without

posting any bond or other undertaking.

 

                13.6         Waiver; Remedies Cumulative.  The rights and remedies of the parties to

this Agreement are cumulative and not alternative. Neither any failure nor any

delay by any party in exercising any right, power or privilege under this

Agreement or any of the documents referred to in this Agreement will operate as

a waiver of such right, power or privilege, and no single or partial exercise

of any such right, power or privilege will preclude any other or further

exercise of such right, power or privilege or the exercise of any other right,

power or privilege. To the maximum extent permitted by applicable law, (a) no

claim or right arising out of this Agreement or any of the documents referred

to in this Agreement can be discharged by one party, in whole or in part, by a

waiver or renunciation of the claim or right unless in writing signed by the

other party; (b) no waiver that may be given by a party will be applicable

except in the specific instance for which it is given; and (c) no notice to or

demand on one party will be deemed to be a waiver of any obligation of that

party or of the right of the party giving such notice or demand to take further

action without notice or demand as provided in this Agreement or the documents

referred to in this Agreement.

 

                13.7         Entire Agreement and Modification.  This Agreement supersedes all prior

agreements, whether written or oral, between the parties with respect to its

subject matter (including any letter of intent and any confidentiality

agreement between Buyer and Seller) and constitutes (along with the Exhibits

and other documents delivered pursuant to this Agreement) a complete and

exclusive statement of the terms of the agreement between the parties with respect

to its subject matter. This Agreement may not be amended, supplemented, or

otherwise modified except by a written agreement executed by the party to be

charged with the amendment.

 

                13.8         Disclosure Letter.

 

 

38

 

(a)           The information in the Disclosure

Letter constitutes (i) exceptions to particular representations, warranties,

covenants and obligations of Seller as set forth in this Agreement or (ii)

descriptions or lists of assets and liabilities and other items referred to in

this Agreement. If there is any inconsistency between the statements in this

Agreement and those in the Disclosure Letter (other than an exception expressly

set forth as such in the Disclosure Letter with respect to a specifically identified

representation or warranty), the statements in this Agreement will control.

 

(b)           The statements in the Disclosure

Letter, and those in any supplement thereto, relate only to the provisions in

the Section of this Agreement to which they expressly relate and not to any

other provision in this Agreement.

 

                13.9         Assignments, Successors and No

Third-Party Rights.  No party may

assign any of its rights or delegate any of its obligations under this

Agreement without the prior written consent of the other parties, except that

Buyer may assign any of its rights and delegate any of its obligations under

this Agreement to any Subsidiary of Buyer and may collaterally assign its

rights hereunder to any financial institution providing financing in connection

with the Contemplated Transactions, so long as no such assignment or delegation

impairs Buyer’s ability to perform its obligations under this Agreement and to

complete the Contemplated Transactions. 

Subject to the preceding sentence, this Agreement will apply to, be

binding in all respects upon and inure to the benefit of the successors and

permitted assigns of the parties. Nothing expressed or referred to in this

Agreement will be construed to give any Person other than the parties to this

Agreement any legal or equitable right, remedy or claim under or with respect

to this Agreement or any provision of this Agreement, except such rights as

shall inure to a successor or permitted assignee pursuant to this Section 13.9.

 

                13.10       Severability.  If any provision of this Agreement is held

invalid or unenforceable by any court of competent jurisdiction, the other

provisions of this Agreement will remain in full force and effect. Any

provision of this Agreement held invalid or unenforceable only in part or

degree will remain in full force and effect to the extent not held invalid or

unenforceable.

 

                13.11       Construction.  The headings of Articles and Sections in

this Agreement are provided for convenience only and will not affect its

construction or interpretation. All references to “Articles,” “Sections” and

“Parts” refer to the corresponding Articles, Sections and Parts of this

Agreement and the Disclosure Letter.

 

                13.12       Time Of Essence.  With regard to all dates and time periods

set forth or referred to in this Agreement, time is of the essence.

 

                13.13       Governing Law.  This Agreement will be governed by and

construed under the laws of the State of Washington without regard to

conflicts-of-laws principles that would require the application of any other

law.

 

                13.14       Execution of Agreement.  This Agreement may be executed in one or

more counterparts, each of which will be deemed to be an original copy of this

Agreement and all of which, when taken together, will be deemed to constitute

one and the same agreement. The exchange of copies of this Agreement and of

signature pages by facsimile transmission shall constitute effective execution

and delivery of this Agreement as to the parties and may be used in lieu of the

original Agreement for all purposes. Signatures of the parties transmitted by

facsimile shall be deemed to be their original signatures for all purposes.

 

 

39

 

                IN

WITNESS WHEREOF, the parties have executed this Agreement as of the date first

written above.

 

 

	

  CALLVISION,

  INC:

  	

   

  	

  ONELINK,

  INC:

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

  By:

  
	

  Its:

  	

   

  	

  Its:

  
	

  Name:

  	

   

  	

  Name:

  

 

 

40

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}]]