Document:

Prepared by MerrillDirect

PURCHASE AGREEMENT

AMONG

JEFFREY A. LUSENHOP

AND

NORSTAN COMMUNICATIONS, INC.

AND

NORSTAN, INC.

 

As of January 1, 2001

 

 

TABLE OF CONTENTS

	
  TABLE OF CONTENTS
  	 
  
	
  Recitals:
  	 
  
	
  Statement of Agreement:
  	 
  
	
    1.     Construction and Definitions
  	 
  
	
    2.     Purchase and Sale of Purchased Interest and Loan Rights.
  	 
  
	
    3.     Representations and Warranties Concerning the Transaction.
  	 
  
	
    4.     Representations and Warranties Concerning Connaissance
  	 
  
	
    5.     Post-Closing Covenants.
  	 
  
	
    6.     Conditions to Obligation to Close.
  	 
  
	
    7.     Condition to Effectiveness of Agreement.
  	 
  
	
    8.     Survival and Construction of Representations and Warranties.
  	 
  
	
    9.     Miscellaneous.
  	 
  
	
  Signatures
  	 
  
	
  Exhibits A Buyer Notes
  	 
  
	
  Exhibits B Security Agreements
  	 
  
	
  Exhibit C Allocation of Purchase Price
  	 
  
	
  Exhibit D Financial Statements
  	 
  
	
  Exhibit E Buyer Legal Opinion
  	 
  
	
  Exhibit F Seller Legal Opinion
  	 
  
	
  Exhibit G Escrow Agreement (if applicable
  pursuant to §2(d))
  	 
  

 

PURCHASE AGREEMENT

          This Purchase Agreement (this “Agreement”) is
entered into as of January 1, 2001, by and among Jeffrey A. Lusenhop (“Buyer”), an individual residing in
Columbus, Ohio, and Norstan Communications, Inc., a Minnesota corporation (“Seller”), and Norstan, Inc., a Minnesota
corporation (“Norstan”).

Recitals:

          Seller owns the Purchased Interest (as defined
herein) with respect to Connaissance Consulting, LLC, a Minnesota limited
liability company (“Connaissance”),
pursuant to the Member Control Agreement of Connaissance Consulting, LLC dated
March 12, 1998, as amended (the “MCA”).

          Seller and Norstan have made certain loans,
defined herein as the “Loan Rights,”
to Connaissance, Buyer, Lusenhop & Associates, Inc., an Ohio corporation (“L&A”), and certain shareholders of
L&A.

          This Agreement contemplates a transaction in
which Buyer will purchase from Seller, and Seller will sell to Buyer, all of
the Purchased Interest and all of the Loan Rights in return for cash and the
Buyer Notes (as defined herein).

Statement of Agreement:

          Now, therefore, in consideration of the
premises and the mutual promises herein made, and in consideration of the
representations, warranties, and covenants herein contained, the parties agree
as follows.

          1.       Construction and
Definitions

          (a)      Construction.  The parties have participated jointly in the negotiation and
drafting of this Agreement.  In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.  Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Agreement.  Terms
defined in the singular shall include the plural, and vice versa, and pronouns
in any gender shall include the masculine, feminine and neuter, as the context
requires.  Any reference to any federal,
state, local, or foreign statute or law shall be deemed also to refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise.  The word “including” shall
mean including without limitation, and use of the term “or” is not intended to
be exclusive, unless the context clearly requires otherwise.  All references to a “§” or “section” refer
to this Agreement,and all references to an “Exhibit” refer to the documents
attached to this agreement, unless the context otherwise requires.

          (b)      Definitions.  In addition to the terms defined elsewhere
in this Agreement and except to the extent that the context otherwise requires,
the following terms used in this Agreement shall mean as follows:

“Accredited Investor” has the meaning set forth in Regulation D promulgated under the
Securities Act.

“Adverse Consequences” means all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in settlement,
Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys' fees and expenses.

“Affiliate” has the meaning set forth in Rule 12-2 of the regulations promulgated
under the Securities Exchange Act.

“Affiliated Group” means any affiliated group within the meaning of Code Sec. 1504 or any
similar group defined under a similar provision of state, local or foreign law.

“Bankruptcy Code”
means the Bankruptcy Code of 1978, as amended.

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

“Buyer Disclosure Schedule” means a written schedule delivered to Seller
prior to the execution and delivery of this Agreement by Buyer describing, in
numbered and lettered paragraphs corresponding to the numbered and lettered
sections of §3(b), any exceptions or qualifications to any of the
representations or warranties made by Buyer in such sections.

“Buyer Notes” has the meaning as defined in §2(b).

“Buyer $1,000,000.00 Note” has the meaning as defined in §2(b).

“Buyer $12,000,000.00 Note” has the meaning as defined in §2(b).

“Closing” has the meaning as defined in §2(c).

“Closing Date” has the meaning as defined in §2(c).

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

“Confidential Information” means any information concerning the
businesses and affairs of Connaissance that is not already generally available
to the public. Confidential Information shall not include any information that
(i) is voluntarily disclosed to the public by Buyer or Connaissance after the
Closing or has become generally known to the public (except for such
public disclosure that has been made by or through Norstan or by a third person
with the knowledge of Norstan without authorization by Buyer); (c) has been
independently developed and disclosed by parties other than Norstan to the
public generally without a breach of any obligation of confidentiality by any
such person running directly or indirectly to the Connaissance or Buyer; or (d)
otherwise enters the public domain through lawful means.

“Connaissance” has the meaning as defined as part of the “Recitals” of this
Agreement.

A “covenant” means any
agreement on the part of any party contained in this Agreement.

“Disclosure Schedule” has the meaning set forth in §4 .

“Escrow Agreement” has the meaning set forth in §2(d).

“GAAP” means
generally accepted accounting principles in the United States as in effect from
time to time.

The term “knowledge”  means actual knowledge after reasonable
investigation.

“L&A” has the meaning as defined as part of the “Recitals” of this Agreement.

“Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due),
including any liability for Taxes.

“Loan Rights” means
all outstanding loans, advances, together with accrued interest made by Seller
or any Affiliate of Seller to Connaissance, Buyer, L&A, or any shareholder
of L&A.

“MCA” has the
meaning as defined as part of the “Recitals” of this Agreement.

“Norstan” has the meaning as defined in the first paragraph of this Agreement.

“Ordinary Course of Business” means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).

The term “party” refers
to any of Seller, Buyer, or, where the context requires, Norstan.

The term “person” means
any individual, a partnership, a corporation, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).

“Purchase Price” has the meaning as defined in §2(b).

“Purchased Interest”
means all of Seller's right, title and interest in and to Connaissance,
including, but not by limitation, all rights, privileges, powers and interests
in capital and property relating to Connaissance, whether tangible or
intangible, all interests in profits, losses, gains, deductions, credits,
distributions and fees relating to Connaissance, all claims through or against
Connaissance, and all items of value in or of Connaissance, of any kind or
nature whatsoever, except for the Loan Rights.

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

“Seller Disclosure Schedule” means a written schedule delivered to Buyer
prior to the execution and delivery of this Agreement by Buyer describing, in
numbered and lettered paragraphs corresponding to the numbered and lettered
sections of §3(a) and §4, any exceptions or qualifications to any of the
representations or warranties made by Seller in such sections.

“Security Agreements” has the meaning as defined in §2(b).

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

“Securities Exchange Act” means the Securities Exchange Act of 1934,
as amended.

“Tax” means
any federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code section 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.

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

          2.       Purchase and Sale of
Purchased Interest and Loan Rights.

          (a)      Basic Transaction. On and subject to the
terms and conditions of this Agreement, Buyer agrees to purchase: (1) the
Purchased Interest from Seller, and Seller agrees to sell to Buyer, all of its
right, title and interest in and to the Purchased Interest for the Purchase
Price defined in §2(b); and (2) the Loan Rights from Seller and Norstan, and
each of Seller and Norstan agrees to sell to Buyer, all of its right, title and
interest in and to the Loan Rights for the Purchase Price.  It is the intent hereof, and it is hereby
agreed, that the Purchased Interest is to be sold, conveyed, assigned and
transferred to Buyer with the effect that after the Closing, Buyer and L&A
will be the only members of Connaissance and that the sale and assignment of
the Purchased Interest and the Loan Rights to Buyer will extinguish all of
Seller’s and its Affiliates' rights, benefits and privileges attributable to the
Loan Rights, the Purchased Interest, Connaissance and the business of
Connaissance, and such parties shall have no further right, title, claim or
interest of any nature whatsoever in the Loan Rights, the Purchased Interest,
Connaissance or the business of Connaissance except as specifically provided in
this Agreement and certain related agreements and instruments, including
without limitation the Buyer Notes and the Security Agreements.

          (b)      Purchase
Price.  Buyer agrees to
deliver the purchase price for the Purchased Interest and the Loan Rights to
Seller at the Closing as follows: (1) $3,000,000.00 in cash payable by wire
transfer or delivery of other immediately available funds; and (2) two
promissory notes drawn by Buyer in favor of Seller (the “Buyer Notes”), the first in the principal
amount of $1,000,000.00 (the “Buyer
$1,000,000.00 Note”) substantially in the form of Exhbit A1 attached
hereto, and the second in the principal amount of $12,000,000.00 (the “Buyer $12,000,000.00 Note”) substantially
in the form of Exhibit A2 attached hereto (the payment of such cash and the
delivery of the Buyer Notes are collectively referred to herein as the “Purchase Price”).  The Buyer Notes shall be secured by
respective assignment intercreditor and security agreements (the “Security Agreements”) in the forms of
Exhibits B1, 2 and 3 attached hereto. 
The Purchase Price shall be allocated to the Purchased Interest and the
Loan Rights and between Seller and Norstan as set forth in Exhibit C.

          (c)      The Closing.  The closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place on January 30, 2001 or another date (the “Closing Date”) mutually agreed by Buyer
and Seller with the intent being that such date will not be later than February
2, 2001.

          (d)      Deliveries at the Closing. At the Closing,
(1) Norstan will deliver to Buyer all documents required to be delivered as a
condition to Closing pursuant to §6(a), (2) Buyer will deliver to Seller all
documents required to be delivered as a condition to Closing pursuant to §6(b),
(3) Seller will deliver to Buyer an assignment of the Purchased Interest and an
assignment of the Loan Rights in form and content satisfactory to Buyer (and
any such other documentation as Buyer may reasonably require in order to effect
the transfer of the Purchased Interest and the Loan Rights), and (4) Buyer will
deliver to order of Seller the Purchase Price; provided, however, that if on or
before the Closing Seller has not received the consent of its principal lender to
the transactions contemplated by this Agreement pursuant to §7, all deliveries
shall be to Resource Trust Company or such other person who may be designated
by the parties as escrow agent under a certain Escrow Agreement, to be attached
in such event hereto as Exhibit G, by and among Buyer, Seller, Norstan and such
escrow agent for disposition by such escrow agent as provided therein (the
“Escrow Agreement”).

          3.       Representations and
Warranties Concerning the Transaction.

          (a)      Representations and Warranties of Seller and Norstan.  Each of Seller and Norstan represents and
warrants to Buyer that each of the following statements is correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this §3(a)) with respect
to itself, except as set forth in Seller Disclosure Schedule.

(1)      Organization
of Seller and Norstan.  Each
of Seller and Norstan is duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation.

(2)      Authorization of Transaction.  Each of Seller and Norstan has the requisite
corporate power and authority (including, if Seller is a corporation, full
corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of each of Seller and Norstan, enforceable in
accordance with its terms and conditions. Neither Seller nor Norstan need give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.

(3)      Noncontravention.  Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which either Seller or Norstan is
subject or, if Seller is a corporation, any provision of its charter, bylaws or
other governing documents or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which either Seller or Norstan is a party or by which it is bound or to
which any of its assets is subject.

(4)      Brokers' Fees. Neither Seller nor Norstan
has any Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which Buyer could become liable or obligated.

(5)      Investment. Each of Seller and Norstan (A)
understands that the Buyer Notes have not been, and will not be, registered
under the Securities Act, or under any state securities laws, (B) is acquiring
the Buyer Notes solely for its own account for investment purposes, and not
with a view to the distribution thereof, (C) is a sophisticated investor with
sufficient knowledge and experience in business and financial matters, (D) is
able to bear the economic risk and lack of liquidity inherent in holding the
Buyer Notes, and (E) is an Accredited Investor.

(6)      Purchased
Interest and Loan Rights. Each of Seller and Norstan holds of record
and owns beneficially the Purchased Interest and Loan Rights as set forth next
to its name in the Disclosure Schedule, free and clear of any restrictions on
transfer (other than any restrictions under the MCA, the Securities Act and
state securities laws), Taxes, security interests, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. Neither Seller
nor Norstan is a party to any option, warrant, purchase right, or other
contract or commitment that could require Seller to sell, transfer, or
otherwise dispose of any interest in the Purchased Interest, Loan Rights or
Connaissance (other than the MCA and this Agreement). Neither Seller nor
Norstan is a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any membership interest of
Connaissance.

(7)      Insolvency. No Insolvency Proceeding has
been commenced or, to Seller’s knowledge, threatened against either Seller or
Norstan, and no grounds for commencing an Insolvency Proceeding by or against
Seller or Norstan exists.  “Insolvency
Proceeding” means any proceeding commenced by or against any person under any
provision of the Bankruptcy Code or under any other federal or state bankruptcy
or insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.

          (b)      Representations and Warranties of Buyer.
Buyer represents and warrants to Seller that each of the following statements
is correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
§3(b)), except as set forth in the Buyer Disclosure Schedule.

(1)      Competence of Buyer.  Buyer is a natural person of legal age and
competency to execute and deliver this Agreement and perform its obligations
hereunder.

(2)      Authorization of Transaction. Buyer has
the requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of Buyer, enforceable in accordance with its terms
and conditions. Buyer need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.

(3)      Noncontravention. Neither the execution
and the delivery of this Agreement, the Buyer Notes or the Security Agreements
nor the consummation of the transactions contemplated by any of the forgoing,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Buyer is subject or any
provision of its articles of incorporation, regulations or other governing
documents or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Buyer is a party or by which it is bound or to which any of its assets is
subject.

(4)      Ordinary
Course of Business.  To the
knowledge of Buyer, since April 30, 2000, Connaissance has been operated in the
ordinary course of its business, including without limitation with respect to
the solicitation of business, the timely performance of consulting and other
engagements, the invoicing of customers for work performed, the collection of
receivables from customers and other debtors of Connaissance, the depositing of
cash collected by Connaissance, and the timely, complete and accurate recording
of transactions in the books and records of Connaissance.

(5)      Brokers' Fees. Buyer has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which any Seller
could become liable or obligated.

(6)      No Knowledge regarding Seller’s Connaissance
Representations.  Except as
disclosed in Buyer Disclosure Schedule, Buyer has no knowledge that any
representation or warranty made by Seller regarding Connaissance in §4 is
untrue.

          4.       Representations and Warranties Concerning

Connaissance.  Seller represents and
warrants to Buyer that each of the following statements is correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this §4), except as set
forth in Seller Disclosure Schedule.  Except
as otherwise specifically provided herein, the knowledge of Buyer as a member
of Connaissance shall not be attributed to the knowledge of Seller.  To the extent that any representation or
warranty made by Seller herein is, within the knowledge of Buyer or Connaissance,
untrue at the time such representation or warranty is made or at the Closing
Date, such representation or warranty shall not, for purposes of this
Agreement, be deemed to have been made by Seller.

(a)      Organization, Qualification, and Corporate Power.
Connaissance is a limited liability company duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its organization.
Connaissance is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required.
Connaissance has full organizational power and authority and all licenses,
permits, and authorizations necessary to carry on the businesses in which it is
engaged and in which it presently proposes to engage and to own and use the
properties owned and used by it.  Seller
has delivered to Buyer correct and complete copies of the articles, operating
agreement, and MCA of Connaissance (as amended to date) (“Governing Documents”).
The minute books (containing the records of meetings of the members, the
governors, managers, officers and any committees of the board of governors),
and the membership interest record books of Connaissance, all as furnished to
Buyer, are correct and complete. Connaissance is not in default under or in
violation of any provision of its Governing Documents.

(b)      Capitalization.
The Purchased Interest has been duly authorized, is validly issued, fully paid,
and nonassessable, and is held of record by Seller as set forth in the
Disclosure Schedule.   Seller and
L&A are the only members of Connaissance and to the knowledge of Seller no
other Person owns or possesses or has ever owned or possessed a right to any
interest whatsoever in Connaissance, including, without limitation: (1) any
right with respect to options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that
could require Connaissance or any member thereof to issue, sell, or otherwise
cause to become outstanding any membership interests of Connaissance or to
admit any additional member to Connaissance; or (1) any right to any income ,
gain, loss, deduction, credit, distribution, fee, payment, or other benefit
relating to Connaissance. To the knowledge of Seller, there are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of any membership interest in Connaissance.

(c)      Noncontravention. Neither the execution
and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (1) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Connaissance is
subject or any provision of the Governing Documents of Connaissance or (2)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Connaissance is a party or
by which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets).  To the knowledge of Seller, Connaissance
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the parties to consummate the transactions contemplated by this
Agreement.

(d)      Brokers' Fees. Connaissance has no
Liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement.

(e)      Financial Statements. Attached hereto as Exhibit
D are the following financial statements (collectively the “Financial Statements”): (1) unaudited
balance sheets and statements of operations, changes in members' equity, and
cash flows as of and for the fiscal years ended April 30, 1999 and 2000 (the “Most Recent Fiscal Year End”) for
Connaissance; and (2) unaudited balance sheets and statements of operations,
changes in members' equity, and cash flows (the “Most Recent Financial
Statements”) as of and for the seven months ended November 30, 2000 (the “Most Recent Month End”) for
Connaissance.  The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, present
fairly the financial condition of Connaissance as of such dates and the results
of its operations for such periods; provided, however, that the Most Recent
Financial Statements are subject to normal year-end adjustments (which will not
be material individually or in the aggregate) and lack footnotes and other
required disclosures.

(f)       Events
Subsequent to Most Recent Fiscal Year End.  To the knowledge of Seller, since the Most Recent Fiscal Year End
there has been no material adverse changes in the business, financial
condition, operations, results of operations, or future prospects of
Connaissance.

(g)      Undisclosed Liabilities.  To the knowledge of Seller, Connaissance has
no Liabilities, except for (1) Liabilities set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) and (2) Liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary Course
of Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).

(h)      Legal Compliance. To the knowledge of
Seller, Connaissance is in compliance with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), or that any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.

(i)       Tax Matters.

(1)      Connaissance has filed
all Tax Returns that it was required to file. 
All such Tax Returns were correct and complete in all respects.  All Taxes shown on any such Tax Return as
owed by Connaissance have been paid. Connaissance currently is not the
beneficiary of any extension of time within which to file any Tax Return.  No claim has ever been made by an authority
in a jurisdiction where Connaissance does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction.

(2)      Connaissance has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
member, or other third party.

(3)      Seller as the member of
Connaissance responsible for Connaissance Tax matters does not expect any
authority to assess any additional Taxes for any period for which Tax Returns
have been filed.  To the best of
Seller’s knowledge as Tax matters member of Connaissance, there is no dispute
or claim concerning any Tax Liability of Connaissance claimed or raised by any
authority. Seller Disclosure Schedule lists all federal, state, local, and
foreign income Tax Returns filed with respect to Connaissance for taxable periods
ended on or after April 30, 2000, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. Seller has delivered to Buyer correct and complete copies of all federal
income Tax Returns, examination reports, and statements of deficiencies
assessed against or agreed to by Connaissance since April 30, 2000.

(4)      To the best of Seller’s
knowledge as Tax matters member of Connaissance, Connaissance has not waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.

(5)      To the best of Seller’s knowledge as Tax
matters member of Connaissance, Connaissance is not a party to any Tax
allocation or sharing agreement. Connaissance (A) has not been a member of an
Affiliated Group filing a consolidated federal income Tax Return or (B) has no
Liability for the Taxes of any Person (other than Connaissance) under Treas.
Reg. §1.1502–6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.

(j)       Employee Benefit Plans.  Seller has no knowledge of any liability
that Connaissance has incurred or will incur after Closing as a successor
employer to Seller with respect to any employee benefit plan within the meaning
of ERISA in which Connaissance has been treated together with Seller or Norstan
as a single employer within the meaning of section 414(b), (c), (m) or (o) of
the Code.

(k)      Employment Matters.  To the knowledge of Seller, Connaissance has
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries, and other payments to employees of Connaissance; and neither
Seller nor Norstan nor Connaissance is liable for any arrears of wages or any
taxes or any penalty for failure to comply with any of the foregoing.  Connaissance is not liable for any payment
to any trust or other fund or to any governmental or administrative authority,
with respect to unemployment compensation benefits, social security or other
benefits or obligations for employees (other than routine payments to be made
in the normal course of business and consistent with past practice).  Connaissance is not a party to any
collective bargaining agreement or other labor union contract nor does Seller
have any knowledge of any activities or proceedings of any labor union to
organize any such employees.  To the
best of Seller’s knowledge, Connaissance is in compliance in all material
respects with all currently applicable laws and regulations respecting
employment, discrimination in employment, terms and conditions of employment,
wages, hours and occupational safety and health and employment practices, and
is not engaged in any unfair labor practice.

          5.       Post-Closing Covenants.  The parties agree as follows with respect to
the period following the Closing:

(a)      Income Tax Returns.  Buyer and L&A, the only members of
Connaissance immediately after the Closing, shall be responsible for the
preparation and filing of all Tax Returns of Connaissance due to be filed after
the Closing, including without limitation, the federal income Tax Return of
Connaissance for the period from May 1, 2000 through the effective date of the
Closing (the “Short Period Return”), subject to Norstan's right to review the
Short Period Return prior to its filing and provide its consent thereto which
shall not be withheld unreasonably. 
Seller hereby consents to Connaissance making an election under section
754 of the Code with respect to the purchase and sale of the Purchased Interest
pursuant to this Agreement on the Short Period Return if such election is
deemed advisable by Connaissance at the time of filing the Short Period Return.

(b)      Corrective Income Allocation.  Seller hereby agrees (without any further
act or agreement required by Seller) and Buyer agrees to cause L&A to
authorize: (1) the allocation of Loss for the Fiscal Year (as defined in the
MCA) ending April 30, 2000 entirely to Seller, and (2) with respect to the
Short Period Return, a special allocation of Profits (as defined in the MCA),
income, gain and items thereof to Seller to the extent necessary to offset that
portion of the allocation of Loss to Seller for the Fiscal Year ending April
30, 2000 that was in excess of the allocation of such Loss to Seller if it had
been made in proportion to Seller's Percentage Interest (as defined in the
MCA).  This §5(b)
shall be treated as an amendment of the MCA.

(c)      General. 
In case at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other party reasonably may request, all at
the sole cost and expense of the requesting party. Seller acknowledges and
agrees that from and after the Closing Buyer will be entitled to possession of
all documents, books, records (including Tax records), agreements, and
financial data of any sort relating to Connaissance .

(d)      Litigation Support.  In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(1) any transaction contemplated under this Agreement or (2) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Connaissance, each of the other parties will
cooperate with him or it and its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending party.

(e)      Transition.  Seller will not take any action that is designed or intended to
have the effect of discouraging any lessor, licensor, customer, supplier, or
other business associate of Connaissance from maintaining the same business
relationships with Connaissance after the Closing as it maintained with
Connaissance prior to the Closing. Seller will refer all customer inquiries
relating to the businesses of Connaissance to Buyer from and after the Closing.

(f)       Confidentiality.  Seller will treat and hold as such all of the Confidential
Information, refrain from using any of the Confidential Information except in
connection with this Agreement, and deliver promptly to Buyer or destroy, at
the request and option of Buyer, all tangible embodiments (and all copies) of
the Confidential Information which are in its possession.  In the event that Seller is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, Seller will notify Buyer
promptly of the request or requirement so that Buyer may seek an appropriate
protective order or waive compliance with the provisions of this §5(f).  If, in the absence of a protective order or
the receipt of a waiver hereunder, Seller is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else
stand liable for contempt, Seller may disclose the Confidential Information to
the tribunal; provided, however, that the disclosing Seller shall use its
reasonable best efforts to obtain, at the reasonable request of Buyer, an order
or other assurance that confidential treatment will be accorded to such portion
of the Confidential Information required to be disclosed as Buyer shall
designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure.

(g)      Tenant Obligations.  On or before the 30th day following the
execution and delivery of this Agreement by the parties, Buyer shall cause
Connaissance to enter into an agreement providing for reimbursement to Seller
or Norstan, whichever is applicable, for any office or other space leased by
Seller or Norstan and currently occupied by Connaissance on the same basis that
Connaissance is being charged for such space prior to the Closing, such
reimbursement to continue for the remainder of each applicable lease term.

          6.       Conditions to
Obligation to Close.

          (a)      Conditions to Obligation of Buyer.  The obligation of Buyer to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:

(1)      The representations and
warranties set forth in §3(a) and §4 shall be true and correct in all material
respects at and as of the Closing Date;

(2)      Each of Seller and
Norstan shall have performed and complied with all of their covenants hereunder
in all material respects through the Closing;

(3)      No action, suit, or
proceeding shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of Buyer to own the Purchased Interest and to
control Connaissance, or (D) affect adversely the right of Connaissance to own
its assets and to operate its businesses (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);

(4)      Each of Seller and
Norstan shall have delivered to Buyer a certificate of a duly authorized
officer to the effect that each of the foregoing conditions is satisfied in all
respects;

(5)      Buyer shall have received from counsel to
Seller an opinion in form and substance as set forth in Exhibit E attached
hereto, addressed to Buyer, and dated as of the Closing Date;

(6)      On or before noon on
February 2, 2001 Seller shall have received or waived receiving the consent of
its principal lender as a condition to Seller’s and Norstan’s obligations
pursuant to §6(b)(5); and

(7)      All actions to be taken
by Each of Seller and Norstan in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions contemplated hereby
will be reasonably satisfactory in form and substance to Buyer.

Buyer may waive any condition in this §6(a)
if it executes a writing so stating at or prior to the Closing.

          (b)      Conditions to Obligation of Seller and Norstan.
The obligation of each of Seller and Norstan to consummate the transactions to
be performed by them in connection with the Closing is subject to satisfaction
of the following conditions:

(1)      The representations and
warranties set forth in §3(b) shall be true and correct in all material
respects at and as of the Closing Date;

(2)      Buyer shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing;

(3)      No action, suit, or
proceeding shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in
effect);

(4)      Buyer shall have
delivered to Seller a certificate of Buyer to the effect that each of the
foregoing conditions is satisfied in all respects;

(5)      Seller shall have
received from counsel to Buyer an opinion in form and substance as set forth in
Exhibit F attached hereto, addressed to Seller, and dated as of the Closing
Date; and

(6)      All actions to be taken
by Buyer in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller.

Each of Seller and Norstan may waive any condition
specified in this §6(b) if it executes a writing so stating at or prior
to the Closing.

          7.       Condition to Effectiveness of Agreement.  The
consent of Norstan's principal lender to
the transactions contemplated by this Agreement is a condition precedent to its
effectiveness and enforceability.  In
the event that such consent is not obtained on or before February 2, 2001, this
Agreement shall not become effective or enforceable, and within five days
thereafter, the escrow agent referred to in §2(d) shall release to the parties
the documents and funds held in the escrow account in compliance with the terms
of the Escrow Agreement.  Upon receipt
of the $3 million cash refunded from the escrow account, Buyer shall
immediately repay Buyer's $2.5 million loan from Connaissance.

          8.       Survival and Construction
of Representations and Warranties.

          (a)      Survival. 
All of the representations and warranties of parties contained in this
Agreement shall survive the Closing hereunder and continue in full force and
effect for a period of one year thereafter.

          (b)      Construction.  The parties intend that each representation and warranty
contained herein shall have independent significance.  If any representation or warranty contained herein is not true in
any respect, the fact that there exists another representation or warranty
relating to the same subject matter (regardless of the relative levels of
specificity) which remains true shall not detract from or mitigate the fact
that the first representation or warranty is not true.

          9.       Miscellaneous.

          (a)      Nature of Certain Obligations.  Seller shall be jointly and severally liable
for any Adverse Consequences to Buyer resulting from any breach of any covenant
any false respresentation or warranty made by Seller or Norstan pursuant to
this Agreement

          (b)      Press Releases and Public Announcements.  Except as required by law or pursuant to the
rules of the Nasdaq stock market, no party shall issue any press release or
make any public announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of both of Buyer and
Seller.

          (c)      No Third-Party Beneficiaries. This
Agreement shall not confer any rights or remedies upon any Person other than
the parties and their respective successors and permitted assigns.

          (d)      Entire Agreement. This Agreement
(including the documents referred to herein) constitutes the entire agreement
among the parties and supersedes any prior understandings, agreements, or
representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof.

          (e)      Succession
and Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties named herein and their respective successors and
permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of Buyer and Seller; provided, however, that Buyer may (1) assign any or all of
its rights and interests hereunder to one or more of its Affiliates and (2) designate
one or more of its Affiliates to perform its obligations hereunder (in any or
all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).

          (f)       Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together will constitute one and the same instrument.

          (g)      Headings. The section headings contained
in this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement.

          (h)      Notices. All notices, requests, demands,
claims, and other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be deemed duly
given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed to the
intended recipient as set forth:

 

	 

  	

If to Seller or Norstan:

  	

Copies to:

  
	 

  	 

  	 

  
	 

  	

Richard Cohen

  	

Jerry P. Lehrman

  
	 

  	

Norstan, Inc.

  	

Norstan, Inc.

  
	 

  	

Chief Financial Officer

  	

5101 Shady Oak Road

  
	 

  	

5101 Shady Oak Road

  	

Minnetonka, MN 55343

  
	 

  	

Minnetonka, MN 55343

  	

Tel. 952-352-4075

  
	 

  	

Tel. 952-352-4340

  	

Fax 952-352-4907

  
	 

  	

Fax 952-352-____

  	 

  
	 

  	 

  	

Philip J. Tilton

  
	 

  	 

  	

Maslon Edelman Borman & Brand

  
	 

  	 

  	

3300 Wells Fargo Center

  
	 

  	 

  	

90 South Seventh Street

  
	 

  	 

  	

Minneapolis, MN 55402

  
	 

  	 

  	

Tel. 612-672-8200

  
	 

  	 

  	

Fax 612-672-8397

  
	 

  	 

  	

Email: philip.tilton@maslon.com

  
	 

  	 

  	 

  
	 

  	

If to Buyer:

  	

Copy to:

  
	 

  	 

  	 

  
	 

  	

Jeffrey A. Lusenhop

  	

Gordon F. Litt

  
	 

  	

C/o Lusenhop & Associates, Inc.

  	

Bricker & Eckler LLP

  
	 

  	

8101 North High Street, Suite 180

  	

100 South Third Street

  
	 

  	

Columbus, Ohio 43235

  	

Columbus, Ohio 43215

  
	 

  	

Tel. 614-825-7701

  	

Tel. 614-227-2305

  
	 

  	

Fax 614-825-7801

  	

Fax 614-227-2390

  
	 

  	

Email: jlusenhop@connaissance

  	

Email: glitt@bricker.com

  
	 

  	

consulting.com

  	 

  

Any party may send any notice, request, demand, claim,
or other communication hereunder to the intended recipient at the address set
forth  using any other means (including
personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless
and until it actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.

          (i)       Governing Law. This Agreement shall be
governed by and construed in accordance with the domestic laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Delaware.

          (j)       Amendments and Waivers. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by Buyer and Seller. No waiver by any party of any
default,  misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.

          (k)      Severability.  Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

          (l)       Expenses. 
Each of the parties, will bear its own costs and expenses (including
legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby. The parties agree that Connaissance has borne
or will bear none of the parties' costs and expenses (including any of their
legal fees and expenses) in connection with this Agreement or any of the  transactions contemplated hereby.

          (m)     Incorporation of Exhibits, Annexes, and Schedules.
The Exhibits and schedules identified in this Agreement are incorporated herein
by reference and made a part hereof.

          (n)      Specific Performance. Each of the parties
acknowledges and agrees that the other parties would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the parties agrees that the other parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the parties and the matter, in
addition to any other remedy to which they may be entitled, at law or in
equity.

Signatures

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

 

	

 
  /s/Jeffrey A. Lusenhop

  
  

  

  	

Executed January 30, 2001

  
	

Jeffrey A. Lusenhop

  	 

  
	 
  	 
  
	

NORSTAN, INC.,

  	 

  
	

a Minnesota corporation

  	 

  
	

Solely with respect to the Loan Rights
  being conveyed

  	 

  
	 

  	 

  
	

By: /s/ Scott Christian

  
  

  

  	

Executed January 30, 2001

  
	

Title: CFO

  
  

  

  	 

  
	 
  	 
  
	

NORSTAN COMMUNICATIONS, INC.,

  	 

  
	

a Minnesota corporation

  	 

  
	

By: /s/ Scott Christian

  
  

  

  	

Executed January 30,2001

  
	

Title: CFO

  
  

  

  	 

  

 

Exhibits A

Buyer Notes

Exhibit A1 –Buyer
$1,000,000 Note

Exhibit A2 –Buyer
$12,000,000 Note

Exhibits B

Security Agreements

Exhibit B1 – Assignment the Put and Security Agreement
(regarding the Buyer $1,000,000 Note)

Exhibit B2 – Intercreditor Agreement (regarding the
Buyer $1,000,000 Note)

Exhibit B3 – (regarding the Buyer $12,000,000 Note)

Exhibit C

Allocation of Purchase Price

Exhibit D

Financial Statements

Exhibit E

Buyer Legal Opinion

1.       Buyer is of legal age and
competency to execute and deliver the Agreement and perform its obligations
thereunder.

2.       Each of the Agreement,
the Buyer Notes and the Security Agreements has been duly authorized, executed
and delivered by Buyer

3.       Each of the Agreement,
the Buyer Notes and the Security Agreements constitutes a legal, valid and
binding obligation of Buyer enforceable against it in accordance with its terms
except as provided below, except as the enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

4.       The execution and
delivery of, and the performance of its obligations at the Closing under, each
of the Agreement, the Buyer Notes and the Security Agreements by Buyer do
not:  (a) violate any order, judgment or
decree of any court or governmental agency in effect and known by us to which
Buyer is party; (b) violate any law of the United States or of the States of
Ohio or Delaware, or any regulation thereunder, which is presently in effect
and to which Buyer is subject; or (c) result in material breach of or
constitute a default under any loan agreement, indenture, note, evidence of
indebtedness, mortgage, bond, debenture, or other agreement or instrument known
to us, which breach or default would adversely affect the validity or
enforceability of Buyer's obligations under the Agreement.

5.       No authorization or
approval of, or filing with, any governmental agency of the United States or of
the States of Ohio or Delaware which has not been obtained or made is necessary
for the execution and delivery of, and performance of its obligations at the
Closing under, each of the Agreement, the Buyer Notes and the Security
Agreements by Buyer.

Exhibit F

Seller Legal Opinion

1.             
Each of Seller and Norstan is duly incorporated
and validly existing and in good standing under the laws of the State of
Minnesota.  Connaissance is a limited
liability company duly formed, validly existing  and in good standing under the laws of the State of Minnesota.

2.             
The Agreement has been duly authorized,
executed and delivered by each of Seller and Norstan.

3.             
The Agreement constitutes the legal,
valid and binding obligation of each of Seller and Norstan enforceable against
it in accordance with its terms except as the enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

4.             
The execution and delivery of, and the
performance of its obligations at the Closing under, the Agreement by each of
Seller and Norstan do not:  (a) violate
any provision of its articles of incorporation, as amended, or the bylaws, as
amended,; (b) violate any order, judgment or decree of any court or
governmental agency in effect and known by us to which it is party; (c) violate
any law of the United States or of the State of Minnesota, or any regulation
thereunder, which is presently in effect and to which it is subject; or (d)
result in material breach of or constitute a default under any loan agreement,
indenture, note, evidence of indebtedness, mortgage, bond, debenture, or other
agreement or instrument known to us, which breach or default would adversely affect
the validity or enforceability of its obligations under the Agreement.

5.             
No authorization or approval of, or
filing with, any governmental agency of the United States or of the State of
Minnesota which has not been obtained or made is necessary for the execution
and delivery of, and performance of its obligations at the Closing under, the
Agreement by either Seller or Norstan.

EXHIBIT G

Escrow Agreement (if applicable pursuant to §2(d))Exhibit 10.1

                                Mark L. Galligan
         Hunters Ridge, P.O. Box 39, Creemore, Ontario, Canada LOM 1GO
                       705 466 3635 (T) 705 466 2397 (F)
                                mlg@bconnca.net

January 1, 2000

Dr. Peter G. Donnelly
56B Washington Crescent
Elliot Lake Ontario
P5A 2S4

RE: Definitive Term Sheet for Position of Director of Client Services: PSITEK
Inc. / CareerTek.org Inc.

VIA Hand Delivery

Dear Dr. Donnelly:

The purpose of this letter is to set forth and confirm the specific terms
and conditions of your full time employment contract. If you accept this
proposal, PSITEK Inc. / CareerTek.org. (the "Company") will appoint you,
Director of Client Services.

Job Description: Director of Client Services

1.       Responsibilities:
        o        Develop and Create Psychometric Screening Software Program(s).
                 These programs will be the property of the Company and will
                 represent the key product and service sold by the Company.
        o        Develop and maintain a statistical infrastructure to support
                 the Company's products.
        o        Manage, Audit, Monitor the products Sold and Marketed by the
                 Company.
        o        Manage 24/7 Web Site Results Processing Operations
        o        Recruit, Train, and Supervise additional Professional
                 Psychologists and support staff.
        o        Develop, Create, and Produce materials to support sales and
                 marketing of the Company's three key Branded products: jobFit,
                 careerFit, studentFit, and their sub-Brand(s). Attend to
                 Marketing Presentations when necessary.
        o        Operate within established budgetary parameters.
        o        File monthly result reports on appropriate topics and
                 activities.
        o        File monthly summary reports for presentation to Executive
                 Committee or Board of Directors.
        o        From a team - centered concept, assist all Company employees in
                 creating a value centered workplace where employees, managers,
                 and shareholders will participate in the personal and financial
                 rewards wrought by outstanding performance.
        o        Provide training, mentoring, and instruction to employees when
                 necessary.
        o        Manage Product Development Projects
        o        Manage the security, utilization, and applications of the
                 Company's database.
        o        Integrate it systems and reports.
        o        Represent the Company in Professional Environs and Conferences.
        o        Manage and conduct quality control reviews of on line products.

2.       Compensation:
        o        Base Salary: $5,000.00 per month paid on the first business day
                 of the month:
        o        Escalations in Salary: Concurrent with the successful
                 completion of an Initial Public Offering an increase in monthly
                 salary to: $12,000.00.
        o        Vesting of "Special" Shares Program: The unconditional vesting
                 of 250,000 of those shares designated by the Company as
                 "Special Shares" providing for the delivery of Common Shares to
                 the Holder of the Special Shares, based upon published table of
                 fully diluted earnings EBIT.
        o        Annual Anniversary Share Bonus: 25,000 Common Shares
                 (Unrestricted)
        o        Additional Share, Cash Incentive, or Option Plan Bonuses per
                 programs instituted by Board Of Directors
        o        Vacation Policy: Four weeks of paid vacation each calendar
                 year, which vacation weeks shall not accumulate beyond and
                 eighteen month period, and which vacation is intended to be
                 utilized in two week intervals.
        o        Individual and dependent Group Insurance Benefits as approved
                 by the Board of Directors.

3.       Term: Three (3) Years
4.       Initiation Date: Upon Acceptance

Confirm your acceptance of the Company's proposal of this full time Employment
Contract by singing below.

Sincerely,
  /s/ Mark L. Galligan                              /s/ Peter G. Donnelly
      Mark L. Galligan                                  Peter G. Donnelly
      CEO & Director

D. Gordon Badger

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