EXHIBIT 2.1
STOCK FOR STOCK EXCHANGE AGREEMENT
THIS STOCK FOR STOCK EXCHANGE AGREEMENT ("Agreement") is made and entered
into as of the 12th day of May 2004, by and among Xxxxx X. Xxxxxxx ("Xxxxxxx"),
Xxxxx X. Xxxxx ("Xxxxx"), Xxxxxxxx X. Xxxxxxx ("Xxxxxxx"), Xxxx X. Xxxxxx
("Xxxxxx") (collectively "Buyers") and Cognigen Networks, Inc., a Colorado
corporation ("Cognigen").
A. WHEREAS, the Buyers own certain shares of the issued and outstanding
common stock of Cognigen and collectively desire to transfer a portion of such
shares totaling 800,000 ("Cognigen Shares") to Cognigen in the following
respective amounts:
Xxxxxxx 216,667
Xxxxx 216,667
Einkauf 216,666
Xxxxxx 150,000;
B. WHEREAS, in exchange for the Cognigen Shares, the Buyers desire to
receive from Cognigen all of the issued and outstanding shares ("CST Shares") of
Cognigen Switching Technologies, Inc., a California Corporation ("CST"), a
wholly owned subsidiary of Cognigen, and Cognigen desires to effectuate such
exchange, on the terms and subject to the conditions contained herein; and
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises made herein and in consideration of the covenants, representations,
warranties and conditions set forth herein, the receipt and sufficiency of which
are hereby acknowledged, the Parties, intending to be legally bound, agree as
follows:
ARTICLE 1.
EXCHANGE OF COGNIGEN SHARES FOR CST SHARES
------------------------------------------
1.1. Exchange of Cognigen Shares for CST Shares. Subject to the terms and
conditions of this Agreement, the Buyers hereby agree to transfer to Cognigen
the Cognigen Shares and, in exchange therefore, Cognigen hereby agrees to
transfer the CST Shares to the Buyers. The CST Shares shall be transferred to
the Buyers and new shares registered as follows:
Xxxxxxx 4,344
Xxxxx 4,344
Einkauf 4,344
Xxxxxx 3,010
1.2. Issuance of Cognigen Warrants. As additional consideration for the
Cognigen Shares, at Closing (as hereinafter defined) Cognigen shall deliver to
the Buyers executed warrants to acquire common stock of Cognigen (collectively,
"Warrants"), in the form attached hereto as Exhibit A and incorporated herein by
this reference, pursuant to which agreements the Buyers will be granted
collectively the right to acquire 200,000 shares of Cognigen common stock for a
period of five (5) years at a price equal to the average of the closing prices
for Cognigen common stock for the twenty (20) trading days prior to the Closing.
The Warrants shall be granted to the Buyers in the following respective amounts:
Xxxxxxx 54,167
Xxxxx 54,167
Einkauf 54,166
Xxxxxx 37,500
ARTICLE 2.
CLOSING
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2.1. The Closing. Subject to the conditions precedent contained herein, the
exchange provided for in this Agreement ("Closing") shall take place at the
offices of Reitner & Stuart, 0000 Xxxxx Xxxxxx, Xxx Xxxx Xxxxxx, Xxxxxxxxxx, at
1:00 p.m. (local time) on (i) the business day upon which all of the conditions
in Sections 6.1, 6.2 and 7.7 have been satisfied or waived, or (ii) such other
date and time as is mutually agreed to by the Buyers and Cognigen ("Closing
Date"). If such Closing has not occurred by May 21, 2004, this Agreement shall
automatically terminate unless mutually extended in writing.
ARTICLE 3.
DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
3.1. Documents to Be Delivered to Cognigen. At the Closing, the following
shall be delivered to Cognigen:
a. Duly executed originals of the share certificates and stock powers
representing the Cognigen Shares, together with such signatures guaranteed
by a member of the Medallion Signature Guarantee Program, as necessary, to
transfer the ownership rights therein to Cognigen;
b. A certificate executed by the Buyers dated as of the Closing Date
certifying that each of the respective representations and warranties of
the Buyers contained in this Agreement are then true and correct to the
best of their knowledge and belief, that the respective Buyers have
complied with all agreements and conditions required of each of them by
this Agreement and all related agreements to be performed or complied with
by them as of the Closing Date; and
c. A fully executed original of the Master Services Agreement (as
hereinafter defined) in the form attached hereto as Exhibit B.
d. Such documentation as Cognigen may reasonably require to evidence
the cancellation of all incentive stock options granted by Cognigen to any
current CST employee.
3.2. Documents to Be Delivered to the Buyers. At the Closing, the following
shall be delivered to the Buyers:
a. The CST Shares in accordance with Section 1.1 above;
b. A certificate executed by an authorized officer of Cognigen dated
as of the Closing Date certifying that each of the representations and
warranties of Cognigen contained in this Agreement are then true and
correct to the best of their knowledge and belief and that Cognigen has
complied with all agreements and conditions required by this Agreement and
all related agreements to be performed or complied with by it as of the
Closing Date;
c. Written consents of all lessors, financial institutions and
creditors of Cognigen or CST and any other third parties or governmental
entities necessary to complete the transactions herein contemplated;
d. The Warrants as set forth in section 1.2 above;
e. A fully executed original of the Master Services Agreement in the
form attached hereto as Exhibit B; and
f. A new promissory note ("Promissory Note") from CST to Sprint
restructuring the current debt owed by CST to Sprint with a new principal
amount of $210,000 and an interest rate of 6.5% per annum (18% in the event
of default). The Promissory Note will be payable in 23 equal payments of
$4,000 per month of principal and interest and will have a balloon payment
for the balance of principal and interest due on the 24th payment date. The
Promissory Note will be a collateralized by all of CST's assets and
proprietary accounts. The debt evidenced by the Promissory Note will be
guaranteed severally by the Buyers in the amount of $10,000 each with such
guaranties to be released after payment by CST of $100,000.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
--------------------------------------------
4.1. Representations and Warranties of Certain of the Buyers. The Buyers in
their individual capacities, as a material inducement to Cognigen to enter into
this Agreement, hereby jointly and severally represent and warrant to Cognigen
that the following statements are true and correct as of the date hereof and
will be true and correct through the Closing of the exchange of the Cognigen
Shares for the CST Shares as if made on the Closing Date. These representations
and warranties may be relied upon fully by Cognigen and/or any assigns.
a. Buyers are, and will be on the Closing Date, the sole record and
beneficial owners and Buyers of the Cognigen Shares set forth in Recital A
as being owned by them, which shares are free and clear of all liens,
claims, rights or other encumbrances of any nature whatsoever.
b. This Agreement constitutes the legal, valid and binding obligation
of the Buyers enforceable against the Buyers in accordance with its terms.
Upon the execution and delivery by the Buyers of the closing documents
listed under Section 3.1 of this Agreement ("Buyers Closing Documents"),
such Closing Documents that are delivered by them will constitute the
legal, valid and binding obligations of the Buyers, enforceable against the
Buyers in accordance with their respective terms. The Buyers have absolute
and unrestricted right, power, capacity and authority to execute and
deliver this Agreement and the Buyer's Closing Documents that are delivered
by them, to perform their obligations under this Agreement and the Buyer's
Closing Documents that are delivered by them, and to deliver the Cognigen
Shares owned by them to Cognigen on the terms contained herein.
c. The Buyers are not insolvent and are receiving new consideration at
least equal to the full and fair value of the Cognigen Shares owned by
them.
d. No representation nor warranty by the Buyers and no statement in
the Exhibits attached hereto contains any untrue statement or omits to
state a material fact necessary to make the statements herein, in light of
the circumstances in which they were made, not misleading.
e. Each Buyer (a) understands that the CST Shares, the Warrants and
the underlying Cognigen Shares have not been, and will not be, registered
under the Securities Act of 1933 or under any state securities laws, are
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering and will contain a legend
restricting transfer; (b) is acquiring the Warrants and the underlying
Cognigen Shares being acquired by Buyer solely for Buyer's own account for
investment purposes, and not with a view to the distribution thereof; (c)
is a sophisticated investor with knowledge and experience in business and
financial matters; (d) has received certain information concerning
Cognigen, has reviewed Cognigen's reports located on the website of the
Securities and Exchange Commission (xxxx://xxx.xxx.xxx) and has had the
opportunity to obtain additional information as desired in order to
evaluate the merits and the risks inherent in holding the Warrants and
underlying Cognigen Shares; and (e) is able to bear the economic risk and
lack of liquidity inherent in holding the Cognigen Warrants and the
underlying Cognigen Shares.
f. No amounts for salary, wages, accrued vacation, accrued sick leave
or any amounts that might be due from CST or Cognigen to any employee of
CST or consultant to CST will be paid or assumed by Cognigen as of the
Closing but rather will be paid by CST and Buyers and CST will indemnify
Cognigen therefrom.
g. Within a period of three months after the Closing, the Buyers will
cause CST to change its name to delete the word "Cognigen" therefrom and
the Buyers will cause CST to no longer use the word "Cognigen" in its name
or otherwise.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF COGNIGEN
------------------------------------------
5.1. Cognigen's Representations and Warranties. Cognigen hereby represents
and warrants to the Buyers that the statements contained in this Article 5 are
true and correct as of the date of this Agreement and will be true and correct
through the Closing:
a. Cognigen is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado; is duly qualified to
transact business as a foreign corporation and is in good standing in such
states in which the conduct of its business or ownership or use of property
requires such qualification except where the failure to be so qualified
would not have a material adverse effect on the financial condition of
Cognigen; and has all corporate power necessary to engage in the business
in which it is presently engaged.
b. This Agreement constitutes the legal, valid and binding obligation
of Cognigen, enforceable against it in accordance with its terms. Cognigen
has absolute and unrestricted right, power, capacity and authority to
execute and deliver this Agreement and Cognigen's closing documents, and to
perform its obligations hereunder. Cognigen has taken all corporate action
necessary to authorize Cognigen's officers to effectuate this Agreement and
the transactions contemplated hereunder.
c. Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated (i) contravene,
conflict with, cancel, terminate, modify, result in the breach of or
accelerate the performance required by, any terms of any contract or other
agreement, (ii) result in the creation of any lien, charge or encumbrance
upon any of the properties or assets of Cognigen or CST under the terms of
any such agreement, or (iii) give any federal, state or local government or
other political subdivision or agency the right to revoke, withdraw,
suspend, cancel, terminate or modify any authorization or license that is
held by Cognigen or CST or that otherwise relates to the business of, or
any of the assets owned or used by, Cognigen or CST.
d. Cognigen does not have any knowledge of any actual, pending or
threatened claim, litigation or any other action against it that
challenges, prevents, delays, makes illegal or otherwise affects its
ability to perform its obligations under this Agreement.
e. The exchange of Cognigen Shares for CST Shares as well as the
issuance of the Warrants to be issued pursuant this Agreement will not be
undertaken in violation of the Securities Act, any blue sky statute, or any
other applicable law. Cognigen has a sufficient number of shares authorized
to issue upon exercise of the Warrants.
f. No representation nor warranty by Cognigen and no statement in the
Exhibits attached hereto contains any untrue statement or omits to state a
material fact necessary to make the statements herein, in light of the
circumstances in which they were made, not misleading.
g. Cognigen owns all of the issued and outstanding shares of common
stock in CST, which total 16,042 shares, free and clear of any lien or
encumbrance, and there are no other outstanding securities of CST, or any
outstanding options or warrants to acquire any security in CST.
ARTICLE 6.
CONDITIONS TO OBLIGATIONS OF THE PARTIES
----------------------------------------
6.1. Conditions Precedent to Obligations of Cognigen. The obligations of
Cognigen under this Agreement are subject to the fulfillment, prior to the
Closing, of the following conditions precedent (in addition to other conditions
and terms of this Agreement), unless specifically waived in writing by Cognigen
at or prior to the Closing:
a. Representations and Warranties. The representations and warranties
of the Buyers shall be in all material respects true, correct and complete
at the Closing as if made at such date and time.
b. Compliance. The Buyers shall have performed all covenants and
agreements, satisfied all conditions and complied with all other terms and
provisions of this Agreement to be performed, satisfied or complied with by
the Buyers as of the Closing.
c. No Error or Misrepresentation. Cognigen shall not have discovered
any material error, misstatement or omission in or failure of any
representation or warranty made by any of the Buyers.
d. Deliveries. The Buyers shall have on or before the Closing
delivered to Cognigen or its authorized representatives a fully executed
original of a master service agreement providing for the business
relationship of CST and Cognigen after the Closing in the form attached
hereto as Exhibit B ("Master Services Agreement").
e. Legal Matters. All legal matters in connection with this Agreement
and the consummation of all transactions herein contemplated, and all
documents and instructions delivered to Cognigen in connection herewith,
shall be reasonably satisfactory in form to Cognigen, its authorized
representatives and its counsel.
f. CST Balance Sheet Adjustments. By the Closing, all accounting
entries and inter-company adjustments of assets and liabilities between CST
and Cognigen shall have been made so that the January 31, 2004 balance
sheet of CST after giving effect to such entries and adjustments shall be
as attached hereto as Exhibit C. The Closing of the transaction
contemplated by this Agreement shall constitute an assignment and/or
assumption, as the case may be, by Cognigen and CST of the assets assigned
and liabilities assumed, as the case may be, on such Exhibit. Cognigen and
CST shall execute, whether prior to or subsequent to the Closing, such
additional documentation, if any, to acknowledge such assignments and
assumptions as may be necessary or appropriate to give legal effect to such
entries and adjustments.
6.2. Conditions Precedent to Obligations of the Buyers. The obligations of
the Buyers under this Agreement to sell, transfer, assign, convey and deliver
the Cognigen Shares to Cognigen are subject to the fulfillment, prior to or
simultaneous with the Closing, of the following conditions precedent (in
addition to other conditions and terms of this Agreement), unless specifically
waived in writing by all of the Buyers at or prior to the Closing:
a. Representations and Warranties. The representations and warranties
of Cognigen contained in this Agreement shall be in all material respects
true, correct and complete at the Closing as if made at such date and time.
b. Compliance. Cognigen shall have performed all covenants and
agreements, satisfied all conditions and complied with all other terms and
provisions of this Agreement to be performed, satisfied or complied with by
it as of the Closing.
c. No Error or Misrepresentation. The Buyers shall not have discovered
any material error, misstatement or omissions in or failure of any
representation or warranty made by Cognigen.
d. Deliveries. Cognigen shall have on or before the Closing delivered
to the Buyers the following:
(i) A fully executed original of the Master Services Agreement;
(ii) Fully executed originals of the Warrants; and
(iii) The Promissory Note.
e. Sufficient Authorized Common Stock. If necessary, Cognigen shall
have increased the number of its authorized but unissued shares of Cognigen
common stock so that it has a sufficient number of authorized but unissued
shares of common stock to issue the number of shares of Cognigen common
stock represented by the Warrants.
f. Legal Matters. All legal matters in connection with this Agreement
and the consummation of all transactions herein contemplated, and all
documents and instructions delivered to the Buyers in connection herewith,
shall be reasonably satisfactory in form to the Buyers, their authorized
representatives and their counsel.
g. CST Balance Sheet Adjustments. By the Closing, all accounting
entries and inter-company adjustments of assets and liabilities between CST
and Cognigen shall have been made so that the January 31, 2004 balance
sheet of CST after giving effect to such entries and adjustments shall be
as attached hereto as Exhibit C. The Closing of the transaction
contemplated by this Agreement shall constitute an assignment and/or
assumption, as the case may be, by Cognigen and CST of the assets assigned
and liabilities assumed, as the case may be, on such Exhibit. Cognigen and
CST shall execute, whether prior to or subsequent to the Closing, such
additional documentation, if any, to acknowledge such assignments and
assumptions as may be necessary or appropriate to give legal effect to such
entries and adjustments.
ARTICLE 7.
COVENANTS OF THE PARTIES
------------------------
The Parties agree that:
7.1. Execution of this Agreement. Prior to the Closing, the Parties hereto
will use their best efforts to cause this Agreement and all related agreements
to become effective, and all transactions herein and therein contemplated to be
consummated, in accordance with its and their terms, to obtain all required
consents, waivers and authorizations of governmental entities and other third
parties, to make all filings and give all notices to those regulatory
authorities or other third parties which may be necessary or reasonably required
in order to effect the transactions contemplated in this Agreement, and to
comply with all federal, state, local and municipal laws, rules and regulations
as may be applicable to the contemplated transactions.
7.2. Restrictive Action. The Parties each agree that the Parties will not
do any thing or act prohibited by this Agreement or any related agreement, or
fail to do any thing or act which the Parties have undertaken or promised to do
in this Agreement or any related agreement.
7.3. Operation of the Business of CST. Between the date of this Agreement
and the Closing, Cognigen and Buyers shall, and shall cause CST to:
a. conduct the business of CST consistent with past practice,
consistent with the business practices known to the Buyers and in
compliance with applicable laws;
b. not take any action except in the ordinary course of business;
c. not engage in any material transaction that would have a material
adverse effect on the business, operations, assets, financial condition or
prospects of CST, including but not limited to the issuance of any
securities of CST;
d. not amend or terminate any material contracts to which CST is a
party; and
e. use their and its reasonable best efforts to (i) preserve
substantially intact the business organization of CST, (ii) keep available
the services of the current management and employees of CST, (iii) maintain
the relations with suppliers, vendors, customers, landlords, licenses,
distributors and other persons or entities having significant business
relationships with CST, (iv) maintain comparable rates of growth in sales
and achieve growth in income consistent with past practice; and (v) pay all
accounts payable of CST in the ordinary course of business consistent with
past payment practices.
7.4 Securities and Exchange Commission Filings. Between the effective date
of this Agreement and the second yearly anniversary of the Closing, Cognigen
agrees to use its best efforts to file all reports and data with the Securities
and Exchange Commission necessary to permit the Buyers to sell any shares of
common stock issued by Cognigen upon the exercise of such Warrants pursuant to
and otherwise in conformity with Rule 144 under the Securities Act of 1933.
7.5 Reseller and PUC Licenses. Buyers agree that all Reseller Licenses or
PUC Licenses in the name of Cognigen will be retained by Cognigen.
7.6 Assignment of Global Crossing Bandwidth Inc. Services Agreement. CST
will assign its agreement with Global Crossing Bandwidth Inc. to Cognigen and
Global Crossing Bandwidth Inc. will agree to such assignment without cost to
Cognigen or CST or change in the agreement.
7.7 Sprint Carrier Agreement UUNET/MCI. CST will assist Cognigen in setting
up a new contract from Sprint to support the CogniPhone product offered by
Cognigen and in obtaining any agreements with UUNET/MCI.
7.8 Accounting for CST and Cognigen. As of February 1, 2004, the business,
operations, books and records of CST and Cognigen have been maintained as though
CST and Cognigen were separate unaffiliated businesses using the Exhibit C
balance sheet as the starting point for such separation. Neither Party shall
claim an interest in or a right to any asset (including any earnings between
February 1, 2004 and the Closing Date) reflected on the other Party's books and
records for the period between February 1, 2004, and the Closing Date nor shall
either Party assert that the other Party has assumed any liability except for
those liabilities (i) set forth on Exhibit C or (ii) otherwise expressly assumed
in writing.
ARTICLE 8.
INDEMNIFICATION PROVISIONS
--------------------------
All representations and warranties in this Agreement, or in any instrument
or document furnished transactions contemplated hereby shall survive the Closing
for a period of one (1) year. All such representations and warranties shall
expire on the first anniversary of the Closing Date, except that claims, if any,
asserted in writing prior to such first anniversary identified as a claim for
indemnification pursuant to this Article 8 shall survive until finally resolved
and satisfied in full. All covenants and agreements contained herein shall
survive until fully performed in accordance with their terms and any recoveries
from third parties.
8.1. Indemnification Provisions -Buyers' Representations, Warranties and
Covenants. The Buyers agree to indemnify Cognigen, its directors and officers
from and against the entirety of any charges, complaints, actions, suits,
damages, claims, costs, amounts paid in settlement, taxes, liens, expenses or
fees, including all attorneys' fees and costs, which Cognigen may suffer
resulting from, arising out of, relating to or caused by the breach of any of
the Buyers' representations, warranties and covenants contained in this
Agreement.
8.2. Indemnification Provisions - Cognigen's Representations, Warranties
and Covenants. Cognigen agrees to indemnify the Buyers from and against the
entirety of any charges, complaints, actions, suits, damages, claims, costs,
amounts paid in settlement, taxes, liens, expenses or fees, including all
attorneys' fees and costs, which the Buyers may suffer resulting from, arising
out of, relating to or caused by the breach of any of Cognigen's
representations, warranties and covenants contained in this Agreement.
8.3. Claims for Indemnification. In the event of the occurrence of any
event which any Party asserts is an indemnifiable event pursuant to this Article
8, the Party claiming indemnification (the "Indemnified Party") shall provide
prompt notice to the Party required to provide indemnification (the
"Indemnifying Party"), specifying in detail the facts and circumstances with
respect to such claim and the basis for which indemnification is available
hereunder. If such event involves the claim of any third party, the Indemnifying
Party shall have the right to control the defense of settlement of such claim;
provided, however, that (a) the Indemnified Party shall be entitled to
participate in the defense of such claim at its own expense, (b) the
Indemnifying Party shall obtain the prior written approval of the Indemnified
Party (which approval shall not be unreasonably withheld or delayed) before
entering into any settlement of such claim if, pursuant to or as a result of
such settlement, injunctive or other non-monetary relief would be imposed
against the Indemnified Party, (c) the Indemnifying Party shall not be entitled
to control (but shall be entitled to participate at its own expense in the
defense of), and the Indemnified Party shall be entitled to have sole control
over, and shall assume all expense with respect to the defense or settlement of
any claim to the extent such claim seeks an order, injunction or other equitable
relief against the Indemnified Party which, if successful, could materially
interfere with the business, operations, assets, condition (financial or
otherwise) or prospects of the Indemnified Party; provided that the Indemnified
Party shall provide written notice to the Indemnifying Party of its election to
assume control over the defense of such claim pursuant to this Section 8.4 if
the Indemnifying Party is entitled but fails to assume control over the defense
of a claim as provided in this Section 8.4. If the Indemnified Party assumes
control of the defense of a claim as permitted hereunder, the Indemnified Party
shall obtain the prior written approval of the Indemnifying Party (which
approval shall not be unreasonably withheld or delayed) before entering into any
settlement of such claim if, pursuant to or as a result of such settlement,
injunctive or other non-monetary relief would be imposed against the
Indemnifying Party.
In the event that the Indemnifying Party shall be obligated to indemnify
the Indemnified Party pursuant to this Article 8, the Indemnifying Party shall,
upon payment of such indemnity in full, be subrogated to all rights of the
Indemnified Party with respect to the claim to which such indemnification
relates.
8.4. Other Remedies. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory or common law remedy any
Party may have for breach of representation, warranty, covenant or contract.
ARTICLE 9.
TERMINATION OF THIS AGREEMENT
-----------------------------
9.1. Grounds for Termination. This Agreement shall terminate:
a. By mutual written consent of Cognigen and the Buyers;
b. By Cognigen or the Buyers, if all the conditions precedent to its
or their respective obligations hereunder have not been satisfied or waived
prior to or at the Closing, as it may be accelerated or extended;
c. If Cognigen or the Buyers shall have defaulted or refused to
perform in any material respect under this Agreement, or if Cognigen or the
Buyers should have reasonable cause to believe there has been a material
misrepresentation concerning, or failure or breach of, any representation
or warranty by the other, or if it appears that Cognigen or the Buyers have
committed any unlawful acts affecting the other and such default, refusal,
misrepresentation, failure, breach or unlawful act shall not have been
fully cured within 30 days from the date of delivery of written notice
specifying the alleged default, refusal, misrepresentation, failure, breach
or unlawful act; or
d. If the transactions contemplated in this Agreement and related
agreements have not been consummated by the Closing Date set forth in
Section 2.1.
9.2. Manner of Termination. Any termination of this Agreement shall be made
in accordance with the above listed grounds and, if the termination is by the
Buyers, shall be supported by a written statement signed by each of the Buyers.
Each Party's right of termination under Article 9 is in addition to any other
right it may have at law or in equity, whether for damages or specific
performance, and the exercise of a right to termination will not be deemed an
election of remedies. Written notice of termination shall be given to the other
Party as provided in Article 11, and upon receipt of such termination notice,
this Agreement shall terminate and the transactions herein contemplated shall be
abandoned without further action by the Party. On termination, each Party shall
bear their own fees, costs and expenses.
ARTICLE 10.
NECESSARY INFORMATION
---------------------
10.1. Each of the Parties hereto shall furnish to the others all
information concerning such Party (including financial statements and
statistical information) required for inclusion in any application or statement
to be filed or made by the other Party with or to any government agency or other
third Party in connection with the proposed exchange of the Cognigen Shares for
the CST Shares and the Warrants.
ARTICLE 11.
NOTICES TO PARTIES
------------------
11.1. All notices, demands, consents or requests required or authorized
hereunder, except as otherwise provide herein, shall be given in writing by
registered or certified mail, return receipt requested, or by telefax
transmission, telegram, cable, messenger or overnight courier service providing
documentation of receipt, at the address set forth below or at such other
address as any Party may designate from time to time given in accordance with
this section, and shall be effectively given when deposited in the United States
mails, postage prepaid or when otherwise received, as may be applicable:
If to Cognigen: Xx. Xxxxxx X. Xxxxx
0000 Xx. Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
If to the Buyers: Xx. Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000X
Xxx Xxxx Xxxxxx, Xxxxxxxxxx 00000
Fax No. 000-000-0000
With a copy to: Xxxx X. Xxxxxx, Esq.
Reitner & Stuart
0000 Xxxxx Xxxxxx
Xxx Xxxx Xxxxxx, XX 00000
Fax No. 000-000-0000
ARTICLE 12.
NO FINDERS
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12.1. Representations and Indemnification by the Buyers. Each of the Buyers
represents and warrants to Cognigen that each has not employed and does not
intend to employ any person on his or its behalf as a finder in connection with
the transactions herein contemplated and the Buyers jointly and severally agree
to indemnify Cognigen against any liability arising from the claims of any
persons claiming to have acted as finders or brokers and against any other
damages suffered as a consequence of the falsity or breach of this Section 12.1.
12.2. Representations and Indemnification by Cognigen. Cognigen represents
and warrants to the Buyers that Cognigen has not employed and does not intend to
employ any person on its behalf as a finder in connection with the transactions
herein contemplated and agrees to indemnify the Buyers against any liability
arising from the claims of any persons claiming to have acted as finders or
brokers and against any other damages suffered as a consequence of the falsity
or breach of this Section 12.2.
ARTICLE 13.
FEES AND EXPENSES
-----------------
13.1. Each Party shall bear its own legal fees and other expenses
associated with this Agreement and the transactions contemplated hereby, and, in
particular, (i) all fees incurred by each of the individual Buyers shall be the
sole responsibility of the individual Buyer incurring such costs and (ii) all
fees and expenses incurred by Cognigen shall be the responsibility of Cognigen.
ARTICLE 14.
MISCELLANEOUS PROVISIONS
------------------------
14.1. Effectiveness. Subject to the satisfaction of the conditions set
forth in Sections 6.1, 6.2 and 7.7, this Agreement shall be effective at
midnight on January 31, 2004. This Agreement shall be binding when signed by all
Parties hereto.
14.2. Amendment. This Agreement maybe amended, modified or supplemented
only by an instrument in writing executed by the Parties hereto.
14.3. Assignment. Neither this Agreement nor any right created hereby or in
any agreement entered into in connection with the transactions contemplated
hereby shall be assignable by any Party hereto without the written consent of
the Party not seeking assignment.
14.4. Parties in Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the Parties hereto. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any person not a Party hereto or thereto any rights or remedies herein or
thereunder.
14.5. Entire Agreement. This Agreement and the agreements contemplated
hereby constitute the entire agreement of the Parties regarding the subject
matter hereof and supersede all prior agreements and understandings both written
and oral, among the Parties or any of them, with respect to the subject matter
hereof.
14.6. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provisions shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provisions never comprised a part hereof and the remaining provisions hereof
shall remain in full force and effect. Furthermore, in lieu of such illegal,
invalid or unenforceable provision, there shall be added automatically as a part
of this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provisions as may be possible and as may be legal, valid and
enforceable.
14.7. Survival. The respective agreements, representations, warranties,
covenants and other statements of the Parties set forth in this Agreement and in
any certificate, Exhibit, schedule or other instrument attached hereto or
delivered by or on behalf of the Buyers or Cognigen, as the case may be, shall
survive and remain in full force and effect after the Closing Date hereof,
notwithstanding any provisions in this Agreement to the contrary.
14.8. Waiver. The failure of any Party to insist upon the strict
performance of any of the provisions of this Agreement shall not be considered
as a waiver of any such subsequent default of the same or similar nature.
14.9. Governing Law and Choice of Forum. This Agreement and the rights and
obligations of any Party hereto shall be governed by and construed and enforced
in accordance with the substantive laws of the State of California. The Parties
agree that the exclusive judicial forums shall be the Superior Court of the
County of San Xxxx Obispo in the State of California and the United States
District Court having jurisdiction over matters in San Xxxx Obispo County,
California.
14.10. Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise effect any of the terms or
provisions hereof.
14.11. Gender and Number. When the context requires, the gender of all
words used herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural.
14.12. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed a original, and all of which
together shall constitute one and the same instrument. Execution and delivery of
this Agreement by exchange of facsimile copies bearing facsimile signatures of a
Party shall constitute a valid and binding execution and delivery of this
Agreement. Such facsimile copies shall constitute enforceable original
documents.
14.13. Prevailing Party Clause. In the event of any litigation arising as a
result of breach of this Agreement or failure to perform hereunder or failure of
any representation or warranty herein, the Party or Parties prevailing in such
dispute shall be entitled to collect the costs of such dispute, including
reasonable attorneys' fees or costs, from the Party or Parties not prevailing.
14.14. Specific Performance. Each of the Parties acknowledge that, in view
of the uniqueness of their respective businesses and the transactions
contemplated in this Agreement, each Party would not have an adequate remedy at
law for money damages in the event that this Agreement has not been performed in
accordance with its terms, and therefore, Cognigen and the Buyers respectively
agree that the other shall be entitled to specific performance of the terms
hereof in addition to any other remedy to which it may be entitled at law or in
equity.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
the day and the year first above written.
BUYERS COGNIGEN NETWORKS, INC.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxx, President
------------------------------------ ---------------------------------
Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxx, President
/s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
EXHIBIT A
STOCK PURCHASE WARRANT
To Subscribe for and Purchase
Common Stock
of
COGNIGEN NETWORKS, INC.
THIS CERTIFIES THAT, for value received, ("Purchaser"), or
------------
its registered assigns, is entitled to subscribe for and purchase from Cognigen
Networks, Inc. ("Company"), a corporation organized and existing under the laws
of the State of Colorado, at the price specified below (subject to adjustment as
noted below) at any time after the date hereof to and including January 31, 2009
(the "Expiration Date") ( ) fully paid and nonassessable shares
------------ ----
of the Company's $0.001 par value common stock ("Common Stock") (subject to
adjustments as noted below) ("Warrant") and if held by more than one person
("Warrants"). The Warrant exercise price shall be $ per share of
-------
Common Stock ("Exercise Price").
This Warrant is subject to the following provisions, terms and conditions:
1. The rights represented by this Warrant may be exercised by the holder
hereof, in whole or in part, by written notice of exercise delivered to the
Company 20 days prior to the intended date of exercise and by the surrender of
this Warrant (properly endorsed if required) at the principal office of the
Company and upon payment to it by official bank check of the purchase price for
such shares. The Company agrees that the shares so purchased shall be and are
deemed to be issued to the holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. Subject to the
provisions of the next succeeding paragraph, certificates for the shares of
stock so purchased shall be delivered to the holder hereof within a reasonable
time, not exceeding 10 days, after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be delivered to the holder hereof
within such time.
2. Notwithstanding the foregoing, however, the Company shall not be
required to deliver any certificate for shares of Common Stock upon exercise of
this Warrant except in accordance with the provisions, and subject to the
limitations, of paragraph 5 hereof.
3. The Company represents and warrants that this Warrant has been duly
authorized by all necessary corporate action, has been duly executed and
delivered and is a legal and binding obligation of the Company. The Company
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant according to the terms
hereof will, upon issuance, be duly authorized and issued, fully paid and
nonassessable. The Company further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized, and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant,
a sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
4. This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company.
5. The holder of this Warrant, by acceptance hereof, agrees to give written
notice to the Company before transferring this Warrant or transferring any
Common Stock issuable or issued upon the exercise hereof of such holder's
intention to do so, describing briefly the manner of any proposed transfer of
this Warrant or such holder's intention as to the disposition to be made of
shares of Common Stock issuable or issued upon the exercise hereof. Such holder
shall also provide the Company with a counsel's opinion satisfactory to the
Company to the effect that the proposed transfer of this Warrant or disposition
of shares of Common Stock may be effected without registration or qualification
(under any federal or state law) of this Warrant or the shares of Common Stock
issuable or issued upon the exercise hereof. Upon receipt of such written notice
and opinion by the Company, such holder shall be entitled to transfer this
Warrant, or to exercise this Warrant in accordance with its terms and dispose of
the shares of Common Stock received upon such exercise or to dispose of shares
of Common Stock received upon the previous exercise of this Warrant, all in
accordance with the terms of the notice delivered by such holder to the Company,
provided that an appropriate legend respecting the aforesaid restrictions on
transfer and disposition may be endorsed on this Warrant or the certificates for
such shares of Common Stock.
6. Subject to the provisions of paragraph 5 hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, at the principal office
of the Company by the holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that the bearer of
this Warrant, when endorsed, may be treated by the Company and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented by this Warrant, or to
the transfer hereof on the books of the Company, any notice to the contrary
notwithstanding; but until such transfer on such books, the Company may treat
the registered holder hereof as the owner for all purposes.
7. This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed for and purchased hereunder,
each of such new Warrants to represent the right to subscribe for and purchase
such number of shares of Common Stock as shall be designated by said holder
hereof at the time of such surrender.
8. The Company covenants that:
(a) All shares of Common Stock that may be issued and delivered to a
holder upon the exercise of this Warrant and payment of the Warrant
purchase price will be, upon such delivery, validly and duly issued, fully
paid and nonassessable.
(b) Subject to the terms and conditions contained herein, this Warrant
shall be binding on the Company and its successors and shall inure to the
benefit of the Purchaser and the successors and assigns of the Purchaser.
(c) If the Company fails to perform any of its obligations hereunder,
it shall be liable to the Purchaser for all damages, costs and expenses
resulting from the failure, including, but not limited to, all reasonable
attorney's fees and disbursements.
(d) This Warrant cannot be changed or terminated or any performance or
condition waived in whole or in part except by an agreement in writing
signed by the party against whom enforcement of the change, termination or
waiver is sought.
(e) If any provision of this Warrant shall be held to be invalid,
illegal or unenforceable, such provision shall be severed, enforced to the
extent possible, or modified in such a way as to make it enforceable, and
the invalidity, illegality or unenforceability shall not affect the
remainder of this Warrant.
9. (a) If the outstanding shares of Common Stock shall be subdivided
(split) or combined (reverse split), by reclassification or otherwise, or if any
dividend payable on the Common Stock in shares of Common Stock shall occur at
the time that any portion of this Warrant remains unexercised in whole or in
part, the Exercise Price and the number of shares of Common Stock available for
purchase pursuant to the exercise of this Warrant immediately prior to such
subdivision, combination or dividend shall be proportionately adjusted as
follows:
(i) If a net increase shall have been effected in the number of
outstanding shares of the Company's Common Stock, the number of shares
of Common Stock underlying this Warrant shall be proportionally
increased and the cash consideration payable per share of Common Stock
shall be proportionately reduced; and
(ii) If a net reduction shall have been effected in the number of
outstanding shares of the Company's Common Stock, the shares of Common
Stock underlying this Warrant shall be proportionately reduced and the
cash consideration payable per share of Common Stock shall be
proportionately increased.
(b) In the event of the proposed dissolution or liquidation of the
Company, or any corporate separation or division, including, but not
limited to, a split-up, split-off or spin-off, or a merger or consolidation
of the Company with another company, or the sale of all or substantially
all of the assets of the Company, the Board of Directors of the Company may
provide that each holder will have the right to exercise this Warrant (at
its then current Exercise Price) solely for the kind and amount of shares
of stock and other securities, property, cash or any combination thereof
receivable upon such dissolution, liquidation, corporate separation or
division, or merger or consolidation by a holder of the number of shares of
Common Stock for which this Warrant might have been exercised immediately
prior to such dissolution, liquidation, corporate separation or division,
or merger or consolidation; or, in the alternative, the Board may provide
that this Warrant will terminate as of a date fixed by the Board; provided,
however that not less than 30 days written notice of the date so fixed must
be given to the holder, who will have the right, during the period of 30
days preceding such termination, to exercise this Warrant as to all or any
part of the shares of Common Stock covered by this Warrant.
(c) The preceding paragraph will not apply to a merger or
consolidation in which the Company is the surviving company and shares of
Common Stock are not converted into or exchanged for stock, securities of
any other company, cash or any other thing of value. Notwithstanding the
preceding sentence, in case of any consolidation or merger of another
company into the Company in which the Company is the surviving company and
in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the shares of Common Stock
(excluding a change in par value, or from no par value to par value, or any
change as a result of a subdivision or combination, but including any
change in such shares into two or more classes or series of shares), the
Board may provide that the holder of this Warrant will have the right to
exercise this Warrant solely for the kind and amount of shares of stock and
other securities (including those of any new direct or indirect parent of
the Company), property, cash or any combination thereof receivable upon
such reclassification, change, consolidation or merger by the holder of the
number of shares of Common Stock for which this Warrant might have been
exercised.
(d) In the event of a change in the Common Stock of the Company as
presently constituted into the same number of shares with a different par
value, the shares resulting from any such change will be deemed to be the
Common Stock of the Company within the meaning of this Warrant.
(e) Except as expressly provided in this Warrant, the holder will have
no rights by reason of any subdivision or consolidation of shares of stock
of any class, or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, or by reason of any
dissolution, liquidation, merger, or consolidation or spin-off of assets or
stock of another company; and any issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
will not affect, and no adjustment will be made with respect to, the number
or price of shares of Common Stock subject to this Warrant. The grant of
this Warrant will not affect in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations or changes of its
capital or business structures, or to merge or consolidate, or to dissolve,
liquidate, or sell or transfer all or any part of its business or assets.
10. All questions concerning this Warrant will be governed and interpreted
and enforced in accordance with the internal law, not the law of conflicts, of
the State of Colorado.
IN WITNESS WHEREOF, Cognigen Networks, has caused this Warrant to be signed
by its duly authorized officer and this Warrant to be dated as of January 31,
2004.
COGNIGEN NETWORKS, INC.
By.
---------------------------------
Its: President
RESTRICTION ON TRANSFER
"The securities represented by this Certificate may not be offered for
sale, sold or otherwise transferred except pursuant to an effective registration
statement under the Securities Act of 1933 (the "Act") or pursuant to an
exemption from registration under the Act, the availability of which is to be
established to the satisfaction of the Company."
SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part:
To: Cognigen Networks, Inc. (the "Company")
The undersigned
--------------------------------
Please insert Social Security or other
identifying number of Subscriber:
hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder, shares of the $0.001 par value
-------
common stock (the "Common Stock") provided for therein and tenders payment
herewith to the order of the Company in the amount of $ , such payment
-----------
being made as provided on the face of this Warrant.
The undersigned requests that certificates for such shares of Common Stock
be issued as follows:
Name:
-------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
Deliver to:
-------------------------------------------------------------------
Address:
----------------------------------------------------------------------
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.
Dated:
Signature
------------------------------------------------
Note: The signature on this Subscription Form must
correspond with the name as written upon the face of
this Warrant in every particular, without alteration
or enlargement or any change whatever.
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
------------------------------------
[NAME]
this Warrant, and appoints
------------------------------------
[NAME]
to transfer this Warrant on the books of the Company with the full power of
substitution in the premises.
Dated:
------------------
In the presence of:
-----------------------------
------------------------------------
(Signature must conform in all respects to
the name of the holder as specified on the
face of this Warrant without alteration,
enlargement or any change whatsoever, and the
signature must be guaranteed in the usual
manner).
EXHIBIT C
MASTER SERVICES AGREEMENT
This MASTER SERVICES AGREEMENT (the "Agreement") is entered into as of the 1st
day of February, 2004, by and among, Cognigen Switching Technologies, Inc.
(hereinafter referred to as "CST") a California corporation with principal
offices at Suite 103A, 0000 Xxxxx Xxxxxxx Xxxxxx, Xxx Xxxx Xxxxxx, XX 00000, and
Cognigen Networks, Inc. (hereinafter referred to as "Cognigen") a Colorado
Corporation with its principal office located at Suite 210, 0000 Xxxxxxx Xxx.
XX, Xxxxxxx, XX, 00000. CST and COGNIGEN are sometimes referred to herein as the
"Party" or "Parties".
WHEREAS, CST is the developer and owner of computer programs and associated
billing systems software and modules used for telecommunications rating,
billing, provisioning, customer care, commissioning and database management; and
WHEREAS, CST, as a wholly owned subsidiary of Cognigen, has performed the
functions of telecommunications rating, billing, customer care, provisioning,
commissioning and database management on behalf of Cognigen in the past, and
WHEREAS, Cognigen desires to obtain from CST and CST desires to perform all of
the aforementioned functions going forward under the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing recitals, of the mutual
promises, agreements and covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by both parties, CST and Cognigen hereby agree as follows:
1. Applicable Terms
A. Term
Subject to earlier termination as provided herein, this Agreement shall become
effective February 1, 2004, and shall continue in effect for a (12) twelve-month
term. This Agreement shall automatically be extended for successive twelve (12)
month terms unless Cognigen or CST shall have provided by certified mail to the
other Party written notice of termination at least thirty (30) days prior to the
expiration of the initial or any subsequent term.
B. Termination
Either Party may terminate this Agreement because of the other Party's material
breach of the Agreement as set forth in Section 4, below. Any such termination
shall not relieve Cognigen of its obligation to pay for services previously
performed on its behalf.
C. Early Termination
i) Cognigen, at its sole discretion, may terminate this Agreement at any
time prior to the expiration of the then current term upon thirty (30) days
prior written notice. In the event Cognigen chooses to terminate this
Agreement prior to the expiration of the then current term, CST shall make
every reasonable effort to assist Cognigen in successfully migrating any
and all services performed by CST on Cognigen's behalf to a third-party
vendor of Cognigen's choice, and continue to provide such services on
Cognigen's behalf until such time the migration is deemed by Cognigen to be
complete. Cognigen shall continue to pay CST in full for services performed
on Cognigen's behalf throughout the course of any such migration effort. In
addition, Cognigen shall pay CST an amount equal to two (2) times the
average of the two (2) previous month's invoice amounts (Early Termination
Fee) upon the completion of the migration.
ii) CST may terminate this agreement in the event that Cognigen fails to
timely pay any amounts when due under Section 3 hereof. In such event,
Cognigen shall be deemed to have elected Early Termination. Cognigen shall
pay CST an Early Termination Fee as provided in Section 1.C(i) hereof.
2. Services. For the term and any extensions thereof, CST hereby agrees to
provide Cognigen with the following services (collectively "Services"):
A. Database management software with the following capabilities:
|X| Multi-Market and/or Cycle Database
|X| Miscellaneous Code/Rate Plan Maintenance
|X| Electronic Invoice Inquiry/Reporting
|X| Payment/Adjustment Posting/Reporting
|X| Sales Database and Commission Data Structure Maintenance
|X| Provisioning for Multiple Carriers
|X| Import/Export
B. An order-entry and administrative management software system that
allows the establishment and update of account records. In conjunction
with the account records, rate plans, product types, usage rates,
monthly recurring charges and other information necessary to support
product sales shall be housed in the CST system. The system also shall
support the functionality necessary to perform new order activations.
C. CST will receive, on Cognigen's behalf, carrier usage data directly at
CST's facility. CST will receive database updates, which are merged
with carrier usage data, CST's billing programs and, where applicable,
the taxation database to rate call records and, if applicable, produce
end-user invoices. Printing, fulfillment and mailing services are
provided at cost for direct invoices to end-users. CST then updates
its software with post billing run results which import into the
account database as well as into various reporting engines and updates
the accounts receivable system.
D. CST shall make every reasonable effort to (a) produce end user
invoices (for Direct Billing) within five (5) business days and/or (b)
produce Exchange Message Interface (`EMI') records within three (3)
business days and (c) produce all management reports within five (5)
business days from receipt of all components to be incorporated within
the billing run exclusive of newly formed markets or cycles, or
billing runs containing new carrier data or modifications to existing
carrier's data. In the event Cognigen desires to review the output of
the billing run prior to it being distributed to either the printer or
the Local Exchange Carrier (LEC) clearinghouse, whichever is
applicable, such time shall be excluded from the calculation of the
number of business days.
F. CST hereby agrees to provide Cognigen the following services,
described in greater detail in Exhibits A-1 and A-2 attached hereto:
i) Computer processing time as well as such CST personnel, as
determined by CST, required for the purposes of producing
end-user invoices, provisioning and servicing customers,
generating required reports, performing fraud
detection/resolution procedures, and for the support of the
Cognigen database software.
ii) All initial required programming and processing of billing
information to produce Cognigen invoices on Cognigen labeled
stock. Changes in billing formats and subsequent additions of
carriers requiring program modifications may be invoiced on a
time and materials basis.
iii) All output files for xxxx printing in XML or flat-file format to
an approved print vendor selected by Cognigen.
iv) If applicable burst, stuff, sort, meter, and mail all Cognigen
invoices. In the event Cognigen has insufficient postage on
deposit, CST may at its discretion, return the unposted items to
Cognigen for Cognigen to disperse.
v) Provide file transfer ability of Cognigen data and detail billing
between the locations of CST and Cognigen. Cognigen database,
invoice summary information and Cognigen billing detail may, at
CST's discretion, be mailed in electronic format via overnight
carrier at Cognigen's expense or placed in the Cognigen's File
Transfer Protocol (`FTP') directory for Cognigen retrieval.
Additional charges may apply.
vi) Maintain a billing system database with respect to Cognigen's
information including but not limited to, account names and
addresses, telephone numbers, rate tables, transactions posted
and any monthly charges associated with its customers.
vii) Provide all management reports created or in the process of being
created on Cognigen's behalf, in addition to the reports included
herein as Exhibit A-2.
viii) Provide Tax Provider's reports.
ix) Provide the CogniConference(TM)conferencing product
x) Provide switched services (e.g. CogniDial(TM), CogniCall(TM)and
calling cards)
G. Cognigen agrees to provide CST with the following:
i) Call data records in files complete with Cognigen's call record
billing information for CST processing. This call data is
required of all carriers providing carrier service to Cognigen.
CST is not responsible for errors on call data provided by third
parties.
ii) Legible record layouts for all involved carriers as applicable
along with accompanying documentation on the data fields.
Cognigen shall make every reasonable effort to work with CST to
ensure that periodic carrier changes to record layouts will be
communicated to CST in writing no less than thirty (30) days
prior to the layout change.
iii) Cognigen will ensure that its underlying carriers properly label
call records and files so as to clearly indicate Cognigen's name
on electronic files and provide a transmittal to accompany the
file clearly identifying the period covered by the tape. CST will
assume no liability for any processing delays or omissions as a
result of non-labeled or mislabeled tapes or files.
iv) Cognigen will have individuals on staff who have a basic
understanding of computers and the functions of their operating
system. Questions as to basic operating system functions will be
billed at CST's Programmer/Analyst Support rate as specified in
Exhibit A-3.
v) Cognigen understands that the integrity of the billing database,
and, therefore the accuracy of its billing, is dependent on the
relationships of its internal tables. Cognigen shall not
intentionally add, modify or delete data within the billing
database with any software other than that supplied by CST.
Cognigen may use other software packages to read data from the
billing database. In the event Cognigen does add, modify or
delete table entries from the billing database, Cognigen fully
understands that CST may not be in a position to assist Cognigen
in the recovery of its billing data. In the event CST can be of
assistance in recovering the billing data, it shall be at CST's
current prevailing rates. CST shall be held harmless from any
losses to Cognigen as a result of Cognigen modifying its billing
database and Cognigen agrees that doing so constitutes a breach
of this agreement and CST may terminate this agreement without
penalty. In such event Cognigen shall be invoiced under EARLY
TERMINATION as outlined in Paragraph 1C(i) of this Agreement.
vi) Cognigen will give advance written notice to CST of its intent to
set up a new market and/or cycle.
vii) Cognigen understands that in order to assure timely processing of
Cognigen invoices, CST adheres to a strict job processing
schedule. Cognigen shall make reasonable efforts to provide or to
have provided to CST any and all necessary components for xxxx
processing within a period not to exceed two (2) business days
after the Monthly Processing Date. The Monthly Processing Date
shall be defined as the average of the day of the month the last
carrier call data records to be incorporated in the processing
run arrives at CST during the first three (3) months under this
Agreement. Cognigen shall make all arrangements to have the
carrier data sent directly to CST and to have each type of media
properly labeled with Cognigen's company name.
3. Service Charges; Payment
A. Service Charges. In consideration of the Services, Cognigen shall pay
such fees and charges to CST as are described on Exhibit A-3 attached
hereto (the "Service Charges").
B. Additional Charges. Service Charges are computed exclusive of any
applicable federal, state or local use, excise, gross receipts, sales
or other taxes or similar charges ("Additional Charges"), whether
charged against CST or Cognigen by reason of the Services provided
hereunder. Cognigen shall pay all such Additional Charges in addition
to the Service Charges provided herein.
C. Payment. Service Charges are to be payable as follows:
i) Service Charges denoted as Set-up Fees on Exhibit A-3 shall start
accruing February 1, 2004.
ii) If incorrect Cognigen information causes a re-run, the greater of
50% of the monthly run cost or $500.00 will be assessed as a
re-run fee.
iii) During any extension of this Agreement beyond its initial term,
the Monthly Service Charges shall be those in effect ninety (90)
days prior to the expiration of the preceding term increased by
up to five (5) percent. CST shall give notice of its intent to
increase pricing ninety (90) days prior to the end of the initial
or subsequent terms.
iv) Postage deposits shall be made one month in advance. CST will
provide a monthly statement showing the reconciliation of actual
postage costs versus deposits made by Cognigen. CST shall notify
Cognigen of inadequate postage deposits and assume no
responsibility for the delivery of invoices to Cognigen's "end
users" where CST has not received adequate postage deposits.
v) If Credit card accounts are billed by CST, funds shall be made
available to Cognigen within 3-5 days after the credit card run.
Cognigen will pay CST its costs associated with that credit card
run within ten (10) business days after the credit card run.
vi) All other Service Charges, as well as any Additional Charges, are
payable within thirty (30) days of invoice date.
D. Late Payment Charge. A late payment charge ("Late Charges") equal to
the greater of 1.5% per month (18% per annum) or the maximum amount
allowable by law will be assessed upon any past due invoices.
E. Billing Disputes. Late Charges shall apply, but shall not be due and
payable, for any invoice disputed by Cognigen, provided that Cognigen
(i) pays all undisputed charges in respect thereof when due,
(ii) presents a written statement to CST within a thirty (30) day
period setting forth in reasonable detail the basis for
Cognigen's dispute or disagreement, and
(iii)negotiates in good faith with CST for the purpose of resolving
such dispute within a thirty (30) day period. In the event such
dispute is resolved in favor of CST, Cognigen agrees to pay CST
the disputed amount, together with all applicable Late Charges,
within ten (10) days of resolution. In the event that such
dispute is resolved in favor of Cognigen, Cognigen will receive a
credit for the disputed amount in question and all applicable
Late Charges. CST shall not be obligated to consider any Cognigen
notice of billing disputes that is received by CST more than
sixty (60) days following the due date of the invoice in
question.
4. Remedies for Breach.
Except as provided in Section 1.C, in the event Cognigen or CST is in breach of
this Agreement, CST or Cognigen may, at CST's or Cognigen's option, terminate
this Agreement by written notice to the other. Cognigen and CST will be granted
a fifteen (15) day cure period to remedy the breach upon receipt of Notice of
Termination. Should Cognigen or CST unreasonably fail to cure said default, this
Agreement shall terminate on the date specified in CST's or Cognigen's Notice of
Termination as if said date were the date specified herein for expiration of the
term of this Agreement. On and after the effective date of such termination, CST
shall have no further obligation to render technical support or service
hereunder. Termination of the Agreement shall be in addition to all other
remedies available to CST or Cognigen, at law and in equity.
5. Warranty
CST MAKES NO REPRESENTATIONS NOR WARRANTIES, EXPRESS OR IMPLIED, ABOUT THE
SERVICES PROVIDED HEREUNDER, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR ANY IMPLIED
WARRANTY ARISING FROM A COURSE OF DEALING OR COURSE OF PERFORMANCE.
6. Wrongful Acts; General Indemnity; Reimbursement; Limited Liability
A. Wrongful Acts: Regardless of the nature of any claim or the form of
any action which may be brought against CST as a result of or arising
out of any errors or omissions which CST may make or which may result
from providing services for Cognigen, CST's sole liability and
obligation to Cognigen shall be to use commercially reasonable efforts
to investigate and, to the extent reasonably practicable and within
the reasonable control of CST, correct the circumstances that caused
such errors. CST shall not be liable for any loss or damages sustained
by reason of any failure, delay or interruption of services (whether
or not within the control of CST) covered by this Agreement, nor shall
CST provide Cognigen with any credits to be applied against future
amounts due, whether such loss or damage arises because of breakdown
of equipment, software errors or because of any other reason. Cognigen
understands that it shares in the quality control and review process.
While CST will apply its knowledge and experience to diligently
discharge its obligations, no information related to the Services
provided hereunder will be released from CST's data processing shop
without Cognigen's approval. CST's liability hereunder or in any way
related to its obligations hereunder or the relationships and
transactions contemplated hereby shall under no individual
circumstances (whether based on a contract, negligence, strict
liability or other legal or equitable theory) be greater than the
amount of fees paid by Cognigen for the services with respect to which
the error or omission occurred and in the aggregate shall not exceed
the amount paid to CST hereunder for the one month period immediately
preceding the last event which gave rise to a claim or action.
B. General Indemnity: Cognigen shall forever indemnify and hold harmless
CST, its Affiliates and their respective officers, members, directors,
employees and agents, against and from any and all liability, loss,
damages, costs and expense (including attorneys' fees and costs of
litigation) arising out of or in connection with any claim or action
which any person or entity (other than Cognigen) may file or threaten
to file against either Party or its officers, directors, employees or
agents in any way relating to this Agreement or the provision of
Services. The indemnification provided herein shall survive the
termination of this Agreement and the termination of any Services
provided pursuant to this Agreement. Notwithstanding any other
provision of this Agreement, the officers, directors, managers,
members, employees and agents of CST shall have no liability to
Cognigen, or any affiliate of Cognigen, under this Agreement or in
connection with Services to be provided hereunder.
C. Reimbursement: Cognigen agrees to reimburse CST for all reasonable
costs and expenses incurred by CST due to CST's direct participation
(either as a Party or witness) in any administrative, regulatory or
criminal proceeding concerning Cognigen if CST's involvement in said
proceeding is based solely on CST's provision of Services to Cognigen.
D. Indemnification; Limitations of Liability:
i) Cognigen shall indemnify, defend and hold CST harmless from and
against any and all claims, demands, suits, judgments, losses or
expenses, including reasonable attorney's fees resulting from any
act and/or omission of Cognigen, its agents, servants or
representatives while engaged in, or in connection with, the
discharge or performance of the obligations to be done or
performed by Cognigen hereunder or otherwise arising out of or
related to the transactions contemplated hereby.
ii) CST will not be liable for consequential, incidental, special,
punitive, exemplary or indirect loss or damages of any kind
arising out of this Agreement or relating to the transactions
contemplated hereby or any failure to perform its obligations
hereunder even if CST was advised of the possibility of such
damages. CST will have no liability to Cognigen for loss or
damage to goodwill or for revenues or profits that might have
been generated or earned under this Agreement but for the
inability or failure of CST to perform its obligations hereunder
or in the event of discontinuation or modification of Services or
otherwise in connection with the transactions contemplated
hereby, nor shall CST have liability for the cost or procurement
of substitute Services.
iii) CST will have no liability for fraudulent activity or other
inappropriate activities of End-Users, nor for the guaranty of
any checks processed by CST.
iv) Cognigen agrees not to violate any FCC or other federal or state
rules regarding Cognigen slamming or cramming. Cognigen agrees to
fully and immediately reimburse, CST and the employees, officers,
directors, partners, shareholders, successors, assigns and
independent contractors of CST, for all claims, damages,
liabilities or expense of any description (including but not
limited to reasonable attorneys fees and costs) arising out of
the violation by Cognigen or any of Cognigen's employees, agents
or representatives of any applicable FCC and/or state rules
regarding Cognigen slamming or cramming. Cognigen further agrees
that Cognigen will not settle any such dispute or claim without
consulting with CST and obtaining CST's prior written consent.
Cognigen must also allow CST to participate in its own defense at
Cognigen's expense.
v) Cognigen shall be solely and singularly responsible for payment
of any commissions or other compensation owed to Cognigen's
employees, agents or representatives. Nothing contained herein
shall be construed to create any obligation by CST whatsoever to
pay commissions or other compensation to any of Cognigen's
employees, agents or representatives. Cognigen shall indemnify
and hold harmless CST from and against any and all claims by any
of Cognigen's employees, agents or representatives for payment of
commissions or other compensation.
vi) CST shall indemnify, defend and hold Cognigen harmless from and
against any and all claims, demands, suits, judgments, losses or
expenses, including reasonable attorney's fees resulting from any
act and/or omission of CST, its agents, servants or
representatives while engaged in, or in connection with, the
discharge or performance of the obligations to be done or
performed by CST hereunder or otherwise arising out of or related
to the transactions completed hereby.
vii) Cognigen will not be liable for consequential, incidental,
special, punitive, exemplary or indirect loss or damages or any
kind arising out of this Agreement or relating to the
transactions contemplated hereby or any failure to perform its
obligations hereunder even if Cognigen was advised of the
possibility of such damages. Cognigen will have no liability to
CST for loss or damage to goodwill or for revenues or profits
that might have been generated or earned under this Agreement but
for the inability or failure of Cognigen to perform its
obligations hereunder or in the event of discontinuation or
modification of services or otherwise in connection with the
transactions contemplated hereby, nor shall CST have liability
for the cost or procurement of substitute services.
7. Alternative Dispute Resolution
A. Arbitration. In the event of any dispute or claim arising out of or
relating to this Agreement, or the breach thereof, the Parties agree
that each shall discuss and negotiate the issues between the Parties'
authorized agents, with informal escalation within the Parties'
organizations as necessary to pursue and achieve resolution as
expeditiously as possible. If a resolution cannot be arrived at
between the Parties through informal negotiations as described above,
either Party may serve written notice upon the other that negotiations
have reached an impasse. After written notice of impasse is served,
either Party may, within sixty (60) days after service of this notice,
serve upon the other written demand that the dispute or claim be
submitted to arbitration. Said demand shall set forth the nature of
the dispute or claim, an approximation of the amount in question, if
any, and the nature of the remedy sought. The dispute or claim shall
be submitted to arbitration administered by the American Arbitration
Association ("AAA"), or any successor organization, under AAA's or any
successor organization's rules for commercial arbitration. Judgment
upon an award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. The place of arbitration shall be
San Luis Obispo, California.
B. Authorized Agent. In the absence of express written notice to the
contrary, each Party's authorized agent for purposes of this Section
10 herein shall be deemed to be each Party's representative whose name
appears as a signatory to this Agreement, or the successor of such
person.
8. Force Majeure
If CST's or Cognigen's performance of this Agreement or any obligation hereunder
is prevented, restricted or interfered with by causes beyond its reasonable
control including, but not limited to, acts of God, acts of terrorism, fire,
explosion, vandalism, loss of electrical power, cable cut, storm or other
similar occurrence, any law, order, regulation, direction, action or request of
the United States government or any foreign government, or state or local
governments, or of any department, agency, commission, court, bureau,
corporation or other instrumentality of any one or more such governments, or of
any civil or military authority, or by national emergency, insurrection, riot,
war, strike, lockout or work stoppage or other labor difficulties, or supplier
failure, shortage, breach or delay, then CST or Cognigen shall be excused from
such performance on a day-to-day basis to the extent of such restriction or
interference. CST or Cognigen shall use reasonable efforts under the
circumstances to avoid or remove such causes or nonperformance and shall proceed
to perform with reasonable dispatch whenever such causes are removed or cease.
9. Notices
Cognigen shall notify CST in writing if Cognigen's billing address is different
from the address shown below. Any invoice, notice, demand, request, payment or
other communications given hereunder shall be in writing and shall be deemed to
be received (a) when delivered if given in person or by courier or courier
service or (b) on the date and at the time of transmission if sent by telex,
facsimile or other wire transmission (receipt confirmed) or (c) by registered,
certified mail five (5) business days after being deposited in the mail postage
prepaid, return receipt confirmed.
CST Notice:
----------
Xxxxx X. Xxxxx
Chief Financial Officer
Suite 103A, 0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxx Xxxxxx, XX 00000
000-000-0000
000-000-0000
Cognigen Notice:
----------------
Xxxx X. Xxxx
Chief Financial Officer
Suite 210, 0000 Xxxxxxx Xxx. XX
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: xxxx@xx.xxx
Cognigen Invoices to:
Name: Xxxx X. Xxxx
Address: Suite 210, 0000 Xxxxxxx Xxx. XX
Xxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: xxxx@xx.xxx
10. No-Waiver
No term or provision of this Agreement shall be deemed waived and no breach or
default shall be deemed excused unless such waiver or consent shall be in
writing and signed by the Party claimed to have waived or consented. A consent
to waiver of or excuse for a breach or default by either Party, whether express
or implied, shall not constitute a consent to, waiver of, or excuse for any
different or subsequent breach or default.
11. Partial Invalidity; Government Action
A. Partial Invalidity: If any part of any provision of this Agreement or
any other agreement, document or writing given pursuant to or in
connection with this Agreement shall be invalid or unenforceable under
applicable law, rule or regulation, that part shall be ineffective to
the extent of such invalidity only, without in any way affecting the
remaining parts of that provision or the remaining provisions of this
Agreement. In such event, Cognigen and CST will negotiate in good
faith with respect to any such invalid or unenforceable part to the
extent necessary to render such part valid and enforceable.
B. Exclusive Remedies. Except as otherwise specifically provided for
herein, the remedies set forth in this Agreement comprise the
exclusive remedies available to either Party at law or in equity.
12. Choice of Law Forum
A. Law: This Agreement shall be construed under the laws of the State of
California without regard to choice of law principles.
B. Forum: Any legal action or proceeding with respect to this Agreement
may be brought in the Courts of the State of California in and for the
County of San Luis Obispo, California. By execution of this Agreement,
both Cognigen and CST hereby submit to such jurisdiction, hereby
expressly waiving whatever rights may correspond to either of them by
reason of their present or future domicile. In furtherance of the
foregoing, Cognigen and CST hereby agree to service by U.S. Mail at
the notice addresses referenced in Section 9.
13. Confidential Information; Non-Solicitation
A. Any specifications, drawings, sketches, models, lists, proposals,
marketing data, samples, tools, designs, computer programs, technical
information, confidential business information or data, written, oral
or otherwise (all hereinafter designated Information) furnished by the
Parties to one another hereunder shall remain the property of the
supplier of such Information. All copies of such Information in
written, graphic or other tangible form shall be returned to the
supplier of such Information upon request or upon termination of this
Agreement.
B. Subject to the exception noted in (A) above, unless such Information
has been or is subsequently made public by the supplier to a third
party, it shall be kept confidential by the recipient and shall be
used by the recipient only in connection with fulfilling the
obligations of the recipient which arise pursuant to this Agreement,
unless the prior written consent of the supplying Party is obtained.
C. Nothing herein shall be construed as waiving the right of either Party
to require the other party to execute a written non-disclosure
agreement containing reasonable additional terms and conditions prior
to the supplying of particular confidential Information from time to
time.
D. During the Term and for a period of one (1) year following the
termination of this Agreement, Cognigen and CST each agree not to
directly or indirectly solicit any employee of the other Party for
employment as an employee, independent contractor, partner, or agent.
14. Successors and Assignment.
This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors or assigns, provided,
however, that Cognigen shall not assign or transfer its rights or
obligations under this Agreement without the prior written consent of CST,
whose consent shall not be unreasonably withheld, and further provided that
any assignment or transfer without such consent shall be void.
15. General.
A. Survival of Terms: The terms and provisions contained in this
Agreement that by their sense and context are intended to survive the
performance thereof by the Parties hereto shall so survive the
completion of performance and termination of this Agreement,
including, without limitation, provisions for indemnification and the
making of any and all payments due hereunder.
B. Industry Terms: Words having well-known technical or trade meanings
shall be so construed, and all listings of items shall not be taken to
be exclusive, but shall include other items, whether similar or
dissimilar to those listed, as the context reasonably requires.
C. Rule of Construction: No rule of construction requiring interpretation
against the drafting Party hereof shall apply in the interpretation of
this Agreement.
D. Headings. Descriptive headings in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
E. Remedy. Except as otherwise provided herein, the remedies provided for
in this Agreement are in addition to any other remedies available at
law or in equity by statute or otherwise.
F. Modification. This Agreement may not be amended except by an
instrument in writing, executed by the Parties. No modification or
amendment hereto shall be effected by the acknowledgment or acceptance
by either Party of any order, sales acknowledgment or other similar
form from the other Party.
G. Execution. This Agreement may be executed in several counterparts,
each of which shall constitute an original, but all of which
constitute one and the same instrument.
16. Entire Agreement.
This Agreement consists of all of the terms and conditions contained herein, and
all of the Exhibits hereto. This Agreement constitutes the complete and
exclusive statement of the understandings between the Parties and supersedes all
proposals and prior agreements (oral or written) between the Parties relating to
the services provided hereunder. No subsequent agreement between the Parties
concerning the services shall be effective or binding unless it is made in
writing and subscribed to by authorized representatives of Cognigen and CST.
IN WITNESS WHEREOF, the Parties have executed this Master Services Agreement on
the date first written above.
Cognigen Networks, Inc. Cognigen Switching Technologies, Inc.
______________________________ _______________________________
(Signature) (Signature)
______________________________ _______________________________
Name Name
______________________________ _______________________________
Title Title
______________________________ _______________________________
Date Date
Exhibit A-1: Description of Services Provided By CST
MIS related functions
|_| Account Administration
|_| A/R administration with Account History
|_| LockBox processing and reporting
|_| Credit Card processing and reporting
|_| Credit card decline reports
|_| Aging reports
|_| Provisioning reports (See Exhibit A-2)
|_| Order breakage reports (See Exhibit A-2)
|_| Usage reports (See Exhibit A-2)
|_| Billing summary reports (See Exhibit A-2)
|_| Vendor reports (See Exhibit A-2)
|_| Peachtree Accounting import files
Carrier Reconciliation
CST generates several reports that breakdown carrier costs and resulting margins
on a xxxx period basis and calendar month basis. CST utilizes these reports in
comparing calculated costs against carrier bills to detect over and
undercharging. CST shall make every reasonable effort to identify potential
carrier disputes and provide Cognigen the requisite support data to file formal
disputes with Cognigen's carriers.
Daily Fraud detection procedures
On a daily basis CST flags all accounts with
|_| more than 100 minutes in a day
|_| more than 2 hour calls
|_| more than 100 dollars in a day
|_| more than 100 dollars for a xxxx period
|_| several other reports are generated and acted on
Invoicing
Web invoice and paper invoices are generated on a monthly basis.
Taxing
|_| Taxing at individual call level
|_| Monthly Tax data file generation used for TaxPartners reporting
|_| Quarterly Tax data file generation used for TaxPartners reporting
|_| Monthly CCH Tax data import and system update
|_| Daily Tax exception handling for anomalous tax jurisdictions
Costing
|_| Costing at a call level
|_| Periodic underlying carrier cost data import and system update
|_| Daily Cost exception handling for anomalous cost regions
Charging
|_| Charging at a call level based on class of service and product model
|_| 1 Plus outbound based on origination billing tier
|_| 1 Plus toll free based on termination billing tier
|_| Dedicated toll free based on orig billing tier
|_| Dedicated outbound based on circuit orig billing tier
|_| Dedicated toll free based on orig lata
|_| Dedicated 80/20 surcharge on accounts with greater than 20% "non-RBOC"
traffic
Rate Tables
|_| Maintain customized BASE RATES table used to generate PRODUCT RATE GROUPS
|_| Generate new product rate groups and brands as requested usually 3 to 5 new
brands a week
|_| Update PRODUCT RATE GROUPS as needed
|_| Generate data files required to populate marketing sites that are handled
by Cognigen's IT personnel
Carrier Interface (Sprint/UUnet/Global Crossing)
All carriers have unique interfaces, procedures and personnel that CST must deal
with daily:
|_| Daily call detail download ( Sprint and GX only )
|_| Periodic call detail processing via FED/EX cd ( UUnet only )
|_| Daily care download
|_| Upload of new orders several times a day
|_| Handle line activation, deactivation and cancel as needed
|_| Handle toll free activation, deactivation and cancel as needed
|_| Process PICC data files for PICC fee presentation on invoices
Subscriber Activation
Handle custom order transactions from Cognigen order entry sites in real time
updated for each new product brand
Automated email feed back system
|_| Order progress
|_| Provisioning progress
|_| Credit card issues
|_| Collection issues
|_| Fraud protection warning reports
|_| Self help feed back system
|_| On demand provisioning progress interface
Customers' Account Management Web site
A website is generated for each new account that signs up that allows the
customer to manage the following:
|_| Update/Add credit card
|_| Update address
|_| Update email address
|_| Send Web based email to customer service
|_| Add new ANI lines and choose local toll and/or 1plus jurisdictions
|_| Add new Toll free numbers and ringto numbers
|_| Add new Calling card pins which are activated in real time
|_| Update/Add dial-around lines
|_| View accounting transactions:
|_| payments made and type
|_| credits received and type
|_| View all billing summary reports shows number, type and detail of calls
made for a xxxx period
|_| View on-line invoice archive
|_| View on-line raw call detail
|_| Rate quotes
|_| Aging report which show 30,60,90,120 status of account
Agents' Brand Management Web Site
This web site will be made available to ALL agents for the purposes of managing
accounts and assisting in customer service, collection and provisioning issues.
Many agents are hands on and prefer to be involved with their accounts care and
feeding. This web site allows the agent to do the following.
View all accounts under the brand by:
|_| accounts sent to carrier and carrier PIC status
|_| closed accounts and reason code for close
|_| aging report showing current, 30,60,90,120 accounts
View action item report that shows the highest priority action items that
the agent must attend to and collection and provisioning issues
View and add notes to accounts
Customer service Subscriber activation system
This web site is used by internal customer service to:
|_| View all new and pending orders by product brand
|_| Identify all VERIFIED orders
|_| Send email and phone communications to customers that require forms or more
information
|_| Perform EquiFax credit checks and send to provisioning system
|_| Abandon orders for over 20 reasons and note accounts
Provisioning system
|_| This system accepts verified orders and determines which carrier to send
the order to based on customized carrier PIC business rules developed
for each product.
|_| The daily care (TCSI) and call detail is used to determine the status of a
line or toll free number. Automated email messages are sent out for
customer required action or successful line or toll free number switch.
|_| Automatic resubmit of orders is performed when no care has been received
for line or toll free number within 3 days. Most of the time some kind
of care is received with 24 hours. This system was developed when it
was found that our carriers sometimes manage to "drop" order lines.
This sweeping action has resurrected many orders.
|_| Automated action item emails to carrier account managers:
There are many instances when the carrier procedures require that an
actual email is sent to the account manager as a work order so that a
line can be added to our - Cognigen's carrier account. This system
detects which email, carrier and account manager to send the message
to. Also, it receives the email reply and automatically processes the
result and performs the resubmit or account status change, etc.
Dial-Around, Calling Card and Conference System
CST has integrated Cognigen's 1 plus product with CST's existing conferencing,
international calling card and dial-around platform. All calls made on this
system appear on the same single 1 plus invoice. The customer can manage all of
these services from a single account administration web site.
Exhibit A-3: Service Charges
Conferencing Product
o CST will pay Cognigen twenty percent (20%) commission on billed revenue,
less taxes and surcharges
Switched Services
o CST will price the provision of switched services to Cognigen at CST's
applicable carrier costs plus twenty percent (20%)
Customer Service and Provisioning
o $18.00 per hour/per seat
o Standard hours of service (PST): 7:00 AM to 5:00 PM, Monday through Saturday
o Customer service work requested by Cognigen outside of standard hours of
service will be invoiced at $50 per hour/per seat
o Initial staffing is 8 full-time seats (40 hours per week)
o Additional staffing requires prior approval by Cognigen
Rating and Billing
o 2.5% of Cognigen's 1+ and dedicated billed revenue, less taxes and
surcharges
_ Rate Table Management and System Administration
o $4,000.00 per month
_ Special Projects/Requests
o Requested modifications to the current billing/reporting system made after
the execution date of this Agreement will be assessed at CST's
Programmer/Analyst Support Rate
o Programmer/Analyst Support Rate = $150.00 per hour
_ Adhoc Report Processing
o Requests for adhoc reports will be invoiced to Cognigen at $150.00 per hour
New Brand Installation
o Eight (8) brand installations for no cost per calendar month ( non
cumulative ) each brand installation after is installed at a charge of
$50. Any unused monthly brand installations do not carry forward to
successive months.
New Base Rate Installation
o $50.00 setup fee for each new Base Rate
_ Posting and Shipping Fees
o Cognigen will provide CST with a postage deposit one month in advance. CST
will provide a monthly reconciliation. CST shall assume no responsibility
for delivery to the U.S. Postal system in the absence of postage funds on
hand.
Invoice Stationary and Printing Services
o CST's actual costs for invoice stationery and printing services, as well as
logo set-up fees, will be passed through to Cognigen.
Miscellaneous Shipping
o At applicable carrier rates, as directed by the Cognigen.
Mailings Letters/Fulfillment
o Work requested by Cognigen will be billed at cost plus 20% margin
EXHIBIT C
TO STOCK FOR STOCK EXCHANGE AGREEMENT
CST BALANCE SHEET AND ADJUSTMENT SCHEDULE
Cognigen Switching Technologies, Inc.
Balance Sheet
January 31, 2004
ASSETS
Current Assets
Xxxxx Cash 200.00
Cash checking B of A 9,554.96
First Regional Reserve 20,028.00
Accounts Receivable 109,941.24
Allowance for Doubtful Account (24,328.56)
----------
Total Current Assets 115,395.64
Property and Equipment
Furniture and Fixtures 4,981.92
Switch equipment 226,358.33
Computer Equipment 36,196.40
Leasehold Improvements 23,203.90
Software 6,015.39
Accum. Depreciation-Furniture (3,006.78)
Accum. Depreciation-Switch (150,108.53)
Accum. Depreciation-Computer (48,274.07)
Accum. Depreciation-Leasehold (17,638.78)
Accumulated Depreciation Softw (6,015.39)
-----------
Total Property and Equipment 71,712.39
Other Assets
Deposits 28,935.96
-----------
Total Other Assets 28,935.96
---------
Total Assets 216,043.99
=========
LIABILITIES AND CAPITAL
Current Liabilities
Accounts Payable 96,447.90
Accrued Commissions 12,310.76
Wages Payable 17,812.02
Accrued Vacation 29,179.25
State and Local Taxes Payable 452.02
Accrued Taxes AAA 3,551.90
Accrued Payphone Charges 1,182.43
---------
Total Current Liabilities 160,936.28
Long-Term Liabilities
Notes Payable-Noncurrent 223,555.93
----------
Total Long-Term Liabilities 223,555.93
---------
Total Liabilities 384,492.21
Capital
Common Stock 12,000.00
Paid-in Capital 2,606,027.02
Retained Earnings (2,548,676.19)
Net Income (237,799.05)
-------------
Total Capital (168,448.22)
-----------
Total Liabilities & Capital 216,043.99
==========
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