Funding Agreement between Cognigen Networks, Inc. and InTandem Communications Corp. dated April 1, 2003

 FUNDING AGREEMENT This Funding Agreement ("Agreement") is made as of April 1, 2003 by and among COGNIGEN NETWORKS, INC., a Colorado corporation, having an address at 7001 Seaview Avenue, N.W., Suite 210, Seattle, Washington 98117 ("Cognigen"), INTANDEM COMMUNICATIONS CORP., a Delaware corporation having its principal address at 48 Dalton Way, Holland, PA 18966 ("InTandem"), DAVID B. HURWITZ, an individual having an address at 48 Dalton Way, Holland, PA 18966 ("Hurwitz"), RICHARD G. DE HAVEN, an individual having an address at 4601 Province Line Road, Princeton, NJ 08540 ("De Haven"), and ANTHONY SGROI, an individual having an address at 27 Mt. Eagle Drive, Penfield, New York 14526 ("Sgroi") (Hurwitz, De Haven and Sgroi are sometimes referred to individually as the "Principal" and collectively as the "Principals"). RECITALS: WHEREAS, Cognigen is in the business of marketing telecommunications products and services; and WHEREAS, InTandem was formed for the purpose of marketing telecommunications services; and WHEREAS, InTandem desires to obtain a series of loans from Cognigen and Cognigen desires to lend to, or invest in, InTandem; WHEREAS, the Principals have or will have an ownership interest in InTandem and desire to be employed and provide for the management and operation of InTandem; NOW, THEREFORE, it is agreed as follows: 1. FUNDING BY COGNIGEN 1.1 Funding. Subject to the terms and conditions herein, Cognigen shall provide up to $448,093 in a series of loans ("Loans" or "Loan") to InTandem in accordance with Schedule A. 1.2 Discontinuance of the Funding. Notwithstanding any other provision of this Agreement to the contrary, Cognigen shall provide the first four monthly Loans in accordance with Schedule A. Thereafter, upon 30 days written notice, Cognigen may cancel its obligation to provide further Loans should InTandem fail to attain a performance level of at least seventy-five (75%) percent of its revenue and profit and loss projections for any month as set forth on Schedule B ("Financial Model"). If Cognigen, at its sole discretion, elects to terminate further loans under this condition, it is understood that Cognigen will continue to perform the responsibilities specified in Schedule C, with no cost allocations back to InTandem through September 30, 2004. 1.3 Promissory Notes. Each Loan shall be represented by a separate promissory note, in the form of Schedule D, bearing an interest rate of 7.5% per annum ("Promissory Note") (all the Promissory Notes are collectively referred to as the "Promissory Notes"). The principal and interest of each Promissory Note shall be due from InTandem in 12 equal monthly installments commencing twelve months after the last Promissory Note is issued. Repayments shall be applied first to interest and then to principal of each Promissory Note individually, in the order in which such Promissory Note was issued; and, subject to the conversion rights of Cognigen set forth in Section 1.4, each Promissory Note shall be deemed satisfied when the payment of principal plus accrued interest allocable to such Promissory Note has been received by Cognigen. Each Promissory Note shall be secured by the pledge of all of the InTandem common stock owned directly or beneficially by the Principals. 1.4 Conversion of the Promissory Notes. If Cognigen makes all the Loans under this Agreement, all of the Promissory Notes shall be, at Cognigen's sole option, convertible into InTandem common stock commencing anytime after the final Loan is made, but not later than 12 months after the last payment on all of the Loans has been received by Cognigen. The total principal of $448,093 plus any interest accrued thereon loaned by Cognigen to InTandem shall be convertible into 49% of InTandem's outstanding common stock as of the date of conversion. If Cognigen chooses to convert the Promissory Notes into InTandem common stock, any payments received by Cognigen from InTandem for repayment of principal and/or interest on the Promissory Notes shall be returned in full to InTandem. 1.5 Failure to Convert the Promissory Notes. Should Cognigen choose not to convert the Promissory Notes into InTandem common stock, InTandem's obligation to repay the Promissory Notes will be discounted by a value equal to 25% of the net income realized by Cognigen from the sale of Cognigen services through the 1+ long distance Cognigen Resale Division created pursuant to Section 6 hereof (the "CRD") (e.g., CogniPhone, ld.net) through InTandem's efforts after the Closing Date defined in Section 7.1 hereof. This income sharing formula will continue for income generated from InTandem's efforts for a period of one year after Cognigen's decision to terminate further funding or Cognigen's decision to not convert the InTandem Promissory Notes, whichever is later. 1.6 Repayment of Loans. Should Cognigen discontinue further lending due to InTandem's failure to meet InTandem's revenue and profit and loss projections, then the principal and interest of each Promissory Note shall be due from InTandem in 12 equal monthly installments (discounted by the formula above) commencing one year after the last Promissory Note is issued. Repayments shall be applied first to interest and then to principal of each Promissory Note individually, in the order in which such Promissory Note was issued; and, subject to the conversion rights of Cognigen set forth in Section 1.4, each Promissory Note shall be deemed satisfied when the payment of principal plus accrued interest allocable to such Promissory Note has been received by Cognigen. Each Promissory Note shall be secured per Section 1.3. 1.7 Restrictions on Issuance of Additional Debt or Equity. Prior to the Closing Date and during the time Cognigen is: (i) a holder of any unpaid InTandem Promissory Notes, (ii) an InTandem shareholder or (iii) has a right to acquire InTandem's common stock, InTandem shall not issue, without the prior written consent of Cognigen, any debt, equity or other securities that can be converted into equity securities of InTandem. 1.8 Restrictions on Transfers. Prior to the Closing Date and during the time Cognigen is (i) a holder of unpaid InTandem promissory notes, (ii) an InTandem shareholder or (iii) has a right to acquire InTandem's common stock, the Principals shall not sell or otherwise transfer an interest in any shares of InTandem common stock or other equity securities of InTandem owned or controlled by the Principals without the prior written consent of Cognigen. The above prohibitive terminology shall not prevent the Principals from an adjustment of their common stock ownership in InTandem among the Principals. 2. BOARD OF DIRECTORS During the time Cognigen is: (i) a holder of an unpaid InTandem Promissory Note, (ii) an InTandem shareholder or (iii) has a right to acquire InTandem's common stock, Cognigen shall have the right to designate two of the directors on InTandem's board of directors. In no event, during such period of time, shall InTandem's board of directors ever exceed five (including the two persons designated by Cognigen). Notwithstanding any provision of InTandem's Certificate of Incorporation, By-Laws, or the Delaware General Corporation Law to the contrary, (a) all decisions made by the InTandem's board of directors shall be approved by a vote of not less than 80% of InTandem's board of directors; and (b) a minimum of four directors shall be required to have a quorum at any InTandem's board of directors' meeting. On or before the Closing Date, InTandem and the Principals agree and covenant to amend InTandem's By-Laws and/or Certificate of Incorporation to reflect the terms of this Section. 3. BUSINESS PLAN AND FINANCIAL STATEMENTS As of the date hereof, InTandem and the Principals represent and warrant that InTandem's financial condition is, and will be as of the date of Closing defined in Section 7.1 hereof, as set forth in the business plan and balance sheet annexed hereto in Schedule E. 4. Employment AND NONCOMPETITION Agreements Prior to the Closing Date, InTandem will enter into employment and noncompetition agreements with Hurwitz and DeHaven, substantially in the form annexed hereto in Schedule F. On the Closing Date, Cognigen shall enter into an employment and noncompetition agreement with Sgroi substantially in the form annexed hereto in Schedule F. 5. Stock PURCHASE AND non-qualified STOCK Options 5.1 Cognigen Option to Purchase Additional InTandem Common Stock. Provided that Cognigen has exercised its conversion rights under Section 1.4, on or before April 1, 2005 or the date Cognigen's conversion rights expire as provided in Section 1.4, whichever is later, but no earlier than April 1, 2004, Cognigen shall have the right to acquire all the outstanding common stock of InTandem from the Principals in InTandem. The price that Cognigen shall pay for such common stock shall be equal to four times the gross revenue generated by InTandem for the last three months prior to the acquisition of the InTandem common stock by Cognigen, multiplied by 51%. Said gross revenue for the said quarter shall exclude revenue derived from sales of Cognigen products and services generated by (a) Cognigen's Internet websites (except those created for InTandem and/or the CRD), (b) affinity programs, or (c) other programs resulting from the efforts or initiatives of Cognigen management or independent representatives' contacts and efforts. Cognigen shall have the right to pay the purchase price by: (i) issuing its common stock based upon the average of the last sale prices of the preceding fifteen trading days; (ii) in cash or; (iii) in any combination thereof. If Cognigen elects to convert its debt, as represented by the Promissory Notes, to equity in accordance with Section 1.4 hereof, and otherwise elects not to purchase the balance of InTandem's common stock, then Cognigen and the Principals of InTandem would continue to earn the percentage of InTandem's net income that corresponds to their respective equity positions in InTandem. 5.2 Principals' Non-Qualified Stock Options in Cognigen. The Principals shall also receive options to purchase an aggregate of 180,000 shares (options for 60,000 shares to each of the Principals) of Cognigen's common stock in the form of non-qualified stock options grants annexed hereto as Schedule G. Such stock options will expire valueless if InTandem fails to meet its revenue and profit and loss projections included in Schedule B of this Agreement. 6. Cognigen resale Division Prior to the Closing Date, Cognigen has organized a 1+ long distance reseller known as Cognigen Resale Division (the "CRD"). The CRD shall either be a division of Cognigen or a wholly-owned subsidiary of Cognigen. 6.1 CRD's Mission, Authority and Responsibilities. CRD has been created by the Cognigen Board of Directors, and is vested with all managerial, administrative, marketing, sales, billing, credit authorization, collection, customer service, carrier provisioning, rate setting, call rating, jurisdictional permitting, network creation, and overall operational authority necessary and proper for the resale of domestic and international 1+ long distance telephone service for Cognigen. CRD shall have the authority, subject to the Board of Directors policies, to contract, in the name of and on behalf of Cognigen, with third party providers and carriers including CST for services as may be appropriate and efficient. 6.2 Management. CRD shall be under the managerial authority and guidance of Sgroi who shall be designated President of the CRD. Sgroi shall report directly to Cognigen's CEO and Board of Directors. Sgroi shall have full and specific responsibility for: (i) completing all permitting (certificates of convenience and necessity) in all target jurisdictions, (ii) marketing, sales, product and service development and management, (iii) contracting with carriers, retail rate setting that maximizes net earnings while being consistent with market competition and development and implementation of least cost routing for all of its interstate, intrastate and international traffic, and (iv) coordinating the development and integration of all systems and applications necessary for the efficient operation of the CRD. InTandem shall provide consulting services at all levels to assist the CRD in fulfilling its mission and responsibilities through the overall transition of a substantial part of Cognigen's sales production from master agency status to proprietary reseller revenue. 6.3 Bonus Option. In the event a third party introduces a large affiliated group of subscribers to Cognigen that requires the specialized product and service management of InTandem, and Cognigen agrees to pay a gross revenue commission to that third party and sponsoring entity at the level of a super agency, the InTandem Principals shall receive as a separate and additional bonus a 15% share of the total commission payable to the super agency and sponsoring entity by Cognigen. Revenue and net earnings derived from such a group of affiliated subscribers shall be excluded from all revenue and net earnings otherwise used to base bonuses, options, repayment of debt discounts and other compensation payable to InTandem or the Principals. 7. Closing 7.1 Closing Date. The closing of the transactions contemplated by this Agreement (the "Closing Date") will take place at the offices of Cognigen Networks, Inc. at 7001 Seaview Avenue, N.W., Suite 210, Seattle, Washington on or before April 1, 2003 at 10:00 a.m., or after all conditions to the parties' obligations set forth in Section 10 hereof have been satisfied or waived by the party entitled to the benefit of such condition. The Closing may take place at such other place and on such other date as is mutually agreeable to Cognigen, InTandem, and the Principals. 7.2 General Procedure. At the Closing, each party shall deliver to the party entitled to receipt thereof the documents required to be delivered pursuant to Section 10 hereof and such other documents, instruments and materials (or complete and accurate copies thereof, where appropriate) as may be reasonably required in order to effectuate the intent and provisions of this Agreement, and all such documents, instruments and materials shall be satisfactory in form and substance to counsel for the receiving party. 8. Representations and Warranties 8.1 Representations and Warranties of InTandem and the Principals. InTandem and the Principals hereby represent and warrant to Cognigen that: (a) Incorporation and Corporate Power. InTandem is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to enter into the transactions contemplated herein. (b) Execution, Delivery; Valid and Binding Agreement. The execution, delivery and performance of this Agreement by InTandem and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of InTandem, and its stockholders, and no other proceedings on their part are necessary to authorize the execution, delivery and performance of this Agreement. This Agreement has been duly executed and delivered by InTandem and the Principals, and assuming that this Agreement is the valid and binding agreement of Cognigen, constitutes the valid and binding obligation of InTandem and the Principals, enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights or by general principles of equity. (c) Authority; No Breach. InTandem has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance of this Agreement by InTandem and the Principals and the consummation of the transactions contemplated hereby do not conflict with or result in any breach of any of the provisions of, or constitute a default under, result in a violation of, result in the creation of a right of termination or acceleration or any lien, security interest, charge or authorization, consent, approval, exemption or other action by or notice to any court or other governmental body, under the provisions of the Certificate of Incorporation or Bylaws of InTandem or any indenture, mortgage, lease, loan agreement, employment agreement, noncompetition agreement or other agreement or instrument by which InTandem or the Principals are bound or affected, or any law, statute, rule or regulation or order, judgment or decree to which InTandem or the Principals are subject. No consent, approval or authorization of any governmental or regulatory authority is required to be obtained by InTandem in connection with its execution, delivery and performance of this Agreement. (d) Brokerage. No third party shall be entitled to receive any brokerage commissions, finder's fees, fees for financial advisory services or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of InTandem or the Principals. (e) Authorized Capital. The authorized equity securities of InTandem consist of 1000 shares of common stock, par value $.01 per share, of which 510 shares are issued and outstanding as of the date of this Agreement. The Principals are and will be on the Closing Date the record and beneficial owners and holders of 510 shares of the common stock of InTandem free and clear of all Encumbrances. With the exception of the shares of common stock owned by the Principals, no other shares of common stock of InTandem have been issued or are outstanding. All of the outstanding equity securities of InTandem have been duly authorized and validly issued and are fully paid and nonassessable. There are no contracts relating to the issuance, sale, or transfer of any equity securities or other securities of InTandem or options or rights to acquire any common stock or other equity securities of InTandem. None of the outstanding equity securities or other securities of InTandem was issued in violation of the Securities Act of 1933. (f) Financial Statements. InTandem and the Principals have delivered to Cognigen an unaudited proforma balance sheet of InTandem as of April 1, 2003, reflecting the first Loan as per Schedule A. Such balance sheet fairly presents the financial condition of InTandem as of April 1, 2003. Such balance sheet is included for reference in Schedule E. (g) No Undisclosed Liabilities. Except for the liabilities listed in Schedule E and Schedule H, InTandem has no liabilities or obligations of any nature (whether absolute, accrued, contingent, or otherwise) in excess of $5,000. (h) Taxes. (i) Tax Returns. InTandem has filed or caused to be filed (on a timely basis since its inception) all tax returns ("Tax Returns") that are or were required to be filed by or with respect to InTandem, either separately or as a member of a group of corporations, pursuant to applicable legal requirements. InTandem has paid, or made provision for the payment of, all taxes that have or may have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by InTandem and the Principals, except such Taxes, if any, that are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the balance sheet attached as Schedule E. (ii) Tax Withholdings. All taxes that InTandem is or was required by legal requirements to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper governmental body. (i) No Material Adverse Change. Since the date of the proforma balance sheet attached as Schedule E, there has not been any material adverse change in the business, operations, properties, prospects, assets, or condition of InTandem, and no event has occurred or circumstance exists that may result in such a material adverse change. 8.2 Representations and Warranties of Cognigen. Cognigen hereby represents and warrants to InTandem that: (a) Incorporation and Corporate Power. Cognigen is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Colorado, with the requisite corporate power and authority to enter into this Agreement and perform its obligations hereunder. (b) Execution, Delivery; Valid and Binding Agreement. The execution, delivery and performance of this Agreement by Cognigen and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite corporate action, and no other corporate proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement. This Agreement has been duly executed and delivered by Cognigen and constitutes the valid and binding obligation of Cognigen, enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights or by general principles of equity. (c) Authority; No Breach. The execution, delivery and performance of this Agreement by Cognigen and the consummation by Cognigen of the transactions contemplated hereby do not conflict with or result in any breach of any of the provisions of, constitute a default under, result in a violation of, result in the creation of a right of termination or acceleration or any lien, security interest, charge or encumbrance upon any assets of Cognigen, or require any authorization, consent, approval, exemption or other action by or notice to any court or other governmental body, under the provisions of the Articles of Incorporation or Bylaws of Cognigen or any indenture, mortgage, lease, loan agreement or other agreement or instrument by which Cognigen is bound or affected, or any law, statute, rule or regulation or order, judgment or decree to which Cognigen is subject. No consent, approval or authorization of any governmental or regulatory authority is required to be obtained by Cognigen in connection with its execution, delivery and performance of this Agreement. (d) Brokerage. Other than possible fee obligations to Combined Telecommunications Consultancy, Ltd., no third party shall be entitled to receive any brokerage commissions, finder's fees, fees for financial advisory services or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Cognigen. 9. Covenants 9.1 Covenants of InTandem and the Principals. InTandem and the Principals agree to observe each term set forth in this Agreement and agree that, from the date hereof until the Closing Date, unless otherwise consented to by Cognigen in writing: (a) InTandem shall not, directly or indirectly, sell, pledge, dispose of or encumber any assets, except in the ordinary course of business. (b) InTandem and the Principals shall take all commercially reasonable actions necessary to cause the conditions set forth in Section 10.1 to be satisfied and to consummate the transactions contemplated herein as soon as reasonably possible after the satisfaction thereof (but in any event within three business days of such date). 9.2 Covenants of Cognigen. Cognigen shall take all commercially reasonable actions necessary to cause the conditions set forth in Section 10.2 to be satisfied and to consummate the transactions contemplated herein as soon as reasonably possible after the satisfaction thereof (but in any event within three business days of such date). 10. Conditions to Closing 10.1 Conditions to Cognigen's Obligations. The obligation of Cognigen to consummate the transactions contemplated by this Agreement is subject to the satisfaction of the following conditions on or before the Closing Date: (a) The representations and warranties set forth in Section 8.1 hereof shall be true and correct in all material respects at and as of the Closing Date as though then made, except that any such representation or warranty made as of a specified date (other than the date hereof) shall only need to have been true on and as of such date; (b) InTandem and the Principals shall have performed in all material respects all of the covenants and agreements required to be performed and complied with by them under this Agreement prior to the Closing; (c) InTandem shall have obtained, or caused to be obtained, each consent and approval required in order to complete the transactions contemplated hereby. (d) There shall not be threatened, instituted or pending any action or proceeding, before any court or governmental authority or agency, domestic or foreign, challenging or seeking to make illegal, or to delay or otherwise directly or indirectly restrain or prohibit, the consummation of the transactions contemplated hereby or seeking to obtain material damages in connection with such transactions. (e) On the Closing Date, InTandem will have delivered to David B. Hurwitz and Richard G. De Haven their Employment Agreements referred to in Section 4 of this Agreement. 10.2 Conditions to InTandem's and the Principal's Obligations. The obligations of InTandem and the Principals to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions on or before the Closing Date: (a) The representations and warranties set forth in Section 8.2 hereof will be true and correct in all material respects at and as of the Closing as though then made; (b) Cognigen shall have performed in all material respects all the covenants and agreements required to be performed by it under this Agreement prior to the Closing; (c) There shall not be threatened, instituted or pending any action or proceeding, before any court or governmental authority or agency, domestic or foreign, challenging or seeking to make illegal, or to delay or otherwise directly or indirectly restrain or prohibit, the consummation of the transactions contemplated hereby or seeking to obtain material damages in connection with such transactions; and (d) On the Closing Date, Cognigen will have delivered to the Principals: (i) the Employment Agreement of Anthony Sgroi referred to in Section 4 of this Agreement; and (ii) the options referred to in Section 5.2 of this Agreement. 11. Termination; Effect of Termination 11.1 Termination. This Agreement may be terminated at any time prior to the Closing: (a) by the mutual consent of Cognigen, InTandem and the Principals; (b) by either Cognigen or InTandem and the Principals if there has been a material misrepresentation, breach of warranty or breach of covenant on the part of the other in the representations, warranties and covenants set forth in this Agreement; (c) by either Cognigen or InTandem and the Principals if the transactions contemplated hereby have not been consummated by April 15, 2003; provided that, neither Cognigen nor InTandem and the Principals will be entitled to terminate this Agreement pursuant to this Section 11.1(c) if such party's willful breach of this Agreement has prevented the consummation of the transactions contemplated hereby; or (d) by Cognigen if, after the date hereof, there shall have been a material adverse change in the condition of InTandem or the death or disability of one of the Principals or if, after the date hereof, an event shall have occurred which, so far as reasonably can be foreseen, would result in any such change, except to the extent such change is directly caused by Cognigen; or (e) by bankruptcy, receivership or complete liquidation of InTandem. 11.2 Effect of Termination. In the event of termination of this Agreement by either Cognigen or InTandem and the Principals as provided in Section 11.1, this Agreement shall become void and there shall be no liability on the part of Cognigen, InTandem or the Principals, or their respective stockholders, officers, or directors, except that Sections 8.1(d), 8.2(d), 12, and 13.6, hereof shall survive indefinitely, and except with respect to willful breaches of this Agreement prior to the time of such termination. 12. Survival; Indemnification 12.1 Survival. The covenants, representations and warranties contained in this Agreement shall survive the closing. 12.2 Indemnification by InTandem. InTandem and the Principals agree to indemnify Cognigen with respect to, and hold Cognigen harmless from, any loss, liability or expense (including, but not limited to, reasonable legal fees) which Cognigen may directly or indirectly incur or suffer prior to or following the Closing by reason of, or which results, arises out of or is based upon (a) the inaccuracy of any representation or warranty made by InTandem or the Principals in this Agreement, or (b) the failure of InTandem or the Principals to comply with any covenants or other commitments made by InTandem or the Principals in this Agreement. 12.3 Indemnification by Cognigen. Cognigen agrees to indemnify InTandem and the Principals with respect to, and hold InTandem and the Principals harmless from, any loss, liability or expense (including, but not limited to, reasonable legal fees) which InTandem or the Principals may directly or indirectly incur or suffer prior to or following the Closing by reason of, or which results, arises out of or is based upon the (a) the inaccuracy of any representation or warranty made by Cognigen in this Agreement, or (b) the failure of Cognigen to comply with any covenants made by Cognigen in this Agreement. 12.4 Legal Proceedings. In the event Cognigen, InTandem or the Principals become involved in any legal, governmental or administrative proceeding which may result in indemnification claims hereunder, such party shall promptly notify the other party in writing and in full detail of the filing, and of the nature of such proceeding. The other party may, at its option and expense, defend any such proceeding if the proceeding could give rise to an indemnification obligation hereunder. If the other party elects to defend any proceeding, it shall have full control over the conduct of such proceeding, although the party being indemnified shall have the right to retain legal counsel at its own expense and shall have the right to approve any settlement of any dispute giving rise to such proceeding, provided that such approval may not be withheld unreasonably by the party being indemnified. The party being indemnified shall reasonably cooperate with the indemnifying party in such proceeding. 13. Miscellaneous Provisions 13.1 Press Releases and Announcements. Prior to the Closing Date, InTandem and the Principals shall not issue any press release (or make any other public announcement) related to this Agreement or the transactions contemplated hereby or make any announcement to the employees, customers or suppliers of InTandem without prior written approval of Cognigen. 13.2 Expenses. Except as otherwise expressly provided for herein, InTandem, the Principals, and Cognigen will pay all of their own expenses (including attorneys' and accountants' fees in connection with the negotiation of this Agreement, the performance of their respective obligations hereunder and the consummation of the transactions contemplated by this Agreement (whether consummated or not). 13.3 Further Assurances. Cognigen, InTandem and the Principals agree that, on and after the Closing Date, they shall take all appropriate action (without incurring any out-of-pocket expenses) and execute any documents, instruments or conveyances of any kind which may be reasonably necessary or advisable to carry out any of the provisions hereof. 13.4 Amendment and Waiver. This Agreement may not be amended or waived except in a writing executed by the party against which such amendment or waiver is sought to be enforced. No course of dealing between or among any persons having any interest in this Agreement will be deemed effective to modify or amend any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement. 13.5 Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when personally delivered or three business days after being mailed by first class U.S. mail, return receipt requested, or when receipt is acknowledged, if sent by facsimile, telecopy or other electronic transmission device. Notices, demands and communications to Cognigen and InTandem and the Principals will, unless another address is specified in writing, be sent to the address indicated below: To Cognigen: 7001 Seaview Avenue, N.W., Suite 210 Seattle, Washington 98117 Attention: Darrell H. Hughes Facsimile: (206) 297-3901 To InTandem and the Principals: David B. Hurwitz, CEO 48 Dalton Way Holland, PA 18966 Attention: David B. Hurwitz Facsimile: 215 ###-###-#### With a copy to: David Lacher, Esq. 46 Sara Lane New Rochelle, NY 10804 Facsimile: 914 ###-###-#### 13.6 Governing Law; Choice of Forum. (a) Governing Law. This Agreement shall be construed and governed in accordance with the laws of the State of Washington, without regard to conflicts of laws principles; and all questions concerning this Agreement, including, but not limited to, the execution, interpretation and performance hereof, shall be subject to such governing law. (b) Forum For Disputes. The parties to this Agreement hereby submit now and forever to the jurisdiction of the Courts of King County of the State of Washington in connection with any action arising in connection with this Agreement. The parties further agree that any action with respect to this Agreement shall be brought only in the Courts of King County of the State of Washington, and no party shall have any objection to the jurisdiction of such courts or shall be permitted to raise any defense or argument that any action has been brought in an inconvenient forum. 13.7 Unenforceable Provisions. If any provision of this Agreement is determined to be legally invalid, inoperative or unenforceable, only that particular provision shall be affected, and the determination shall have no effect whatsoever on any other provision of this Agreement, and all other provisions shall remain in full force and effect and fully enforceable. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only as broad as is enforceable. 13.8 No Assignment. Except as expressly provided herein, the rights and obligations under this Agreement may not be assigned by Cognigen, InTandem or by any Principal except with the prior written consent of each of the other parties hereto. This Agreement is made solely for the benefit of the parties, and no other person shall acquire or have any right under or by virtue of this Agreement. 13.9 Multiple Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 13.10Headings. The headings in this Agreement have been inserted as a matter of convenience and shall not affect the construction hereof. 13.11Entire Agreement; Modification In Writing. This Agreement is intended by the parties as a final expression of their agreement, and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter, including, in particular, the Term Sheet dated March 11, 2003. This Agreement shall be binding upon Cognigen, its successors and permitted assigns, InTandem, its successors and permitted assigns, the Principals, their permitted assigns, heirs, devisees, executors and administrators, and upon any transferees pursuant to this Agreement. This Agreement may not be modified except in a written instrument, duly executed by each of the parties hereto. [Signatures on following page] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. COGNIGEN NETWORKS, INC. By: /s/ Darrell H. Hughes ---------------------------------------- Darrell H. Hughes Title: President DAVID B. HURWITZ, Individually /s/ David B. Hurwitz --------------------------------------- RICHARD G. DEHAVEN, Individually /s/ Richard G. De Haven --------------------------------------- ANTHONY SGROI, Individually /s/ Anthony Sgroi --------------------------------------- INTANDEM COMMUNICATIONS CORP. By: /s/ David B. Hurwitz ---------------------------------- David Hurwitz Title: Chief Executive Officer SCHEDULE A LOAN SCHEDULE The initial funding of the Corporation shall be by Cognigen as follows: Monthly Installments Month 1 $ 84,073.55 Month 2 $ 78,471.80 Month 3 $ 66,393.79 Month 4 $ 60,462.80 Month 5 $ 61,014.49 Month 6 $ 50,165.60 Month 7 $ 40,510.64 Month 8 $ 5,000.00 Month 9 $ 2,000.00 SCHEDULE C COGNIGEN RESPONSIBILITIES Cognigen agrees to provide: (a) the benefits of certain facilities controlled by Cognigen rent-free for a period of twelve (12) months; (b) the benefits of any underlying carrier agreements to which Cognigen or any of its Affiliates may be a party, at cost; (c) the benefits of any operational agreements with CST or the CRD, at cost; and (d) other in-kind services performed by Cognigen. Such in-kind services shall include, without limitation, billing and call rating, commissions, certifications, provisioning, customer service and credit/collections functions, information technology support, and web development of custom order-entry and associated reporting systems. SCHEDULE D PROMISSORY NOTES THIS SECURITY AND ANY SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY PORTION HEREOF MAY BE OFFERED, SOLD OR DELIVERED EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. TRANSFER OF THIS SECURITY IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE NOTE. INTANDEM COMMUNICATIONS CORP. 7.5% Secured Convertible Note due 200_ No. ______ Principal Amount: $__________ Issue Date: _____________, 2003 INTANDEM COMMUNICATIONS CORP., a Delaware corporation (the "Company"), promises to pay to COGNIGEN NETWORKS, INC. or registered assigns ("Holder"), the principal amount of $____________ Thousand Dollars ($________) on __________ __, 200_ (the "Due Date"). This Note is one of the duly authorized issue of Notes of the Company, limited in aggregate principal amount to $448,093, issued or to be issued by the Company to the Holder. 1. Interest. The Company promises to pay interest on the principal amount of this Note at the interest rate of 7.5% per annum. The Company will pay the principal and interest on this Note in 12 equal monthly installments commencing 12 months after the last of the Notes is issued by the Company to the Holder. Interest on this Note will accrue from the Issue Date above. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Notwithstanding this paragraph, the Holder shall forfeit any accrued interest rate if it exercises its conversion right set forth herein. 2. Method of Payment. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal and interest by its check payable in such money. It may mail an interest check to the Holder's registered address. If the Company defaults in a payment of interest on the Notes, it shall pay the defaulted interest to Holder on a subsequent special record date selected by the Company. 3. Collateral. David B. Hurwitz, Richard G. De Haven and Anthony Sgroi (the "Principals") have entered into a Pledge Agreement dated April 1, 2003 (the "Pledge Agreement"), pledging all of the issued and outstanding common stock of the Company to secure the obligations under this Note. 4. Conversion. The aggregate of all the Notes in the principal amount of $448,093 are convertible into 49% of the issued and outstanding common stock of the Company. The Holder may convert the Notes into common stock of the Company at any time before the close of business on a date that is 12 months after the last payment on the Notes. To convert the Notes the Holder must: (1) have loaned the Company the amount of no less than $448,093 evidenced by the Notes, (2) complete and sign the conversion notice on the back of the Notes, (3) surrender the Notes to the Company, and (3) furnish appropriate endorsements or transfer documents required by the Company. The Holder may not convert the Notes if the total principal amount represented by the Notes is less than $448,093. No adjustment will be made for accrued interest on a converted Note and, as full payment for the 49% of the issued and outstanding common stock of the Company, all principal and interest will be forfeited by the Holder in the event of conversion of the Notes. The Company shall reserve out of its authorized but unissued common stock or its common stock held in treasury enough shares of common stock to permit the conversion of the Notes. All shares of common stock which may be issued upon conversion of the Notes shall be fully paid and non-assessable. The Notes will not entitle the Holder to vote on any matter voted on at a meeting of the Company's shareholders. 5. Transfer. The Notes cannot be transferred by the Holder unless the Notes are registered under the United States Securities Act of 1933 or an exemption from registration is available. In order for the Holder to transfer the Notes pursuant to an exemption, the request for transfer must be accompanied by evidence satisfactory to the Company that an exemption is available for the transfer, which may include an opinion of counsel or a no-action letter from the Securities and Exchange Commission. In addition, the Company may require the Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any required taxes and fees. 6. Persons Deemed Owners. The Holder of a Note or the Notes may be treated as the owner of it for all purposes. 7. Defaults and Remedies. An "Event of Default" occurs if: (1) the Company defaults in the payment of interest on any Note when the same becomes due and payable and the default continues for a period of 30 days after written notice thereof; (2) the Company defaults in the payment of the principal of any Note when the same becomes due and payable at maturity, upon redemption or otherwise; (3) the Company or the Principals fail to comply with any of its other agreements in the Note or the Pledge Agreement and the default continues for the period and after the notice specified below; (4) the Company pursuant to or within the meaning of any Bankruptcy Law (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) consents to the appointment of a Custodian of it or for all or substantially all of its property, or (d) makes a general assignment for the benefit of its creditors; or (5) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (a) is for relief against the Company in an involuntary case, (b) appoints a Custodian of the Company or for all or substantially all of its property, or (c) orders the liquidation of the Company, and the order or decree remains unstayed and in effect for 90 days. The term "Bankruptcy Law" means title 11, U.S. Code or any similar Federal or State law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. A default under clause (3) is not an Event of Default until the holders of at least 25% in principal amount of the Notes notify the Company of the default and the Company does not cure the default within 90 days after receipt of the notice. The notice must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." If an Event of Default occurs and is continuing past the expiration of the notice period, the Holder by further notice to the Company may declare the principal of and accrued interest on all the Notes to be due and payable immediately. Upon a declaration such principal and interest shall be due and payable immediately. The Holder by notice to the Company may rescind an acceleration and its consequences if all existing Events of Default have been cured or waived and if the rescission would not conflict with any judgment or decree. If an Event of Default occurs and is continuing, the Holder may pursue any available remedy by proceeding at law or in equity to collect the payment of principal or interest on the Notes or to enforce the performance of any provision of the Notes. A delay or omission by the Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. The Holder by notice to the Company may waive an existing Default and its consequences. When a Default is waived, it is cured and stops continuing. 8. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday, a legal holiday or a day on which banking institutions are not required to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. 9. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM ("tenants in common"), TEN ENT ("tenants by the entireties"), JT TEN ("joint tenants with right of survivorship and not as tenants in common"), CUST ("custodian"), and U/G/M/A ("Uniform Gift to Minors Act"). 10. Governing Law. THE LAWS OF THE STATE OF WASHINGTON SHALL GOVERN THE NOTE AND THE PLEDGE AGREEMENT. IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under its corporate seal. Dated: ___________, 2003 INTANDEM COMMUNICATIONS CORP. By: ______________________________ Its: ______________________________ [SEAL] ASSIGNMENT FORM CONVERSION NOTICE To assign this Note, fill in the form To convert this Note into common stock below: of the Company, check the box [ ]. I or we assign and transfer this Note to - ------------------------- _________________________ If you want the stock certificate made (Insert assignee's soc. sec. or tax ID out in another person's name fill in no.) the form below: ------------------------- - ------------------------- ------------------------- _________________________ (Insert the other person's soc. sec. tax ID no.) - ------------------------- (Print or type assignee's name, address __________________________ and zip code) -------------------------- and irrevocably appoint - -------------------- -------------------------- agent to transfer this Note on the (Print or type other person's name, books of the Company. The agent may address and zip code) substitute another to act for him. Date: __________ Your Signature: _________________________________ - --------------------------------------------------------------- (Sign exactly as your name appears on the other side of this Note) PLEDGE AGREEMENT PLEDGE AGREEMENT (this "Agreement"), dated as of April __, 2003, between David B. Hurwitz, Richard G. De Haven, and Anthony Sgroi, ("Pledgors"), and Cognigen Networks, Inc., a Colorado corporation (the "Company"). WHEREAS, the Pledgors have requested that the Company provide a series of loans ("Loans") to InTandem Communications, Corp., a Delaware corporation ("InTandem"), where the Pledgors are or will be the sole shareholders, and as an inducement Pledgors have offered to guarantee the Loans and pledge, as collateral, all of the InTandem issued and outstanding shares of common stock (the "Pledged Shares"); and WHEREAS, InTandem has or will deliver to the Company convertible notes (the "Note" or "Notes") in the amount of the Loans; and WHEREAS, the Company has required that Pledgors grant to the Company, and Pledgors are willing to grant to the Company, a security interest in the Pledged Shares as security for the payment by InTandem of its obligations under the Notes. NOW, THEREFORE, in consideration of the premises, the mutual agreements set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: 1. Pledge of Stock. (a) Pledge. As security for the prompt payment of any amounts at any time due to the Company from InTandem pursuant to the Notes, Pledgors hereby grant a security interest to the Company in the Pledged Shares. (b) Delivery. Immediately upon execution of this Agreement, Pledgors will deliver to the Company the certificates representing all of the Pledged Shares, which certificates shall be endorsed in blank or with executed stock powers attached. 2. Rights and Benefits of Pledged Shares. (a) General. Except as provided in Section 2(b), the Company shall receive and hold (by the Company or by an agent of the Company) the Pledged Shares and any property (including without limitation monies or securities) distributed or issued with respect to the Pledged Shares, whether as a dividend, in partial or complete liquidation, pursuant to a merger or reorganization plan or otherwise. Pledgors shall cause any property distributed or issued with respect to the Pledged Shares to be assigned and transferred to the Company and delivered to the Company, and such securities shall be subject to the terms and conditions of this Agreement. (b) Voting. Unless and until a default is declared by the Company pursuant to Section 5, Pledgors shall be entitled to vote the Pledged Shares. (c) Assignment, Etc. Except as provided or specifically permitted herein, Pledgors shall not pledge, sell, assign, transfer or otherwise dispose of the Pledged Shares without the prior written approval of the Company. (d) Legend. The certificates representing the Pledged Shares shall bear an endorsement in substantially the following form: "The shares of stock represented by this certificate are pledged under, and are subject to the terms and conditions of, a Pledge Agreement, dated as of April __, 2003, between Cognigen Networks, Inc. and the registered owner of this certificate as security for the performance of the obligations of InTandem Communications, Corp. under convertible notes to Cognigen Networks, Inc. Such shares cannot be pledged, sold, assigned, transferred or otherwise disposed of except as provided in such Pledge Agreement." 3. Appointment of the Company as Attorney-in-Fact. Pledgors hereby appoint and constitute the Company as Pledgors' true and lawful attorney-in-fact and with full power of substitution in the premises to execute such assignments and/or endorsements of the Pledged Shares as may be necessary to effect the rights and remedies which the Company has under this Agreement in the event of a default under this Agreement. 4. Event of Default; Remedies. The occurrence of an event of default under the Note shall constitute an event of default under this Agreement. Upon the occurrence of an event of default, the Company shall have the option to declare this Agreement in default and thereupon the Company is authorized to exercise and shall have, in addition to the rights and remedies provided in this Agreement and all other applicable rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code of the State of Washington and any other applicable laws. In particular, and without limitation, the Company is authorized at its option and without further notice or demand to cause the Pledged Shares to be transferred of record to the Company or its agent or nominee and shall be entitled to exercise all rights of ownership in respect to the Pledged Shares and all property received with respect to the Pledged Shares. The Company shall also have the right to hold and vote the Pledged Shares and, at its option and upon 20 days' notice in writing to Pledgors of such default, shall have the right to sell and transfer the Pledged Shares and the property received with respect to the Pledged Shares or any portion thereof at any public or private sale, including private placement based upon investment representations, and for cash or such other consideration as the Company shall, in its sole discretion, determine to be reasonable, and Pledgors shall have no right or equity of redemption in connection with any such sale; provided, however, that during such 20-day period Pledgors shall have the right to cure any default by paying all obligations under the Note, together with all expenses incurred by the Company including, without limitation, reasonable attorneys' fees and expenses in obtaining, holding and preparing for sale the Pledged Shares and the property received with respect to the Pledged Shares and in arranging for the sale. After deducting the expenses of such sale, including reasonable attorneys' fees, the proceeds therefrom shall be applied to the payment of Pledgors' obligations under the Note and the surplus, if any, shall be paid to Pledgors. 5. Release of Collateral. At such time as the Notes have been paid or converted in full, the Company shall deliver the Pledged Shares and any property distributed with respect to the Pledged Shares to Pledgors in accordance with Pledgors written directions, and Pledgors shall thereafter be discharged in full from any and all obligations under this Agreement. 6. Cooperation. Upon the execution of this Agreement and at any time or from time to time thereafter, Pledgors and the Company agree to cooperate in carrying out the terms of this Agreement, including the execution and delivery of such further instruments and documents as may be reasonably requested in order to more effectively carry out the terms and conditions of this Agreement. 7. Miscellaneous. (a) Entire Agreement. This Agreement, the Notes, and the Funding Agreement of even date, contain the entire understanding between the parties hereto with respect to the subject matter hereof and supersede any prior understandings, agreements or representations, written or oral, relating to the subject matter hereof. (b) Counterparts. This Agreement may be executed in separate counterparts, each of which will be an original and all of which taken together shall constitute one and the same agreement, and any party hereto may execute this Agreement by signing any such counterpart. (c) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law but if any provision of this Agreement is held to be invalid, illegal or unenforceable under any applicable law or rule, the validity, legality and enforceability of the other provision of this Agreement will not be affected or impaired thereby. (d) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. (e) Modification, Amendment, Waiver or Termination. No provision of this Agreement may be modified, amended, waived or terminated except by an instrument in writing signed by the parties to this Agreement. No course of dealing between the parties will modify, amend, waive or terminate any provision of this Agreement or any rights or obligations of any party under or by reason of this Agreement. No delay on the part of the Company in the exercise of any right or remedy under this Agreement shall operate as a waiver thereof, and no single or partial exercise by the Company of any right or remedy under this Agreement shall preclude other or further exercise thereof or the exercise of any other right or remedy. No waiver by the Company of any right or remedy under this Agreement shall be deemed to be or construed as a further or continuing waiver of such right or remedy or as a waiver of any other right or remedy. (f) Notices. All notices, consents, requests, instructions, approvals or other communications provided for herein shall be in writing and delivered by personal delivery, overnight courier, mail, electronic facsimile or e-mail addressed to the receiving party at the address set forth herein. All such communications shall be effective when received. If to Cognigen: Cognigen Networks, Inc. 7001 Seaview Avenue, N.W., Suite 210 Seattle, Washington 98117 Attention: Darrell H. Hughes If to Pledgors: David B. Hurwitz 48 Dalton Way Holland, Pennsylvania 18966 Richard G. De Haven 4601 Province Line Road Princeton, New Jersey 08540 Anthony Sgroi 27 Mt. Eagle Drive Penfield, New York 14526 With a copy to: David Lacher, Esq. 46 Sara Lane New Rochelle, NY 10804 Any party may change the address set forth above by notice to each other party given as provided herein. (g) Headings. The headings and any table of contents contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. (h) Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF WASHINGTON, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF. (i) Third-Party Benefit. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights, remedies, obligations or liabilities of any nature whatsoever. (j) Remedies Cumulative. All rights and remedies of the Company under this Agreement are cumulative and are in addition to, but not in limitation of, any rights or remedies which it may have under applicable law. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth in the first paragraph. PLEDGORS - -------------------------------- DAVID B. HURWITZ - -------------------------------- RICHARD G. DE HAVEN - -------------------------------- ANTHONY SGROI COGNIGEN NETWORKS, INC. By: ------------------------------------- Darrell H. Hughes, President SCHEDULE F EMPLOYMENT AGREEMENTS EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT (this "Agreement"), dated as of April ___, 2003, is made by and between COGNIGEN NETWORKS, INC., a Colorado corporation having its principal office at 7001 Seaview Avenue, N.W., Suite 210, Seattle, Washington 98117 ("Cognigen"), and Anthony Sgroi ("Executive"). WHEREAS, Cognigen has entered into a Funding Agreement, (the "Funding Agreement") with InTandem Communications Corp. ("InTandem; and WHEREAS, Cognigen desires to retain the services of the Executive subsequent to the execution of the Funding Agreement, but prior to granting loans to InTandem, and the Executive desires to be employed by Cognigen, on the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises, the mutual agreements set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and as an inducement to Cognigen to complete the Funding Agreement and lend funds to InTandem, the parties agree as follows: SECTION 1. Employment and Term. (a) Cognigen hereby employs Executive commencing as of the date hereof (the "Commencement Date"). The initial term of Executive's employment shall continue for as long as Cognigen (i) owns the right to acquire any, or owns any InTandem common stock or (ii) for four years after the Commencement Date, whichever is shorter, subject to earlier termination as specified herein (the "Employment Term"). Cognigen shall be able to forfeit its right to acquire InTandem common stock at any time thereby enabling Cognigen to terminate this Agreement. Any renewal or extension of the Employment Term and this Agreement shall be determined by the mutual agreement of Executive and Cognigen, subject to Section 8 hereof. (b) Executive shall be employed as the President of the Cognigen Resale Division of Cognigen (the CRD) with powers and duties consistent with such position, for the duration of the Employment Term. Initially, Executive shall report to the Chief Executive Officer and Board of Directors of Cognigen. SECTION 2. Full-Time Employment. (a) During Executive's employment by Cognigen, Executive shall devote Executive's entire business time, energy and skill to the performance of Executive's duties hereunder and to the business of Cognigen. Executive shall faithfully and diligently perform such duties, shall adhere to the instructions of the Chief Executive Officer and Board of Directors of Cognigen and shall use his best efforts to promote the interests of Cognigen consistent with the foregoing. Executive shall adhere to all corporate policies of Cognigen to the extent not inconsistent with the terms hereof and, to the extent applicable to Executive's duties hereunder, Cognigen's subsidiaries and affiliates. Executive shall not, directly or indirectly, alone or as a member of any partnership, or as an officer, director or executive of any other corporation, partnership or other organization, be actively engaged in or concerned with any other duties or pursuits which interfere with the performance of his duties hereunder, or which may be inimical to or contrary to the best interests of Cognigen. (b) Executive represents and warrants that he is free to be employed by Cognigen upon the terms contained in this Agreement and that he is not a party to any employment contract or restrictive covenant or other arrangement which could reasonably be expected to prevent, interfere with or hinder, or be deemed to be breached by, full performance of his duties hereunder. SECTION 3. Compensation. (a) Base Salary. For all services rendered by Executive in any capacity during Executive's employment under this Agreement, including, without limitation, service as an executive, officer, director or member of any committee of Cognigen or any of its subsidiaries or affiliates, Cognigen agrees to pay or cause to be paid to Executive a base salary (the "Base Salary") in accordance with the following formula: First Calendar Year $10,000 per month Second Calendar Year $12,500 per month Third Calendar Year $15,000 per month Fourth Calendar Year $15,000 per month Executive's Base Salary shall be less any legally required withholdings and reductions shall be paid in equal installments in accordance with the prevailing salary payment practices of Cognigen in effect from time to time. In the event that sickness or accident disability payments under Cognigen's insurance programs shall become payable to Executive in respect of any period of Executive's employment hereunder, the salary installment payable to Executive hereunder in respect of Executive's Base Salary on the next succeeding salary installment payment date shall be an amount computed by subtracting (i) the amount of such disability payments which shall have become payable during the period between such date, from (ii) the salary installment otherwise payable to Executive hereunder in respect of Executive's Base Salary on such date. (b) Bonus. For the initial term of this Agreement, no bonus is expressly provided for. Any bonus considered to be paid to Executive shall be paid at the sole discretion of the Board of Directors of Cognigen, and shall be made to the extent, at such time and in such amount as determined by the unanimous vote of the Board of Directors of Cognigen, in its sole discretion. (c) Incentive Compensation. In addition to the Base Salary, the Executive shall be eligible to earn, as incentive compensation, a percentage, that in the aggregate does not exceed 3.0% in the second InTandem fiscal year, 2.5% in the third InTandem fiscal year and 2.0% in the fourth InTandem fiscal year, of InTandem's net income. (d) Benefits. Executive shall be entitled to participate in the medical, dental, life insurance, disability insurance, 401(k) savings, Executive stock purchase plan and other benefits (collectively, the "Benefits") as these or other Benefits may be implemented from time to time and in accordance with prevailing policies of Cognigen for executive Executives. SECTION 4. Vacation. Executive shall be entitled to an annual vacation of three (3) weeks (without deduction in salary or other compensation or Benefits). Such vacation shall be taken at such time or times as may be convenient to the operations of Cognigen and shall be consistent with the prevailing vacation policies of Cognigen. Within 10 days of the termination or expiration of the Employment Term, any accrued but unused vacation earned by Executive shall be paid to Executive at the rate of Executive's base salary at the time of termination or expiration of the Employment Term. SECTION 5. Reimbursement for Expenses. Executive is authorized to incur reasonable and necessary traveling expenses and other reasonable and necessary expenses and disbursements for or on behalf of Cognigen in the performance of Executive's duties during Executive's employment under this Agreement, in accordance with Cognigen's prevailing expense incurrence policies. Cognigen will reimburse Executive for all such expenses in accordance with Cognigen's prevailing expense reimbursement policies upon presentation of a properly itemized account of such expenditures and the business reasons for such expenditures. SECTION 6. Termination of Employment By Cognigen. (a) Termination. Executive shall be subject to dismissal from Executive's position as an executive of Cognigen at any time and with or without Cause. The effect of any termination of the employment of Executive with Cause is set forth in Section 8(a) hereof. The effect of any termination of the employment of Executive without Cause is set forth in Section 8(d) hereof. (b) Definition of Cause. The term "Cause" shall mean: (i) a material breach of this Agreement by Executive, but only if such breach is not cured within thirty (30) days following written notice by Cognigen to Executive of such breach, assuming such breach may be cured; (ii) Executive is convicted of any act or course of conduct involving moral turpitude; or (iii) Executive engages in any act or course of conduct constituting an abuse of office or authority which significantly adversely affects the business or reputation of Cognigen. Any written notice by Cognigen to Executive pursuant to this Section 6(b) shall set forth, in reasonable detail, the facts and circumstances claimed to constitute the cause. (c) Termination by Reason of Incapacity. In the event that Executive suffers a disability which prevents him from substantially performing Executive's duties under this Agreement for a period of at least sixty (60) calendar days within any fiscal year period (whether consecutive or non-consecutive) (a "Disability"), Cognigen shall have the right to dismiss Executive upon ten (10) calendar days' written notice. In the event of any dispute between Cognigen and Executive as to whether Executive has suffered a Disability, the determination of whether Executive has suffered a Disability shall be made by an independent physician selected by InTandem, and the decision of such physician shall be binding upon Cognigen and Executive. (d) Termination by Death. In the event Executive dies during the Employment Term, this Agreement shall terminate automatically, such termination to be effective on the date of Executive's death. SECTION 7. Termination of Employment By Executive. The employment of Executive under this Agreement shall be deemed to have been terminated by Executive for "Good Reason" if Executive voluntarily terminates employment following the occurrence of (a) a material breach by Cognigen of any of its obligations under this Agreement; provided, however, that Executive shall provide written notice of such material breach within thirty (30) days after Executive's discovery of such material breach and Cognigen shall have the opportunity to cure such default within thirty (30) days after receipt of such written notice, and if Cognigen does not cure the default within such time, then Executive's employment shall be deemed to have been terminated for Good Reason by Executive, thirty (30) days after receipt of such written notice by Cognigen, or such shorter period as InTandem may elect; or (b) a diminution of job responsibilities, reporting assignment or job title for any reason other than for Cause as defined in Section 6(b) above. No resignation or other voluntary termination by Executive other than pursuant to this Section 7 shall be deemed under any circumstances to be a termination with Good Reason, a "constructive termination" or otherwise not in breach of Executive's obligations under this Agreement. SECTION 8. Effect of Termination. (a) For Cause by InTandem; Without Good Reason by Executive. In the event of termination of this Agreement (x) by Cognigen for Cause or (y) by Executive without Good Reason, Cognigen shall pay to Executive within thirty (30) days of such termination any Base Salary accrued but not paid to Executive prior to the effective date of such termination, and Executive shall be entitled to any Benefits which may then be due under any of the benefit or other plans in which Executive is a participant. Executive shall forfeit any right to any bonus not previously paid to Executive by Cognigen and shall not be entitled to any further compensation or benefits hereunder (including, without limitation, the Benefits), except as the same are required by applicable law to be continued or otherwise made available. In addition, Executive shall forfeit all unvested options held by Executive in accordance with the terms of any Incentive Stock Option Agreement then in effect. (b) By Reason of Executive's Death. In the event of the termination of this Agreement by reason of the death of the Executive, Cognigen (i) shall pay, within sixty (60) days of death, Executive's legal representatives (A) any unpaid salary installment in respect of Executive's Base Salary through the last day of the calendar month in which Executive's death occurs, and (B) any bonus previously awarded but not yet paid to Executive; and (ii) shall continue to provide (subject to any applicable eligibility criteria) any medical and dental benefits comprising part of the Benefits (or comparable benefits) to the spouse and any dependents of Executive at the time of Executive's death, for a period of twelve (12) months from the last day of the calendar month in which Executive's death occurs. In addition, any unvested Cognigen options held by Executive at the time of Executive's death that are scheduled to vest within one (1) year of Executive's death shall become immediately vested. (c) By Reason of the Incapacity of the Executive. In the event of termination of this Agreement by reason of the Disability of Executive, Cognigen (i) shall pay to Executive (A) any unpaid Base Salary through the last day of the calendar month in which such termination occurs, and (B) any bonus previously awarded but not yet paid to Executive; and (ii) shall continue to provide (subject to any applicable eligibility criteria) any medical and dental benefits comprising part of the Benefits (or comparable benefits) to Executive, Executive's spouse and any dependents of Executive who enjoyed such benefits at the time of Executive's Disability, for a period of twelve (12) months from the last day of the calendar month in which such termination occurs. In addition, all unvested Cognigen options held by Executive at the time of Executive's death that are scheduled to vest within one (1) year of Executive's death shall become immediately vested. (d) Without Cause by Cognigen; For Good Reason by Executive. In the event of termination of this Agreement (x) by Cognigen without Cause or (y) by Executive for Good Reason, Cognigen (i) shall continue pay to Executive (A) the full amount of Executive's Base Salary through the expiration of the initial Term of this Agreement, as if the Executive's employment had continued without interruption through the date of termination, and (B) any bonus previously awarded to but not yet paid to Executive; and (ii) shall continue to provide Executive with Benefits (or comparable benefits), including (subject to applicable eligibility criteria) medical and dental benefits comprising a portion of the Benefits (or comparable benefits) in respect of Executive's spouse and any dependents of the Executive as of the date of such termination, until one year following the date of termination. In addition, upon any such termination in accordance with this Section 8(d), (xx) any Cognigen stock options granted to Executive shall become immediately vested and exercisable; and (yy) notwithstanding anything to the contrary in any shareholders' agreement to which Executive is a party, Executive shall not be subject to forfeiture of any shares of Cognigen common stock then beneficially owned or controlled by Executive. (e) Sole Remedy. Executive shall not be entitled to any form of severance benefits, including, without limitation, benefits otherwise payable under any of Cognigen regular severance policies, other than those set forth herein. In consideration of the compensation and benefits available and paid hereunder, Executive, except as otherwise expressly provided in this Agreement, unconditionally releases Cognigen and its present and future Affiliates, directors, officers, Executives and agents, or any of them, from any and all claims, liabilities and obligations of any nature pertaining to termination of Executive's employment hereunder. Executive and Cognigen further agree that upon any termination of Executive's employment in accordance with the terms hereof, each of Executive and Cognigen shall act in good faith in connection with any such termination, and neither Executive nor Cognigen shall disparage or otherwise defame the business reputation of the other party hereto. (f) Change in Control. (i) After a Change in Control (as defined below) of Cognigen has occurred, all of Executive's stock options, stock appreciation rights, restricted stock grants or stock bonuses and similar benefits shall be deemed to vest in full on the effective date of such Change of Control, notwithstanding any provision to the contrary in any applicable agreement or plan. If Cognigen (or any successor thereto) terminates Executive's employment with Cognigen within six (6) months after the Change in Control, Executive shall be entitled to receive the sum of (1) Executive's Base Salary for the remainder of the initial term of this Agreement (but in no event less than twelve (12) months' then-current base Salary), (2) bonus compensation, to the extent that Cognigen's commitment to the same existed as of the date of the Change in Control, pro-rated to the date of termination, (3) incentive stock compensation, (4) benefits, (5) perquisites and awards, including, without limitation, immediate vesting of benefits and awards under Cognigen's stock option, stock appreciation, restricted stock, stock bonus or similar plan to the extent not theretofore vested, and (6) any benefits in InTandem pension or retirement plan or program, accrued through the date Executive's employment with Cognigen, that would otherwise terminate pursuant to the terms thereof (the "Termination Date") (all of the foregoing six elements, individually and collectively, the "Termination Compensation"). Notwithstanding the foregoing, if Executive is offered an employment agreement ("New Agreement") by Cognigen within sixty (60) days after the Change in Control, having a term of not less than twelve (12) months on terms substantially similar to those provided herein, Executive shall not be entitled to the Termination Compensation unless within three (3) months after Executive's acceptance of the New Agreement, Executive determines to sever Executive's employment relationship with Cognigen, in which event, the Executive shall be entitled to the Termination Compensation. (ii) or purposes hereof, a "Change in Control" shall be deemed to have occurred if, after the date hereof and before the date Cognigen Networks, Inc. ("Cognigen") owns any InTandem shares of common stock: (A) any "person" or "group" (as such terms are used in Sections (3), 3(a), (9) and 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended) other than the existing shareholders of Cognigen as of the date of this Agreement, including their respective affiliates, becomes a "beneficial owner" (as such term is used in the Exchange Act), directly or indirectly, of shares of Cognigen representing fifty percent (50%) or more of the combined voting power of Cognigen's then outstanding shares; (B) a change in "control" of Cognigen (as the term "control" is defined in rule 12b-2 or successor rule promulgated under the Exchange Act) shall have occurred; (C) the majority of the Board of Directors, as such entire Board of Directors is composed as of the date hereof, no longer serve as directors of Cognigen; (D) the shareholders of Cognigen approve, and Cognigen actually consummates, a plan of complete liquidation of Cognigen or an agreement for the sale or disposition by Cognigen of all or substantially all of Cognigen's assets; or (E) the shareholders of Cognigen approve, and Cognigen actually consummates, a merger or consolidation of Cognigen with any other entity, in which the voting power of Cognigen's interest represents fifty percent (50%) or less of the total voting power of the successor entity. Notwithstanding the foregoing, any transaction involving a leveraged buyout or other acquisition of Cognigen which would otherwise constitute a Change in Control, in which Executive participates in the surviving or successor entity (other than solely as an Executive or consultant), shall not constitute a Change in Control. (iii)It is intended that the "present value" of the payments and benefits to Executive, whether under this Agreement or otherwise, which are included in the computation of "Termination Compensation" shall not, in the aggregate, exceed 2.99 times the "base amount" (the terms "present value" and "base amount" being determined in accordance with Section 280G of the Code). However, if Executive receives payments or benefits from Cognigen prior to payment of the Termination Compensation which, when added to the Termination Compensation, would, in the opinion of the Accountants, subject any of the payments or benefits to Executive to the excise tax imposed by Section 4999 of the Code, Cognigen shall be responsible for payment of such tax and shall gross-up the payment to Executive, accordingly, so as to make the impact of such tax neutral with respect to payments made to Executive. SECTION 9. Non-Competition and Permitted Business Activities. (a) Non-Compete During Employment Term. Executive agrees that during the Employment Term of this Agreement, except with the written consent of InTandem and Cognigen, such Executive shall not, directly or indirectly, engage in competition with InTandem or Cognigen in any manner or capacity (e.g., as an advisor, principal, agent, partner, officer, director, stockholder, Executive, member of any association or otherwise) in any phase of the business which InTandem or Cognigen is conducting during the term of this Agreement, including any business engaged in the provision of telecommunications and internet provider services other than through the facilities of InTandem or Cognigen (a "Competing Business") or (ii) hold any beneficial ownership interest, directly or indirectly, in any Competing Business; provided however, that none of the foregoing shall prohibit Executive from owning, for the purpose of passive investment, (x) less than 5% of any class of securities of another publicly-held corporation, or (y) such interest(s) in non-public non-Competing Business entities as Executive owned prior to the effective date of this Agreement. (b) Executive agrees that, during the term of this Agreement and for a period of twelve (12) consecutive months after termination of employment, Executive shall not, except in the course of Executive's duties hereunder, or except with the prior written permission of InTandem and Cognigen, (i) hire any person employed by InTandem or Cognigen as of the date of termination of employment; or (ii) directly or indirectly induce or attempt to induce or otherwise counsel, advise, solicit or encourage any person to leave the employ of InTandem or Cognigen (or any subsidiary or affiliate thereof) to accept employment with any person or entity other than InTandem or Cognigen, as the case may be. (c) Executive agrees that during the term of this Agreement, and for a period of twelve (12) consecutive months after termination of such employment, Executive shall not directly or indirectly solicit, induce or attempt to solicit, induce or otherwise counsel, advise, or encourage any customer or supplier of InTandem or Cognigen (or any subsidiary or affiliate thereof) to sever its business relationship with InTandem or Cognigen and to become a customer or supplier of another person or entity other than InTandem or Cognigen. (d) Executive agrees that during the term of this Agreement, and for a period of twelve (12) consecutive months after termination of such employment, Executive shall not directly or indirectly solicit, induce or attempt to solicit, induce or otherwise counsel, advise, or encourage any agent, dealer, distributor or consultant of InTandem or Cognigen (or any subsidiary or affiliate thereof) to sever its business relationship with InTandem and to move its existing business base to another person or entity other than InTandem or Cognigen. (e) Executive agrees that during the term of this Agreement, and for a period of twelve (12) consecutive months after termination of such employment. The Executive will not, directly or indirectly, assist or encourage any other person in carrying out, directly or indirectly, any activity that would be prohibited by the above provisions of this Section 9 if such activity were carried out by the Executive, either directly or indirectly. In particular the Executive agrees that he/she will not, directly or indirectly, induce any executive of InTandem to carry out, directly or indirectly, any such activity. (f) The Executive agrees that the restrictions and agreements contained in this Section 9 are reasonable and necessary to protect the legitimate interests of InTandem and that any violation of this Section 9 will cause substantial and irreparable harm to InTandem that would not be quantifiable and for which no adequate remedy would exist at law and accordingly injunctive relief shall be available for any violation of this Section 9. (g) If the duration or geographical extent of, or business activities covered by, this Section 9 are in excess of what is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration, geographical extent or activities that are valid and enforceable. The Executive acknowledges the uncertainty of the law in this respect and expressly stipulates that this Agreement be given the construction which renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law. SECTION 10. Ownership of Work Product. (a) Executive acknowledges that during the Employment Term, he may conceive of, discover, invent or create inventions, improvements, new contributions, literary property, material, ideas and discoveries related to the business of InTandem and Cognigen, whether or not patentable or copyrightable (collectively, "Work Product"), and that various business opportunities may be presented to him by reason of Executive's employment by Cognigen. Executive acknowledges that, unless Cognigen otherwise agrees in writing, all such Work Product related to the business of Cognigen, and all such business opportunities, shall be owned by and belong exclusively to Cognigen, and that he shall have no personal interest therein. (b) Executive shall further, unless Cognigen otherwise agrees in writing, (i) promptly disclose any such Work Product and business opportunities to Cognigen, (ii) assign to Cognigen, upon request and without additional compensation, the entire rights to such Work Product and business opportunities, (iii) execute all documents necessary to carry out the foregoing and (iv) give testimony in support of Executive's inventorship or creation in any appropriate case, upon request of the senior management of Cognigen. Executive agrees that he will not assert any rights to any Work Product or business opportunity as having been made or acquired by him prior to the date of this Agreement, except for Work Product or business opportunities, if any, disclosed to and acknowledged by Cognigen in writing prior to the date hereof. SECTION 11. Non-Disclosure of Confidential Information. (a) Executive shall hold in a fiduciary capacity for the benefit of Cognigen all Confidential Information (as defined below) and shall not, during the term of Executive's employment hereunder or after the termination of such employment, communicate or divulge any Confidential Information to, or use any Confidential Information for the benefit of, any person (including Executive) other than Cognigen, affiliates of Cognigen or persons designated in writing by Cognigen. "Confidential Information" shall mean customer lists, supplier lists, costs and specifications of Cognigen's products and services, know-how, trade secrets, financial data, operational methods, marketing and sales information, marketing plans and strategies, business plans, personnel information, research projects, development plans or projects and all other information of a proprietary nature. Upon termination of Executive's employment with Cognigen for any reason whatsoever, Executive shall promptly return to Cognigen or, at the sole option of Cognigen, otherwise destroy any documents or other written, recorded or graphic matter containing, relating or referring to any Confidential Information (and all copies and extracts thereof and any notes relating thereto) in Executive's possession or control, and deliver to Cognigen a written confirmation that all such Confidential Material has been so returned or destroyed. (b) Executive covenants that he will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity, and that he will not bring onto the premises of Cognigen any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity. (c) The provisions of this Section 11 shall survive the expiration, cancellation or other termination of this Agreement. SECTION 12. Liability for Actions or Inactions; Indemnification. Executive shall not be liable, in damages or otherwise, to Cognigen for any act or failure to act on behalf of Cognigen, performed within the scope of Executive's authority conferred by the terms of Executive's employment under this Agreement, unless such act or omission constituted Cause or fraudulent or willful misconduct, was performed or omitted in bad faith or constituted gross negligence. SECTION 13. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior agreements and understandings, both written and oral, of the parties with respect to the subject matter hereof. SECTION 14. Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Washington (other than its rules of conflicts of laws to the extent that the application of the laws of another jurisdiction would be required thereby). (b) With respect to any suit, action, or proceedings relating to this Agreement ("Proceedings"), the parties irrevocably: (i) submit to the non-exclusive jurisdiction of the courts of the State of Colorado and the United States District Court located in King County , State of Washington; and (ii) waive any objection that they may have at any time to the laying of venue of any Proceedings brought in any such court; waive any claim that such Proceedings have been brought in an inconvenient forum; and further waive the right to object, with respect to such Proceedings, that such court does not have jurisdiction over such party. (c) The parties irrevocably consent to service of process given in the manner provided for notices in Section 20. Nothing in this Agreement shall affect the right of either party to serve process in any other manner permitted by law. SECTION 15. Specific Enforcement. If Executive breaches, or threatens to commit a breach of, any of the provisions of Sections 9, 10, or 11 hereof, Cognigen shall have the right and remedy to have such provision specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to Cognigen and that money damages will not provide an adequate remedy to Cognigen. Nothing in this Section 14 shall be construed to limit the right of Cognigen to collect money damages in the event of a breach of any of the provisions of this Agreement, including, without limitation, Sections 9, 10 and 11 hereof. SECTION 16. Third Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any third party (other than Executive's heirs or representatives of Cognigen), including, without limitation, any creditor of Cognigen or of Executive. No such third party shall obtain any right under any provision of this Agreement or shall by reason of any such provision make any claim in respect of any debt, liability, or obligation (or otherwise) against Cognigen. SECTION 17. Waiver of Jury Trial. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation arising out of or relating to this Agreement and Executive's employment by Cognigen. Each party (a) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver; and (b) acknowledges that it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications set forth in this Section. SECTION 18. Expenses. Each party hereto shall assume and pay its own expenses incident to the negotiation and execution of this Agreement, the preparation for carrying it into effect and the consummation of the transactions contemplated hereby. Without limiting the generality of the foregoing, each party shall pay all legal fees and other fees to consultants and advisors incurred by it relating to this Agreement and such transactions and shall indemnify and hold the other party harmless from and against any claims for such expenses and fees. SECTION 19. Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended and the terms hereof may be waived, only by a written instrument signed by each party, or, in the case of a waiver, by the party waiving compliance. Except where a specific period for action or inaction is provided herein, no delay on the part of a party in exercising any right, power or privilege hereunder shall operate as a waiver thereof. Neither any waiver on the part of a party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege shall preclude any further exercise thereof or the exercise of any other such right, power or privilege. SECTION 20. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and shall be deemed given when so delivered by hand, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service), as follows: If to Cognigen: Cognigen Networks, Inc. 7001 Seaview Avenue, N.W., Suite 210 Seattle, Washington 98117 Attention: Darrell H. Hughes, Chairman and CEO If to Executive: at the then-current address for Executive maintained in the Cognigen Executive files. SECTION 21. Calculations. All calculations of dollar amounts hereunder shall be rounded to the nearest whole cent. Equidistant amounts shall be rounded upwards. SECTION 22. Severability. If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement or the application of such provision to other persons or circumstances shall not be affected thereby; provided, however, that the parties shall negotiate in good faith with respect to an equitable modification of the provision or application thereof held to be invalid. To the extent that it may effectively do so under applicable law, each party hereto hereby waives any provision of law, which renders any provision of this Agreement invalid, illegal or unenforceable in any respect. SECTION 23. Opportunity to Review; No Drafting Presumptions. Both parties acknowledge that the terms and conditions of this Agreement reflect the correct understanding and intent of both parties. The parties acknowledge that they have carefully reviewed the terms and conditions of this Agreement with legal counsel of their own choosing. Should any provision of this Agreement require interpretation or construction, is agreed by the parties that the entity interpreting or construing this Agreement shall not apply a presumption against the party who prepared the document. SECTION 24. Successors and Assigns. Except as otherwise specifically provided in this Agreement, this Agreement shall be binding upon and inure to the benefit of the parties and Cognigen, and their legal representatives, and permitted successors and assigns. SECTION 25. Captions. All headings, paragraph titles and captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provisions hereof. SECTION 26. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be on original and all of which, when taken together, shall together constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. COGNIGEN NETWORKS, INC. By: ---------------------------------------- Title: President ------------------------------- EXECUTIVE Anthony Sgroi EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT (this "Agreement"), dated as of April ___, 2003, is made by and between INTANDEM COMMUNICATIONS CORP., a Delaware corporation having its principal office at ------------------------------------------------ ("InTandem"), and ___________________ ("Executive"). WHEREAS, InTandem desires to retain the services of the Executive and the Executive desires to be employed by InTandem, on the terms and subject to the conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises, the mutual agreements set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: SECTION 1. Employment and Term. (a) InTandem hereby employs Executive commencing as of the date hereof (the "Commencement Date"). The initial term of Executive's employment shall be four years, subject to earlier termination as specified herein (the "Employment Term"). Any renewal or extension of this Agreement shall be determined by the mutual agreement of Executive and InTandem, subject to Section 8 hereof. (b) Executive shall be employed as the ____________________________ of InTandem, with powers and duties consistent with such position, for the duration of the Employment Term. Initially, Executive shall report to the _________________________ and Board of Directors of InTandem. SECTION 2. Full-Time Employment. (a) During Executive's employment by InTandem, Executive shall devote Executive's entire business time, energy and skill to the performance of Executive's duties hereunder and to the business of InTandem. Executive shall faithfully and diligently perform such duties, shall adhere to the instructions of the ____________ and Board of Directors of InTandem and shall use Executive's best efforts to promote the interests of InTandem consistent with the foregoing. Executive shall adhere to all corporate policies of InTandem to the extent not inconsistent with the terms hereof and, to the extent applicable to Executive's duties hereunder, InTandem's subsidiaries and affiliates. Executive shall not, directly or indirectly, alone or as a member of any partnership, or as an officer, director or executive of any other corporation, partnership or other organization, be actively engaged in or concerned with any other duties or pursuits which interfere with the performance of Executive's duties hereunder, or which may be inimical to or contrary to the best interests of InTandem. (b) Executive represents and warrants that he is free to be employed by InTandem upon the terms contained in this Agreement and that he is not a party to any employment contract or restrictive covenant or other arrangement which could reasonably be expected to prevent, interfere with or hinder, or be deemed to be breached by, full performance of Executive's duties hereunder. SECTION 3. Compensation. (a) Base Salary. For all services rendered by Executive in any capacity during Executive's employment under this Agreement, including, without limitation, service as an executive, officer, director or member of any committee of InTandem or any of its subsidiaries or affiliates, InTandem agrees to pay or cause to be paid to Executive a base salary (the "Base Salary") in accordance with the following formula: First Calendar Year $10,000 per month Second Calendar Year $12,500 per month Third Calendar Year $15,000 per month Fourth Calendar Year $15,000 per month Executive's Base Salary shall be less any legally required withholdings and reductions shall be paid in equal installments in accordance with the prevailing salary payment practices of InTandem in effect from time to time. In the event that sickness or accident disability payments under InTandem's insurance programs shall become payable to Executive in respect of any period of Executive's employment hereunder, the salary installment payable to Executive hereunder in respect of Executive's Base Salary on the next succeeding salary installment payment date shall be an amount computed by subtracting (i) the amount of such disability payments which shall have become payable during the period between such date, from (ii) the salary installment otherwise payable to Executive hereunder in respect of Executive's Base Salary on such date. (b) Bonus. For the initial term of this Agreement, no bonus is expressly provided for. Any bonus considered to be paid to Executive shall be paid at the sole discretion of the Board of Directors of InTandem, and shall be made to the extent, at such time and in such amount as determined by the unanimous vote of the Board of Directors of InTandem, in its sole discretion. (c) Incentive Compensation. In addition to the Base Salary, the Executive shall be eligible to earn, as incentive compensation, a percentage equal to, 3% in the second InTandem fiscal year, 2.5% in the third InTandem fiscal year and 2% in the fourth InTandem fiscal year, of InTandem's net income. (d) Benefits. Executive shall be entitled to participate in the medical, dental, life insurance, disability insurance, 401(k) savings, Executive stock purchase plan and other benefits (collectively, the "Benefits") as these or other Benefits may be implemented from time to time and in accordance with prevailing policies of InTandem for executive Executives. SECTION 4. Vacation. Executive shall be entitled to an annual vacation of three (3) weeks (without deduction in salary or other compensation or Benefits). Such vacation shall be taken at such time or times as may be convenient to the operations of InTandem and shall be consistent with the prevailing vacation policies of InTandem. Within 10 days of the termination or expiration of the Employment Term, any accrued but unused vacation earned by Executive shall be paid to Executive at the rate of Executive's base salary at the time of termination or expiration of the Employment Term. SECTION 5. Reimbursement for Expenses. Executive is authorized to incur reasonable and necessary traveling expenses and other reasonable and necessary expenses and disbursements for or on behalf of InTandem in the performance of Executive's duties during Executive's employment under this Agreement, in accordance with InTandem's prevailing expense incurrence policies. InTandem will reimburse Executive for all such expenses in accordance with InTandem's prevailing expense reimbursement policies upon presentation of a properly itemized account of such expenditures and the business reasons for such expenditures. SECTION 6. Termination of Employment By InTandem. (a) Termination. Executive shall be subject to dismissal from Executive's position as an executive of InTandem at any time and with or without Cause. The effect of any termination of the employment of Executive with Cause is set forth in Section 8(a) hereof. The effect of any termination of the employment of Executive without Cause is set forth in Section 8(d) hereof. (b) Definition of Cause. The term "Cause" shall mean: (i) a material breach of this Agreement by Executive, but only if such breach is not cured within thirty (30) days following written notice by InTandem to Executive of such breach, assuming such breach may be cured; (ii) Executive is convicted of any act or course of conduct involving moral turpitude; or (iii) Executive engages in any act or course of conduct constituting an abuse of office or authority which significantly adversely affects the business or reputation of InTandem. Any written notice by InTandem to Executive pursuant to this Section 6(b) shall set forth, in reasonable detail, the facts and circumstances claimed to constitute the cause. (c) Termination by Reason of Incapacity. In the event that Executive suffers a disability which prevents him from substantially performing Executive's duties under this Agreement for a period of at least sixty (60) calendar days within any fiscal year period (whether consecutive or non-consecutive) (a "Disability"), InTandem shall have the right to dismiss Executive upon ten (10) calendar days' written notice. In the event of any dispute between InTandem and Executive as to whether Executive has suffered a Disability, the determination of whether Executive has suffered a Disability shall be made by an independent physician selected by InTandem, and the decision of such physician shall be binding upon InTandem and Executive. (d) Termination by Death. In the event Executive dies during the Employment Term, this Agreement shall terminate automatically, such termination to be effective on the date of Executive's death. SECTION 7. Termination of Employment By Executive. The employment of Executive under this Agreement shall be deemed to have been terminated by Executive for "Good Reason" if Executive voluntarily terminates employment following the occurrence of (a) a material breach by InTandem of any of its obligations under this Agreement; provided, however, that Executive shall provide written notice of such material breach within thirty (30) days after Executive's discovery of such material breach and InTandem shall have the opportunity to cure such default within thirty (30) days after receipt of such written notice, and if InTandem does not cure the default within such time, then Executive's employment shall be deemed to have been terminated for Good Reason by Executive, thirty (30) days after receipt of such written notice by InTandem, or such shorter period as InTandem may elect; or (b) a diminution of job responsibilities, reporting assignment or job title for any reason other than for Cause as defined in Section 6(b) above. No resignation or other voluntary termination by Executive other than pursuant to this Section 7 shall be deemed under any circumstances to be a termination with Good Reason, a "constructive termination" or otherwise not in breach of Executive's obligations under this Agreement. SECTION 8. Effect of Termination. (a) For Cause by InTandem; Without Good Reason by Executive. In the event of termination of this Agreement (x) by InTandem for Cause or (y) by Executive without Good Reason, InTandem shall pay to Executive within thirty (30) days of such termination any Base Salary accrued but not paid to Executive prior to the effective date of such termination, and Executive shall be entitled to any Benefits which may then be due under any of the benefit or other plans in which Executive is a participant. Executive shall forfeit any right to any bonus not previously paid to Executive by InTandem and shall not be entitled to any further compensation or benefits hereunder (including, without limitation, the Benefits), except as the same are required by applicable law to be continued or otherwise made available. In addition, Executive shall forfeit all unvested options held by Executive in accordance with the terms of any Incentive Stock Option Agreement then in effect. (b) By Reason of Executive's Death. In the event of the termination of this Agreement by reason of the death of the Executive, InTandem (i) shall pay, within sixty (60) days of death, Executive's legal representatives (A) any unpaid salary installment in respect of Executive's Base Salary through the last day of the calendar month in which Executive's death occurs, and (B) any bonus previously awarded but not yet paid to Executive; and (ii) shall continue to provide (subject to any applicable eligibility criteria) any medical and dental benefits comprising part of the Benefits (or comparable benefits) to the spouse and any dependents of Executive at the time of Executive's death, for a period of twelve (12) months from the last day of the calendar month in which Executive's death occurs. In addition, any unvested InTandem options held by Executive at the time of Executive's death that are scheduled to vest within one (1) year of Executive's death shall become immediately vested. (c) By Reason of the Incapacity of the Executive. In the event of termination of this Agreement by reason of the Disability of Executive, InTandem (i) shall pay to Executive (A) any unpaid Base Salary through the last day of the calendar month in which such termination occurs, and (B) any bonus previously awarded but not yet paid to Executive; and (ii) shall continue to provide (subject to any applicable eligibility criteria) any medical and dental benefits comprising part of the Benefits (or comparable benefits) to Executive, Executive's spouse and any dependents of Executive who enjoyed such benefits at the time of Executive's Disability, for a period of twelve (12) months from the last day of the calendar month in which such termination occurs. In addition, all unvested InTandem options held by Executive at the time of Executive's death that are scheduled to vest within one (1) year of Executive's death shall become immediately vested. (d) Without Cause by InTandem; For Good Reason by Executive. In the event of termination of this Agreement (x) by InTandem without Cause or (y) by Executive for Good Reason, InTandem (i) shall continue pay to Executive (A) the full amount of Executive's Base Salary through the expiration of the initial Term of this Agreement, as if the Executive's employment had continued without interruption through the date of termination, and (B) any bonus previously awarded to but not yet paid to Executive; and (ii) shall continue to provide Executive with Benefits (or comparable benefits), including (subject to applicable eligibility criteria) medical and dental benefits comprising a portion of the Benefits (or comparable benefits) in respect of Executive's spouse and any dependents of the Executive as of the date of such termination, until one year following the date of termination. In addition, upon any such termination in accordance with this Section 8(d), (xx) any InTandem stock options granted to Executive shall become immediately vested and exercisable; and (yy) notwithstanding anything to the contrary in any shareholders' agreement to which Executive is a party, Executive shall not be subject to forfeiture of any shares of InTandem common stock then beneficially owned or controlled by Executive. (e) Sole Remedy. Executive shall not be entitled to any form of severance benefits, including, without limitation, benefits otherwise payable under any of InTandem's regular severance policies, other than those set forth herein. In consideration of the compensation and benefits available and paid hereunder, Executive, except as otherwise expressly provided in this Agreement, unconditionally releases InTandem and its present and future Affiliates, directors, officers, Executives and agents, or any of them, from any and all claims, liabilities and obligations of any nature pertaining to termination of Executive's employment hereunder. Executive and InTandem further agree that upon any termination of Executive's employment in accordance with the terms hereof, each of Executive and InTandem shall act in good faith in connection with any such termination, and neither Executive nor InTandem shall disparage or otherwise defame the business reputation of the other party hereto. (f) Change in Control. (i) After a Change in Control (as defined below) of InTandem has occurred, all of Executive's stock options, stock appreciation rights, restricted stock grants or stock bonuses and similar benefits shall be deemed to vest in full on the effective date of such Change of Control, notwithstanding any provision to the contrary in any applicable agreement or plan. If InTandem (or any successor thereto) terminates Executive's employment with InTandem within six (6) months after the Change in Control, Executive shall be entitled to receive the sum of (1) Executive's Base Salary for the remainder of the initial term of this Agreement (but in no event less than twelve (12) months' then-current base Salary), (2) bonus compensation, to the extent that InTandem's commitment to the same existed as of the date of the Change in Control, pro-rated to the date of termination, (3) incentive stock compensation, (4) benefits, (5) perquisites and awards, including, without limitation, immediate vesting of benefits and awards under InTandem's stock option, stock appreciation, restricted stock, stock bonus or similar plan to the extent not theretofore vested, and (6) any benefits in InTandem pension or retirement plan or program, accrued through the date Executive's employment with InTandem, that would otherwise terminate pursuant to the terms thereof (the "Termination Date") (all of the foregoing six elements, individually and collectively, the "Termination Compensation"). Notwithstanding the foregoing, if Executive is offered an employment agreement ("New Agreement") by InTandem within sixty (60) days after the Change in Control, having a term of not less than twelve (12) months on terms substantially similar to those provided herein, Executive shall not be entitled to the Termination Compensation unless within three (3) months after Executive's acceptance of the New Agreement, Executive determines to sever Executive's employment relationship with InTandem, in which event, the Executive shall be entitled to the Termination Compensation. (ii) For purposes hereof, a "Change in Control" shall be deemed to have occurred if, after the date hereof and before the date Cognigen Networks, Inc. ("Cognigen") owns any InTandem shares of common stock: (A) any "person" or "group" (as such terms are used in Sections (3), 3(a), (9) and 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended) other than the existing shareholders of InTandem as of the date of this Agreement, including their respective affiliates, becomes a "beneficial owner" (as such term is used in the Exchange Act), directly or indirectly, of shares of InTandem representing fifty percent (50%) or more of the combined voting power of InTandem's then outstanding shares; (B) a change in "control" of InTandem (as the term "control" is defined in rule 12b-2 or successor rule promulgated under the Exchange Act) shall have occurred; (C) the majority of the Board of Directors, as such entire Board of Directors is composed as of the date hereof, no longer serve as directors of InTandem; (D) the shareholders of InTandem approve, and InTandem actually consummates, a plan of complete liquidation of InTandem or an agreement for the sale or disposition by InTandem of all or substantially all of InTandem's assets; or (E) the shareholders of InTandem approve, and InTandem actually consummates, a merger or consolidation of InTandem with any other InTandem, in which the voting power of InTandem's interest represents fifty percent (50%) or less of the total voting power of the successor entity. Notwithstanding the foregoing, any transaction involving a leveraged buyout or other acquisition of InTandem which would otherwise constitute a Change in Control, in which Executive participates in the surviving or successor entity (other than solely as an Executive or consultant), shall not constitute a Change in Control. (iii)It is intended that the "present value" of the payments and benefits to Executive, whether under this Agreement or otherwise, which are included in the computation of "Termination Compensation" shall not, in the aggregate, exceed 2.99 times the "base amount" (the terms "present value", and "base amount" being determined in accordance with Section 280G of the Code). However, if Executive receives payments or benefits from InTandem prior to payment of the Termination Compensation which, when added to the Termination Compensation, would, in the opinion of the Accountants, subject any of the payments or benefits to Executive to the excise tax imposed by Section 4999 of the Code, InTandem shall be responsible for payment of such tax and shall gross-up the payment to Executive, accordingly, so as to make the impact of such tax neutral with respect to payments made to Executive. SECTION 9. Non-Competition and Permitted Business Activities. (a) Non-Compete During Employment Term. Executive agrees that during the Employment Term of this agreement, except with the written consent of InTandem and Cognigen, such Executive shall not, directly or indirectly, engage in competition with InTandem or Cognigen in any manner or capacity (e.g., as an advisor, principal, agent, partner, officer, director, stockholder, Executive, member of any association or otherwise) in any phase of the business which InTandem or Cognigen is conducting during the term of this Agreement, including any business engaged in the provision of telecommunications and internet provider services other than through the facilities of InTandem or Cognigen (a "Competing Business") or (ii) hold any beneficial ownership interest, directly or indirectly, in any Competing Business; provided however, that none of the foregoing shall prohibit Executive from owning, for the purpose of passive investment, (x) less than 5% of any class of securities of another publicly-held corporation, or (y) such interest(s) in non-public non-Competing Business entities as Executive owned prior to the effective date of this Agreement. (b) Executive agrees that, during the term of this Agreement and for a period of twelve (12) consecutive months after termination of employment, Executive shall not, except in the course of Executive's duties hereunder, or except with the prior written permission of InTandem and Cognigen, (i) hire any person employed by InTandem or Cognigen as of the date of termination of employment; or (ii) directly or indirectly induce or attempt to induce or otherwise counsel, advise, solicit or encourage any person to leave the employ of InTandem or Cognigen (or any subsidiary or affiliate thereof) to accept employment with any person or entity other than InTandem or Cognigen, as the case may be. (c) Executive agrees that during the term of this Agreement, and for a period of twelve (12) consecutive months after termination of such employment, Executive shall not directly or indirectly solicit, induce or attempt to solicit, induce or otherwise counsel, advise, or encourage any customer or supplier of InTandem or Cognigen (or any subsidiary or affiliate thereof) to sever its business relationship with InTandem or Cognigen and to become a customer or supplier of another person or entity other than InTandem or Cognigen. (d) Executive agrees that during the term of this Agreement, and for a period of twelve (12) consecutive months after termination of such employment, Executive shall not directly or indirectly solicit, induce or attempt to solicit, induce or otherwise counsel, advise, or encourage any agent, dealer, distributor or consultant of InTandem or Cognigen (or any subsidiary or affiliate thereof) to sever its business relationship with InTandem and to move its existing business base to another person or entity other than InTandem or Cognigen. (e) Executive agrees that during the term of this Agreement, and for a period of twelve (12) consecutive months after termination of such employment. The Executive will not, directly or indirectly, assist or encourage any other person in carrying out, directly or indirectly, any activity that would be prohibited by the above provisions of this Section 9 if such activity were carried out by the Executive, either directly or indirectly. In particular the Executive agrees that he/she will not, directly or indirectly, induce any executive of InTandem to carry out, directly or indirectly, any such activity. (f) The Executive agrees that the restrictions and agreements contained in this Section 9 are reasonable and necessary to protect the legitimate interests of InTandem and that any violation of this Section 9 will cause substantial and irreparable harm to InTandem that would not be quantifiable and for which no adequate remedy would exist at law and accordingly injunctive relief shall be available for any violation of this Section 9. (g) If the duration or geographical extent of, or business activities covered by, this Section 9 are in excess of what is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration, geographical extent or activities that are valid and enforceable. The Executive acknowledges the uncertainty of the law in this respect and expressly stipulates that this Agreement be given the construction which renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law. SECTION 10. Ownership of Work Product. (a) Executive acknowledges that during the Employment Term, he may conceive of, discover, invent or create inventions, improvements, new contributions, literary property, material, ideas and discoveries related to the business of InTandem, whether or not patentable or copyrightable (collectively, "Work Product"), and that various business opportunities may be presented to him by reason of Executive's employment by InTandem. Executive acknowledges that, unless InTandem otherwise agrees in writing, all such Work Product related to the business of InTandem, and all such business opportunities, shall be owned by and belong exclusively to InTandem, and that he shall have no personal interest therein. (b) Executive shall further, unless InTandem otherwise agrees in writing, (i) promptly disclose any such Work Product and business opportunities to InTandem, (ii) assign to InTandem, upon request and without additional compensation, the entire rights to such Work Product and business opportunities, (iii) execute all documents necessary to carry out the foregoing and (iv) give testimony in support of Executive's inventorship or creation in any appropriate case, upon request of the senior management of InTandem. Executive agrees that he will not assert any rights to any Work Product or business opportunity as having been made or acquired by him prior to the date of this Agreement, except for Work Product or business opportunities, if any, disclosed to and acknowledged by InTandem in writing prior to the date hereof. SECTION 11. Non-Disclosure of Confidential Information. (a) Executive shall hold in a fiduciary capacity for the benefit of InTandem all Confidential Information (as defined below) and shall not, during the term of Executive's employment hereunder or after the termination of such employment, communicate or divulge any Confidential Information to, or use any Confidential Information for the benefit of, any person (including Executive) other than InTandem or Cognigen, affiliates of InTandem or Cognigen or persons designated in writing by InTandem or Cognigen. "Confidential Information" shall mean customer lists, suppliers lists, costs and specifications of InTandem's or Cognigen's products and services, know-how, trade secrets, financial data, operational methods, marketing and sales information, marketing plans and strategies, business plans, personnel information, research projects, development plans or projects and all other information of a proprietary nature. Upon termination of Executive's employment with InTandem for any reason whatsoever, Executive shall promptly return to InTandem or, at the sole option of InTandem, otherwise destroy any documents or other written, recorded or graphic matter containing, relating or referring to any Confidential Information (and all copies and extracts thereof and any notes relating thereto) in Executive's possession or control, and deliver to InTandem a written confirmation that all such Confidential Material has been so returned or destroyed. (b) Executive covenants that he will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity, and that he will not bring onto the premises of InTandem any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity. (c) The provisions of this Section 11 shall survive the expiration, cancellation or other termination of this Agreement. (d) Liability for Actions or Inactions; Indemnification. Executive shall not be liable, in damages or otherwise, to InTandem for any act or failure to act on behalf of InTandem, performed within the scope of Executive's authority conferred by the terms of Executive's employment under this Agreement, unless such act or omission constituted Cause or fraudulent or willful misconduct, was performed or omitted in bad faith or constituted gross negligence. SECTION 12. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any and all prior agreements and understandings, both written and oral, of the parties with respect to the subject matter hereof. SECTION 13. Governing Law; Jurisdiction; Service of Process. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Washington (other than its rules of conflicts of laws to the extent that the application of the laws of another jurisdiction would be required thereby). (b) With respect to any suit, action, or proceedings relating to this Agreement ("Proceedings"), the parties irrevocably: (i) submit to the non-exclusive jurisdiction of the courts of the State of Washington and the United States District Court located in King County, State of Washington; and (ii) waive any objection that they may have at any time to the laying of venue of any Proceedings brought in any such court; waive any claim that such Proceedings have been brought in an inconvenient forum; and further waive the right to object, with respect to such Proceedings, that such court does not have jurisdiction over such party. (c) The parties irrevocably consent to service of process given in the manner provided for notices in Section 20. Nothing in this Agreement shall affect the right of either party to serve process in any other manner permitted by law. SECTION 14. Specific Enforcement. If Executive breaches, or threatens to commit a breach of, any of the provisions of Sections 9, 10, or 11 hereof, InTandem or Cognigen, as the case may be, shall have the right and remedy to have such provision specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to InTandem or Cognigen and that money damages will not provide an adequate remedy to InTandem or Cognigen. Nothing in this Section 14 shall be construed to limit the right of InTandem to collect money damages in the event of a breach of any of the provisions of this Agreement, including, without limitation, Sections 9, 10 and 11 hereof. SECTION 15. Third Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any third party (other than Executive's heirs or representatives or Cognigen), including, without limitation, any creditor of InTandem, Cognigen or of Executive. No such third party shall obtain any right under any provision of this Agreement or shall by reason of any such provision make any claim in respect of any debt, liability, or obligation (or otherwise) against InTandem or Cognigen. SECTION 16. Waiver of Jury Trial. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation arising out of or relating to this Agreement and Executive's employment by InTandem. Each party (a) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver; and (b) acknowledges that it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications set forth in this Section. SECTION 17. Expenses. Each party hereto shall assume and pay its own expenses incident to the negotiation and execution of this Agreement, the preparation for carrying it into effect and the consummation of the transactions contemplated hereby. Without limiting the generality of the foregoing, each party shall pay all legal fees and other fees to consultants and advisors incurred by it relating to this Agreement and such transactions and shall indemnify and hold the other party harmless from and against any claims for such expenses and fees. SECTION 18. Waivers and Amendments. This Agreement may be amended, superseded, canceled, renewed or extended and the terms hereof may be waived, only by a written instrument signed by each party, or, in the case of a waiver, by the party waiving compliance. Except where a specific period for action or inaction is provided herein, no delay on the part of a party in exercising any right, power or privilege hereunder shall operate as a waiver thereof. Neither any waiver on the part of a party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege shall preclude any further exercise thereof or the exercise of any other such right, power or privilege. SECTION 19. Notices. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service and shall be deemed given when so delivered by hand, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service), as follows: if to InTandem: InTandem Communications Corp. [ ] [ ] Attention: ________________ With a copy to: [ ] [ ] Attention: ________________ if to Executive: -------------------- [ ] [ ] at the then-current address for Executive maintained in the InTandem Executive files. SECTION 20. Calculations. All calculations of dollar amounts hereunder shall be rounded to the nearest whole cent. Equidistant amounts shall be rounded upwards. SECTION 21. Severability. If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Agreement or the application of such provision to other persons or circumstances shall not be affected thereby; provided, however, that the parties shall negotiate in good faith with respect to an equitable modification of the provision or application thereof held to be invalid. To the extent that it may effectively do so under applicable law, each party hereto hereby waives any provision of law, which renders any provision of this Agreement invalid, illegal or unenforceable in any respect. SECTION 22. Opportunity to Review; No Drafting Presumptions. Both parties acknowledge that the terms and conditions of this Agreement reflect the correct understanding and intent of both parties. The parties acknowledge that they have carefully reviewed the terms and conditions of this Agreement with legal counsel of their own choosing. Should any provision of this Agreement require interpretation or construction, is agreed by the parties that the entity interpreting or construing this Agreement shall not apply a presumption against the party who prepared the document. SECTION 23. Successors and Assigns. Except as otherwise specifically provided in this Agreement, this Agreement shall be binding upon and inure to the benefit of the parties and Cognigen, and their legal representatives, and permitted successors and assigns. SECTION 24. Captions. All headings, paragraph titles and captions contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provisions hereof. SECTION 25. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be on original and all of which, when taken together, shall together constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. INTANDEM COMMUNICATIONS CORP. By: ---------------------------------------- Title: ------------------------------- EXECUTIVE SCHEDULE G PRINCIPALS' STOCK OPTION COGNIGEN NETWORKS, INC. NON-QUALIFIED STOCK OPTION AGREEMENT This NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made this _____ day of _____, _____, by and between COGNIGEN NETWORKS, INC., a Colorado corporation (the "Company") and _____, an individual resident of _____, _____ ("Optionee"). 1. Grant of Option. The Company hereby grants Optionee the option (the "Option") to purchase all or any part of one-third of an aggregate number of shares of the Company's common stock (up to a maximum of 90,000 shares) (the "Shares") that is determined (i) by deducting from the total amount of the Company's revenue derived for the period between the Closing Date and April 1, 2004, from the sales of its 1 + resale products the revenue that the Company received from the sales thereof as of the Closing Date; (ii) multiplying that amount by 6% (for sales of 1 + resale products attributable to the Company) and 12% (for sales of 1 + resale products, attributable to InTandem); and (iii) dividing the total of the percentage result by the last sale price of a share of the Company's common stock as of April 1, 2004. The exercise price shall be equal to the last sale price of the Company's common stock as of April 1, 2004. The Option shall terminate March 31, 2009. 2. Vesting of Option Rights. Except as otherwise provided in this Agreement, the Option may be exercised by Optionee quarterly over a three-year period commencing one year after the date hereof. During the lifetime of Optionee, the Option shall be exercisable only by Optionee and shall not be assignable or transferable by Optionee, other than by will or the laws of descent and distribution. 3. Method of Exercise of Option. Subject to the foregoing, the Option may be exercised in whole or in part from time to time by serving written notice of exercise on the Company at its principal office within the Option period. The notice shall state the number of Shares as to which the Option is being exercised and shall be accompanied by payment of the exercise price. Payment of the exercise price shall be made in cash (including bank check, personal check or money order payable to the Company). 4. Acceleration of Exercisability Upon Change in Control. Notwithstanding any other provision in the Agreement, the Option may be exercised as to 100% of the Shares on the date of a "Change in Control." A "Change in Control" shall mean any of the following: (i) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other corporate reorganization are owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other corporate reorganization, (ii) a public announcement that any person has acquired beneficial ownership of 51% or more of the then outstanding shares of Common Stock and, for this purpose, the terms "person" and "beneficial ownership" shall have the meanings provided in Section 13(d) of the Securities Exchange Act of 1934, as amended or related rules promulgated by the Securities and Exchange Commission; (iii) the commencement of or public announcement of an intention to make a tender or exchange offer for 51% or more of the then outstanding shares of the Common Stock; (iv) a sale of all or substantially all of the assets of the Company or (v) the Board of Directors of the Company, in its sole and absolute discretion, determines that there is a change in control of the Company. 5. Dilution or Other Adjustment. (a) Adjustment of Exercise Price for Stock Splits, Reverse Stock Splits and Stock Dividends. If the outstanding shares of Common Stock shall be subdivided (split), 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 Option 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 Option 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 Option shall be proportionately increased, and the cash consideration payable per share of 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 Option shall be proportionately reduced and the cash consideration payable per share of Common Stock shall be proportionately increased. (b) Adjustment for Capital Reorganizations. If at any time there shall be a capital reorganization or reclassification of the Company's Common Stock or a merger or consolidation of the Company with or into another corporation (other than a merger after which the Company is the continuing corporation and which does not result in any change of outstanding shares of Common Stock), or the sale or lease of all or substantially all of the Company's properties and assets to any other entity or person, then, as part of such reorganization, reclassification, merger, consolidation, sale or lease, the Company, as a condition precedent to such transaction, shall provide, or cause effective provision to be made so, that the Optionee shall thereafter be entitled to receive on exercise of this Option during the exercise period specified in this Option and upon payment of the exercise price of this Option, as adjusted to the extent required under (a) above, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such merger or consolidation, to which a holder of the Shares deliverable on exercise of this Option would have been entitled on such capital reorganization, reclassification, merger, consolidation or sale if this Option had been exercised immediately before such capital reorganization, reclassification, merger, consolidation, sale or lease. In any such case, appropriate adjustment, as determined in good faith by the Company's Board of Directors, shall be made in the application of the provisions of this Option with respect to the rights and interests of the Optionee after the reorganization, reclassification, merger. consolidation, sale or lease to assure that the provisions of this Option, including all adjustments to the exercise price of this Option then in effect and the number of shares which may be purchased upon exercise of this Option, but without any change in the aggregate exercise price, shall be applicable after any such transaction, as near as reasonably they may be, in relation to any shares or other securities or property deliverable after such event upon exercise of this Option. If, as a result of an adjustment made pursuant to this subsection (b), the Optionee of the Option that is thereafter exercised shall become entitled to receive shares of two or more classes of capital stock of the Company or any other corporation or entity, the board of directors (or other governing body if there be no board of directors) thereof (whose determination shall be conclusive and shall be described in a statement filed with the Company) shall determine the allocation of the adjusted exercise price between or among shares of such classes of capital stock. If any subsequent adjustments to the exercise price are made pursuant to this Section 5, such adjustments shall be made separately to the portion of the exercise price so allocated to each of such classes of capital stock. The foregoing provisions of this subsection (b) similarly apply to successive reclassifications, consolidations, mergers, sales or leases. (c) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 5, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Optionee a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of the Optionee, furnish or cause to be furnished to the Optionee a like certificate setting forth: (i) Such adjustments or readjustments; (ii) The exercise price of this Option at the time in effect; and (iii)The number of Shares and the amount, if any, of other property that at the time would be received upon the exercise of this Option. (d) Notices of Record Date. If (i) the Company establishes a record date to determine the holders of any class of securities for the purpose of determining who is entitled to receive any dividend or other distribution, (ii) the Company shall offer to the holders of Common Stock for subscription or purchase by them of any shares of stock of any class or any other rights, or (iii) any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company or dissolution, liquidation or winding up of the Company ("Certain Events") shall be effected, the Company shall mail to the Optionee at least ten (10) days prior to the date specified for the taking of (A) a record or (B) the proposed action, a notice specifying the proposed action to be taken and stating the date (1) of record for any such dividend or distribution or (2) when any such Certain Events are to be consummated and the date, if any, to be fixed as to when the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon the completion of any such Certain Events. 6. Miscellaneous. (a) No Rights of Stockholders. Neither Optionee, Optionee's legal representative nor a permissible assignee of this Option shall have any of the rights and privileges of a stockholder of the Company with respect to the Shares, unless and until such Shares have been issued in the name of Optionee, Optionee's legal representative or permissible assignee, as applicable. (b) No Right to Employment. The grant of the Option shall not be construed as giving Optionee the right to be retained in the employ of the Company or of an affiliate or give the Optionee the right to be a director of the Company or an affiliate of the Company, nor will it affect in any way the right of the Company or an affiliate to terminate such employment or position at any time, with or without cause. In addition, the Company or an affiliate may at any time dismiss Optionee from employment, or terminate the term of a director of the Company or an affiliate, free from any liability or any claim under this Agreement. Nothing in this Agreement shall confer on any person any legal or equitable right against the Company or any affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an affiliate. The Option granted hereunder shall not form any part of the wages or salary of Optionee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an Optionee of the Company or any affiliate be entitled to any compensation for any loss of any right or benefit under this Agreement which such Optionee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. (c) Governing Law. The validity, construction and effect of this Agreement, and any rules and regulations relating to this Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Washington. (d) Severability. If any provision of this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify this Agreement under any law deemed applicable by the Company, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Company, materially altering the purpose or intent of this Agreement, such provision shall be stricken as to such jurisdiction of this Agreement, and the remainder of this Agreement shall remain in full force and effect. (e) No Trust or Fund Created. This Agreement shall not create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any affiliate and Optionee or any other person. (f) Headings. Headings are given to the Sections and subsections of the Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Agreement or any provision thereof. (g) Conditions Precedent to Issuance of Shares. Shares shall not be issued pursuant to the exercise of the Option unless such exercise and the issuance and delivery of the applicable Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Securities and Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, the requirements of any applicable Stock Exchange or the Nasdaq National Market and the Washington General Corporation Law. As a condition to the exercise of the purchase price relating to the Option, the Company may require that the person exercising or paying the purchase price represent and warrant that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation and warranty is required by law. (h) Withholding. In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to assure (i) notice to the Company of any disposition of the shares of the Company within the time periods described above, and (ii) that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Optionee. IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement on the date set forth in the first paragraph. COGNIGEN NETWORKS, INC. By: Name: Title: [OPTIONEE] Name: COGNIGEN NETWORKS, INC. NON-QUALIFIED STOCK OPTION AGREEMENT 1. This NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made this _____ day of _____, _____, by and between COGNIGEN NETWORKS, INC., a Colorado corporation (the "Company") and _____, an individual resident of _____, _____ ("Optionee").Grant of Option. - The Company hereby grants Optionee the option (the "Option") to purchase all or any part of 60,000 shares of the Company's common stock (the "Shares"), at the option exercise price equal to the last sale price as of the closing date of the Funding Agreement. The Option shall terminate at the close of business five years from the date hereof. 2. Vesting of Option Rights. (a) Except as otherwise provided in this Agreement, the Option may be exercised by Optionee in accordance with the following schedule: Number of Shares with respect to which On or after each of the Option is the following dates exercisable - ------------------------- -------------------------- April 1, 2004 20,000 July 1, 2004 5,000 Oct 1, 2004 5,000 Jan 1, 2005 5,000 April 1, 2005 5,000 July 1, 2005 5,000 Oct 1, 2005 5,000 Jan 1, 2006 5,000 April 1, 2006 5,000 (b) During the lifetime of Optionee, the Option shall be exercisable only by Optionee and shall not be assignable or transferable by Optionee, other than by will or the laws of descent and distribution. 3. Termination of Option. (a) Exercise of Option After Termination of Employment. The Option shall terminate and may no longer be exercised after 12 months after Optionee ceases to be employed by the Company. 4. InTandem's Failure to Meet Performance Objective. This Option shall expire valueless in the event that InTandem Communications Corp. fails to meet its revenue and profit and loss performance objectives established in Schedule B of the Funding Agreement. Method of Exercise of Option. Subject to the foregoing, the Option may be exercised in whole or in part from time to time by serving written notice of exercise on the Company at its principal office within the Option period. The notice shall state the number of Shares as to which the Option is being exercised and shall be accompanied by payment of the exercise price. Payment of the exercise price shall be made in cash (including bank check, personal check or money order payable to the Company). 5. Acceleration of Exercisability Upon Change in Control. Notwithstanding any other provision in the Agreement, the Option may be exercised as to 100% of the Shares on the date of a "Change in Control." A "Change in Control" shall mean any of the following: (i) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other corporate reorganization are owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other corporate reorganization, (ii) a public announcement that any person has acquired beneficial ownership of 51% or more of the then outstanding shares of Common Stock and, for this purpose, the terms "person" and "beneficial ownership" shall have the meanings provided in Section 13(d) of the Securities Exchange Act of 1934, as amended or related rules promulgated by the Securities and Exchange Commission; (iii) the commencement of or public announcement of an intention to make a tender or exchange offer for 51% or more of the then outstanding shares of the Common Stock; (iv) a sale of all or substantially all of the assets of the Company or (v) the Board of Directors of the Company, in its sole and absolute discretion, determines that there is a change in control of the Company. 6. Dilution or Other Adjustment. (a) Adjustment of Exercise Price for Stock Splits, Reverse Stock Splits and Stock Dividends. If the outstanding shares of Common Stock shall be subdivided (split), 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 Option 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 Option 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 Option shall be proportionately increased, and the cash consideration payable per share of 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 Option shall be proportionately reduced and the cash consideration payable per share of Common Stock shall be proportionately increased. (b) Adjustment for Capital Reorganizations. If at any time there shall be a capital reorganization or reclassification of the Company's Common Stock or a merger or consolidation of the Company with or into another corporation (other than a merger after which the Company is the continuing corporation and which does not result in any change of outstanding shares of Common Stock), or the sale or lease of all or substantially all of the Company's properties and assets to any other entity or person, then, as part of such reorganization, reclassification, merger, consolidation, sale or lease, the Company, as a condition precedent to such transaction, shall provide, or cause effective provision to be made so, that the Optionee shall thereafter be entitled to receive on exercise of this Option during the exercise period specified in this Option and upon payment of the exercise price of this Option, as adjusted to the extent required under (a) above, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such merger or consolidation, to which a holder of the Shares deliverable on exercise of this Option would have been entitled on such capital reorganization, reclassification, merger, consolidation or sale if this Option had been exercised immediately before such capital reorganization, reclassification, merger, consolidation, sale or lease. In any such case, appropriate adjustment, as determined in good faith by the Company's Board of Directors, shall be made in the application of the provisions of this Option with respect to the rights and interests of the Optionee after the reorganization, reclassification, merger, consolidation, sale or lease to assure that the provisions of this Option, including all adjustments to the exercise price of this Option then in effect and the number of shares which may be purchased upon exercise of this Option, but without any change in the aggregate exercise price, shall be applicable after any such transaction, as near as reasonably they may be, in relation to any shares or other securities or property deliverable after such event upon exercise of this Option. If, as a result of an adjustment made pursuant to this subsection (b), the Optionee of the Option that is thereafter exercised shall become entitled to receive shares of two or more classes of capital stock of the Company or any other corporation or entity, the board of directors (or other governing body if there be no board of directors) thereof (whose determination shall be conclusive and shall be described in a statement filed with the Company) shall determine the allocation of the adjusted exercise price between or among shares of such classes of capital stock. If any subsequent adjustments to the exercise price are made pursuant to this Section 6, such adjustments shall be made separately to the portion of the exercise price so allocated to each of such classes of capital stock. The foregoing provisions of this subsection (b) similarly apply to successive reclassifications, consolidations, mergers, sales or leases. (c) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 6, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Optionee a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of the Optionee, furnish or cause to be furnished to the Optionee a like certificate setting forth: (i) Such adjustments or readjustments; (ii) The exercise price of this Option at the time in effect; and (iii)The number of Shares and the amount, if any, of other property that at the time would be received upon the exercise of this Option. (d) Notices of Record Date. If (i) the Company establishes a record date to determine the holders of any class of securities for the purpose of determining who is entitled to receive any dividend or other distribution, (ii) the Company shall offer to the holders of Common Stock for subscription or purchase by them of any shares of stock of any class or any other rights, or (iii) any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company or dissolution, liquidation or winding up of the Company ("Certain Events") shall be effected, the Company shall mail to the Optionee at least ten (10) days prior to the date specified for the taking of (A) a record or (B) the proposed action, a notice specifying the proposed action to be taken and stating the date (1) of record for any such dividend or distribution or (2) when any such Certain Events are to be consummated and the date, if any, to be fixed as to when the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon the completion of any such Certain Events. 7. Miscellaneous. (a) No Rights of Stockholders. Neither Optionee, Optionee's legal representative nor a permissible assignee of this Option shall have any of the rights and privileges of a stockholder of the Company with respect to the Shares, unless and until such Shares have been issued in the name of Optionee, Optionee's legal representative or permissible assignee, as applicable. (b) No Right to Employment. The grant of the Option shall not be construed as giving Optionee the right to be retained in the employ of the Company or of an affiliate or give the Optionee the right to be a director of the Company or an affiliate of the Company, nor will it affect in any way the right of the Company or an affiliate to terminate such employment or position at any time, with or without cause. In addition, the Company or an affiliate may at any time dismiss Optionee from employment, or terminate the term of a director of the Company or an affiliate, free from any liability or any claim under this Agreement. Nothing in this Agreement shall confer on any person any legal or equitable right against the Company or any affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an affiliate. The Option granted hereunder shall not form any part of the wages or salary of Optionee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an Optionee of the Company or any affiliate be entitled to any compensation for any loss of any right or benefit under this Agreement which such Optionee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. (c) Governing Law. The validity, construction and effect of this Agreement, and any rules and regulations relating to this Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Washington. (d) Severability. If any provision of this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify this Agreement under any law deemed applicable by the Company, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Company, materially altering the purpose or intent of this Agreement, such provision shall be stricken as to such jurisdiction of this Agreement, and the remainder of this Agreement shall remain in full force and effect. (e) No Trust or Fund Created. This Agreement shall not create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any affiliate and Optionee or any other person. (f) Headings. Headings are given to the Sections and subsections of the Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Agreement or any provision thereof. (g) Conditions Precedent to Issuance of Shares. Shares shall not be issued pursuant to the exercise of the Option unless such exercise and the issuance and delivery of the applicable Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Securities and Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, the requirements of any applicable Stock Exchange or the Nasdaq National Market and the Washington General Corporation Law. As a condition to the exercise of the purchase price relating to the Option, the Company may require that the person exercising or paying the purchase price represent and warrant that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation and warranty is required by law. (h) Withholding. In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to assure (i) notice to the Company of any disposition of the shares of the Company within the time periods described above, and (ii) that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Optionee. IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement on the date set forth in the first paragraph. COGNIGEN NETWORKS, INC. By: Name: Title: [OPTIONEE] Name: SCHEDULE H LIABILITIES