10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-K

(Mark One)
ý	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the fiscal year ended December 31, 2001

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from                          to                          .

Commission File Number 0-22718

ZAMBA CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	41-1636021
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
3033 Excelsior Blvd, Suite 200, Minneapolis, Minnesota  55416
(Address of Principal Executive Offices, including Zip Code)
Registrant’s Telephone Number, Including Area Code: (952) 832-9800
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES ý  NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

The aggregate market value of voting stock held by non-affiliates of the registrant was approximately $13,000,000 based on the closing sale price of the Registrant’s Common Stock as reported on the Nasdaq National Market on March 21, 2002.

The number of shares outstanding of the registrant’s common stock, as of March 21, 2002, was 38,916,993 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the registrant’s Annual Meeting of Stockholders to be held on June 4, 2002, are incorporated by reference into Part III of this report.

PART I

Cautionary Statement Regarding Forward-Looking Information

Certain statements in this Annual Report on Form 10-K are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  You can identify these forward-looking statements by our use of the words “believes,” “anticipates,” “plans,” “expects,” “may,” “will,” “would,” “intends,” “estimates” and similar expressions, whether in the negative or affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations.  Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make.   These statements are only predictions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, and/or performance of achievements.   We do not assume any obligation to update any forward-looking statements that we make, whether as a result of new information, future events or otherwise.

Factors that may impact forward-looking statements include, among others, the growth rate of the marketplace for customer-centric solutions, our ability to develop skills in implementing customer-centric solutions, the ability of our partners to maintain competitive products, the impact of competition and pricing pressures from actual and potential competitors with greater financial resources, our ability to obtain large-scale consulting services agreements, client decision-making processes, changes in expectations regarding the information technology industry, our ability to hire and retain competent employees, our ability to make acquisitions under advantageous terms and conditions, our success in integrating acquisitions into our business and our culture and possible costs incurred related to the integration, our ability to grow revenues from acquired companies, possible changes in collections of accounts receivable, changes in general economic conditions and interest rates, and other factors identified in our filings with the Securities and Exchange Commission, including the factors set forth on Exhibit 99.01 to this Form 10-K.

Item 1.  Business.

Our Company

ZAMBA Corporation provides customer relationship management (“CRM”) consulting and systems integration services for large corporations and other organizations.  We were incorporated in Delaware in 1990 and conduct operations under the trade name “ZAMBA Solutions.”  We offer a comprehensive array of CRM solutions and offerings that help companies profitably acquire, retain, and grow customers by leveraging best practices and best-in-class technology across all customer processes, and by providing customer interactions across all touchpoints, or methods by which customers communicate with an organization.  We provide strategy and business process consulting, as well as customization and systems integration for software applications, which we call “packages,” that our clients purchase from third parties.  The end result of our work is the CRM “solution.”  These “solutions” include helping our clients to implement standard methods for interacting with their customers, by integrating multiple technology-based sales, marketing, and service channels, such as the Internet, telephone, fax, email, wireless, and direct.  Our clients hire us to assist them with strategic planning and development of technology-based tools, designed to allow collection and analysis of detailed information concerning their customers, and to help them meet their customers’ requirements.

Our solutions are driven by a comprehensive CRM Blueprint™, which provides a framework of interdependent processes and technologies for integrated, strategic CRM solutions.  Our specific solution offerings include:

•Strategy & Alignment — helps companies in the creation of a customer-centric vision that is in alignment with their business strategy.  It defines the processes of change management and enterprise transformation necessary for the successful execution of the strategy.  This offering results in the development of a business case and a comprehensive roadmap, detailing specific CRM solutions that will provide consistent and integrated customer experience models and business processes;

2

•Analytics & Marketing — helps organizations build a comprehensive repository of customer data, prepare that data for use through a variety of data analysis and data mining techniques, and then apply the insights developed to online and offline marketing activities, based on predictive models and real-time reactions to customer behaviors;

•Content & Commerce — advances brand awareness and enhances multiple touchpoints by enabling enterprises to market and sell directly to customers online through the efficient creation, management and delivery of personalized transactive content, products and services;

•Contact Center — helps companies engage their customers in a multi-channel customer interaction center that provides superior service and consistent experiences, as well as cross-sell and up-sell activities via live agents or automated interactions;

•Field Sales — allows organizations to shorten sales cycles and increase the probability of sales success through effective contact, lead, activity, opportunity, pipeline, account, commissions and territory management;

•Field Service — helps companies more efficiently provide customer service and support through the management of service requests, workforce scheduling, contracts, repair process tracking, service part usage, ordering and return, and defect tracking and reporting; and

•Enterprise Integration — enables the design and implementation of unified business processes and technology systems across the extended enterprise in order to link CRM applications to one another, as well as to other systems, including Enterprise Resource Planning (ERP), supply chain and legacy, thereby aligning organizational processes and functions to deliver value to customers.

Prior to 1998, we derived a substantial amount of our revenue from the sales of proprietary hardware and software that originally enabled data communication over specialized mobile radio (“SMR”) technology and, eventually, most types of wireless networks.  During 1996, we began a process to expand the services we could offer to our clients by becoming a systems integrator focused on wireless data communication and ceased production of our proprietary hardware.  We took these actions due to slower than expected market and related revenue growth in the proprietary hardware and software market.  During the second half of 1997 and throughout 1998, we broadened our sales focus to provide systems integration services for customer care including sales force automation, customer support, marketing, field service and field sales automation, and call centers. In September 1998, we completed our acquisition of the QuickSilver Group, Inc. (“QuickSilver”), a customer care consulting company specializing in software package implementation for call center management, sales automation, marketing automation, and automated field service and field sales.  This acquisition enabled us to expand our consulting and systems integration capabilities and geographic presence. In 1998, less than 4% of our revenue was derived from the sale of proprietary hardware and software, and in 1999 and later, less than 1% of our revenue was derived from the sale of proprietary hardware and software. For additional information regarding our acquisitions, see Note 5 to the consolidated financial statements included in Item 14 in this Annual Report on Form 10-K.

We now exclusively provide CRM services, helping clients to create a high-level customer management vision and align it with their business strategy, and then customizing CRM software packages developed by third party vendors to their needs.  We help our clients better anticipate, understand and respond to the needs of their current and potential customers.  Based on our CRM expertise and experience,  we have created solutions that we believe address each aspect of CRM.

We derive a portion of our revenue from sales outside the United States. In 2001, approximately 10% of our revenues were derived from a customer located in Canada.  In 1999 and 2000, less than 1% of our revenues were derived from the same customer.   Any long-lived assets located in foreign countries were immaterial for the past three fiscal years.

Industry Background

CRM is a business strategy used by businesses and governmental organizations to enhance their customers’ access to and experience with their enterprise through multiple channels of communication, including the Internet, telephone, and direct sales.  In addition, organizations implement CRM to increase their knowledge of their customers’ preferences and needs.

The ability to profitably attract, retain, service and expand customer relationships is critical to success in today’s highly competitive market.  As companies implement CRM tools and best practices to

3

enhance their customer management abilities, they are realizing the importance of providing consistent, high quality customer experiences.  Because customers will no longer accept different treatments through different channels, companies must have an effective multi-channel approach for customer interactions.  However, integrating multiple channels with existing enterprise systems requires enterprise-wide strategic vision, business process management skills and technology expertise.  To meet this challenge, organizations are seeking assistance from third party CRM service providers.  However, in the past twelve to eighteen months, there has been a pronounced decline in customer spending for information technology consulting services, including CRM services.  There is no assurance that expenditures for information technology consulting services, including CRM services, will return to their former levels.

Clients

We primarily target large corporations. We have proven our CRM expertise by implementing solutions for over 300 clients since 1998. Best Buy, Nortel Networks, and Enbridge Services, each accounted for over 10% of our revenues in 2001. Best Buy was the only customer who accounted for more than 10% of our revenues in 2000.  No customer accounted for more than 10% of our revenues in 1999.

Relationships With Leading Technology Providers

In order to deliver best-in-class solutions, we have established alliances with some of the leading software companies and technology providers in the world. Some of the companies that we have worked with in the past year include Amdocs, Art Technology Group, Aspect Communications, E.piphany, Genesys, Informatica, Interwoven, Palm, PeopleSoft, Pivotal, Primus, and Siebel Systems.

At the present time, we do not have material contracts with any of these companies. However, some of these alliances are important to us for the referrals they may provide.  Currently, our most significant alliances in terms of revenue opportunities are Amdocs, Aspect, Siebel, and PeopleSoft.   We work closely with these companies’ sales organizations to pursue joint clients in need of CRM solutions. In many instances, these companies sell their CRM software packages to customers, and we provide customization and systems integration.  In other cases, our clients request that we assist in determining the most appropriate CRM packages to meet their needs.

Strategic Alliance With HCL Technologies

On February 22, 2002, we entered into a Strategic Alliance Agreement with HCL Technologies America, Inc. (“HCL America”) and HCL Technologies Limited, India (“HCL”), in which we will work with HCL and HCL America to jointly pursue, facilitate, manage and maintain business opportunities with Amdocs and Blue Cross Blue Shield for the provision of CRM services through the use of the services offered by, and the particular experience and expertise of, ZAMBA, HCL America and HCL.  In connection with the Strategic Alliance Agreement, HCL America purchased 2,460,025 shares of our common stock from us in a private transaction, for an aggregate consideration of $1,000,000, and we issued HCL America a warrant to purchase up to 615,006 shares of our common stock.  This warrant may be exercised at a per share purchase price of $0.61 at any time through the close of business on February 21, 2007.  The shares were issued at the average closing bid price of our common stock for the twenty trading days preceding the date of the agreement, and the exercise price for the warrant was set at 150% of the per share price for the common stock purchased by HCL America.  As a result of the purchase of our shares and the issuance of the warrant, HCL America and HCL, as the parent company of HCL America, are now jointly beneficial owners of more than 5% of our outstanding common stock.

Ownership in NextNet Wireless, Inc.

We also own approximately 33% of the equity in NextNet Wireless, Inc. (“NextNet”), a private corporation that develops non-line-of-sight broadband wireless access platforms that provide telecommunications carriers with solutions for rapid deployment of high-speed, two-way voice and data services over the “last mile” of the communications network.  Our chairman, Joseph B. Costello, is also the chairman and a shareholder of NextNet.  Another one of our directors, Dixon Doll, is also a director and a shareholder of NextNet.  Several of NextNet’s employees are former employees of ours, but we have no involvement with NextNet’s operations other than through our role as a shareholder and our common directors.  Our involvement with NextNet is that of a passive investor.

4

Competition

The CRM services integration market is highly competitive and served by numerous global, national, regional and local firms.  The market includes participants from a variety of market segments, including consulting and systems integration firms, contract programming companies, application software firms and their professional services groups, and teleservice and contact center outsourcers.

We believe that our primary competitors include:

•     Large systems integrators or management consulting firms (e.g., Accenture, PricewaterhouseCoopers, IBM, EDS)

•      CRM consulting companies (e.g., Akibia, Answerthink, E-Loyalty, Wheelhouse)

In addition to these external competitors, we also face competition from service organizations within potential client companies.  Some of our competitors, particularly large systems integrators, may have a pre-existing relationship with many of our potential customers, either through non-CRM services that they provide to such customers or, in the case of large management consulting firms, through audit or other non-audit services those management consulting firms provide to our current or potential clients.

We differ from nearly all of our competitors by our exclusive focus on CRM services, as evidenced through our end-to-end CRM Blueprint described above.  Our highly skilled consultants work closely with clients to implement industry best practices in CRM through technologies and business processes that drive business value.

In addition to facing a large number of potential competitors, many of our competitors also have certain advantages over us, including:

•      better name recognition;

•      a broader range of products and services;

•      greater sales, marketing, distribution and technical capabilities;

•      greater revenues and financial resources; and

•      established market positions.

We believe that the principal competitive factors in the systems integration industry include technical expertise, responsiveness to client needs, speed in delivering solutions, quality of service and perceived value.  We also believe that our ability to compete depends in part on a number of competitive factors outside our control, including the ability of our competitors to hire, retain, and motivate employees, the price at which other companies offer comparable services, and the extent of our competitors’ responsiveness to customer needs.  We believe that technological changes, the decreased spending on information technology consulting services by many current and potential CRM clients, and industry consolidation or new entrants will continue to cause a rapid evolution in the competitive environment of the CRM industry.  At this time, it is difficult to predict the full scope and nature of this evolution.  Increased competition could result in price reductions, reduced margins on technology consulting services, and a further loss of revenue.  We cannot assure you that we will be able to compete successfully with existing or new competitors or that competitive pressures will not materially and adversely affect our business, financial condition and results of operations.

People and Culture

People are the most important ingredient in our success, and we attempt to foster programs to make ZAMBA a fulfilling and rewarding place to work. Our goal of helping clients satisfy their customers’ needs profitably is achieved through the relationships our people build with our clients. As of December 31, 2001, we had 167 employees, mainly throughout North America. Of that total, 122 individuals were in the professional staff, 28 in administrative roles and 17 in business development.  During 2001, as a result of the restructuring of our business, we reduced the number of our employees significantly through involuntary workforce reductions.  Additional information concerning our restructuring in 2001 is contained in Item 7 of this report.

5

Our employees are not parties to any collective bargaining agreements, and we believe that relations with our employees are good.

Proprietary Rights

Our success is dependent upon our software deployment and consulting methodologies and other intellectual property rights.  We rely upon a combination of trade secret, nondisclosure and other contractual arrangements and technical measures, and copyright and trademark laws, to protect our proprietary rights.  We generally enter into confidentiality agreements with employees, consultants, clients and potential clients and limit access to, and distribution of, our propriety information.  There can be no assurance that our actions will be adequate to deter misappropriation of our propriety information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights.

Our business includes the development of custom software applications in connection with specific client engagements.  Ownership of such software is generally assigned to our clients.  In addition, we also develop object-oriented software components that can be reused in software application development and certain foundation and application software products, or software tools, most of which remain our property.

Although we believe that our services and products do not infringe on the intellectual property rights of others, there can be no assurance that such a claim will not be asserted against us in the future.

Item 2.  Properties.

Our headquarters consists of approximately 27,000 square feet located in a multi-story building in Minneapolis, Minnesota.  The facility is leased pursuant to an agreement that expires in December 2005. We also maintain leased offices totaling approximately 50,000 square feet for operations and sales functions in Campbell, California; Colorado Springs and Parker, Colorado; Boston, Massachusetts; Toronto, Canada and Chennai, India. These leases expire between April 2002 and June 2007.  In addition, we have leased space in St. Paul, Minnesota and Pleasanton, California, totaling approximately 25,000 square feet, which are not used in our current operations.  As described in Note 8 to the consolidated financial statements included in this Annual Report on Form 10-K, these facilities have been included in our restructuring provisions.

Approximately 4,000 square feet in Boston, Massachusetts is being subleased to another entity.  On February 14, 2002, we entered into an agreement to sublease the entire 6,000 square feet in our Pleasanton, California facility. Also, on February 20, 2002, we entered into an agreement to sublease the entire 28,000 square feet in our Campbell, California facility. Because of this sublease in Campbell, we intend on relocating nearby on a short-term lease with approximately 6,000 square feet of space. We continue to engage in subleasing initiatives to employ alternate uses for many of our existing facilities.   Additional information about our lease obligations are set forth in Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K.

Item 3.  Legal Proceedings.

We are subject to various legal proceedings and claims that arise in the ordinary course of business.  We currently believe that resolving these matters will not have a material adverse effect  on our business, financial condition and  results of operations.

Item 4.  Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of our stockholders during the fourth quarter of 2001.

6

PART II

Item 5.  Market For Registrant’s Common Equity and Related Stockholder Matters.

We were incorporated in Delaware in 1990 under the name Racotek, Inc.  Our common stock began trading on December 10, 1993, on the Nasdaq National Market under the symbol “RACO,” in connection with our initial public offering.  We changed our corporate name to Zamba Corporation on October 5, 1998, and, in conjunction with this name change, our common stock began trading on the Nasdaq National Market under the symbol “ZMBA.”

A summary of the range of high and low closing prices for our common stock for each quarterly period in the two most recent fiscal years, is presented below.  These prices reflect inter-dealer prices and do not include retail markups, markdowns or commissions.

2000	High		Low
First Quarter	$	20.13	$	8.00
Second Quarter	9.13		4.81
Third Quarter	7.00		4.25
Fouth Quarter	4.81		1.63
2001
First Quarter	$	4.00	$	1.61
Second Quarter	1.99		0.77
Third Quarter	1.20		0.42
Fouth Quarter	0.62		0.34

We have never paid cash dividends on our common stock and do not anticipate declaring or paying any cash dividends in the foreseeable future.  We intend to retain future earnings, if any, for the development of our business.

On March 14, 2002, the last reported sale price of our common stock on the Nasdaq National Market was $0.44.  As of March 15, 2002, we had approximately 8,000 stockholders of record.

Item 6.  Selected Financial Data.

CONSOLIDATED STATEMENTS OF OPERATIONS DATA (for the years ended December 31)

(In thousands, except per share data)

	2001				2000				1999				1998				1997
Net revenues	$	33,302			$		41,740		$	29,030			$		9,373		$	5,097
Costs and expenses:
Project and personnel costs	20,036				20,549				15,225				4,513				4,546
Sales and marketing	5,824				5,791				2,695				2,187				4,237
General and adminsistrative	14,503				14,624				9,435				3,638				2,721
Restructuring charges and non-recurring items	2,188				753				—				—				—
Research and development	—				—				—				1,069				3,286
Amortization of intangibles	231				2,881				3,771				936				—
Loss from operations	(9,480			)	(2,858			)	(2,096			)	(2,970			)	(9,693			)
Other income (expense), net	(49			)	182				(10			)	188				422
Net loss	$		(9,529	)	$	(2,676		)	$		(2,106	)	$	(2,782		)	$		(9,271	)
Net loss per share - basic and diluted	$		(0.28	)	$	(0.08		)	$		(0.07	)	$	(0.10		)	$		(0.36	)
Weighted average common shares outstanding - basic and diluted	33,568				31,572				30,628				26,792				25,932

7

CONSOLIDATED BALANCE SHEET DATA (as of December 31)

(In thousands)

	2001			2000		1999		1998		1997
Cash, cash equivalents and short-term investments	$	1,326		$	4,843	$	7,973	$	3,054	$	5,414
Working capital	(289		)	7,143		6,707		4,173		5,182
Total assets	7,668			16,513		16,511		14,383		7,533
Long-term debt, less current	194			469		816		1,333		—
Total stockholders’ equity	2,088			9,062		10,251		11,196		6,323

Quarterly Financial Information (Unaudited)

(In thousands, except per share data)

	March 31, 2000			June 30, 2000			September 30, 2000			December 31, 2000
Net revenues	$	8,217		$	9,715		$	11,310		$	12,498
Operating loss	(937		)	(564		)	(832		)	(525		)
Net loss	(885		)	(524		)	(802		)	(465		)
Net loss per share:
Basic	(0.03		)	(0.02		)	(0.03		)	(0.01		)
Diluted	(0.03		)	(0.02		)	(0.03		)	(0.01		)
	March 31, 2001			June 30, 2001			September 30, 2001			December 31, 2001
Net revenues	$	11,810		$	8,020		$	7,669		$	5,803
Operating loss	(1,112		)	(5,267		)	(924		)	(2,177		)
Net loss	(1,082		)	(5,286		)	(937		)	(2,224		)
Net loss per share:
Basic	(0.03		)	(0.16		)	(0.03		)	(0.06		)
Diluted	(0.03		)	(0.16		)	(0.03		)	(0.06		)

8

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

ZAMBA Corporation provides customer relationship management (“CRM”) consulting and systems integration services for large corporations and other organizations.  CRM is a business strategy used by businesses and governmental organizations to help clients better anticipate, understand and respond to the needs of their current and potential customers through integrated, multi-channel solutions. CRM attempts to increase their customers’ access to the enterprise through the use of multiple channels of communication, including the internet, call-based routing, and sales force automation, and to increase the enterprise’s knowledge of the preferences and needs of its customers.  Based on our CRM expertise and experience, we have created solutions that we believe address each aspect of CRM, including strategy, marketing and analytics, content and commerce, contact center, field sales, field service and enterprise integration.  We also own approximately 33% of the equity in NextNet Wireless, Inc., a private corporation that develops non-line-of-sight broadband wireless access platforms that provide telecommunications carriers with solutions for rapid deployment of high-speed, two-way voice and data services over the “last mile” of the communications network.  Our chairman, Joseph B. Costello, is also the chairman of NextNet Wireless, Inc. Another one of our directors, Dixon Doll, is also a director and a shareholder of NextNet Wireless, Inc.

We currently derive most of our revenues from systems integration services, including business case evaluation, system planning and design, software package implementation, custom software development, training, installation and change management.  Our revenues and earnings may fluctuate from quarter-to-quarter based on the number, size and scope of projects in which we are engaged, the contractual terms and degree of completion of such projects, any delays incurred in connection with a project, the adequacy of provisions for losses, the accuracy of estimates of resources required to complete ongoing projects, and general economic conditions and other factors. Consequently, the results of operations described in this report may not be indicative of results to be achieved in future periods. In addition, revenues from a large client may constitute a significant portion of our total revenues in any particular quarter.

Restructuring Charges and Non-recurring Items

In connection with our initiative to streamline our operations, we recorded a restructuring charge of $2.19 million in the second quarter of fiscal 2001, which represents approximately 7% of our revenues for the year ended December 31, 2001. This charge was composed of $777,000 for severance payments, $123,000 for other employee-related costs (including continued medical benefits), $1.173 million for facility closings and other leasehold termination costs, $87,000 arising out of a contract dispute with a vendor, and $28,000 of other related restructuring charges.  No non-cash write-offs were incurred in connection with the restructuring charge.

We conducted this restructuring due to several factors, including the following: (1) the impact of the slowing economy on our business, as evidenced by the 20% decrease in our revenues during the year ended December 31, 2001, compared to the year ended December 31, 2000, and similar revenue decreases experienced by many other information technology consulting companies, and (2) our expectation that our revenue during fiscal 2001 would be less than the amount we had anticipated at the beginning of fiscal 2001. Because we had increased our staffing and facilities during the last half of 2000 and first quarter of 2001 in anticipation of growth, our reduced expectations required us to lower our ongoing costs, the largest of which are our payroll and facility expenses.

In order to reduce our payroll expenses, we reduced our headcount in the second quarter of fiscal 2001 by 89 employees, which represented approximately 28% of our total workforce.  Of these 89 employees, 62 employees (or approximately 70%) were billable consultants and 27 employees (or approximately 30%) were non-billable staff.  Because most of the consultants who were laid off were not

9

engaged on full-time projects at the time of our workforce reduction, our ongoing operations were not materially adversely affected by this reduction. We paid all $900,000 of the employee-related restructuring charge during the year ended December 31, 2001. We expect the headcount reductions to result in an annual savings of approximately $8.0 million, which we first realized starting in the third quarter of 2001.

The facilities portion of the restructuring charge includes new and additional lease termination costs and other expenses associated with our decision to consolidate our operations and close unproductive or duplicative office locations in St. Paul, Minnesota, and Pleasanton and Carlsbad, California.  Of the approximately $1.2 million in facilities-related restructuring charges, we paid $546,000 during the year ended December 31, 2001, and expect to pay the balance of approximately $627,000 between the first quarter of fiscal 2002 and the third quarter of fiscal 2002.

Although our revenues were lower than anticipated in fiscal 2001, because the number of our consultants and size of our facilities was designed to correlate with our expected revenues, the restructuring charges that we incurred in fiscal 2001 did not have a material adverse effect on our operations.  In fact, the restructuring charge reduced our cost structure for the second half of fiscal 2001 and into fiscal 2002.  We intend to continue our initiative to achieve more cost-efficient operations throughout fiscal 2002.  In addition, certain actions may not be completed, or full savings realized, until sometime in fiscal 2002.  Although we do not expect to incur additional restructuring charges, our restructuring initiative, or a continued slowing of the demand for information technology consulting services, could cause us to incur additional restructuring expenses in amounts that have not yet been determined.  Although the amount and timing of the cost savings that we expect to realize due to this restructuring is difficult to quantify, we currently anticipate that, in combination with other operational changes effectuated during the second quarter of fiscal 2001, we will realize cost savings of approximately $11.0 million during fiscal 2002. Because we attempted to correlate the number of consultants and facilities we retained with our expected revenues during the remainder of fiscal 2001, our workforce reductions in the second quarter of fiscal 2001 did not significantly affect our operations, except that we expect the restructuring charge to reduce our cost structure into fiscal 2002.

Restructuring activities through December 31, 2001, were as follows:

	Second Quarter 2001 Provision		2001 Utilized		Balance as of December 31, 2001
Restructuring Charge
Severance Payments to Employees	$	777,000	$	777,000	$	—
Other Employee Related Costs	123,000		123,000		—
Facility Closings	1,106,000		546,000		560,000
Leasehold Termination Costs	67,000		—		67,000
Other	115,000		115,000		—
Totals	$	2,188,000	$	1,561,000	$	627,000

Non-recurring charges of $753,000 were incurred in 2000. These items consist of severance expenses for recently departed senior management, costs associated with closing our St. Paul office in order to consolidate into an expanded, common Minneapolis facility, and the termination of a long-term software support contract. We had licensed a project management software product in August 1998, and were amortizing it over an estimated useful life of three years. We decided not to use the software in October 2000, and wrote off the remaining balance of $207,000 in the fourth quarter of 2000.

Additional Cost Savings Initiatives

In addition to the restructuring charges in the second quarter of 2001, as described above, we have taken other actions since the second quarter of fiscal 2001 to streamline our operations. The main cost savings from these actions are related to facilities and employees. In February 2002, we subleased our Pleasanton and Campbell, California facilities, which will result in an annual cost savings of $1.0 million. Also, our employee headcount has decreased by approximately 95 employees since our restructuring

10

charges in the second quarter of 2001, to the present. This represents approximately 40% of the workforce that remained after the restructuring charge in the second quarter of 2001. Of these 95 employees, 65 employees (or approximately 70%) were billable consultants and 30 employees (or approximately 30%) were non-billable staff. Because most of the consultants who were laid off were not engaged on full-time projects at the time of our workforce reduction, our ongoing operations were not materially adversely affected by this reduction. This is expected to result in annual cost savings of approximately $10.0 million.

Results of Operations

Year Ended December 31, 2001, Compared to Year Ended December 31, 2000

Net Revenues

Net revenues decreased approximately 20% to $33.3 million in 2001 compared to $41.7 million in 2000. The decrease was due principally to a significant reduction in the demand for information technology consulting services, due to a general slowdown in the economy. With the economic slowdown, many companies either delayed decisions on information technology consulting projects, or cancelled the projects altogether. Similar revenue decreases were experienced by many other information technology consulting companies. As a result, we experienced declines during 2001 in the utilization rate of our billable consultants, partially mitigated by our cost reduction activities during the year, from 67% in 2000, to 50% in 2001. We are also experiencing pricing competition. Although we averaged a rate of $183 per hour in 2001, as compared to $182 per hour in 2000, our average rates have declined significantly after peaking in the first quarter of 2001. Our average rates had increased throughout 2000. We expect our average rate to decrease in 2002.

Project and Personnel Costs

Project costs consist primarily of payroll and payroll-related expenses for personnel dedicated to client assignments and is directly associated with, and varies with, the level of client services being delivered. These costs represent the most significant expense we incur in providing service.  Project costs were $20.0 million, or 60% of net revenues, in 2001, compared to $20.5 million, or 49% of net revenues, in 2000.  The increase in the percentage of costs compared to net revenues was primarily from decreased revenues due to a significant reduction in demand for information technology consulting services. This increase in percentage of costs was driven primarily by a general slowdown in the economy, as described in the preceding paragraph.

Sales and Marketing

Sales and marketing costs consist primarily of salaries, employee benefits, travel expenses of selling and marketing personnel and promotional costs.  Sales and marketing expenses were $5.8 million, or 17% of net revenues in 2001, compared to $5.8 million, or 14% of net revenues, in 2000. Commission costs decreased by $270,000 in 2001 as compared to 2000 due to lower revenue, but this was offset by an increase in salaries paid due to hiring additional sales personnel. The increase as a percentage of revenue was primarily due to lower revenue than anticipated.

General and Administrative

General and administrative costs consist primarily of expenses associated with our management, information technology, training and recruiting, facility costs, and finance, legal, human resources and administrative groups.    General and administrative expenses were $14.5 million, or 44% of net revenues, in 2001, compared to $14.6 million, or 35% of net revenues, in 2000.  The increase as a percentage of revenue was primarily due to revenue being much lower than anticipated in 2001. Although our total costs remained relatively consistent, there were many fluctuations in 2001 when compared to 2000. Office rent increased $500,000 in 2001 as compared to 2000 due to new and expanded facility leases in the second half of 2000, primarily in Campbell, California and Minneapolis, Minnesota. Equipment rent increased by $800,000 in 2001 as compared to 2000 due to leasing of furniture, computers and computer equipment, and

11

upgraded phone systems. Much of this equipment was leased in the third and fourth quarters of 2000 and first quarter of 2001 as we were still hiring employees in anticipation of revenue growth. This expense was offset partially by a decrease in depreciation of $180,000 in 2001 as compared to 2000. Depreciation decreased since we are now leasing more equipment instead of purchasing the equipment.  Outside services costs increased by $600,000 in 2001 as compared to 2000, mainly due to recruiting fees paid for new hires. Travel and entertainment costs decreased by $700,000 in 2001 as compared to 2000, mainly due to cost-savings initiatives.  Bad debt expense decreased by $540,000 in 2001, as compared to 2000, mainly due to three dot-com customer write-offs in 2000.

Amortization of Intangibles

Amortization of intangibles was $231,000 in 2001 compared to $2.9 million in 2000.  The amortization is due to the acquisition of The QuickSilver Group (“QuickSilver”) in September 1998.  The Quicksilver acquisition was accounted for using the purchase method of accounting, and the purchase price was allocated to tangible and identifiable intangible assets.  The fair value of identifiable intangible assets was $7.7 million and was allocated to the following categories:  people and experiences, client references, client lists, and intellectual property and delivery methodology.  These amounts were amortized over economic useful lives of between two and four years.   All of the costs related to the QuickSilver acquisition have been fully amortized as of December 31, 2001.

Interest Income

Interest income was $139,000 in 2001 compared to $251,000 in 2000.  This decrease is primarily due to decreased cash and investment balances throughout 2001 compared to 2000.  Because our cash balance decreased throughout the year 2001, we expect interest income to decrease in 2002.

Interest Expense

Interest expense in 2001 was $188,000 compared to $69,000 in 2000.  This increase is due to establishing, and using a line of credit with Silicon Valley Bank in 2001. We expect interest expense to increase in 2002 due to borrowings on our line of credit facility as well as amortization of our issuance costs related to the credit facility. See “Liquidity and Capital Resources” below.

Income Taxes

We have incurred net operating losses since inception.  We are uncertain about whether we will have taxable earnings in the future, and we have not reflected any benefit of such net operating loss carryforwards in the accompanying consolidated financial statements.

As of December 31, 2001, we had approximately $80.5 million of net operating loss carryforwards for both financial statement and federal income tax purposes that will begin to expire in 2005.  The use of these carryforwards in any one year is limited under Internal Revenue Code Section 382 because of significant ownership changes.  In addition, the net operating loss carryforward of QuickSilver is limited under the federal consolidated tax return rules.

Year Ended December 31, 2000, Compared to Year Ended December 31, 1999

Net Revenues

Net revenues increased 44% to $41.7 million in 2000 compared to $29.0 million in 1999. The increase was due principally to increased demand for CRM services, resulting in increases in the number of billable personnel, average size and number of client projects as well as the average billing rate on the projects.

12

Project and Personnel Costs

Project costs consist primarily of payroll and payroll-related expenses for personnel dedicated to client assignments and is directly associated with, and varies with, the level of client services being delivered. These costs represent the most significant expense we incur in providing service.  Project costs were $20.5 million, or 49% of net revenues, in 2000, compared to $15.2 million, or 52% of net revenues, in 1999.  The increase in project costs was primarily due to an increase in project personnel from 153 at December 31, 1999, to 214 at December 31, 2000.

Sales and Marketing

Sales and marketing costs consist primarily of salaries, employee benefits, travel expenses of selling and marketing personnel and promotional costs.  Sales and marketing expenses were $5.8 million, or 14% of net revenues, in 2000 compared to $2.7 million, or 9% of net revenues, in 1999. The dollar and percentage increases were primarily due to hiring more and higher paid personnel, and to a lesser extent, investments we made in a new brand identity.

General and Administrative

General and administrative costs consist primarily of expenses associated with our management, information technology, training and recruiting, occupancy costs, and finance and administrative groups.  General and administrative expenses were $14.6 million, or 35% of net revenues, in 2000, compared to $9.4 million, or 33% of net revenues, in 1999.  The dollar and percentage increases were primarily due to investments we made in anticipation of business growth, which resulted in an increase in payroll and payroll-related expenses of $2.8 million based on the number of employees hired during 2000, an increase in occupancy costs of $960,000 related to significant expansion of our office space, and an increase of $530,000 in additional lease costs related to information technology infrastructure spending. We also incurred an $830,000 increase in write-offs of uncollectible accounts receivable. While we focus on doing business with large corporations, we do perform services for companies of various sizes. The primary reason for our increase in the write-off of uncollectible accounts was due to writing off $655,000 with three dot-com customers whose business declined subsequent to our initial engagement.

Amortization of Intangibles

Amortization of intangibles and non-cash compensation was $2.9 million in 2000 compared to $3.8 million in 1999.  The amortization is due to the acquisition of QuickSilver in September 1998.  The QuickSilver acquisition was accounted for using the purchase method of accounting, and the purchase price was allocated to tangible and identifiable intangible assets.  The fair value of identifiable intangible assets was $7.7 million and was allocated to the following categories:  people and experiences, client references, client lists, and intellectual property and delivery methodology.  These amounts are being amortized over economic useful lives of between two and four years.  Approximately 97% of the costs related to the QuickSilver acquisition had been amortized as of December 31, 2000.

Interest Income

Interest income was $251,000 in 2000 compared to $97,000 in 1999.  This increase is primarily due to increased cash and investment balances throughout 2000 compared to 1999.

Interest Expense

Interest expense in 2000 was $69,000 compared to $107,000 in 1999.  This decrease is due to paying down notes payable, primarily those related to the notes payable issued in September 1998 in connection with the acquisition of QuickSilver.

13

Income Taxes

We have incurred net operating losses since inception.  We are uncertain about whether we will have taxable earnings in the future, and we have not reflected any benefit of such net operating loss carryforwards in the accompanying consolidated financial statements.

As of December 31, 2000, we had approximately $71.4 million of net operating loss carryforwards for both financial statement and federal income tax purposes that will begin to expire in 2005.  The use of these carryforwards in any one year is limited under Internal Revenue Code Section 382 because of significant ownership changes.  In addition, the net operating loss carryforward of QuickSilver is limited under the federal consolidated tax return rules.

Critical Accounting Policies

We have identified the policies below as critical to our business operations and the understanding of our results of operations.  The impact and any associated risks to these policies on our business, financial conditions and results of operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where these policies affect our reported and expected financial results.  For a detailed discussion of the application of these and other accounting policies, see Note 1 of our notes to the consolidated financial statements.  Our preparation of this Annual Report on Form 10-K requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities as of the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period.  There can be no assurance that actual results will not differ from those estimates.

Our critical accounting policies are as follows:

•    Revenue Recognition;

•    Allowance for Doubtful Accounts; and

•    Investment in NextNet Wireless, Inc.

Revenue Recognition.  We derive our revenues from systems integration services and post-implementation support agreements.  Revenues pursuant to fixed bid contracts are recognized as the services are rendered based on the percentage-of-completion method of accounting (based on the ratio of hours incurred to total estimated hours) in accordance with AICPA Statement of Position 81-1, “Accounting for Performance of Construction-type and Certain Production-type Contracts”. Estimated losses on long-term contracts are recognized in the period in which a loss becomes apparent.  Revenue pursuant to time and material contracts are recognized as the services are performed.  Customer support revenues are recognized ratably over the term of the underlying support agreements. All revenue is supported by binding contractual agreements with our customers.

Significant management judgments and estimates must be made and used in connection with the revenue recognized on fixed bid contracts in any accounting period.   Material differences may result in the amount and timing of our revenue for any period if we made different judgments or utilized different estimates. If we do not accurately estimate the resources required or the scope of the work to be performed, or do not manage the projects properly within the planned periods of time or satisfy our obligations under the contracts, then our future consulting margins may be materially affected or losses on existing contracts may need to be recognized. Any such resulting reductions in margins or contract losses could be material to our financial condition and results of operations.

Deferred revenue is composed of amounts received or billed in advance of services to be performed.  Unbilled receivables represent amounts recognized on services performed in advance of billings in accordance with the terms of the contract.

Allowance for Doubtful Accounts.  The preparation of financial statements requires that we make estimates and assumptions that affect the reported amount of assets.  Specifically, we must make estimates of the collectability of our accounts receivable.  We determine the adequacy of our allowance for doubtful accounts by analyzing  historical write-offs, customer credit-worthiness, current economic trends and changes in our customer payment terms.  If we have information that the customer may have an

14

inability to meet its financial obligations (bankruptcy, etc.), we use our judgment, based on the best available facts and circumstances, and record a specific reserve for that customer against amounts due to reduce the receivable to the amount that is expected to be collected.  These specific reserves are reevaluated and adjusted as additional information is received.  In addition, a general reserve is established for all customers based on a range of percentages applied to the remaining balance.  This percentage is based on our historical collection and write-off experience.  If circumstances change, our estimates of the recoverability of amounts due to us could be reduced materially.  Our accounts receivable balance was $1.6 million, net of allowance for doubtful accounts of $183,000, as of December 31, 2001.

Investment in NextNet Wireless, Inc.  On September 21, 1998, we transferred our “NextNet” wireless data technology to an entity now known as “NextNet Wireless, Inc.”  In exchange for this technology, we received an equity investment in NextNet Wireless, a newly incorporated privately held business.  We originally recorded this investment at $0 because of uncertainties surrounding the realizability of the investment.

We account for the investment in NextNet using the equity method of accounting due to having “significant influence” (usually defined as owning 20% or more of the outstanding voting stock) over NextNet operations.  Under the equity method, we would recognize the proportionate share of income and losses from NextNet operations.  Losses would be recognized until the investment is written down to $0.  Given that the original basis of the investment was $0, we have not recognized any of the losses by NextNet.  The investment in NextNet continues to be valued at $0 as of December 31, 2001.

If “significant influence” did not exist and NextNet did not have a “readily determinable fair value”, then Zamba would account for the investment in NextNet using the cost method of accounting (investment carried at the original cost basis).  If “significant influence” did not exist and NextNet had a “readily determinable fair value”, then Zamba would account for the investment in NextNet at the then fair value.

We do not have any obligations to provide future funding for this investment. As of December 31, 2001, we owned approximately one-third of NextNet.

Liquidity and Capital Resources

We invest predominantly in instruments that are highly liquid, investment grade and have maturities of less than one year. At December 31, 2001, we had approximately $1.3 million in cash and cash equivalents compared to $4.8 million at December 31, 2000.

Cash used in operating activities was $5.5 million for the year ended December 31, 2001, and resulted primarily from a net loss of  $9.5 million and a decrease in deferred revenue of $1.4 million, offset by a decrease in accounts receivable of $4.0 million, and a decrease in notes receivable of $1.3 million. Cash used in operating activities was $2.1 million for the year ended December 31, 2000 and resulted primarily from income before amortization and depreciation of  $1.2 million, increases in accounts payable of $510,000, provision for bad debts of $965,000 and deferred revenue of $717,000, but were offset by an increase in accounts receivable of $3.2 million, notes receivable of $2.0 million, and prepaid expenses and other assets of $590,000.

Cash used in investing activities was $703,000 for the year ended December 31, 2001, and resulted primarily from the purchase of property and equipment. Cash used in investing activities was $1.8 million for the year ended December 31, 2000, and resulted from the purchase of property and equipment of $1.4 million and the increase in notes receivable from related parties of $356,000.

Cash provided by financing activities was $2.7 million for the year ended December 31, 2001, and consisted primarily of proceeds from sale of common stock of $2.3 million and proceeds from the line of credit of $1.1 million, but was partially offset by $490,000 of payments of outstanding debt. Cash provided by financing activities was $770,000 for the year ended December 31, 2000 and consisted primarily of cash

15

received from the sale of common stock upon the exercise of stock options, but was offset partially by payments of outstanding debt.

On February 27, 2001, as amended on August 2, 2001 and December 31, 2001, we established a secured revolving credit facility with Silicon Valley Bank of up to a maximum of $5.0 million based on eligible collateral.  Borrowings under this line of credit bear interest at the bank’s prime rate plus 2.0%, and are payable monthly.  The amended agreement requires, among other things, that we comply with minimum tangible net worth and profitability covenants.  In the event of default on the covenants, Joseph B. Costello, our Chairman, has committed to provide funding to us in an amount up to $2.0 million, to cure such default.  A total of $1.0 million of Mr. Costello’s funding commitment has been provided to Zamba as of March 26, 2002.  This commitment expires on December 31, 2002.  We were in compliance with the covenants as of December 31, 2001.  As of December 31, 2001, $1.1 million was outstanding under the line of credit, which was the maximum eligible amount available to us under the credit facility as of that date.  This facility expires on December 31, 2002.

Future payments due under debt and lease obligations, excluding sublease income, are as follows (in thousands):

Year Ending December 31,	Bank Line Of Credit		Notes Payable		Non Cancelable Operating Leases		Total
2002	$	1,100	$	392	$	4,060	$	5,552
2003	—		194		3,635		3,829
2004	—		—		3,123		3,123
2005	—		—		2,639		2,639
2006	—		—		1,119		1,119
Later	—		—		528		528
Total	$	1,100	$	586	$	15,104	$	16,790

Future payments due Zamba for subleases are as follows (in thousands):

Year Ending December 31,	Sublease Amounts Due Zamba
2002	$	1,025
2003	1,213
2004	1,042
2005	1,073
2006	1,106
Later	520
Total	$	5,979

On January 31, 2002, Mr. Costello purchased 626,504 shares of our common stock from us in a private transaction, at a purchase price of $0.479 per share, for an aggregate consideration of $300,000. In connection with the January 31, 2002, stock purchase, we issued Mr. Costello a warrant to purchase up to 313,252 shares of our common stock.  This warrant may be exercised at a per share purchase price of $0.599 at any time through the close of business on January 31, 2007.  The shares were issued at 90% of the average closing bid price for our common stock for the twenty trading days prior to the date of issuance, and the exercise price for the warrant was set at 125% of the per share price for the common stock purchased by Mr. Costello.

16

On February 1, 2002, we sold 793,383 shares of our common stock at a purchase price of $0.479 per share to a group of seven individual investors in private transactions, for $380,000.  The purchase price is equal to 90% of the average closing bid prices of our common stock on the Nasdaq National Market System for the twenty business days prior to February 1, 2002.  In connection with this transaction, we also issued warrants to the individuals in this group that entitles them to purchase up to 396,691 shares of our common stock, at an exercise price of $0.599 per share.  These warrants may be exercised at any time through the close of business on February 1, 2007. The warrant exercise price represents 125% of the average closing bid prices of our common stock on the Nasdaq National Market System for the twenty business days prior to February 1, 2002.

On February 22, 2002, we entered into a Strategic Alliance Agreement with HCL Technologies America, Inc. (“HCL America”) and HCL Technologies Limited, India (“HCL”), in which we will work with HCL and HCL America to jointly pursue, facilitate, manage and maintain business opportunities with Amdocs and Blue Cross Blue Shield for the provision of CRM services through the use of the services offered by, and the particular experience and expertise of, ZAMBA, HCL America and HCL.  In connection with the Strategic Alliance Agreement, HCL America purchased 2,460,025 shares of our common stock from us in a private transaction, for an aggregate consideration of $1,000,000, and we issued HCL America a warrant to purchase up to 615,006 shares of our common stock.  This warrant may be exercised at a per share purchase price of $0.61 at any time through the close of business on February 21, 2007.  The shares were issued at the average closing bid price of our common stock for the twenty trading days preceding the date of the agreement, and the exercise price for the warrant was set at 150% of the per share price for the common stock purchased by HCL America.  As a result of the purchase of our shares and the issuance of the warrant, HCL America and HCL, as the parent company of HCL America, are now jointly beneficial owners of more than 5% of our outstanding common stock.

On February 26, 2002, we entered into a Stock Purchase Agreement with Mr. Costello to sell to him certain of our Series A Preferred Stock in NextNet Wireless, Inc. (“NextNet”) for $300,000.  In exchange, we will transfer to Mr. Costello that number of our Series A preferred shares that is obtained by dividing the purchase price by the per share price for our NextNet stock at the earliest of the following occurrences: (a) the price per share of our NextNet preferred stock determined upon the merger, consolidation, sale of all or substantially all of the assets or any other change-in-control of NextNet; (b) the price per share of our NextNet preferred stock established upon our sale of any shares of NextNet preferred stock to any third party; or (c) if the items described in “(a)” or “(b)” do not occur by December 31, 2002, the price per share determined by an independent accountant, valuation expert or other entity experienced in the valuation of companies substantially similar to NextNet.

On March 25, 2002, we entered into a Stock Purchase Agreement with Mr. Costello to sell to him certain of our Series A Preferred Stock in NextNet Wireless, Inc. (“NextNet”) for $400,000.  In exchange, we will transfer to Mr. Costello that number of our Series A preferred shares that is obtained by dividing the purchase price by the per share price for our NextNet stock at the earliest of the following occurrences: (a) the price per share of our NextNet preferred stock determined upon the merger, consolidation, sale of all or substantially all of the assets or any other change-in-control of NextNet; (b) the price per share of our NextNet preferred stock established upon our sale of any shares of NextNet preferred stock to any third party; or (c) if the items described in “(a)” or “(b)” do not occur by December 31, 2002, the price per share determined by an independent accountant, valuation expert or other entity experienced in the valuation of companies substantially similar to NextNet.

We believe that our existing cash and cash equivalents at December 31, 2001, cash we have received subsequent to December 31, 2001, our secured revolving credit facility with Silicon Valley Bank, and the related funding commitment from Joseph B. Costello will be sufficient to meet our working capital and capital expenditure requirements through at least April 30, 2002.  We will continue to explore possibilities for additional financing, which may include debt, equity, or other forms of financing transactions, and other strategic alternatives that may be available to us, including a potential sale of all or a portion of our stock, assets, or investments.

17

New Accounting Standards

In November 2001, the Financial Accounting Standards Board (FASB) issued Staff Announcement, Topic No. D-103, regarding the income statement classification of reimbursements received for “out-of-pocket” expenses incurred. This announcement requires that out-of-pocket expenses incurred and the related reimbursements be reflected in the income statement on a gross basis as both revenue and expense.  Currently, we classify these out-of-pocket expense reimbursements as a reduction of project and personnel costs.  This Staff Announcement is effective for financial reporting periods beginning after December 15, 2001, and accordingly, we will implement this Staff Announcement on January 1, 2002.  When adopted, we will adjust revenue for all periods reported to include out-of-pocket expense reimbursements.  This change in classification, when implemented in 2002, will have no effect on current or previously reported net income (loss) or earnings (loss) per share.

In August 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets.  While SFAS No. 144 supersedes both SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” (APB No. 30), it retains the fundamental provisions of those Statements.  SFAS No. 144 becomes effective for fiscal years beginning after December 15, 2001.  We are evaluating SFAS No. 144 to determine the impact on our financial condition and results of operations, but do not expect that they will have a material effect on our financial statements.

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets,” which change the accounting for business combinations and goodwill.  SFAS No. 141 requires that the purchase method of accounting be used for business combinations initiated after June 30, 2001.  Use of the pooling-of-interests method is prohibited.  SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach.  Amortization of goodwill, including goodwill recorded in past business combinations, will therefore cease upon adoption of SFAS No. 142, which for us will be January 1, 2002. The adoption of SFAS No. 141 and SFAS No. 142,  will not have a material effect on our financial statements.

The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138.  SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities.  SFAS No. 133 requires companies to recognize all derivatives as either assets or liabilities, and measure those instruments at fair value. SFAS No. 133 is effective beginning on January 1, 2001. We implemented SFAS No. 133, as amended, in fiscal year 2001.  The implementation of SFAS No. 133 did not have an impact on our financial position, results of operations or cash flows for the year ended December 31, 2001.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk from changes in security prices and interest rates. Market fluctuations could impact our results of operations and financial condition. We are exposed to certain market risks based on our outstanding debt obligations of $586,000 and our secured revolving credit facility of $1.1 million at December 31, 2001.  As discussed in Note 10 to the consolidated financial statements, the interest rate charged on our long-term debt obligations range from 8.5% to 10.0%, and the obligations mature monthly and quarterly through December 2003.  As discussed in Note 9 to our consolidated financial statements, the interest charged on our line of credit is the bank’s prime rate plus 2.0%. We do not invest in any derivative financial instruments. Excess cash is invested in short-term, low-risk vehicles, such as money market investments. Changes in interest rates are not expected to have a material effect on our financial condition or results of operations.

18

Item 8.  Financial Statements and Supplemental Schedule.

The  Financial Statements, Supplemental Schedule and Independent Auditors’ Report thereon that follow this Annual Report on Form 10-K are incorporated herein by reference:

19

PART III

Item 10.  Directors and Executive Officers of the Registrant.

The information concerning our directors and executive officers and compliance with Section 16(a) required by this item is contained in the sections entitled “Election of Directors” in Item No. 1, “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance,” appearing in our definitive Proxy Statement (the “Proxy Statement”) to be delivered to stockholders in connection with the Annual Meeting of Stockholders to be held on June 4, 2002, and is incorporated herein by reference.

Item 11.  Executive Compensation.

The information required by this item is contained in the sections entitled “How are Directors Compensated?” in Item No. 1, “Executive Compensation” (except for the information set forth under the sub-caption “Report of the Compensation Committee”) and “Compensation Committee Interlocks and Insider Participation,” appearing in our Proxy Statement and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

The information required by this item is contained in the section entitled “Stock Ownership” appearing in our Proxy Statement and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions.

The information required by this item is contained in the section entitled “Certain Relationships and Related Transactions” appearing in our Proxy Statement and is incorporated herein by reference.

20

PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)   Documents Filed as Part of Form 10-K

(1)   Financial Statements

•      Consolidated Balance Sheets as of December 31, 2001 and 2000

•      Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999

•      Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999

•      Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2001, 2000 and 1999

•      Notes to Consolidated Financial Statements

•      Supplemental Schedule – Schedule II Valuation and Qualifying Accounts

•      Report of Independent Auditors

(2)   Financial Statement Schedules

•All schedules for which provision is made in the applicable accounting regulations of the SEC have been omitted since they are either not required, not applicable, or the information is otherwise included, except for Schedule II, which is attached to the financial statements included in this Item 14.

(3)   Exhibits

3.01Registrant’s Fifth Amended and Restated Certificate of Incorporation, dated August 3, 2001 (Incorporated by reference to Exhibit 3.01 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2001).

3.02Certificate of Designation specifying the terms of the Series A Junior Participating Preferred Stock of the Registrant as filed with the Delaware Secretary of State on September 14, 1994 (Filed as an Exhibit to the Registrant’s Report on Form 8-K that was filed with the Securities and Exchange Commission on September 15, 1994, and incorporated herein by reference).

3.03Registrant’s Bylaws, as amended (Filed as an Exhibit to the Registrant’s Report on Form 8-K that was filed with the Securities and Exchange Commission on September 15, 1994, and incorporated herein by reference).

4.01Form of specimen certificate for Registrant’s Common Stock (Incorporated by reference to Exhibit 4.01 to the Registrant’s Registration Statement on Form S-1 (No. 33-70728), that was declared effective December 9, 1993).

4.02Rights Agreement dated September 12, 1994 between the Registrant and Norwest Bank Minnesota, N.A., as Rights Agent, which includes as exhibits thereto the form of rights certificate and the summary of rights to purchase preferred shares (Incorporated by reference to Exhibit 4.02 to the Registrant’s Report on Form 8-K that was filed with the Securities and Exchange Commission on September 15, 1994).

10.01*Registrant’s 1989 Stock Option Plan, as amended, and related documents (Incorporated by reference to Exhibit 10.01 to the Registrant’s Registration Statement on Form S-1 (No. 33-70728), that was declared effective December 9, 1993).

21

10.02*Registrant’s 1993 Equity Incentive Plan and related documents, as amended through January 10, 1998 (Incorporated by reference to Exhibit 10.02 to the Registrant’s Form 10-K for the year ended December 31, 1997).**

10.03Registrant’s 1993 Directors Stock Plan, as amended, and related documents, as amended through November 14, 1995 (Incorporated by reference to Exhibit 10.03 to the Registrant’s Form 10-K for the year ended December 31, 1995).

10.04*Registrant’s 1994 Officer’s Option Plan (Incorporated by reference to Exhibit 10.04 to the Registrant’s Form 10-K for the year ended December 31, 1994).

10.05*1997 Stock Option Plan for Key Employees, Consultants and Directors of QuickSilver Group, Inc. (Incorporated by reference to Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8 that was declared effective on October 22, 1998).

10.06*Registrant’s 1998 Non-Officer Stock Option Plan (Incorporated by reference to Exhibit 99.1 to the Registrant’s Registration Statement on Form S-8 that was declared effective on October 22, 1998).

10.07*Form of Indemnification Agreement entered into by the Registrant and each of its directors and executive officers (Incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 (No. 33-70728), that was declared effective December 9, 1993).

10.08*Letter agreement by and between Registrant and Paul Edelhertz dated September 25, 1997 (Incorporated by reference to Exhibit 10.04 to the Registrant’s Form 10-Q for the quarterly period ended September 30, 1997).

10.09*Change in Control Employment and Severance Agreement dated March 10, 1998, by and between Registrant and Paul Edelhertz (Incorporated by reference to Exhibit 10.43 to the Registrant’s Form 10-K for the year ended December 31, 1997).

10.10Lease Agreement dated April 8, 1998, by and between the Registrant and EOP–New England Executive Park, L.L.C. for premises at 8 New England Executive Park, Burlington, Massachusetts 01893 (Incorporated by reference to Exhibit 10.22 to the Registrant’s Form 10-K for the year ended December 31, 1998).

10.11Lease Agreement dated September 14, 1998, by and between the Registrant and Square 24 Associates (d.b.a. Square 24 Associates L.P.) for premises at 3875 Hopyard Road, Pleasanton, California 94588 (Incorporated by reference to Exhibit 10.23 to the Registrant’s Form 10-K for the year ended December 31, 1998).

10.12*Change of Control Agreement between the Registrant and Michael Carrel dated July 8, 1999 (Incorporated by reference to Exhibit 10.02 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 1999).

10.13*Change of Control Agreement between the Registrant and Ian Nemerov dated July 8, 1999 (Incorporated by reference to Exhibit 10.03 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 1999).

10.14Agreement and Plan of Merger and Reorganization dated December 28, 1999 between the Registrant, ZCA Corp. and Camworks, Inc. (Incorporated by

22

reference to Exhibit 2.1 to the Registrant’s Report on Form 8-K that was filed with the Securities and Exchange Commission on January 21, 2000).

10.15Lease dated January 4, 2000, between the Registrant and WTA Campbell Technology Park LLC (Incorporated by reference to Exhibit 10.25 to the Registrant’s Form 10-K for the year ended December 31, 1999).

10.16Work Letter Agreement dated January 4, 2000, between the Registrant and WTA Campbell Technology Park LLC (Incorporated by reference to Exhibit 10.26 to the Registrant’s Form 10-K for the year ended December 31, 1999).

10.17Agreement and Plan of Reorganization among ZAMBA Corporation, ZFA Corp., and Fusion Consulting, Inc. dated January 7, 2000 (Incorporated by reference to Exhibit 10.01 to the Registrant’s Form 10-Q for the quarterly period ended March 31, 2000).

10.18* Amendment to Change of Control Agreement between the Registrant and Paul Edelhertz, dated May 5, 2000 (Incorporated by reference to Exhibit 10.02 to the Registrant’s Form 10-Q for the quarterly period ended March 31, 2000).

10.19Promissory Notes between Registrant and Tim Cameron dated February 9, 2000 and April 28, 2000 (Incorporated by reference to Exhibit 10.03 to the Registrant’s Form 10-Q for the quarterly period ended March 31, 2000).

10.20Promissory Note between Registrant and Paul Lundberg dated February 9, 2000 (Incorporated by reference to Exhibit 10.04 to the Registrant’s Form 10-Q for the quarterly period ended March 31, 2000).

10.21Lease Agreement dated May 5, 2000, between the Registrant and Harvard Property (Lake Calhoun), LP (Incorporated by reference to Exhibit 10.01 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2000).

10.22Lease Agreement dated May 31, 2000, between the Registrant and EOP-New England Executive Park, LCC (Incorporated by reference to Exhibit 10.02 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2000).

10.23* Offer letter for Doug Holden (Incorporated by reference to Exhibit 10.01 to the Registrant’s Form 10-Q for the quarterly period ended September 30, 2000).

10.24* Offer letter for Jeff McCall (Incorporated by reference to Exhibit 10.02 to the Registrant’s Form 10-Q for the quarterly period ended September 30, 2000).

10.25* Offer letter for Manish Gupta (Incorporated by reference to Exhibit 10.03 to the Registrant’s Form 10-Q for the quarterly period ended September 30, 2000).

10.26* Registrant’s 2000 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.3(1) to the Registrant’s Form S-8 that was filed with the Securities and Exchange Commission on June 29, 2000).

10.27* Registrant’s 1999 Non-Officer Stock Option Plan (Incorporated by reference to Exhibit 99.1 to the Registrant’s Form S-8 that was filed with the Securities and Exchange Commission that was declared effective on December 18, 2000).

10.28* Registrant’s 2000 Non-Officer Stock Option Plan (Incorporated by reference to Exhibit 99.2 to the Registrant’s Form S-8 that was filed with the Securities and Exchange Commission that was declared effective on December 18, 2000).

23

10.29* Promissory Note between Registrant and Paul Edelhertz dated December 26, 2000 (Incorporated by reference to Exhibit 10.31 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.30Loan and Security Agreement dated February 27, 2001, between the Registrant and Silicon Valley  Bank, Commercial Finance Division (Incorporated by reference to Exhibit 10.32 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.31Registration Rights Agreement dated February 27, 2001, between the Registrant and Silicon Valley Bank (Incorporated by reference to Exhibit 10.33 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.32Warrant to Purchase Stock dated February 27, 2001, between the Registrant and Silicon Valley Bank (Incorporated by reference to Exhibit 10.34 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.33*Change in Control Employment and Severance Agreement dated March 5, 2001, between the Registrant and Manish Gupta (Incorporated by reference to Exhibit 10.35 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.34*Change in Control Employment and Severance Agreement dated March 7, 2001, between the Registrant and Jeff McCall (Incorporated by reference to Exhibit 10.36 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.35*Change in Control Employment and Severance Agreement dated March 8, 2001, between the Registrant and Doug Holden (Incorporated by reference toExhibit 10.37 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.36*Promissory Note between Registrant and Paul Lundberg dated May 12, 2000 (Incorporated by reference to Exhibit 10.40 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.37*Letter Agreement between the Registrant and Richard De Francisco dated March 6, 2001 (Incorporated by reference to Exhibit 10.41 to the Registrant’s Form 10-K for the year ended December 31, 2000).

10.38Stock Purchase Agreement dated June 29, 2001, between Zamba Corporation and Joseph B. Costello (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated July 2, 2001).

10.39*Warrant to Purchase Shares of Common Stock issued by Zamba Corporation to Joseph B. Costello (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated July 2, 2001).

10.40*Settlement and Release Agreement dated August 2, 2001, between the Registrant and Paul Edelhertz (Incorporated by reference to Exhibit 10.05 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2001).

10.41Amendment to Loan Document as of June 30, 2001, between the Registrant and Silicon Valley Bank (Incorporated by reference to Exhibit 10.06 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2001).

24

10.42Warrant to Purchase Stock dated August 2, 2001, between the Registrant and Silicon Valley Bank (Incorporated by reference to Exhibit 10.07 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2001).

10.43Fifth Amended and Restated Certificate of Incorporation of Zamba Corporation, dated August 3, 2001 (Incorporated by reference to Exhibit 10.08 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2001).

10.44Amendment to Loan Document as of December 31, 2001, between Registrant and Silicon Valley Bank.

10.45Warrant to Purchase Stock dated December 31, 2001, between the Registrant and Silicon Valley Bank.

10.46Registration Rights Agreement dated December 31, 2001, between the Registrant and Silicon Valley Bank.

10.47Stock Purchase Agreement dated January 31, 2002, between Zamba Corporation and Joseph B. Costello (Incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K dated March 14, 2002).

10.48Warrant to Purchase Common Stock dated January 31, 2002, issued by Zamba Corporation to Joseph B. Costello (Incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K dated March 14, 2002).

10.49Form of Stock Purchase Agreement dated February 1, 2002 (Incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K dated March 14, 2002).

10.50Form of Warrant to Purchase Common Stock dated February 1, 2002 (Incorporated by reference to Exhibit 99.4 to the Registrant’s Current Report on Form 8-K dated March 14, 2002).

10.51Third Amendment Lease dated February 6, 2002, between Zamba Corporation and Square 24 Associates.

10.52Sublease Consent and Agreement dated February 7, 2002, between Zamba Corporation, Square 24 Associates and Park Place Associates.

10.53 Sublease Agreement dated January 9, 2002, between Zamba Corporation and Park Place Capital Corporation.

10.54Sublease Agreement dated February 19, 2002, between Zamba Corporation and Purlight LLC.

10.55Strategic Alliance Agreement  between Zamba Corporation, HCL Technologies America, Inc. and HCL Technologies Limited, India, dated February 22, 2002 (Incorporated by reference to Exhibit 99.5 to the Registrant’s Current Report on Form 8-K dated March 14, 2002).

10.56Stock Purchase Agreement dated February 21, 2002, between Zamba Corporation and HCL Technologies America, Inc. (Incorporated by reference to Exhibit 99.6 to the Registrant’s Current Report on Form 8-K dated March 14, 2002).

25

10.57Warrant to Purchase Common Stock dated February 21, 2002, issued by Zamba Corporation to HCL Technologies America, Inc. (Incorporated by reference to Exhibit 99.7 to the Registrant’s Current Report on Form 8-K dated March 14, 2002).

10.58Stock Purchase Agreement dated February 26, 2002, between Zamba Corporation and Joseph B. Costello (Incorporated by reference to Exhibit 99.8 to the Registrant’s Current Report on Form 8-K dated March 14, 2002).

10.59Stock Purchase Agreement dated March 25, 2002, between Zamba Corporation and Joseph B. Costello.

10.60Amendment No. 1 to the Stock Purchase Agreement dated February 26, 2002, dated March 25, 2002, between Zamba Corporation and Joseph B. Costello.

23.01Consent of KPMG  LLP.

24.01Power of Attorney (included on signature page to this report).

99.01Cautionary Statement Regarding Forward-Looking Statements.

*Management contract or compensatory plan required to be filed as an exhibit to Form 10-K.

(b)  Reports on Form 8-K

On March 14, 2002, we filed a report on Form 8-K to report the following:

On January 31, 2002, Mr. Costello purchased 626,504 shares of our common stock from us in a private transaction at a purchase price of $0.479 per share, for an aggregate consideration of $300,000. In connection with the January 31, 2002 stock purchase, we issued Mr. Costello a warrant to purchase up to 313,252 shares of our common stock.  This warrant may be exercised at a per share purchase price of $0.599 at any time through the close of business on January 31, 2007.  The shares were issued at 90% of the average closing bid price for our common stock for the twenty trading days prior to the date of issuance, and the exercise price for the warrant was set at 125% of the per share price for the common stock purchased by Mr. Costello.

On February 1, 2002, we sold 793,383 shares of our common stock at a purchase price of $0.479 per share to a group of seven individual investors in private transactions for $380,000.  The purchase price is equal to 90% of the average closing bid prices of our common stock on the Nasdaq National Market System for the twenty business days prior to February 1, 2002.  In connection with this transaction, we also issued warrants to the individuals in this group that entitles them to purchase up to 396,691 shares of our common stock, at an exercise price of $0.599 per share.  These warrants may be exercised at any time through the close of business on February 1, 2007.  The warrant exercise price represents 125% of the average closing bid prices of our common stock on the Nasdaq National Market System for the twenty business days prior to February 1, 2002.

On February 22, 2002, we entered into a Strategic Alliance Agreement with HCL Technologies America, Inc. (“HCL America”) and HCL Technologies Limited, India (“HCL”), in which we will work with HCL and HCL America to jointly pursue, facilitate, manage and maintain business opportunities with Amdocs and Blue Cross Blue Shield for the provision of CRM services through the use of the services offered by, and the particular experience and expertise of, ZAMBA, HCL America and HCL.  In connection with the Strategic Alliance Agreement, HCL America purchased 2,460,025 shares of our common stock from us in a private transaction, for an aggregate consideration of $1,000,000, and we issued HCL America a warrant to purchase up to 615,006 shares of our common stock.  This warrant may be exercised at a per share purchase price of $0.61 at any time through the close of business on February 21, 2007.  The shares were issued at the average closing bid price for our common stock for the twenty trading days preceding the date of the agreement, and the exercise price for the warrant was set at 150% of the per share price for the common stock purchased by HCL America.  As a result of the purchase of our shares and the issuance of the warrant, HCL America and HCL, as the parent company of HCL America, are now jointly beneficial owners of more than 5% of our outstanding common stock.

On February 26, 2002, we entered into a Stock Purchase Agreement with Mr. Costello to sell to him certain of our Series A Preferred Stock in NextNet Wireless, Inc. (“NextNet”) for $300,000.  In exchange, we will transfer to Mr. Costello that number of our Series A preferred shares that is obtained by dividing the purchase price by the per share price for our NextNet stock at the earliest of the following occurrences: (a) the price per share of our NextNet preferred stock determined upon the merger, consolidation, sale of all or substantially all of the assets or any other change-in-control of NextNet; (b) the price per share of our NextNet preferred stock established upon our sale of any shares of

26

NextNet preferred stock to any third party; or (c) if the items described in “(a)” or “(b)” do not occur by December 31, 2002, the price per share determined by an independent accountant, valuation expert or other entity experienced in the valuation of companies substantially similar to NextNet.

(c)  Exhibits

See Item 14 (a) (3).

(d)  Financial Statement Schedules

See Item 14(a)(2).

27

Independent Auditors’ Report

The Board of Directors and Stockholders of

ZAMBA Corporation:

We have audited the consolidated financial statements of ZAMBA Corporation and subsidiaries as listed in the accompanying index.  In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule listed in the accompanying index.  These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ZAMBA Corporation and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.  Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in note 2 to the consolidated financial statements, the Company has incurred significant losses and negative cash flows from operations in the year ended December 31, 2001.  These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ KPMG LLP

Minneapolis, Minnesota

January 23, 2002, except as to note 4, which is as of February 21, 2002 and notes 2 and 17, which are as of March 26, 2002

28

ZAMBA CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31, 2001 and 2000

	2001			2000
	(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	1,326		$	4,843
Accounts receivable, net	1,556			5,858
Unbilled receivables	608			426
Notes receivable	560			1,979
Notes receivable – related parties	310			359
Prepaid expenses and other current assets	737			660
Total current assets	5,097			14,125
Property and equipment, net	1,799			1,650
Restricted cash	471			264
Intangible assets, net	—			231
Other assets	301			243
Total assets	$	7,668		$	16,513
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	1,100		$	—
Current installments of long-term debt	392			607
Accounts payable	1,059			1,589
Accrued expenses	2,734			3,306
Deferred revenue	101			1,480
Total current liabilities	5,386			6,982
Long-term debt, less current installments	194			469
Commitments (Note 4)
Total liabilities	5,580			7,451
Stockholders’ equity :
Preferred stock, $0.01 par value, 5,000,000 shares authorized, none issued or outstanding	—			—
Common stock, $0.01 par value, 120,000,000 shares authorized, 35,007,063 and 32,164,259 issued and outstanding at December 31, 2001 and 2000, respectively	350			322
Additional paid-in capital	84,403			81,876
Note receivable from director	(500		)	(500		)
Accumulated deficit	(82,165		)	(72,636		)
Total stockholders’ equity	2,088			9,062
Total liabilities and stockholders’ equity	$	7,668		$	16,513

The accompanying notes are an integral part of the consolidated financial statements.

29

ZAMBA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2001, 2000 and 1999

	2001				2000					1999
	(In thousands, except share and per share data)
Net revenues	$	33,302			$			41,740		$			29,030
Costs and expenses:
Project and personnel costs	20,036				20,549					15,225
Sales and marketing	5,824				5,791					2,695
General and administrative	14,503				14,624					9,435
Restructuring charges and non-recurring items	2,188				753					—
Amortization of intangibles	231				2,881					3,771
Loss from operations	(9,480			)	(2,858				)	(2,096				)
Other income (expense):	139				251					97
Interest income	(188			)	(69				)	(107				)
Interest expense	(49			)	182					(10				)
Net loss	$		(9,529	)	$		(2,676		)	$		(2,106		)
Net loss per share – basic and diluted	$		(0.28	)	$	(0.08			)	$	(0.07			)
Weighted average common shares outstanding	33,567,564				31,571,549					30,627,756

The accompanying notes are an integral part of the consolidated financial statements.

30

ZAMBA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2001, 2000 and 1999

	2001				2000				1999
	(In thousands)
Cash flows from operating activities:
Net loss	$	(9,529		)	$	(2,676		)	$	(2,106	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	987				3,916				4,613
Loss on disposal of fixed assets	18				63				—
Provision for bad debts	423				965				83
Non-cash stock compensation	—				—				325
Changes in operating assets and liabilities:
Accounts receivable	4,027				(3,164			)	(1,377		)
Unbilled receivables	(182			)	(152			)	35
Notes receivable	1,276				(1,979			)	—
Prepaid expenses and other assets	(75			)	(590			)	54
Accounts payable	(530			)	510				821
Accrued expenses	(571			)	277				2,169
Deferred revenue	(1,379			)	717				336
Net cash provided by (used in) operating activities	(5,535			)	(2,113			)	4,953
Cash flows from investing activities:
Purchase of property and equipment	(748			)	(1,433			)	(636		)
Notes receivable – related parties	45				(356			)	—
Other	—				—				(68		)
Net cash used in investing activities	(703			)	(1,789			)	(704		)
Cash flows from financing activities:
Proceeds from line of credit, net	1,100				—				—
Proceeds from exercises of options and warrants	57				984				729
Proceeds from sale of common stock	2,261				255				—
Proceeds from debt	—				113				240
Payments on debt	(490			)	(426			)	(382		)
Changes in restricted cash	(207			)	(154			)	100
Dividends	—				—				(17		)
Net cash provided by  financing activities	2,721				772				670
Net increase (decrease) in cash and cash equivalents	(3,517			)	(3,130			)	4,919
Cash and cash equivalents, beginning of period	4,843				7,973				3,054
Cash and cash equivalents, end of period	$		1,326		$		4,843		$	7,973
Supplemental Schedule of Disclosures of Cash Flow Information:
Cash paid during the period for interest	$		185		$		149		$	36

The accompanying notes are an integral part of the consolidated financial statements.

31

ZAMBA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Years ended December 31, 2001, 2000 and 1999

	Common Stock			Additional Paid-In Capital			Note Receivable From Director				Accumulated Deficit				Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except share data)
Balances at December 31, 1998	30,094,204	$	301	$	78,748		$	—			$	(67,854		)	$	11,195
Exercise of stock options	497,520	4		725			—				—				729
Exercise of warrants	461,183	5		(5		)	—				—				—
Non-cash compensation	—	—		325			—				—				325
Conversion of note to common stock	56,611	1		107			—				—				108
Net loss	—	—		—			—				(2,106			)	(2,106		)
Balances at December 31, 1999	31,109,518	311		79,900			—				(69,960			)	10,251
Exercise of stock options	962,543	10		1,474			—				—				1,484
Note receivable from director	—	—		—			(500			)	—				(500		)
Issuance of common stock	92,198	1		254			—				—				255
Amortization of Non-cash compensation	—	—		248			—				—				248
Net loss	—	—		—			—				(2,676			)	(2,676		)
Balances at December 31, 2000	32,164,259	322		81,876			(500			)	(72,636			)	9,062
Exercise of stock options	186,425	2		55			—				—				57
Issuance of common stock	2,656,379	26		2,235			—				—				2,261
Amortization of Non-cash compensation	—	—		237			—				—				237
Net loss	—	—		—			—				(9,529			)	(9,529		)
Balances at December 31, 2001	35,007,063	$	350	$	84,403		$		(500	)	$		(82,165	)	$	2,088

The accompanying notes are an integral part of the consolidated financial statements.

32

ZAMBA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Business Description:

ZAMBA Corporation provides comprehensive Customer Relationship Management (CRM) consulting and systems integration services for large corporations and other organizations.  We help our clients increase customer loyalty and sales by improving those areas within their business that impact their customers.  We derive substantially all of our revenues from professional services.  Prior to October 1998, we were known as Racotek, Inc.

Basis of Reporting:

Our fiscal year-end is December 31.  The accompanying consolidated financial statements include the accounts of Camworks, Inc., which was acquired December 29, 1999, and Fusion Consulting, Inc., which was acquired January 7, 2000.  The Camworks and Fusion transactions were accounted for by the pooling-of-interests method of accounting.  All intercompany accounts and balances have been eliminated in consolidation.

Use of Estimates:

The preparation of financial statements in accordance with auditing standards generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash Equivalents:

We consider all highly liquid investments in money market funds or other investments with initial maturities of three months or less to be cash equivalents.

Revenue Recognition:

We derive our revenues from systems integration services and post-implementation support agreements.  Revenues pursuant to fixed bid contracts are recognized as the services are rendered based on the percentage-of-completion method of accounting (based on the ratio of hours incurred to total estimated hours) in accordance with AICPA Statement of Position 81-1, “Accounting for Performance of Construction-type and Certain Production-type Contracts”. These contracts are considered substantially complete upon customer acceptance. Estimated losses on long-term contracts are recognized in the period in which a loss becomes apparent.  Revenue pursuant to time and materials contracts are recognized as the services are performed.  Customer support revenues are recognized ratably over the term of the underlying support agreements.

Deferred revenue is comprised of amounts received or billed in advance of services to be performed.  Unbilled revenue represents amounts recognized on services performed in advance of billings in accordance with the terms of the contract.

Property and Equipment:

Property and equipment are stated at cost.  Significant additions or improvements extending asset lives are capitalized; normal maintenance and repair costs are expensed as incurred.  Depreciation is determined using the straight-line method over the estimated useful lives of the assets, which range from two to seven years.  Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the underlying lease term (five to seven years).  The cost and related accumulated depreciation or amortization of assets sold or disposed of are removed from the accounts and the resulting gain or loss is included in operations.

33

Intangible Assets:

Intangible assets are amortized over the economic useful lives of between two and five years.  Our remaining intangible assets are $0 as of December 31, 2001.

Income Taxes:

We utilize the asset and liability method of accounting for income taxes whereby deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is the sum of the tax currently payable and the change in the deferred tax assets and liabilities during the period.

Stock-Based Compensation:

We have chosen to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations (APB No. 25).  We account for stock-based compensation to non-employees using the fair value method prescribed by Statements of Financial Accounting Standards (SFAS) No. 123.  Accordingly, compensation costs for stock options granted to employees are measured as the excess, if any, of the value of our stock at the date of the grant over the amount an employee must pay to acquire the stock.  Compensation cost for stock options granted to non-employees is measured as the fair value of the option at the date of grant.  Such compensation costs, if any, are amortized on a straight-line basis over the underlying option vesting terms.

Net Loss Per Share:

Basic and diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period.  A total of 5,045, 2,730,584 and 2,851,249 assumed conversion shares for the years ended December 31, 2001, 2000 and 1999, respectively, were excluded from the net loss per share computation as their effect is anti-dilutive.  Common stock options could potentially dilute basic earnings per share in future periods if we generate net income.

Reclassifications:

Certain prior year amounts have been reclassified to conform to the current year presentation.

New Accounting Standards:

In November 2001, the Financial Accounting Standards Board (FASB) issued Staff Announcement, Topic No. D-103, regarding the income statement classification of reimbursements received for “out-of-pocket” expenses incurred. This Staff Announcement requires that out-of-pocket expenses incurred and the related reimbursements be reflected in the income statement on a gross basis as both revenue and expense.  Currently, we classify these out-of-pocket expense reimbursements as a reduction of project and personnel costs.  This Staff Announcement is effective for financial reporting periods beginning after December 15, 2001, and accordingly, we will implement this Staff Announcement on January 1, 2002.  When adopted, we will adjust revenue for all periods reported to include out-of-pocket expense reimbursements.  This change in classification, when implemented in 2002, will have no effect on current or previously reported net income (loss) or earnings (loss) per share.

In August 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets.  While SFAS No. 144 supersedes both SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” (APB No. 30), it retains the fundamental provisions of those Statements.  SFAS No. 144 becomes effective for fiscal years beginning after December 15, 2001.  We are

34

evaluating SFAS No. 144 to determine the impact on our financial condition and results of operations, but do not expect that they will have a material effect on our financial statements.

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets,” which change the accounting for business combinations and goodwill.  SFAS No. 141 requires that the purchase method of accounting be used for business combinations initiated after June 30, 2001.  Use of the pooling-of-interests method is prohibited.  SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach.  Amortization of goodwill, including goodwill recorded in past business combinations, will therefore cease upon adoption of SFAS No. 142, which for us will be January 1, 2002.  The adoption of SFAS No. 141 and SFAS No. 142 will not have a material effect on our financial statements.

The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 138.  SFAS No. 133 establishes accounting and reporting standards for derivative instruments and for hedging activities.  SFAS No. 133 requires companies to recognize all derivatives as either assets or liabilities, and measure those instruments at fair value. SFAS No. 133 is effective beginning on January 1, 2001. We implemented SFAS No. 133, as amended, in fiscal year 2001.  The implementation of SFAS No. 133 did not have an impact on our financial position, results of operations or cash flows for the year ended December 31, 2001.

2.             LIQUIDITY AND GOING CONCERN MATTERS:

We incurred significant losses and negative cash flows from operations during the year ended December 31, 2001, and continued to incur losses in the first two months of fiscal 2002.  Therefore, since December 31, 2001, we have raised $2,380,000 in additional funding as described below.  As of February 28, 2002 (our most recent monthly reporting period to the bank), we were in compliance with the covenants for our line of credit with Silicon Valley Bank, but our ability to continue as a going concern depends upon our ability to continue to access our line of credit facility, obtain additional funding, and achieve sustained profitability.  The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business.  These financial statements do not include any adjustments that might result if we were forced to discontinue our operations.

We have raised $2,380,000 in additional funding through March 26, 2002 to fund our working capital needs.  Joseph B. Costello, our Chairman, has committed to provide funding to us in an amount up to $2.0 million to cure any default on our covenants under the Silicon Valley Bank credit facility.  To date, Mr. Costello has provided $1.0 million under his commitment, including $300,000 for the purchase of shares of our common stock and $700,000 for the purchase of certain Series A preferred shares that we own in NextNet Wireless, Inc. (“NextNet”).  These transactions are described below.  Mr. Costello paid us $300,000 on January 31, 2002, in connection with a private purchase of 626,504 shares of our common stock at a purchase price of $0.479 per share. In connection with the January 31, 2002 stock purchase, we also issued Mr. Costello a warrant to purchase up to 313,252 shares of our common stock at a purchase price of $0.599 per share, which represents 125% of the per share price for the common stock purchased by Mr. Costello.  Mr. Costello also paid us $300,000 on February 26, 2002, in connection with the purchase of that number of our Series A preferred shares in NextNet that is obtained by dividing the purchase price by the per share price for our NextNet stock at the earliest of the following occurrences: (a) the price per share of our NextNet preferred stock determined upon the merger, consolidation, sale of all or substantially all of the assets or any other change-in-control of NextNet; (b) the price per share of our NextNet preferred stock established upon our sale of any shares of NextNet preferred stock to any third party; or (c) if the items described in “(a)” or “(b)” do not occur by December 31, 2002, the price per share determined by an independent accountant, valuation expert or other entity experienced in the valuation of companies substantially similar to NextNet.  Mr. Costello also paid us $400,000 on March 25, 2002, in connection with a similar transaction for certain of our shares in NextNet.  Mr. Costello’s remaining total commitment still available to us is $1.0 million.

35

We received another $380,000 on February 1, 2002, from a group of seven individual investors in private transactions, in exchange for an aggregate of 793,383 shares of our common stock at a purchase price of $0.479 per share.  We also issued warrants to these private investors entitling them to purchase up to an aggregate of 396,691 shares of our common stock at a purchase price of $0.599 per share, which represents 125% of the average closing bid prices of our common stock on the Nasdaq National Market System for the twenty business days prior to February 1, 2002.

We also received $1,000,000 from HCL Technologies America, Inc. (“HCL America”) on March 5, 2002, in connection with a Strategic Alliance Agreement we entered into on February 22, 2002 with HCL America and its parent company, HCL Technologies Limited, India (“HCL”).  In exchange for its funding, we provided HCL America with 2,460,025 shares of our common stock at a purchase price of $0.407 per share, and we issued HCL America a warrant to purchase up to 615,006 shares of our common stock at a purchase price of $0.61 per share.  The shares were issued at the average closing bid price of our common stock for the twenty days prior to the date of the agreement, and the warrant exercise price is equal to 150% of the per share price for the common stock purchased by HCL America.

In order to reduce our operating losses, we continue to reduce our overall cost structure.   In addition to the restructuring charges in the second quarter of 2001 (see Note 8), we have taken other actions subsequently to streamline our operations. Our largest cost savings are related to facilities and employees.  In February 2002, we reduced our ongoing facilities expenses by subleasing our Pleasanton and Campbell, California, facilities, in two separate transactions, which will result in an aggregate annual savings of approximately $1.0 million.  In addition, since the restructuring, our employee headcount has decreased approximately by an additional 95 employees, or approximately 40% of our workforce.  When compared to the costs we projected for our business after we completed the restructuring, these additional headcount reductions will result in additional annual cost savings of approximately $10.0 million.

We are currently exploring alternatives to meet our future liquidity requirements and are making payments to significant creditors as cash flow allows.  We are in ongoing contact with certain of these creditors regarding our slowness in payments, and we are attempting to resolve issues regarding late payment or no-payment. However, there can be no assurance that we will be able to resolve these matters satisfactorily, and if we are unable to do so, we could be subject to litigation that could have a material adverse effect on our business, financial condition, and results of operation.

We believe that our existing cash and cash equivalents at December 31, 2001, cash we have received subsequent to December 31, 2001, our secured revolving credit facility with Silicon Valley Bank, and the related funding commitment from Joseph B. Costello will be sufficient to meet our working capital and capital expenditure requirements through at least April 30, 2002.  We will continue to explore possibilities for additional financing, which may include debt, equity, or other forms of financing transactions, and other strategic alternatives that may be available to us, including a potential sale of all or a portion of our stock, assets, or investments.

36

3.             SELECTED BALANCE SHEET INFORMATION:

	December 31,
	2001			2000
	(in thousands)
Accounts Receivable, Net:
Accounts receivable	$	1,739		$	6,287
Less allowance for doubtful accounts	(183		)	(429		)
Total, net	$	1,556		$	5,858
Property and Equipment, Net:
Computer equipment	$	1,695		$	1,406
Furniture and equipment	614			694
Leasehold improvements	1,189			931
Total	3,498			3,031
Less accumulated depreciation and amortization	(1,699		)	(1,381		)
Total, net	$	1,799		$	1,650
Accrued Expenses:
Payroll related	$	242		$	720
Vacation	672			841
Restructuring costs	627			—
Interest payable	17			15
Professional fees	325			192
Subcontractor fees	4			154
Other	847			1,384
Total	$	2,734		$	3,306

4.             LEASE COMMITMENTS:

We maintain our corporate headquarters in Minneapolis, Minnesota and operating offices in Campbell, California; Burlington, Massachusetts; Colorado Springs and Parker, Colorado; Toronto, Canada and Chennai, India under terms of non-cancelable operating leases, which expire between April 2002 and June 2007.  These leases require us to pay a pro rata share of the lessor’s operating costs.  We also have leases for facilities that have been closed in St. Paul, Minnesota and Pleasanton, California, as described further in Note 8. In addition to the office space leases, we also have non-cancelable operating leases for furniture and equipment.

One of the leases requires us to maintain a restricted cash balance as security for our obligations under the lease.  The remaining leases require us to provide security deposits as part of the lease agreement.  Total rental expense, including a pro rata share of the lessor’s operating costs, were $3,546,144, $2,247,000, and $971,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

Future minimum lease payments for office space and equipment under non-cancelable operating leases are as follows (in thousands):

37

Year Ending December 31,	Operating Leases
	(in thousands)
2002	$	4,060
2003	3,635
2004	3,123
2005	2,639
2006	1,119
Later	528
Total	$	15,104

We are subleasing some of our office space commitments described above. On February 14, 2002, we entered into an agreement to sublease our space in Pleasanton, California. On February 20, 2002, we entered into an agreement to sublease our space in Campbell, California. This sublease will require us to take a one-time charge of approximately $1,300,000 in the first quarter of fiscal 2002. These subleases expire from May 2003 through June 2007. Annual minimum lease payments due to Zamba on these subleases are as follows (in thousands):

Year Ending December 31,	Minimum Sublease Payments Due
2002	$	1,025
2003	1,213
2004	1,042
2005	1,073
2006	1,106
Later	520
Total	$	5,979

5.             ACQUISITIONS:

Fusion Consulting, Inc.

On January 7, 2000, we acquired Fusion Consulting, Inc. (“Fusion”), a front office package solutions provider based in Colorado Springs, Colorado.  An aggregate of 80,001 shares of our common stock was issued in exchange for all of the outstanding common stock of Fusion. The transaction was accounted for as a pooling-of-interests, and accordingly, the accompanying financial statements have been restated to include the financial position, results of operations and cash flows of Fusion for all periods presented.  Merger-related expenses of approximately $60,000 were included in general and administrative expenses in 2000.

Camworks, Inc.

On December 29, 1999, we acquired Camworks, Inc. (“Camworks”), an e-business solutions provider based in St. Paul, Minnesota.  An aggregate of 1,000,000 shares of our common stock was issued in exchange for all of the outstanding common stock of Camworks. This transaction was accounted for as a pooling-of-interests transaction, and accordingly, the accompanying financial statements have been restated to include the financial position, results of operations and cash flows of Camworks for all periods presented.  Merger-related expenses of approximately $90,000 were included in general and administrative expenses in 1999.

6.             NOTE RECEIVABLE:

Between September 29, 2000 and December 6, 2000, we entered into several interest-bearing promissory notes with Lifescape, LLC.  The principal amount of these notes totaled approximately $1,680,000, and

38

each note carried an interest rate of 12.0% per annum.  As of December 31, 2001, the four scheduled monthly installments totaling $1,120,000 have been received and the final two installments of $560,000 remain outstanding.

7.             NOTES RECEIVABLE – RELATED PARTIES:

Notes receivable – related parties include amounts due from two employees. These notes are due through June 2002, with interest at 9.0%.

8.             RESTRUCTURING CHARGES AND NON-RECURRING ITEMS:

Due to a decrease in demand for information technology consulting services, we undertook an initiative to streamline our operations during the second quarter of fiscal 2001.  This restructuring initiative included a reduction in our workforce and the consolidation of certain unproductive or duplicative facilities.  In connection with our restructuring initiative, we incurred a restructuring charge of $2.19 million in the second quarter of fiscal 2001.  This charge was composed of $777,000 for severance payments, $123,000 for other employee-related costs, such as continued medical benefits, $1.173 million for facility closings and other leasehold termination costs, $87,000 arising out of a contract dispute with a vendor, and $28,000 of other related restructuring charges.  No non-cash write-offs were incurred in connection with the restructuring charge.

In connection with the restructuring, we reduced our employee headcount by 89 employees, which represents approximately 28% of our workforce.  Of these 89 employees, 62 employees (or approximately 70%) were billable consultants and 27 employees (or approximately 30%) were non-billable staff. All costs related to employees had been paid out by the end of fiscal 2001.  The facilities charges were due to office closures in Pleasanton and Carlsbad, California, and St. Paul, Minnesota. As of December 31, 2001, $627,000 in facilities-related costs remained. We also wrote off approximately $28,000 in furniture and fixtures.

Restructuring activities through December 31, 2001, were as follows:

	Second Quarter 2001 Provision		2001 Utilized		Balance as of December 31, 2001
Restructuring Charge
Severance Payments to Employees	$	777,000	$	777,000	$	—
Other Employee Related Costs	123,000		123,000		—
Facility Closings	1,106,000		546,000		560,000
Leasehold Termination Costs	67,000		—		67,000
Other Employee Related Costs	115,000		115,000		—
Totals	$	2,188,000	$	1,561,000	$	627,000

Non-recurring charges of $753,000 were recorded in 2000. The items consist of severance expenses for recently departed senior management, costs associated with closing our St. Paul office in order to consolidate into an expanded, common Minneapolis facility, and the termination of a long-term software support contract. At December 31, 2001, $52,000 of this amount is included in accounts payable and $52,000 is included in current maturities of long-term debt and is due in October 2002.

9.             LINE OF CREDIT:

On February 27, 2001, as amended on August 2, 2001 and December 31, 2001, we established a secured revolving credit facility with Silicon Valley Bank of up to a maximum of $5.0 million based on eligible collateral.  Borrowings under this line of credit bear interest at the bank’s prime rate plus 2.0%, and are payable monthly.  The amended agreement requires, among other things, that we comply with minimum tangible net worth and profitability covenants.  In the event of default on the covenants, Joseph B. Costello, our Chairman, has committed to provide funding to us in an amount up to $2.0 million, to cure such

39

default.  This commitment expires on December 31, 2002.  We were in compliance with the covenants as of December 31, 2001.  As of December 31, 2001, $1.1 million was outstanding under the line of credit.  This facility expires on December 31, 2002.  See Note 2 for further discussion.

10.          NOTES PAYABLE:

As part of the 1998 acquisition of QuickSilver, we issued $2.16 million in promissory notes payable.  Interest on the notes is computed at 7% of the outstanding balance and is due quarterly on the final day of each quarter, commencing December 31, 1999, and ending December 31, 2003.  Principal payments are due quarterly on the last day of each quarter in 16 equal installments, commencing December 31, 1999.  Holders may request to convert their notes to our common stock.  Conversion is computed at fair market value, and is at the sole and absolute discretion of our Board of Directors. No notes were converted to common stock during 2001 and 2000. During 1999, $104,000 of the principal value of the notes and $4,000 of accrued interest payable related to such notes were converted into 46,119 shares of our common stock.

As part of the acquisitions of QuickSilver and Camworks, we also acquired debt related to loan obligations.  Loan payments are made monthly and consist of principal and interest, which is computed at rates ranging between 8.5% and 10.0%.  Of these obligations, $13,000 is payable in 2002.

In September 1998, we purchased software and support for $413,000.  The remaining $52,000 of this obligation is due in October 2002.

Aggregate annual maturities of notes payable, subsequent to December 31, 2001, are as follows:

Year Ending December 31	Payments on Notes
	(in thousands)
2002	$	392
2003	194

Cash paid for interest charges was $185,000, $149,000 and $36,000 in 2001, 2000 and 1999, respectively.

11.          NEXTNET:

On September 21, 1998, we transferred our “NextNet” wireless data technology to an entity now known as NextNet Wireless, Inc. We have an investment in NextNet Wireless, which is carried at $0 because of uncertainty surrounding the realizability of the investment. We do not have any obligations to provide funding for this investment. As of December 31, 2001 and 2000, we owned approximately one-third of NextNet.

12.          STOCKHOLDERS’ EQUITY:

Our stock incentive and non-qualified option plans provide for grants of stock options and stock awards.  The number of common shares available for grant pursuant to the plans was 3,508,045, 2,948,590, and 1,763,406, as of December 31, 2001, 2000 and 1999, respectively.

Options become exercisable over periods of up to four years from the date of grant and expire within ten years from date of grant.

The following table details option activity:

40

	Options		Price Per Option							Weighted Average Exercise Price
Balances, December 31, 1998	6,278,199			$	0.2000	—		$	12.6250	$	1.83
Granted	3,283,950			1.5630		—		11.2970		3.06
Exercised	(497,520	)		0.2900		—		3.7500		1.47
Canceled	(1,283,484	)		0.4200		—		5.0000		1.87
Balances, December 31, 1999	7,781,145			0.2000		—		12.6250		2.44
Granted	6,381,391			2.5312		—		20.1250		5.21
Exercised	(962,543	)		0.2000		—		2.6875		1.50
Canceled	(1,516,124	)		0.4200		—		20.1250		6.82
Balances, December 31, 2000	11,683,869			0.2000		—		20.1250		3.50
Granted	2,781,147			0.3400		—		3.7500		1.55
Exercised	(186,425	)		0.2000		—		2.1250		0.30
Canceled	(3,390,477	)		0.9900		—		20.1250		3.73
Balances, December 31, 2001	10,888,114			0.3400		—		20.1250		2.90
Options exercisable at December 31, 2001	5,670,588			$	0.4200	—	$		20.1250	$		2.85

No compensation cost has been recognized for stock options granted to employees or directors under our 1989 Stock Option Plan, 1993 Equity Incentive Plan, 1993 Directors Option Plan, 1997 Stock Option Plan, 1998 Non-Officers Plan, 1999 Non-Officers Plan, 2000 Non-Officers Plan, or 2000 Non-Qualified Plan (collectively referred to as the “Plans”).  Had compensation cost for the Plans been determined based on the fair value of options at the grant date for awards in 2001, 2000, and 1999, our net loss and net loss per share would have increased to the pro forma amounts indicated below:

		2001			2000			1999
		(In thousands, except per share amounts)
Net loss	As reported	$	(9,529	)	$	(2,676	)	$	(2,106	)
	Pro forma	(19,131		)	(9,004		)	(4,644		)
Net loss per share –	As reported	(.28		)	(.08		)	(.07		)
Basic and diluted	Pro forma	(.57		)	(.29		)	(.15		)

The aggregate fair value of options granted during 2001, 2000, and 1999, respectively, was $150,000 , $8.37 million, and $3.35 million for the 1993 Equity Incentive Plan, $69,000, $1.90 million, and $163,000 for the 1993 Directors Option Plan,  $0, $1.85 million, and $3.10 million for the 1998 Non-Officer Option Plan, $0, $5.04 million, and $2.58 million for the 1999 Non-Officer Plan, $446,000, $6.51 million, and $0 for the 2000 Non-Officer Plan, and $2.76 million, $5.71 million, and $0 for the 2000 Non-Qualified Option Plan.  No options were granted in 2001, 2000, and 1999 for the 1997 Stock Option Plan for Key Employees, Consultants and Directors of QuickSilver Group, Inc.  The aggregate fair value was calculated by using the fair value of each option grant on the date of grant, utilizing the Black-Scholes option-pricing model and the following key assumptions for the Plans:

Assumptions	2001		2000		1999
Risk-free interest rates	3.96%–5.13	%	5.52%–6.76	%	4.59%–6.30	%
Volatility	115	%	133	%	112	%
Expected lives (months)	60		60		60

41

The following table summarizes information about fixed-price stock options outstanding at December 31, 2001:

		Options Outstanding				Options Exercisable
Range of Exercise Prices		Number Outstanding at December 31, 2001	Weighted-Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable at December 31, 2001	Weighted- Average Exercise Price
$	0.34 – 0.99	456,991	8.46	$	0.73	116,991	$	0.66
1.00 – 1.94		3,322,247	8.25	1.57		1,822,464	1.60
2.00 – 3.88		5,403,109	7.22	2.83		2,846,027	2.58
4.00 – 5.97		1,236,038	8.16	4.86		653,240	4.86
6.00 – 20.13		469,729	8.12	9.92		231,866	10.96

Stock-Based Compensation:

We have non-cash compensation charges, including expenses associated with Camworks stock granted to Camworks employees prior to the merger under pre-existing change of control provisions within their employment agreements.  These stock grants represented a one-time charge to 1999 earnings of $325,000.  We also granted 213,000 stock options to non-shareholder employees of Camworks and Fusion following our acquisition of these companies.  The options were granted with an exercise price less than fair market value as an incentive to employees to continue employment with us.  Non-cash compensation charges were $237,000, $248,000, and $0 for the years ended December 31, 2001, 2000, and 1999.  The remaining deferred compensation related to these options is $175,000, and will be recognized over a four-year vesting period, based upon the intrinsic value method in accordance with APB No. 25.

Preferred Stock:

Our Fifth Amended and Restated Certificate of Incorporation authorizes issuance of up to 5.0 million preferred shares with a par value of $0.01 per share and allows our Board of Directors, without obtaining stockholder approval, to issue such preferred stock.  In October 1998, 1.0 million shares of preferred stock were purchased by our then-chairman for $2.00 per share.  These shares converted by their terms to common stock on December 29, 1998.  There were no preferred shares issued or outstanding as of December 31, 2001, 2000, or 1999.

Warrants:

On June 29, 2001, we sold 2,352,942 shares of our common stock at the average closing bid price of our common stock on the Nasdaq Stock Market for the five trading days prior to the date of issuance, to Joseph B. Costello, our current Chairman, for $2.0 million.  In connection with this transaction, we also issued a warrant to Mr. Costello that entitles him to purchase up to 1,176,471 shares of our common stock, at an exercise price of $1.0625 per share.  The warrant exercise price represents 125% of the per share price of our common stock on the date of issuance.  The fair value of the warrant is $809,000, which is included as part of additional paid-in capital. The fair value of the warrant was calculated by utilizing the Black-Scholes option-pricing model and the following key assumptions:

Assumptions:
Risk-free interest rate	4.69	%
Volatility	111	%
Expected life (months)	48

On February 27, 2001, as amended on August 2, 2001 and December 31, 2001, we established a secured revolving credit facility with Silicon Valley Bank that allows us to borrow up to a maximum of $5.0 million based on our eligible accounts receivable.  The amended agreement requires, among other things, that we comply with minimum tangible net worth and profitability covenants.  In connection with the establishment of the credit facility, we issued a warrant to purchase 35,000 shares at an exercise price of

42

$2.80 per share to Silicon Valley Bank.  The fair value of the warrant issued upon establishment of the credit facility was $62,000.  As part of the August 2, 2001 amendment, we issued a warrant to Silicon Valley Bank to purchase an additional 35,000 shares of our common stock at an exercise price of $0.86 per share.  The fair value of the warrant issued upon the August 2001 amendment is $23,000.  As part of the December 31, 2001 amendment, we issued a warrant to Silicon Valley Bank to purchase an additional 20,000 shares of common stock at an exercise price of $0.51 per share.  The fair value of the warrant issued upon the December 2001 amendment is $10,000.  The exercise price for each warrant was established by averaging the closing price of our common stock for the five trading days prior to the date of issuance, and each warrant expires five years from the date of issuance.  The remaining fair value of the warrants is being charged to interest expense over the life of the credit facility, which expires on December 31, 2002.  The aggregate fair value for the compensation cost for the warrants granted in connection with the February 27, 2001 establishment of the credit facility and the August 2, 2001 and December 31, 2001 amendments were calculated by using the fair value of the warrant on the date of grant, utilizing the Black-Scholes option-pricing model and the following key assumptions:

	February 27, 2001 Warrant		August 2, 2001 Warrant		December 31, 2001 Warrant
Risk-free interest rate	4.80	%	4.54	%	4.42	%
Volatility	83	%	102	%	107	%
Expected life (months)	48		60		60

In connection with our acquisition of QuickSilver, warrants to purchase QuickSilver common stock were converted to 462,247 warrants to purchase our common stock.  These warrants were exercised during 1999.  No other warrant rights are outstanding as of December 31, 2001 or 2000.

Stockholder Rights Plan:

On September 7, 1994, the Board of Directors adopted a Stockholder Rights Plan.  Under this plan, the Board of Directors declared a dividend of one preferred share purchase right (a “Right”) for each share of common stock outstanding as of September 28, 1994 (the “Record Date”).  In addition, one Right will be issued with each share of common stock that becomes outstanding after the Record Date, except in certain circumstances.  All Rights will expire on September 12, 2004, unless we extend the expiration date, redeem the Rights or exchange the Rights for common stock.

The Rights are initially attached to our common stock and will not trade separately.  If a person or a group acquires 20 percent or more of our common stock (an “Acquiring Person”) or announces an intention to make a tender offer for 20 percent or more of our common stock, then the Rights will be distributed (the “Distribution Date”) and will thereafter trade separately from the common stock.  Upon the Distribution Date, each Right may be exercised for 1/100th of a share of a newly designated Series A Junior Participating Preferred Stock at an exercise price of $25.00 per share.

Upon a person or group becoming an Acquiring Person, holders of the Rights (other than the Acquiring Person) will have the right to acquire shares of our common stock at a substantially discounted price in lieu of the preferred stock. Additionally, if, after the Distribution Date, we merge into or engage in certain other business combination transactions with an Acquiring Person or 50 percent or more of our assets are sold in a transaction with an Acquiring Person, the holders of Rights (other than the Acquiring Person) will have the right to receive shares of common stock of the acquiring corporation at a substantially discounted price.

After a person or a group has become an Acquiring Person, our Board of Directors may, at its option, require the exchange of outstanding Rights (other than those held by the Acquiring Person) for common stock at an exchange ratio of one share of our common stock per Right.  The Board also has the right to redeem outstanding Rights at any time prior to the Distribution Date (or later in certain circumstances) at a price of $0.005 per Right.  The terms of the Rights, including the period to redeem the Rights, may be amended by our Board of Directors in certain circumstances.

43

Employee Stock Purchase Plan:

As of July 1, 2000, our Board of Directors adopted a non-compensatory Employee Stock Purchase Plan (the “ESPP”). Under the ESPP, employees who elect to participate may purchase common stock at a 15% discount from the market value of such stock. The ESPP permits an enrolled employee to make contributions to purchase shares of common stock by having from 1%-10% of their compensation withheld from each payroll, up to a maximum of $6,250 each quarter. The total number of shares that may be issued pursuant to options granted under the ESPP is 750,000. Approximately 303,000 shares were issued under the ESPP at an average price of $0.86 per share in 2001, and approximately 92,000 shares were issued under the ESPP at an average price of $2.76 per share in 2000.

13.          INCOME TAXES:

We have incurred net operating losses since our inception in 1990.  Because of the uncertainty about whether we will have taxable earnings in the future, we have not reflected any benefit of such net operating loss carryforwards in the accompanying consolidated financial statements.

As of December 31, 2001, we have approximately $80.5 million of net operating loss carryforwards for both financial statement and for federal income tax purposes that begin to expire in 2005.  The use of these carryforwards in any one year may be limited under Internal Revenue Code Section 382 due to significant ownership changes.  In addition, the net operating loss carryforward of QuickSilver is limited under the federal consolidated tax return rules.

The provision for income taxes differs from the expected tax benefit, computed by applying the federal corporate tax rate, as follows:

	2001			2000
Expected federal benefit	$	(2,710,000	)	$	(910,000	)
Change in valuation allowance	3,160,000			1,025,000
State taxes, net	(450,000		)	(210,000		)
Amortization	75,000			960,000
Stock compensation	(35,000		)	(951,000		)
Other	(40,000		)	86,000
Total benefit	—			—

Valuation allowances have been established for the entire tax benefit associated with the carryforwards and net future deductible temporary differences as of December 31, 2001 and 2000.

The tax effect of items that comprise a significant portion of deferred tax assets is:

	2001			2000
Deferred tax assets:
Net operating loss carryforwards	$	31,400,000		$	28,240,000
Tax credits	750,000			750,000
Other, principally depreciation and amortization	785,000			785,000
Valuation allowance	(32,935,000		)	(29,775,000		)
Net deferred tax asset	—			—

Due to the uncertainty surrounding the timing of realizing the benefits of favorable tax attributes in future tax returns, we have placed a valuation allowance against our otherwise recognizable deferred tax assets.

14.          EMPLOYEE SAVINGS PLAN:

We offer a Section 401(k) defined contribution benefit plan for which all regular employees are eligible.  Participants may contribute up to 20% of their compensation in any plan year subject to an annual

44

limitation.  We may make an employer contribution to the 401(k) plan at the discretion of our Board of Directors.  We have not made any employer contributions to the 401(k) plan to date.

15.          MAJOR CUSTOMERS:

A portion of our revenues have been derived from significant customers for the years ended December 31, 2001, 2000 and 1999 as follows:

	2001		2000		1999
Customer 1	12	%	16	%	2	%
Customer 2	10	%	7	%	0	%
Customer 3	10	%	2	%	1	%

16.          FAIR VALUE OF FINANCIAL INSTRUMENTS:

The carrying amount for cash and cash equivalents and long-term debt approximates fair value because of the short maturity of those instruments.

17.          SUBSEQUENT EVENTS:

On January 31, 2002, Mr. Costello purchased 626,504 shares of our common stock from us in a private transaction at a purchase price of $0.479 per share, for an aggregate consideration of $300,000. In connection with the January 31, 2002, stock purchase, we issued Mr. Costello a warrant to purchase up to 313,252 shares of our common stock.  This warrant may be exercised at a per share purchase price of $0.599 at any time through the close of business on January 31, 2007.  The shares were issued at 90% of the average closing bid price for our common stock for the twenty trading days prior to the date of issuance, and the exercise price for the warrant was set at 125% of the per share price for the common stock purchased by Mr. Costello. The fair value of the warrant is $105,000, which is included as part of additional paid-in capital.

On February 1, 2002, we sold 793,383 shares of our common stock at a purchase price of $0.479 per share to a group of seven individual investors in private transactions, for $380,000.  The purchase price is equal to 90% of the average closing bid prices of our common stock on the Nasdaq National Market System for the twenty business days prior to February 1, 2002.  In connection with this transaction, we also issued warrants to the individuals in this group that entitles them to purchase up to 396,691 shares of our common stock, at an exercise price of $0.599 per share.  These warrants may be exercised at any time through the close of business on February 1, 2007.  The warrant exercise price represents 125% of the average closing bid prices of our common stock on the Nasdaq National Market System for the twenty business days prior to February 1, 2002.  The aggregate fair value of the warrant is $130,000, which is included as part of additional paid-in capital.

On February 22, 2002, we entered into a Strategic Alliance Agreement with HCL Technologies America, Inc. (“HCL America”) and HCL Technologies Limited, India (“HCL”), in which we will work with HCL and HCL America to jointly pursue, facilitate, manage and maintain business opportunities with Amdocs and Blue Cross Blue Shield for the provision of CRM services through the use of the services offered by, and the particular experience and expertise of, ZAMBA, HCL America and HCL.  In connection with the Strategic Alliance Agreement, HCL America purchased 2,460,025 shares of our common stock from us in a private transaction, for an aggregate consideration of $1,000,000, and we issued HCL America a warrant to purchase up to 615,006 shares of our common stock.  This warrant may be exercised at a per share purchase price of $0.61 at any time through the close of business on February 21, 2007.  The shares were issued at the average closing bid price for our common stock for the twenty trading days preceding the date of the agreement, and the exercise price for the warrant was set at 150% of the per share price for the common stock purchased by HCL America.  As a result of the purchase of our shares and the issuance of the warrant, HCL America and HCL, as the parent company of HCL America, are now jointly beneficial owners of more than 5% of our outstanding common stock. The fair value of the warrant is $142,000, which is included as part of additional paid-in capital.

45

On February 26, 2002, we entered into a Stock Purchase Agreement with Mr. Costello to sell to him certain of our Series A Preferred Stock in NextNet Wireless, Inc. (“NextNet”) for $300,000.  In exchange, we will transfer to Mr. Costello that number of our Series A preferred shares that is obtained by dividing the purchase price by the per share price for our NextNet stock at the earliest of the following occurrences: (a) the price per share of our NextNet preferred stock determined upon the merger, consolidation, sale of all or substantially all of the assets or any other change-in-control of NextNet; (b) the price per share of our NextNet preferred stock established upon Our sale of any shares of NextNet preferred stock to any third party; or (c) if the items described in “(a)” or “(b)” do not occur by December 31, 2002, the price per share determined by an independent accountant, valuation expert or other entity experienced in the valuation of companies substantially similar to NextNet.

On March 25, 2002, we entered into a Stock Purchase Agreement with Mr. Costello to sell to him certain of our Series A Preferred Stock in NextNet Wireless, Inc. (“NextNet”) for $400,000.  In exchange, we will transfer to Mr. Costello that number of our Series A preferred shares that is obtained by dividing the purchase price by the per share price for our NextNet stock at the earliest of the following occurrences: (a) the price per share of our NextNet preferred stock determined upon the merger, consolidation, sale of all or substantially all of the assets or any other change-in-control of NextNet; (b) the price per share of our NextNet preferred stock established upon our sale of any shares of NextNet preferred stock to any third party; or (c) if the items described in “(a)” or “(b)” do not occur by December 31, 2002, the price per share determined by an independent accountant, valuation expert or other entity experienced in the valuation of companies substantially similar to NextNet.

                The fair value of the above warrants were calculated by utilizing the Black-Scholes option-pricing model and the following key assumptions:

	January 31, 2002 Warrant		February 1, 2002 Warrants		February 22, 2002 Warrant
Risk-free interest rate	4.40	%	4.40	%	4.27	%
Volatility	108	%	108	%	108	%
Expected life (months)	60		60		60

46

Zamba Corporation

Schedule II

Valuation and Qualifying Accounts

(in thousands)

Column A	Column B		Column C		Column D			Column E
	Balance at Beginning of Period		Additions Charged to Expense		Deduction from Allowance			Balance at End of Period
Description
Year ended December 31, 2001 Allowance for doubtful accounts (deducted from accounts receivable)	$	429	$	275	$	(521	)	$	183
Year ended December 31,2000 Allowance for doubtful accounts (deducted from accounts receivable)	309		965		(845		)	429
Year ended December 31, 1999 Allowance for doubtful accounts (deducted from accounts receivable)	228		179		(98		)	309

47

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		ZAMBA CORPORATION
Date:  April 1 , 2002	By	/s/ Douglas M. Holden
		Douglas M. Holden
		President and Chief Executive Officer

Each person whose signature appears below constitutes and appoints Douglas M. Holden and Michael H. Carrel, jointly and severally, his true and lawful attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign this Annual Report on Form 10-K and any amendments thereto, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ Douglas M. Holden	President and Chief Executive Officer (Principal Executive Officer)	April 1, 2002
Douglas M. Holden
/s/ Michael H. Carrel	Executive Vice President and Chief Financial Officer   (Principal Financial and Accounting Officer)	April 1, 2002
Michael H. Carrel
OTHER DIRECTORS:
/s/ Joseph B. Costello	Chairman of the Board	April 1, 2002
Joseph B. Costello
	Director	April 1, 2002
Dixon R. Doll
/s/ Paul D. Edelhertz	Director	April 1, 2002
Paul D. Edelhertz
/s/ John Olsen	Director	April 1, 2002
John Olsen
	Director	April 1, 2002
Subrahmanian Raman
/s/ Sven A.Wehrwein	Director	April 1, 2002
Sven A.Wehrwein

EX-10.44

Exhibit 10.44

Silicon Valley Bank

Amendment to Loan Documents

Borrower:                ZAMBA CORPORATION

Address:                  3033 Excelsior Boulevard, Suite 200

                                   Minneapolis, Minnesota 55416

Date:                         as of December 31, 2001

THIS AMENDMENT TO LOAN DOCUMENTS is entered into between SILICON VALLEY BANK,  COMMERCIAL FINANCE DIVISION (“Silicon”), whose address is 3003 Tasman Drive, Santa Clara, California  95054, and the borrower(s) named above (individually and collectively, jointly and severally, the “Borrower”), whose chief executive office is located at the above address (“Borrower’s Address”).

The Parties agree to amend the Loan and Security Agreement between them, dated as of February 27, 2001 (as otherwise amended, the “Loan Agreement”), as follows, effective as of the date hereof.  (Capitalized terms used but not defined in this Amendment, shall have the meanings set forth in the Loan Agreement.):

1.             Modification of Definition of Eligible Receivables.  The following is hereby added (in proper numerical order) as a new clause (xi) in the definition of “Eligible Receivables” set forth in Section 8 of the Loan Agreement:

, and (xi) the Receivable must not be owing from a Dot Com Account Debtor (as defined below) other than BestBuy.com; as used herein, the term “Dot Com Account Debtor” means an Account Debtor that, in Silicon’s sole discretion, is an internet-based company.

2.             Modification of Cash Management Sublimit.  The portion of Section 1 of the Schedule that currently reads as follows:

Cash Management Services and Reserves.  Borrower may use up to $152,500 (the “Cash Management Sublimit”) of Loans available hereunder for Silicon’s Cash Management Services (as defined below) consisting of (i) ACH services for the reimbursement of Borrower’s employee expenses (“ACH Services”), and (ii) business credit card services (“Business Credit Card Services”), in each case, as such services are identified in one or more cash management services agreements between Borrower and Silicon related to such service

1

(collectively, the “Cash Management Services”); provided, however, that not more than $62,500 of the Cash Management Sublimit may be available for Business Credit Card Services, and not more than $90,000 of the Cash Management Sublimit may be available for ACH Services.  Silicon may, in its sole discretion, reserve against Loans which would otherwise be available hereunder such sums as Silicon shall determine in connection with the Cash Management Services, and Silicon may charge to Borrower’s Loan account, any amounts that may become due or owing to Silicon in connection with the Cash Management Services.  Borrower agrees to execute and deliver to Silicon all standard form applications and agreements of Silicon in connection with the Cash Management Services, and, without limiting any of the terms of such applications and agreements, Borrower will pay all standard fees and charges of Silicon in connection with the Cash Management Services. All amounts that Silicon pays or expends in respect of any Cash Management Services shall constitute Obligations hereunder. Borrower hereby agrees to indemnify, save, and hold Silicon harmless from any loss, cost, expense, or liability, including payments made by Silicon, expenses, and reasonable attorneys’ fees incurred by Silicon arising out of or in connection with any Cash Management Services. The Cash Management Services shall terminate on the Maturity Date or any earlier effective date of termination of this Agreement (or such later date requested by Borrower as Silicon may agree in writing in its sole discretion if and to the extent Borrower’s reimbursement and indemnity obligations with respect to such Cash Management Services are secured by cash in amounts and on terms and conditions acceptable to Silicon in its sole discretion).

is hereby amended in its entirety to read as follows:

Cash Management Services and Reserves.  Borrower may use up to $90,000 (the “Cash Management Sublimit”) of Loans available hereunder for Silicon’s Cash Management Services (as defined below) consisting of (i) ACH services for the reimbursement of Borrower’s employee expenses (“ACH Services”), and (ii) [reserved], in each case, as such services are identified in one or more cash management services agreements between Borrower and Silicon related to such service (collectively, the “Cash Management Services”).  Silicon may, in its sole discretion, reserve against Loans which would otherwise be available hereunder such sums as Silicon shall determine in connection with the Cash Management Services, and Silicon may charge to Borrower’s Loan account, any amounts that may become due or owing to Silicon in connection with the Cash Management Services.  Borrower agrees to execute and deliver to Silicon all standard form applications and agreements of Silicon in connection with the Cash Management Services, and, without limiting any of the terms of such applications and agreements, Borrower will pay all standard fees and

2

charges of Silicon in connection with the Cash Management Services. All amounts that Silicon pays or expends in respect of any Cash Management Services shall constitute Obligations hereunder. Borrower hereby agrees to indemnify, save, and hold Silicon harmless from any loss, cost, expense, or liability, including payments made by Silicon, expenses, and reasonable attorneys’ fees incurred by Silicon arising out of or in connection with any Cash Management Services. The Cash Management Services shall terminate on the Maturity Date or any earlier effective date of termination of this Agreement (or such later date requested by Borrower as Silicon may agree in writing in its sole discretion if and to the extent Borrower’s reimbursement and indemnity obligations with respect to such Cash Management Services are secured by cash in amounts and on terms and conditions acceptable to Silicon in its sole discretion).

3.             Modification of Maturity Date. Section 4 of the Schedule is hereby amended in its entirety to read as follows:

4.  MATURITY DATE

(Section 6.1):                            December 31, 2002

4.             Modification of Profitability Covenant.  The portion of Section 5 of the Schedule that currently reads as follows:

Profitability:Borrower shall have positive net income, determined in accordance with generally accepted accounting principles, for the fiscal quarter of Borrower ending December 31, 2001.

is hereby amended in its entirety to read as follows:

Profitability:Borrower shall have positive net income, determined in accordance with generally accepted accounting principles, for the fiscal quarter of Borrower ending June 30, 2002 and for each fiscal quarter of Borrower thereafter.

5.             Modification of TNW Covenant.  The portion of Section 5 of the Schedule that currently reads as follows:

Minimum Tangible

Net Worth:As of any date of determination, Borrower shall maintain a Tangible Net Worth of not less than the result of:

3

(i)            the TNW Base Amount; plus

(ii)           the TNW Capital Increase (if any); plus

(iii)          the TNW Income Increase (if any); minus

(iv)          the Lifescape Writeoff Amount (if any).

                                                                                      For purposes of this Tangible Net Worth covenant:

The term “TNW Base Amount” means, as of any date of determination, the amount set forth below corresponding to the time period set forth below:

(A) during the period commencing on the date of this Agreement and ending on June 30, 2001, $4,500,000;

(B) during the period commencing on July 1, 2001 and ending on September 30, 2001, $3,291,000; and

(C) from and after October 1, 2001, $3,416,000.

The term “TNW Capital Increase” means, as of any date of determination, the greater of (a) $-0- and (b) 50% of all consideration (if any) received after the date of this Agreement for equity securities and subordinated debt of the Borrower. In no event shall the amount of the TNW Capital Increase be decreased.

The term “TNW Income Increase” means, as of any date of determination: (A) on or before September 30, 2001, $-0-; and (B) from and after October 1, 2001, the greater of (a) $-0- and (b) 50% of the aggregate amount of positive net income (if any), determined in accordance with generally accepted accounting principles, earned by Borrower subsequent to October 1, 2001. In no event shall the amount of the TNW Income Increase be decreased. The term “Lifescape Writeoff Amount” means, as of any date of determination: (A) from and after

4

the date (if ever) that Borrower writes off all or a portion of the Lifescape Note (as such term is defined in the definition of “Eligible Receivables”) in accordance with generally accepted accounting principles, the lesser of (1) $1,500,000, and (2) the amount of such actual write-off of all or a portion of the Lifescape Note; and (B) prior to such date (if ever), $-0-.

is hereby amended in its entirety to read as follows:

Minimum Tangible

Net Worth:As of any date of determination, Borrower shall maintain a Tangible Net Worth of not less than the result of:

(i)            the TNW Base Amount; plus

(ii)           the TNW Capital Increase (if any); minus

(iii)          the Lifescape Writeoff Amount (if any) and the Permitted Sublease Loss Amount (if any).

                                                                                      For purposes of this Tangible Net Worth covenant:

The term “TNW Base Amount” means, as of any date of determination, the amount set forth below corresponding to the time period set forth below:

(A)  during the period commencing on November 1, 2001 and ending on December 31, 2001, $1,700,000;

(B)  during the period commencing on January 1, 2002 and ending on March 31, 2002, $900,000;

(C) during the period commencing on April 1, 2002 and ending on June 30, 2002, $940,000;

(D) during the period commencing on July 1, 2002 and ending on September 30, 2002, $1,225,000;

(C)  from and after October 1, 2002, $1,500,000.

5

The term “TNW Capital Increase” means, as of any date of determination, the greater of (a) $-0- and (b) 50% of all consideration (if any) received after the date of this Agreement for equity securities and subordinated debt of the Borrower (other than up to $2,000,000 of cash consideration (if any) received from Mr. Joseph Costello after December 31, 2001 for equity securities or Subordinated Debt of the Borrower issued to Mr. Joseph Costello after December 31, 2001). In no event shall the amount of the TNW Capital Increase be decreased.

The term “Lifescape Writeoff Amount” means, as of any date of determination: (A) from and after the date (if ever) that Borrower writes off all or a portion of the Lifescape Note (as such term is defined in the definition of “Eligible Receivables”) in accordance with generally accepted accounting principles, the lesser of (1) $1,500,000, and (2) the amount of such actual write-off of all or a portion of the Lifescape Note; and (B) prior to such date (if ever), $-0-.

The term “Permitted Sublease Loss Amount” means, as of any date of determination: (A) from and after the later of December 31, 2001 and the date (if ever) that Borrower accrues a one-time loss, in accordance with generally accepted accounting principles, resulting from Borrower’s net revenues from the subleasing by Borrower (as sublessor) to one or more third parties (as sublessees) of premises leased by Borrower (as lessee) from other third parties (as lessors) being less than Borrower’s net rental expenses paid by Borrower for such premises, the lesser of (1) $2,000,000, and (2) the amount of such accrued one-time loss; and (B) prior to the later of December 31, 2001 and such date (if ever), $-0-.

6.             Additional Warrants.  The following hereby is added to the Schedule, in proper numerical order, as a new Section 9(6) thereof:

6

(6)Warrants.  On the date of execution and delivery of that certain Amendment to Loan Documents dated as of December 31, 2001 between Silicon and Borrower (the “December 31, 2001 Amendment”) (such date, the “12-2001 Target Date”), Borrower shall provide Silicon with additional five-year warrants to purchase an additional 20,000 shares of common stock of the Borrower, at a price per share equal to the 12-2001 Target Date Designated Price (as defined herein), on terms acceptable to Silicon, all as set forth in the Warrant to Purchase Stock (the “12-2001 Target Date Warrant”) and related Registration Rights Agreement being executed concurrently with the December 31, 2001 Amendment.  The 12-2001 Target Date Warrant shall be deemed fully earned on the 12-2001 Target Date, shall be in addition to all interest and other fees, and shall be non-refundable. As used herein, the term “12-2001 Target Date Designated Price” means the average closing price of the Shares reported for the 5 trading days immediately before the 12-2001 Target Date.

7.             Representations True.  Borrower represents and warrants to Silicon that all representations and warranties set forth in the Loan Agreement, as amended hereby, are true and correct.

8.             Fees.  In consideration for Silicon entering into this Amendment, Borrower shall concurrently pay Silicon a renewal fee in the amount of $32,500.00 and a modification fee in the amount of $5,000.00, each of which shall be non-refundable and in addition to all interest and other fees payable to Silicon under the Loan Documents.  Silicon is authorized to charge said fees to Borrower’s loan account.

[remainder of page intentionally left blank; signature page follows]

7

9.             General Provisions.This Amendment, the Loan Agreement, any prior written amendments to the Loan Agreement signed by Silicon and Borrower, and the other written documents and agreements between Silicon and Borrower set forth in full all of the representations and agreements of the parties with respect to the subject matter hereof and supersede all prior discussions, representations, agreements and under­standings between the parties with respect to the subject hereof.  Except as herein expressly amended, all of the terms and provisions of the Loan Agreement, and all other documents and agreements between Silicon and Borrower shall continue in full force and effect and the same are hereby ratified and confirmed. 

Borrower:			Silicon:
	ZAMBA CORPORATION		SILICON VALLEY BANK
	By	/s/ Michael H. Carrel	By	/s/ J. Anthony Clarkson
		President or Vice President	Title	Market Manager
	By	/s/ Ian Nemerov
		Secretary or Ass’t Secretary

8

EX-10.45

Exhibit 10.45

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

WARRANT TO PURCHASE STOCK

Corporation:  ZAMBA CORPORATION

Number of Shares:  20,000

Class of Stock:  Common

Initial Exercise Price: $0.51 (which is the average closing price of the Shares reported for the 5 trading days immediately before the Issue Date)

Issue Date: December 31, 2001

Expiration Date: the fifth (5^th) anniversary of the Issue Date

THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other good and valuable consideration, SILICON VALLEY BANK (“Holder”) is entitled to purchase the number of fully paid and nonassessable shares of the class of securities (the “Shares”) of the corporation (the “Company”) at the initial exercise price per Share (the “Warrant Price”) all as set forth above and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.    Concurrently herewith, the Company and Holder are entering into that certain Amendment to Loan Documents, dated as of December 31, 2001, and this Warrant is the “12-2001 Target Date Warrant” referred to therein.

ARTICLE 1. EXERCISE.

1.1           Method of Exercise.  Holder may exercise this Warrant by delivering a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company.  Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.

1.2           Conversion Right.  In lieu of exercising this Warrant as specified in Section 1.1, Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share.  The fair market value of the Shares shall be determined pursuant to Section 1.4.

1.3           Intentionally Omitted

1.4           Fair Market Value.  If the Shares are traded in a public market, the fair market value of the Shares shall be the closing price of the Shares reported for the business day immediately before Holder delivers its Notice of Exercise to the Company.  If the Shares are not traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment.  The foregoing notwithstanding, if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then the Company and Holder shall promptly agree upon a reputable investment banking firm to undertake such valuation.  If the valuation of such investment banking firm is greater than that determined by the Board of Directors, then all fees and expenses of such

1

investment banking firm shall be paid by the Company.  In all other circumstances, such fees and expenses shall be paid by Holder.

1.5           Delivery of Certificate and New Warrant.  Promptly after Holder exercises or converts this Warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this Warrant has not been fully exercised or converted and has not expired, a new Warrant representing the Shares not so acquired.

1.6           Replacement of Warrants.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.

1.7           Repurchase on Sale, Merger, or Consolidation of the Company.

1.7.1.       “Acquisition”.  For the purpose of this Warrant, “Acquisition” means any sale, license, or other disposition of all or substantially all of the assets of the Company, or any reorganization, consolidation, or merger of the Company where the holders of the Company’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.

1.7.2.       Assumption of Warrant.  Upon the closing of any Acquisition the successor/acquiring entity shall assume the obligations of this Warrant, and this Warrant shall be exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing.  The Warrant Price shall be adjusted accordingly.

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

2.1           Stock Dividends, Splits, Etc.   If the Company declares or pays a dividend on its common stock (or the Shares if the Shares are securities other than common stock) payable in common stock, or other securities, subdivides the outstanding common stock into a greater amount of common stock, or, if the Shares are securities other than common stock, subdivides the Shares in a transaction that increases the amount of common stock into which the Shares are convertible, then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred.

2.2           Reclassification, Exchange or Substitution.  Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event.  Such an event shall include any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as the Shares to common stock pursuant to the terms of the Company’s Articles of Incorporation upon the closing of a registered public offering of the Company’s common stock.  The Company or its successor shall promptly issue to Holder a new Warrant for such new securities or other property.  The new Warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.

2

2.3           Adjustments for Combinations, Etc.  If the outstanding shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased.

2.4           Intentionally Omitted

2.5           No Impairment.  The Company shall not, by amendment of its Articles of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect Holder’s rights under this Article against impairment.  If the Company takes any action affecting the Shares or its common stock other than as described above that adversely affects Holder’s rights under this Warrant, the Warrant Price shall be adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that the aggregate Warrant Price of this Warrant is unchanged.

2.6           Fractional Shares.  No fractional Shares shall be issuable upon exercise or conversion of the Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share.  If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying Holder an amount computed by multiplying the fractional interest by the fair market value of a full Share.

2.7           Certificate as to Adjustments.  Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based.  The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price.

ARTICLE 3.REPRESENTATIONS AND COVENANTS OF THE COMPANY.

3.1           Representations and Warranties.  The Company hereby represents and warrants to the Holder as follows:

(a)           [intentionally omitted]

(b)           All Shares which may be issued upon the exercise of the purchase right represented by this Warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.

(c)           The Capitalization Table attached to this Warrant is true and complete as of the Issue Date in all material respects.

3.2           Notice of Certain Events.  If the Company proposes at any time (a) to declare any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) to effect any reclassification or recapitalization of common stock; (d) to merge or consolidate with or into any other corporation, or sell, lease, license, or convey all or substantially all of its assets, or to liquidate, dissolve or wind up; or (e) offer holders of registration rights the opportunity to participate in an underwritten public offering of the company’s securities for cash, then, in connection with each such event, the Company shall give Holder (1) at least 20 days prior written notice of the date on which a record will be taken for such

3

 dividend, distribution, or subscription rights (and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to above; (2) in the case of the matters referred to in (c) and (d) above at least 20 days prior written notice of the date when the same will take place (and specifying the date on which the holders of common stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such event); and (3) in the case of the matter referred to in (e) above, the same notice as is given to the holders of such registration rights.

3.3           Information Rights.  So long as the Holder holds this Warrant and/or any of the Shares, the Company shall deliver to the Holder (a) promptly after mailing, copies of all notices or other written communications to the shareholders of the Company, (b) within one hundred twenty (120) days after the end of each fiscal year of the Company, the annual audited financial statements of the Company certified by independent public accountants of recognized standing and (c) such other financial statements required under and in accordance with any loan documents between Holder and the Company (or if there are no such requirements [or if the subject loan(s) no longer are outstanding]), then within forty-five (45) days after the end of each of the first three quarters of each fiscal year, the Company’s quarterly, unaudited financial statements.

3.4           Registration Under Securities Act of 1933, as amended. The Company agrees that the Shares shall be subject to the registration rights set forth for the Shares in that certain Registration Rights Agreement, dated as of the Issue Date, between the Company and Holder (as the same may be amended, restated, supplemented, or otherwise modified from time to time).

ARTICLE 4. MISCELLANEOUS.

4.1           Term.  This Warrant is exercisable, in whole or in part, at any time and from time to time on or before the Expiration Date set forth above.

4.2           Legends.  This Warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form (unless and until registered under the Securities Act (and, upon such registration, the Company agrees to cooperate in the prompt removal of such legend requested by the Holder)):

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

4.3           Compliance with Securities Laws on Transfer.  This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company).  The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder s notice of proposed sale.

4.4           Transfer Procedure.  Subject to the provisions of Section 4.3, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) at any time to Silicon Valley Bancshares or

4

The Silicon Valley Bank Foundation, or to any affiliate of Holder, or, to any other transferree by giving the Company notice of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable).  Unless the Company is filing financial information with the SEC pursuant to the Securities Exchange Act of 1934, the Company shall have the right to refuse to transfer any portion of this Warrant to any person who directly competes with the Company.

4.5           Notices.  All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first–class registered or certified mail at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such holder from time to time.  All notices to be provided under this Warrant shall be sent to the following address:

Silicon Valley Bank

Attn: Treasury Department

3003 Tasman Drive

Santa Clara, CA  95054

4.6           Waiver.  This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

4.7           Attorneys Fees.  In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

[remainder of page intentionally left blank; signature page follows]

5

4.8           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles regarding conflicts of law.

“COMPANY”
ZAMBA CORPORATION
By:	/s/ Michael H. Carrel
Name:	Michael H. Carrel
Title:	Chairman of the Board, President or Vice President
By:	/s/ Ian Nemerov
Name:	Ian Nemerov
Title:	Chief Financial Officer, Secretary, Assistant Treasurer or Assistant Secretary

6

APPENDIX 1

NOTICE OF EXERCISE

1.             The undersigned hereby elects to purchase            shares of the Common/Preferred Series         [Strike one] Stock of                               pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.

1.             The undersigned hereby elects to convert the attached Warrant into Shares/cash [strike one] in the manner specified in the Warrant.  This conversion is exercised with respect to                               of the Shares covered by the Warrant.

[Strike paragraph that does not apply.]

2.             Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:

(Name)

(Address)

3.             The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.

	(Signature)
(Date)

7

EX-10.46

Exhibit 10.46

SILICON VALLEY BANK

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT is entered into as of December 31, 2001 by and between SILICON VALLEY BANK (“Purchaser”) and ZAMBA CORPORATION (the “Company”).

RECITALS

A.            Concurrently with the execution of this Agreement, the Purchaser is purchasing from the Company a Warrant to Purchase Stock (the “Warrant”) pursuant to which Purchaser has the right to acquire from the Company the Shares (as defined in the Warrant).  The Warrant is referred to as the “12-2001 Target Date Warrant” in that certain Amendment to Loan Documents dated as of December 31, 2001 between Purchaser and Company.

B.            By this Agreement, the Purchaser and the Company desire to set forth the registration rights of the Shares all as provided herein.

NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions hereinafter set forth, the parties hereto mutually agree as follows:

1.             Registration Rights.  The Company covenants and agrees as follows:

1.1           Definitions.  For purposes of this Section 1:

(a)           The term “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a Registration Statement or similar document in compliance with the Securities Act of 1933, as amended (the “Securities Act”), and the declaration or ordering of effectiveness of such Registration Statement or document.

(b)           The term “Registrable Securities” means (i) the Shares, and (ii) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, any stock referred to in (i).

(c)           The terms “Holder” or “Holders” means the Purchaser or qualifying transferees under Section 1.9 hereof who hold Registrable Securities.

(d)           The term “SEC” means the Securities and Exchange Commission.

(e)           The term “Registration Statement” means a registration statement filed by the Company with the SEC in compliance with the Securities Act and the rules and

1

regulations promulgated thereunder for a public offering and sale of its Common Stock (other than a registration statement on a Limited Purpose Form).  As used herein, “Limited Purpose Form” means Form S-8 relating solely to employee stock option or purchase plans, or Form S-4 relating solely to an SEC Rule 145 transaction, or any other form (but excluding Forms S-1, S-2, S-3 or S-18, or their successor forms) or any successor to such forms, which does not include substantially the same information as would be required to be included in a Registration Statement covering the sale of Registrable Securities.

1.2           Company Registration.

(a)           Registration.  If at any time or from time to time, the Company shall determine to register any of its securities, for its own account or the account of any of its shareholders, other than a registration on a Limited Purpose Form, the Company will:

(i)            promptly give to each Holder written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt to qualify such securities under the applicable blue sky or other state securities laws); and

(ii)           include in such registration (and compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 30 days after receipt of such written notice from the Company, by any Holder or Holders, except as set forth in Section 1.2(b) below.

(b)           Underwriting.  If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 1.2(a)(i).  In such event the right of any Holder to registration pursuant to this Section 1.2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.  All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other shareholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 1.2, if the underwriter advises the Company that marketing factors require a limitation of the number of securities underwritten (including Registrable Securities), then the Company shall so advise all holders (including the Holders) of Registrable Securities that would otherwise be so underwritten, and the number of shares that may be included in the underwriting shall be allocated to the holders (including the Holders) of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such holders (including the Holders).

1.3           Expenses of Registration.  All expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 1 including without limitation, all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits incidental to or required by such registration, shall be borne by the Company except the Company shall not be required to pay underwriters’

2

fees, discounts or commissions relating to Registrable Securities.  All expenses of any registered offering not otherwise borne by the Company shall be borne pro rata among the Holders participating in the offering and the Company.

1.4           Registration Procedures.  In the case of each registration, qualification or compliance effected by the Company pursuant to this Registration Rights Agreement, the Company will keep each Holder participating therein advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof.  At its expense (except as otherwise provided in Section 1.3), the Company will:

(a)           (i) in the case of a registration under Section 1.2, prepare and file with the SEC a Registration Statement with respect to such Registrable Securities and use its best efforts to cause such Registration Statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such Registration Statement effective for up to 120 days.; and (ii) in the case of a registration under Section 1.8, take the actions specified in such Section.

(b)           Prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement.

(c)           Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

(d)           Use its best efforts to register and qualify the securities covered by such Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(e)           In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering.  Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

(f)            Notify each Holder of Registrable Securities covered by such Registration Statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act or the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

3

1.5           Indemnification.

(a)           The Company will indemnify each Holder of Registrable Securities and each of its officers, directors and partners, and each person controlling such Holder, with respect to which such registration, qualification or compliance has been effected pursuant to this Rights Agreement, and each underwriter, if any, and each person who controls any underwriter of the Registrable Securities held by or issuable to such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related Registration Statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, or any violation or alleged violation by the Company of the Securities Act, the Securities Exchange Act of 1934, as amended, (“Exchange Act”) or any state securities law applicable to the Company or any rule or regulation promulgated under the Securities Act, the Exchange Act or any such state law and relating to action or inaction required of the Company in connection with any such registration, qualification of compliance, and will reimburse each such Holder, each of its officers, directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, within a reasonable amount of time after incurred for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 1.5(a) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld); and provided further, that the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by an instrument duly executed by such Holder or underwriter specifically for use therein.

(b)           Each Holder will, if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such a Registration Statement, each person who controls the Company within the meaning of the Securities Act, and each other such Holder, each of its officers, directors and partners and each person controlling such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such Registration Statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, partners, persons or underwriters for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such

4

Registration Statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder specifically for use therein; provided, however, that the indemnity agreement contained in this Section 1.5(b) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Holder, (which consent shall not be unreasonably withheld); and provided further, that the total amount for which any Holder shall be liable under this Section 1.5(b) shall not in any event exceed the aggregate proceeds received by such Holder from the sale of Registrable Securities held by such Holder in such registration.

(c)           Each party entitled to indemnification under this Section 1.5 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense; and provided further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in prejudice to the Indemnifying Party; and provided further, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding.  No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

1.6           Information by Holder.  Any Holder or Holders of Registrable Securities included in any registration shall promptly furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to herein.

1.7           Rule 144 Reporting.  With a view to making available to Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees at all times to:

(a)           make and keep public information available, as those terms are understood and defined in SEC Rule 144;

5

(b)           file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(c)           so long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144, the Securities Act, and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as the Holder may reasonably request in complying with any rule or regulation of the SEC allowing the Holder to sell any such securities without registration.

1.8           Demand Registration of Registrable Securities.

(a)           If the Company shall receive at any time after the closing of the Agreement, a written request from the Holder that the Company file a registration statement under the Securities Act covering the Registrable Securities, then the Company shall,

(i)            within fifteen (15) days of the receipt thereof, give written acknowledgment of such request to the Holder; and

(ii)           subject to the limitations of Sections 1.8.b-1.8.d, effect, as soon as practicable, the registration under the Securities Act and all such qualifications and compliances as would permit or facilitate the sale and distribution of all Registrable Securities that the Holder requests to be registered.

(b)           If the Holder intends to distribute the Registrable Securities covered by its request by means of an underwriting, the Holder shall so advise the Company as a part of its request made pursuant to this Section 1.8 and the Company shall include such information in the written notice referred to in Section 1.8(a).  In such event, the right of the Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.  If the Holder proposes to distribute its securities through such underwriting, the Holder shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting (which underwriter or underwriters shall be reasonably acceptable to the Company).  Notwithstanding any other provision of this Section 1.8, if the underwriter advises the Company in writing that marketing factors require a limitation of the number of securities to be underwritten then the Company shall so advise the Holder, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis.  Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.

(c)           If, at the time any written request for registration is received by the Company pursuant to this Section 1.8, the Company has determined to proceed with the actual preparation and filing of a registration statement under the Securities Act in connection with the proposed offer and sale for cash of any of its securities by it or any of its security holders, such written request shall be deemed to have been given pursuant to Section 1.2 hereof rather than this Section 1.8, and the rights of the Holder shall be governed by Section 1.2 hereof.

6

(d)           Upon the effectiveness of a Registration Statement under this Section 1.8, the Company will keep such Registration Statement effective for up to ninety (90) days.

1.9           Transfer of Registration Rights.  Holders’ rights to cause the Company to register their securities and keep information available, granted to them by the Company under Sections 1.2, 1.7, and 1.8 may be assigned to a transferee or assignee of a Holder’s Registrable Securities not sold to the public, provided, that the Company is given written notice by such Holder at the time of or within a reasonable time after said transfer, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being assigned.  The Company may prohibit the transfer of any Holders’ rights under this Section 1.9 to any proposed transferee or assignee who the Company reasonably believes is a competitor of the Company.

2.             General.

2.1           Waivers and Amendments.  With the written consent of the record or beneficial holders of at least a majority of the Registrable Securities, the obligations of the Company and the rights of the Holders of the Registrable Securities under this agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely), and with the same consent the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement; provided, however, that no such modification, amendment or waiver shall reduce the aforesaid percentage of Registrable Securities without the consent of all of the Holders of the Registrable Securities.  Upon the effectuation of each such waiver, consent, agreement of amendment or modification, the Company shall promptly give written notice thereof to the record holders of the Registrable Securities who have not previously consented thereto in writing.  This Agreement or any provision hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this Section 2.1.

2.2           Governing Law.  This Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California.

2.3           Successors and Assigns.  Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

2.4           Entire Agreement.  Except as set forth below, this Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.

7

2.5           Notices, etc.  All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by first class mail, postage prepaid, certified or registered mail, return receipt requested, addressed (a) if to Holder, at such Holder’s address as set forth below, or at such other address as such Holder shall have furnished to the Company in writing, or (b) if to the Company, at the Company’s address set forth below, or at such other address as the Company shall have furnished to the Holder in writing.

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

2.7           Titles and Subtitles.  The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

[remainder of page intentionally left blank; signature page follows]

8

2.8           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

PURCHASER		COMPANY
SILICON VALLEY BANK		ZAMBA CORPORATION
By:	/s/ J. Anthony Clarkson	By:	/s/ Michael H. Carrel
Name:	J. Anthony Clarkson	Name:	Michael H. Carrel
Title:	Market Manager	Title:	Chairman of the Board, President or Vice President
Address: Silicon Valley Bank Attn: Treasury Department 3003 Tasman Drive Santa Clara, CA  95054		Address: ZAMBA Corporation 3033 Excelsior Boulevard, Suite 200 Minneapolis, Minnesota 55416

9

EX-10.51

Exhibit 10.51

THIRD AMENDMENT TO LEASE

THIS THIRD AMENDMENT TO LEASE (this “Amendment”) is dated February 6, 2002 (for reference purposes only) by and between SQUARE 24 ASSOCIATES, a District of Columbia limited partnership (d.b.a. SQUARE 24 ASSOCIATES, L.P.) (“Landlord”), and ZAMBA CORPORATION, a Delaware corporation (“Tenant”).

RECITALS

A.            Landlord and The Quicksilver Group (“Quicksilver”) entered into that certain Office Lease dated as of September 14, 1998 (the “Initial Lease”), in which Landlord leased to Quicksilver and Quicksilver leased from Landlord approximately 4,905 rentable square feet within that certain building, commonly known as “Hacienda West”, 3875 Hopyard Road, Pleasanton, California (the “Original Premises”).

B.            Quicksilver and Racotek, Inc., a Delaware corporation (“Racotek”), entered into that certain Agreement and Plan of Merger and Reorganization dated as of July 6, 1998 (the “Assignment”) in which Quicksilver was merged into Racotek, and Racotek assumed all of Quicksilver’s interest under the Initial Lease.  Racotek subsequently changed its name to Zamba Corporation, a Delaware corporation.

C.            Pursuant to that certain First Amendment to Lease dated as of October 15, 1998 (the “First Amendment”), Landlord consented to the Assignment.

D.            Pursuant to that certain Second Amendment to Lease dated as of December 21, 2000, by and between Landlord and Tenant (the “Second Amendment”), the parties amended the Initial Lease to add additional space (the “Expansion Space”) to the Original Premises and to extend the term of the Initial Lease to November 30, 2003. The Original Premises, together with the Expansion Space, is collectively referred to herein as the “Premises”.  The Initial Lease, as amended by the First Amendment and the Second Amendment, is referred to herein as the “Original Lease”.

E.             Landlord and Tenant desire to further amend the Lease to offer Tenant the right to defer the monthly installments of Base Rent due for the calendar months of December 2001 and January 2002, to be repaid as Additional Rent on May 1, 2002, and to make certain other amendments to the Original Lease on the basis of, and subject to, the terms, covenants and conditions hereinafter set forth. The Original Lease, as amended by this Amendment, is sometimes referred to herein as the “Lease”.

NOW, THEREFORE, in consideration of the agreements of Landlord and Tenant herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

1.             Use of Defined Terms; Effective Date.

1.1           Definitions. Unless the context clearly requires otherwise, all capitalized terms used herein shall have the defined meanings ascribed to them in the Original Lease.  The provisions of the Recitals above are fully incorporated herein by this reference.

1

1.2           Effective Date. Unless otherwise specifically provided herein, all provisions of this Amendment shall be effective as of the execution date set forth next to the Landlord’s signature below.

2.             Amendments to Lease.  The Original Lease is hereby amended as follows:

2.1           Rent Deferral.  Tenant is hereby entitled to defer payment of the monthly Base Rent otherwise accrued and due for the months of December 2001 and January 2002 (the “Rent Deferral”).

2.2           Repayment of Rent Deferral. Subject to the provisions of Section 2.3 below, on May 1, 2002 (the “Repayment Date”), in addition to the monthly Base Rent and other Rent payable by Tenant under the Lease, Tenant shall pay to Landlord, as Additional Rent, the total amount of the Rent Deferral.

2.3           Repayment upon Assignment or Default. Landlord and Tenant acknowledge that Landlord’s agreement to permit the Rent Deferral as provided in this Amendment is expressly conditioned on Tenant’s agreement to fully and faithfully perform all of the terms, covenants, conditions and agreements to be performed and observed by Tenant under the Lease, as and when due during the remainder of the Term.  Further, the permitted Rent Deferral hereunder is personal to Zamba Corporation.  Accordingly, if Tenant assigns all or any portion of its interest in the Lease or defaults on any of its obligations under the Lease beyond any applicable cure period, then Tenant’s right to the Rent Deferral shall immediately cease and the total amount of the Rent Deferral shall be immediately due and payable as Additional Rent. Tenant’s obligation to repay the full amount of the Rent Deferral as provided in this Section shall survive the termination of the Lease.

2.4           Survival.  Section 26(U) of the Original Lease is hereby deleted and replaced in its entirety with the following:

“U.          Survival. The waivers of claims or rights, the releases and the obligations of Tenant under this Lease to indemnify, protect, defend and hold harmless Landlord and other indemnitees shall survive the expiration or earlier termination of this Lease, and so shall all other obligations or agreements of Landlord or Tenant hereunder which by their terms survive expiration or earlier termination of this Lease.”

3.             Confidentiality.  Tenant agrees to keep the terms and conditions of this Amendment (“Confidential Information”) in the strictest confidence, and shall not disclose any Confidential Information to any third parties except as expressly permitted herein, and will take all measures necessary to safeguard such information in order to preserve its confidentiality. Without limiting the generality of the foregoing, Tenant may not disclose Confidential Information to any third parties, other than as may be necessary to its directors, officers, employees, agents and contractors (“Tenant’s Agents”), or as may be required by law, provided that Tenant agrees to use diligent efforts to prevent Tenant’s Agents from making any unauthorized disclosure of the Confidential Information.  The terms, covenants and conditions contained in this Section 3 shall survive the expiration or earlier termination of the Lease.

4.             Tenant’s Certification.  Tenant hereby certifies to Landlord that, as of the execution and delivery of this Amendment by Tenant to Landlord, there are no existing defenses against the enforcement of any of the obligations of Tenant under the Lease, and Landlord is not in default under the Lease by reason of its failure to perform any obligations thereunder, and there is no circumstance, event, condition or state of facts which, by the passage of time or the giving of notice, or both, could entitle Tenant to any such defenses or constitute or result in such a default

2

5.             Real Estate Brokers.  Tenant represents and warrants that Tenant has not had any dealings with any broker in connection with the negotiation or execution of this Amendment, and Tenant agrees to indemnify Landlord and hold Landlord harmless from any and all costs (including attorneys’ fees), expenses or liability for commissions or other compensation claimed by any other broker or agent claiming to have had dealings with Tenant in connection with this Amendment.

6.             Reimbursement of Landlord’s Expenses.  Tenant shall reimburse Landlord for the reasonable attorneys’ fees and costs incurred by Landlord in connection with preparation of this Amendment, within ten (10) days following Tenant’s receipt of an invoice therefor.

7.             Miscellaneous.

7.1           Except as modified by this Amendment, all of the terms, conditions and provisions of the Original Lease shall remain in full force and effect and are hereby ratified and confirmed.

7.2           To the extent the terms of the Original Lease and this Amendment are inconsistent, the terms of this Amendment shall control.

7.3           The submission of this Amendment to Tenant for examination or execution does not create an option or constitute an offer to Tenant to amend the Original Lease on the terms and conditions contained herein, and this Amendment shall not become effective as an Amendment to the Original Lease unless and until it has been executed and delivered by both Landlord and Tenant.  By executing and delivering this Amendment, the person or persons signing on behalf of Tenant represent and warrant that Tenant is a corporation duly organized and existing under the laws of the State of California and that they have the requisite authority to bind Tenant.

7.4           This Amendment contains the entire agreement of Landlord and Tenant with respect to the subject matter hereof.  It is understood that there are no oral agreements between Landlord and Tenant affecting the Original Lease as hereby amended, and this Amendment supersedes and cancels any and all previous negotiations, representations, agreements and understandings, if any, between Landlord and Tenant and their respective agents with respect to the subject matter thereof, and none shall be used to interpret or construe the Original Lease as amended hereby.  Tenant acknowledges that all prior communications from Landlord or its agents are not and were not, and shall not be construed to be, representations or warranties of Landlord or its agents as to the matters communicated, and have not and will not be relied upon by Tenant.

3

IN WITNESS WHEREOF, the parties have caused this Third Amendment to Lease to be executed as of the day and year set forth under their respective signatures below.

LANDLORD:
SQUARE 24 ASSOCIATES, a District of Columbia limited partnership (d.b.a. Square 24 Associates, L.P.)
By:	Carr Real Estate Services, L.L.C., a Delaware limited liability company
Its:	General Partner
	By:	Carr Real Estate Services Partnership, a Delaware partnership
	Its:	Sole Member
		By:	Carr Realty, L.P., a Delaware limited partnership
		Its:	Managing Partner
			By:	CarrAmerica Realty Corporation, a Maryland corporation
			Its:	General Partner
				By:	/s/ Philip L. Hawkins
					Philip L. Hawkins
				Its:	Chief Operating Officer

TENANT:

ZAMBA CORPORATION, a
Delaware corporation

By: /s/ Michael H. Carrel

Name: Michael H. Carrel

Title: CFO

4

EX-10.52

Exhibit 10.52

SUBLEASE CONSENT AND AGREEMENT

This Sublease Consent and Agreement (“Agreement”) dated for reference purposes only as February 7, 2002, is made by and among SQUARE 24 ASSOCIATES, a District of Columbia limited partnership (d.b.a. SQUARE 24 ASSOCIATES, L.P.) (“Landlord”),ZAMBA CORPORATION, a Delaware corporation (“Tenant”), and PARK PLACE CAPITAL CORPORATION, a California corporation (“Subtenant”).

RECITALS:

A.            Landlord and Tenant are parties to that certain Office Lease dated as of September 14, 1998 (the “Original Master Lease”), by and between Landlord and The Quicksilver Group (“Quicksilver”) for certain premises within that certain building commonly known as “Hacienda West”, located at 3875 Hopyard Road, Pleasanton, California (the “Original Premises”), as more particularly described in the Original Master Lease.

B.            Quicksilver and Racotek, Inc., a Delaware corporation (“Racotek”), entered into that certain Agreement and Plan of Merger and Reorganization dated as of July 6, 1998 (the “Assignment”) in which Quicksilver was merged into Racotek, and Racotek assumed all of Quicksilver’s interest under the Lease.  Racotek subsequently changed its name to Zamba Corporation, a Delaware corporation.

C.            The Original Master Lease was amended by that certain First Amendment to Lease dated as of October 15, 1998 (the “First Amendment”), and that certain Second Amendment to Lease dated as of December 21, 2000 (the “Second Amendment”), pursuant to which, among other things, the parties added additional space (the “Expansion Space”) to the Original Premises and extended the term of the Original Master Lease.  The Original Premises, together with the Expansion Space, is collectively referred to herein as the “Premises”.  The Original Master Lease, as amended by the Assignment, the First Amendment and the Second Amendment, is referred to herein as the “Master Lease”.

D.            Tenant desires to sublease all of the Premises (the “Subleased Premises”) to Subtenant in accordance with that certain sublease (the “Sublease”) dated January 9, 2002, between Tenant and Subtenant, a copy of which is attached hereto as Exhibit A.

E.             Landlord is willing to agree to consent to the Sublease upon the terms and conditions of this Agreement.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing and the covenants, promises and undertakings set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.          Landlord’s Consent.  Landlord hereby consents to the Sublease in the form attached hereto as Exhibit A.  The Sublease shall not be amended or modified without the prior

1

written consent of Landlord.  This consent is granted only upon the terms and conditions of this Agreement, and Tenant and Subtenant hereby agree to each of such terms and conditions.

2.          Master Lease.

2.1              The Sublease shall be subject and subordinate at all times to the Master Lease and to all of its provisions, covenants and conditions.  Landlord shall not be bound or estopped in any way by any of the terms, covenants, or conditions of the Sublease, nor shall any provision of the Sublease or this Agreement operate as an express or implied consent to or approval or ratification by Landlord of any specific provisions of the Sublease or as an endorsement, representation or warranty of any kind by Landlord regarding the Premises, Tenant, the Master Lease or any other matter, all of which are expressly disclaimed.  In case of any conflict between the provisions of the Master Lease and the provisions of the Sublease, as between Landlord and Tenant, the provisions of the Master Lease shall prevail unaffected by the Sublease.  Tenant and Subtenant agree that the Sublease is hereby amended to conform to the terms and conditions of this Agreement.

2.2              Notwithstanding any provision of the Sublease to the contrary, including, without limitation, anything contained in the paragraphs entitled “Rent”, “Operating Expenses” and “Miscellaneous”, nothing contained in the Sublease shall alter, amend, expand or reduce any of the obligations of Landlord or Tenant under the Master Lease, nor impose on Landlord any obligation to provide notice to, or obtain consent from, Subtenant with respect to amendments, defaults, waivers or any other matters pertaining to the Master Lease or the Premises.  Except to the extent the Sublease becomes a direct lease between Landlord and Subtenant pursuant to Section 4.1 below, all communications with Landlord regarding the Master Lease, the Premises, the Sublease or Subtenant shall be recognized by Landlord only if made by Tenant, not Subtenant, including without limitation, requests for approvals as required under the Master Lease and requests for any service to be supplied by Landlord to the Subleased Premises.  Tenant consents that Landlord may elect to communicate directly with Subtenant regarding Subtenant’s occupancy of the Subleased Premises or the Sublease without any implied waiver of this provision.  Tenant shall indemnify, protect, defend and hold Landlord harmless from any liability of, or claim against Landlord by Subtenant which arises from Tenant’s failure to timely provide notice to Landlord of requests made by Subtenant to Tenant, as the sublandlord under the Sublease.

2.3              Notwithstanding any provision to the contrary contained in the paragraph entitled “Operating Expenses” of the Sublease, Tenant and Subtenant acknowledge and agree that, pursuant to Section 13 of the Schedule to the Original Master Lease, the Base Year for the Original Premises is 1998, and, pursuant to Section 9 of the Second Amendment, the Base Year for the Expansion Space is 2001.

3.          Relationship with Landlord.

3.1              Except as otherwise provided by law, nothing contained in this Agreement or the Sublease shall be deemed to create privity of contract between Landlord and Subtenant, to make Subtenant a third party beneficiary of the provisions of the Master Lease, or to create or permit any direct right of action by Subtenant against Landlord for breach of the covenant of quiet enjoyment or any other covenant of Landlord under the Master Lease. Landlord shall have no obligations nor incur any liability to Subtenant with respect to any warranties of any nature,

2

whether pursuant to the Master Lease or the Sublease, or otherwise, including, without limitation, any warranties respecting use, compliance with zoning, construction, or fitness of the Subleased Premises for Subtenant’s purposes.

3.2              Tenant and Subtenant acknowledge that, pursuant to Section 4 of the Sublease, Subtenant is required to pay the rental amounts required thereunder directly to Landlord.  Such payments to Landlord shall satisfy and discharge Subtenant’s obligation for the payment of rent under the Sublease to the full extent of such payments made to Landlord.

4.          Termination of Master Lease.

4.1              Any termination of the Master Lease for any reason shall constitute, without further act or deed, a termination of the Sublease, provided that Landlord shall have the option, at its sole election, to:

(a)           elect by written notice to continue the Sublease solely with respect to the Subleased Premises without any additional or further agreement of any kind on the part of Subtenant and with the same force and effect as if Landlord, as landlord, and Subtenant, as tenant, had entered into a lease as of the effective date of such expiration, termination or surrender of the Master Lease for a term equal to the then unexpired term of the Sublease, and containing the same terms and conditions as those contained in the Sublease (except as specifically provided in this Agreement), in which event Landlord shall assume Tenant’s obligations as sublandlord thereunder and Subtenant shall attorn to Landlord as landlord on such terms and conditions.

(b)           enter into a lease directly with Subtenant for the balance of the term remaining under the Sublease, for the same consideration and upon the same terms and conditions as in the Sublease.  If Landlord exercises such option, Landlord and Subtenant shall enter into a new lease directly between Landlord and Subtenant upon such terms and conditions.

4.2              If Landlord elects to proceed under either Sections 4.1(a) or 4.1(b) above, in no event shall Landlord be:

(a)           bound by or liable for any rent paid by Subtenant to Tenant; or any security deposit paid by Subtenant to Tenant that is not transferred to Landlord;

(b)           liable for any act or omission of Tenant or for any default of Tenant under the Sublease which occurred prior to Landlord’s assumption;

(c)           subject to any defenses or offsets that Subtenant may have against Tenant which arose prior to Landlord’s assumption; or

(d)           bound by any changes or modifications made to the Sublease without the written consent of Landlord.

5.          Non-Release of Tenant.  Nothing contained in this Agreement or the Sublease, including, without limitation, Subtenant’s obligation to pay Landlord directly, shall be deemed to alter the primary liability of Tenant to pay the Rent and perform all of Tenant’s obligations under the Master Lease (including, without limitation, the payment of all bills rendered by Landlord for

3

charges incurred by Subtenant for services and materials supplied to the Subleased Premises), nor release Tenant from its obligations under the Master Lease, nor waive any rights that Landlord may now have or later acquire against Tenant under the Master Lease, except to the extent of Rent received by Landlord from Subtenant.  The acceptance of any sums by Landlord from Subtenant or any third party shall not be deemed a waiver by Landlord of Tenant’s obligation to pay Rent or any other amounts as provided in the Master Lease.  The performance of any obligation required of Tenant under the Master Lease by Subtenant or any third party shall not be deemed a waiver by Landlord of Tenant’s duty to perform such obligation.  Any act or omission by Subtenant or any of its agents, employees or invitees in, on, or about the Premises or the Building, or any act by Subtenant or any of its agents, employees or invitees pursuant to the terms and conditions of the Sublease, shall constitute the act or omission of Tenant.  Any sums that may be payable under the Master Lease by virtue of any act or omission of Subtenant shall be the obligation of Tenant to pay and discharge in accordance with the terms of the Master Lease.

6.             Further Transfers.  The consent of Landlord is limited solely to the Sublease.  Any assignment of the Master Lease or the Sublease or further subletting of any part of the Premises shall be subject to Landlord’s consent as provided in the Master Lease.  Landlord may consent in its absolute and sole discretion to subsequent subleases and assignments of the Sublease or any amendments or modifications to the Sublease without notifying Tenant or anyone else liable under the Master Lease, and without obtaining their consent.  No such action by Landlord will relieve those persons from any liability to Landlord or otherwise with regard to the Subleased Premises, and Tenant and Subtenant waive any provision of California law to the contrary, including without limitation Sections 2787 to 2855, inclusive, of the California Civil Code.  In addition, no provision of the Sublease or this Agreement shall limit Landlord’s right, in the event of a proposed future assignment or subletting of any portion of the Premises, including the Subleased Premises, to recapture such portion of the Premises, including the Subleased Premises, affected by that proposed assignment or subletting, as provided in Section 17.F) of the Master Lease, or to receive any payment required under Section 17.E of the Master Lease, and, without limiting the generality of any of any other provision of this Agreement relating to the Sublease, no provision of the Sublease pertaining to sharing of excess rentals or profits on further subletting shall in any way diminish or affect Landlord’s rights under Section 17 of the Master Lease.

7.            Conditions to Landlord’s Consent.  Landlord’s consent to the Sublease is expressly conditioned on the following:

7.1            Prior to the Subtenant’s taking occupancy of the Subleased Premises, Tenant shall deliver to Landlord certificates of insurance evidencing Subtenant’s compliance with Section 8 of the Master Lease and indicating that Landlord is named as an additional insured on such policies.

7.2            In accordance with Section 17.A of the Master Lease, Tenant shall pay all of Landlord’s attorneys’ fees and other expenses incurred in connection with Landlord’s consent to the Sublease and this Agreement within ten (10) days following Tenant’s receipt of an invoice.

7.3            Tenant shall pay to Landlord as and when required under the Master Lease, the amounts set forth in Section 17.E of the Master Lease regarding Excess Rent.

4

7.4             Subtenant shall waive to the extent permitted by law, any claims it may have against Landlord or its officers, directors, employees or agents for business interruption or damage to property sustained by Subtenant as the result of any act or omission of Landlord, its agents or employees, as set forth in Section 8.A of the Master Lease.

7.5             Subtenant shall indemnify, defend and hold harmless Landlord and its officers, directors, employees and agents against any claim by any third party for injury to any person or damage to or loss of any property occurring in or around the Project and arising from the use of the Premises or from any other act or omission, negligence or intentional misconduct of Subtenant, its employees, agents or invitees, or Subtenant’s breach of its obligations under the Sublease or this Agreement, as set forth in Section 8.B of the Master Lease.  Subtenant’s obligations under this Section shall survive the termination of the Sublease.

8.            Representations of Tenant and Subtenant.

8.1            Tenant and Subtenant represent and warrant to Landlord that a true copy of the Sublease, and all agreements relating to Subtenant’s use and occupancy of the Subleased Premises, and all exhibits, addendum, amendments, modifications and supplements thereto, is attached hereto as Exhibit A.

8.2            Tenant and Subtenant represent and warrant to Landlord that, except as set forth in the Sublease and Bill of Sale attached hereto as Exhibit A, Subtenant is not paying to Tenant any rent, additional rent or other consideration whatsoever in connection with the Sublease and/or Subtenant’s use and/or occupancy of the Subleased Premises or any portion thereof (including, but not limited to, payments for Tenant’s assets, trade fixtures, equipment and/or other personal property, goodwill, intangible property and/or any capital stock or other equity ownership of Tenant).

8.3            Tenant and Subtenant represent and warrant to Landlord that Tenant has provided Subtenant with a complete copy of the Master Lease, and Subtenant further represents and warrants to Landlord that Subtenant is familiar with the provisions thereof.

8.4             Tenant and Subtenant represent and warrant that Landlord will not be liable for any brokerage commission or finder’s fee in connection with the consummation of the Sublease or this Agreement.  Tenant and Subtenant, jointly and severally, shall protect, indemnify, defend and hold Landlord harmless from and against any claims for any such commissions, fees or costs, and for all costs, expenses and liabilities incurred in connection with such claims, including, without limitation, attorneys’ fees and costs.

9.           Miscellaneous.

9.1             Should any party to this Agreement bring an action against another party, by reason of or alleging the failure of the other party to comply with any or all of its obligations hereunder, whether for declaratory or other relief, then the party which prevails in such action shall be entitled to its reasonable attorneys’ fees and expenses related to such action, in addition to all other recovery or relief.  A party shall be deemed to have prevailed in any such action (without limiting the generality of the foregoing) if such action is dismissed upon the payment by the other party of the sums allegedly due or the performance of obligations allegedly not complied with, or if such party obtains substantially the relief sought by it in the action,

5

 irrespective of whether such action is prosecuted to judgment.  Attorneys’ fees shall include, without limitation, fees incurred in discovery, contempt proceedings, and bankruptcy litigation.  The non-prevailing party shall also pay the attorneys’ fees and costs incurred by the prevailing party in any post-judgment proceedings to collect and enforce the judgment.  The covenant in the preceding sentence is separate and several and shall survive the merger of this provision into any judgment on this Agreement.

9.2.            Promptly upon Landlord’s request, Tenant and Subtenant shall execute and deliver such further customary documents and/or instruments and perform such further customary acts as may be required to give full effect to the transaction herein contemplated.

9.3             Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Master Lease.  Captions to the paragraphs and sections in this Agreement are included for convenience only and do not modify any of the terms of this Agreement.  No one party shall be deemed to have drafted this Agreement and it shall be construed according to its fair meaning and not against any party.  All indemnity obligations under this Agreement and any other provision hereof the survival of which is necessary to its enforcement shall survive the expiration or earlier termination of the Sublease and this Agreement.

9.4             LANDLORD, TENANT AND SUBTENANT EACH ACKNOWLEDGES THAT IT HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT TO ITS RIGHTS TO TRIAL BY JURY UNDER THE CONSTITUTIONS OF THE UNITED STATES AND THE STATE OF CALIFORNIA.  EACH PARTY EXPRESSLY AND KNOWINGLY WAIVES AND RELEASES ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY MATTERS ARISING OUT OF OR IN ANY WAY RELATED TO, EITHER DIRECTLY OR INDIRECTLY, THIS AGREEMENT, OR THE SUBJECT MATTER HEREOF, SUBTENANT’S USE OR OCCUPANCY OF THE SUBLEASED PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE.

Landlord’s Initials                       Tenant’s Initials                         Subtenant’s Initials                          

9.5              Landlord’s consent hereunder shall not be effective until Landlord has received a copy of this Agreement, fully executed with original signatures of Tenant and Subtenant thereon.

9.6              If any provision of this Agreement shall be invalid, unenforceable or ineffective for any reason whatsoever, all other provisions hereof shall be and remain in effect.

9.7              This Agreement is the entire agreement between the parties with respect to the subject matter hereof, and no alteration, modification or interpretation hereof shall be binding unless in writing and signed by all parties. This Agreement shall be construed and enforced in accordance with the laws of the State of California. This Agreement may be executed and delivered in any number of counterparts, each of which so executed and delivered shall be deemed to be an original and all of which shall constitute one and the same instrument.

6

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date set forth above.

LANDLORD:
SQUARE 24 ASSOCIATES, a District of Columbia limited partnership (d.b.a. Square 24 Associates, L.P.)
By:	Carr Real Estate Services, L.L.C., a Delaware limited liability company
Its:	General Partner
By:		Carr Real Estate Services Partnership, a Delaware partnership
Its:		Sole Member
By:			Carr Realty, L.P., a Delaware limited partnership
Its:			Managing Partner
By:				CarrAmerica Realty Corporation, a Maryland corporation
Its:				General Partner
By:						/s/ Philip L. Hawkins
					Philip L. Hawkins
Its:					Chief Operating Officer

TENANT:				SUBTENANT:
ZAMBA CORPORATION, a				PARK PLACE CAPITAL
Delaware corporation				CORPORATION,
				a California corporation
By:	/s/ Michael Carrel
				By:	/s/ Jon Daurio
Name:			Michael Carrel
				Name:		Jon Daurio
Title:		CFO
				Title:		EVP

7

EX-10.53

CORNISH & CAREY COMMERCIAL

ONCOR INTERNATIONAL

SUBLEASE

			Exhibit 10.53
Sublessor:	Zamba Corporation a Delaware Corporation	Subleased Premises:	3875 Hopyard Road, Suite 345 Pleasanton, CA  94588
Sublessee:	Park Place Capital Corporation
		Date:	January 9, 2002

1.             Parties:

This Sublease is made and entered into as of January 9, 2002, by and between Zamba Corporation (Sublessor), and Park Place Capital Corporation (Sublessee), under the Master Lease dated September 14, 1998, the First Amendment dated October 15, 1998, Second Amendment dated December 21, 2000, between Square 24 Associates (d.b.a. Square 24 Associates LP), as (Lessor) and Sublessor under this Sublease as (Lessee.)  A copy of the Master Lease is attached hereto as Exhibit “A” and incorporated herein by this reference.

2.             Provisions Constituting Sublease:

2.1.          This Sublease is subject to all of the terms and conditions of the Master Lease. Sublessee hereby assumes and agrees to perform all of the obligations of Lessee under the Master Lease to the extent said obligations apply to the Subleased Premises and Sublessee’s use of the common areas, except as specifically set forth herein. Sublessor hereby agrees to cause Lessor, under the Master Lease, to perform all of the obligations of Lessor thereunder to the extent said obligations apply to the Subleased Premises and Sublessee’s use of the common areas. Sublessee shall not commit or permit to be committed on the Subleased Premises or on any other portion of the Project any act or omission which violates any term or condition of the Master Lease. Except to the extent waived or consented to in writing by the other party or parties hereto who are affected thereby, neither of the parties hereto will, by renegotiation of the Master Lease, assignment, subletting, default or any other voluntary action, avoid or seek to avoid the observance or performance of the terms to be observed or performed hereunder by such party but, will at all times, in good faith assist in carrying out all the terms of this Sublease and in taking all such action as may be necessary or appropriate to protect the rights of the other party or parties hereto who are affected thereby against impairment. Nothing contained in this Section 2.1 or elsewhere in this Sublease shall prevent or prohibit Sublessor from assigning its interest in this Sublease or subletting the Premises to any other third party.

3.             Premises:

Sublessor leases to Sublessee and Sublessee leases from Sublessor the Subleased Premises “as-is” upon all of the terms, covenants and conditions contained in this Sublease. The Subleased Premises consist of approximately 6,201± square feet, per the Master Lease document, located at 3875 Hopyard Road, Suite 345, Pleasanton, California 94588 as shown and described in Exhibit “B”.

4.             Rent:

Upon execution of this Agreement, Sublessee shall deposit into a mutually agreeable escrow account as Rent for the Subleased Premises the sum of Twenty-four Thousand One Hundred Eighty-Three and 90/100 Dollars ($24,183.90), representing the first month’s rent and one months rent to be left in the escrow account for the balance of the sublease term.  Thereafter, rent shall be in accordance with the following schedule:

Months	Amount Square Foot	FULL SERVICE
2 — 11	$ 12,091.95
12-22	$ 12,402.00

5976 WEST LAS POSITAS BOULEVARD, SUITE 120, PLEASANTON, CA 94588 · (925) 467-0900 FAX (925) 467-0911

The rental amount shall be paid, without deductions, offset, prior notice or demand each month to the escrow account to be used for the next month’s rent payment.  All interest shall go directly to the Sublessee.  If the commencement date or the termination date of the Sublease occurs on a date other than the first day or the last day, respectively, of a calendar month, then the Rent for such partial month shall be prorated and the prorated Rent shall be payable on the Sublease commencement date or on the first day of the calendar month in which the Sublease termination date occurs, respectively.

All costs for setting up the escrow account or monthly costs associated with the escrow account or payment for direct deposit to the Landlord for month rental payments shall be solely the responsibility of the Sublessee.

Final decision on the process of rent and operating expense pass through payments by Sublessee to Sublandlord or direct payment to Landlord via assignment of payment or escrow account is subject to Landlord’s approval.

5.             Operating Expenses:

Per the Master Lease and First and Second Amendments, Sublessee shall assume a Base Year 2001.

6.             Security Deposit:

Upon execution of this Agreement, Sublessee shall pay to Sublessor an equivalent of the last month’s rent, equal to $12,402.00 as a noninterest bearing Security Deposit. In the event Sublessee has performed all of the terms and conditions of this Sublease during the term hereof, Sublessor shall return to Sublessee, within ten (10) days after Sublessee has vacated the Subleased Premises, the Security Deposit less any sums due and owing to Sublessor.

7.             Rights of Access and Use:

7.1.          Use:

Sublessee shall use the Subleased Premises only for those purposes permitted in the Master Lease, unless Sublessor and Master Lessor consent in writing to other uses prior to the commencement thereof.

8.             Sublease Term:

8.1.          Sublease Term:

The Sublease Term shall be for the period commencing on February 1, 2002, and continuing through November 30, 2003.  In no event shall the Sublease Term extend beyond the Term of the Master Lease.

8.2.          Inability to Deliver Possession:

In the event Sublessor is unable to deliver possession of the Subleased Premises at the commencement of the term, Sublessor shall not be liable for any damage caused thereby nor shall this Sublease be void or voidable, but Sublessee shall not be liable for Rent until such time as Sublessor offers to deliver possession of the Subleased Premises to Sublessee, but the term hereof shall not be extended by such delay. If Sublessee, with Sublessor’s consent, takes possession prior to commencement of the term, Sublessee shall do so subject to all the covenants and conditions hereof and shall pay Rent for the period ending with the commencement of the term at the same rental as that prescribed for the first month of the term prorated at the rate of 1/30th thereof per day. In the event Sublessor has been unable to deliver possession of the Subleased Premises within 30 days from the commencement date, Sublessee, at Sublessee’s option, may terminate this Sublease.

9.             Notices:

All notices, demands, consents and approvals which may or are required to be given by either party to the other hereunder shall be given in the manner provided in the Master Lease at the addresses shown below. Sublessor shall notify Sublessee of any Event of Default under the Master Lease, or of any other event of which Sublessor has actual knowledge which will impair Sublessee’s ability to conduct its normal business at the Subleased Premises, as soon as reasonably practicable following Sublessor’s receipt of notice from the Lessor of an Event of Default or actual knowledge of such impairment.

Sublessor’s Address:	Zamba Corporation Attn: Legal 3033 Excelsior Boulevard Suite 200 Minneapolis, MN  55416	Sublessee’s Address: Park Place Capital Corporation Attn: Jon R. Daurio, Esq. 101 Innovation Dr. #210 Irvine, CA  92612
Phone Number:	(952) 844-3126	Phone Number:	(949) 509-4603
Fax Number:	(952) 832-9383	Fax Number:	(949) 717-3076

2

10.           Broker Fee:

Upon execution of the Sublease, Sublessor shall pay Cornish & Carey Commercial, a licensed real estate broker, fees set forth in a separate agreement between Sublessor and Broker.

11.           Broker Representation:

The only Brokers involved in this Sublease are Cornish & Carey Commercial representing Sublessor and Saca Commercial representing  Sublessee.  Saca Commercial shall receive a commission equal to four percent (4%) of the total Sublease consideration and Cornish and Carey Commercial shall receive a commission equal to three (3%) of the total Sublease consideration.

12.           Compliance With Americans With Disabilities Act:

o Sublessor  o Sublessee shall be responsible for the installation and cost of any and all improvements, alterations or other work required on or to the Subleased Premises or to any other portion of the property and/or building of which the Subleased Premises are a part, required or reasonably necessary because of: (1) Sublessee’s use of the Subleased Premises or any portion thereof; (2) the use by a Sublessee by reason of assignment or sublease; or (3) both, including any improvements, alterations or other work required under the Americans With Disabilities Act of 1990. Compliance with the provisions of this Section 8 shall be a condition of Sublessor granting its consent to any assignment or Sublease of all or a portion of this Sublease and the Subleased Premises described in this Sublease.

13.           Compliance With Nondiscrimination Regulations:
It is understood that it is illegal for Sublessor to refuse to display or sublease the Subleased Premises or to assign, surrender or sell the Master Lease, to any person because of race, color, religion, national origin, sex, sexual orientation, marital status or disability.

14.           Toxic Contamination Disclosure:

Sublessor and Sublessee each acknowledge that they have been advised that numerous federal, state, and/or local laws, ordinances and regulations (Laws) affect the existence and removal, storage, disposal, leakage of and contamination by materials designated as hazardous or toxic (Toxics). Many materials, some utilized in everyday business activities and property maintenance, are designated as hazardous or toxic.

Some of the Laws require that Toxics be removed or cleaned up by landowners, future landowners or former landowners without regard to whether the party required to pay for “clean up” caused the contamination, owned the property at the time the contamination occurred or even knew about the contamination. Some items, such as asbestos or PCBs, which were legal when installed, now are classified as Toxics and are subject to removal requirements. Civil lawsuits for damages resulting from Toxics may be filed by third parties in certain circumstances.

Sublessor and Sublessee each acknowledge that Broker has no specific expertise with respect to environmental assessment or physical condition of the Subleased Premises, including, but not limited to, matters relating to: (i) problems which may be posed by the presence or disposal of hazardous or toxic substances on or from the Subleased Premises, (ii) problems which may be posed by the Subleased Premises being within the Special Studies Zone as designated under the Alquist-Priolo Special Studies Zone Act (Earthquake Zones), Section 2621-2630, inclusive of California Public Resources Code, and (iii) problems which may be posed by the Subleased Premises being within a HUD Flood Zone as set forth in the U.S. Department of Housing and Urban Development “Special Flood Zone Area Maps,” as applicable.

Sublessor and Sublessee each acknowledge that Broker has not made an independent investigation or determination of the physical or environmental condition of the Subleased Premises, including, but not limited to, the existence or nonexistence of any underground tanks, sumps, piping, toxic or hazardous substances on the Subleased Premises. Sublessee agrees that it will rely solely upon its own investigation and/or the investigation of professionals retained by it or Sublessor, and neither Sublessor nor Sublessee shall rely upon Broker to determine the physical and environmental condition of the Subleased Premises or to determine whether, to what extent or in what manner, such condition must be disclosed to potential sublessees, assignees, purchasers or other interested parties.

3

15.           Signage and Building Security:

At Sublessee’s sole cost and expense and subject to approval by Landlord, Sublessor shall transfer to Sublessee all rights to signage and building security.

16.           Rent Abatement and Damages to Personal Property:

In the event Sublessor, pursuant to the terms of the Master Lease, is entitled to and receives rent abatement, then to the extent such rent abatement affects the Subleased Premises, Sublessee shall be entitled to rent abatement in an amount that the net rentable area of the Subleased Premises bears to the total net rentable area of the Master Lease, and only to the extent any such abatement applies to the Sublease Term.  In addition, any amounts paid or credited to Sublessor under the terms of the Master Lease for damage to personal property shall be credited to Sublessee, subject to the same limitations set forth above.

Sublessor:		ZAMBA CORPORATION
By:	/s/ Michael Carrel		Date:	1/20/02
	Michael Carrel — Chief Financial Officer
Sublessee:  PARK PLACE CAPITAL CORPORATION
By:	/s/ Jon Daurio		Date:	1/28/02

NOTICE TO SUBLESSOR AND SUBLESSEE: CORNISH & CAREY COMMERCIAL, IS NOT AUTHORIZED TO GIVE LEGAL OR TAX ADVICE; NOTHING CONTAINED IN THIS SUBLEASE OR ANY DISCUSSIONS BETWEEN CORNISH & CAREY COMMERCIAL AND SUBLESSOR AND SUBLESSEE SHALL BE DEEMED TO BE A REPRESENTATION OR RECOMMENDATION BY CORNISH & CAREY COMMERCIAL, OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL EFFECT OR TAX CONSEQUENCES OF THIS DOCUMENT OR ANY TRANSACTION RELATING THERETO. ALL PARTIES ARE ENCOURAGED TO CONSULT WITH THEIR INDEPENDENT FINANCIAL CONSULTANTS AND/OR ATTORNEYS REGARDING THE TRANSACTION CONTEMPLATED BY THIS PROPOSAL.

4

EX-10.54

Exhibit 10.54

Sublessor:	Zamba Corporation	Subleased Premises:	655 Campbell Technology Parkway
Sublessee:	Purlight LLC a Nevada Limited Liability Corporation	Date:	February 19, 2002

1.        Parties:

This Sublease is made and entered into as of February 19, 2002, by and between Zamba Corporation. (Sublessor), and Purlight LLC, a Nevada Limited Liability Corporation (Sublessee), under the Master Lease dated January 4, 2000, between WTA Campbell Technology Park LLC as (Lessor) and Sublessor under this Sublease as (Lessee).  A copy of the Master Lease is attached hereto as Exhibit “A” and incorporated herein by this reference.

2.        Provisions Constituting Sublease:

2.1        This Sublease is subject to all of the terms and conditions of the Master Lease.  Sublessee hereby assumes and agrees to perform all of the obligations of Lessee under the Master Lease to the extent said obligations apply to the Subleased Premises and Sublessee’s use of the common areas, except as specifically set forth herein.  Sublessor hereby agrees to cause Lessor, under the Master Lease, to perform all of the obligations of Lessor thereunder to the extent said obligations apply to the Subleased Premises and Sublessee’s use of the common areas.  Sublessee shall not commit or permit to be committed on the Subleased Premises or on any other portion of the Project any act or omission, which violates term, or condition of the Master Lease.  Except to the extent waived or consented to in writing by the other party or parties hereto who are affected thereby, neither of the parties hereto will, by renegotiation of the Master Lease, assignment, subletting, default or any other voluntary action, avoid or seek to avoid the observance or performance of the terms to be observed or performed hereunder by such party but, will at all times, in good faith assist in carrying out all the terms of this Sublease and in taking all such action as may be necessary or appropriate to protect the rights of the other party or parties hereto who are affected thereby against impairment.  Nothing contained in this Section 2.1 or elsewhere in this Sublease shall prevent or prohibit Sublessor (a) from exercising its right to terminate the Master Lease pursuant to the terms thereof or (b) from assigning its interest in this Sublease or subletting the Premises to any other third party.  In the event Sublessor is in default of Master Lease and fails to cure any default of Master Lease, Lessor may elect to terminate this sublease.

2.2        All of the terms and conditions contained in the Master Lease are incorporated herein, except Paragraphs 3, 4, 5, 7, and Exhibit B, and shall together with the terms and conditions specifically set forth in this Sublease constitute the complete terms and conditions of this Sublease.

3.        Premises:

Sublessor leases to Sublessee and Sublessee leases from Sublessor the Subleased Premises upon all of the terms, covenants and conditions contained in this Sublease.  The Subleased Premises consist of approximately 28,319± rentable square feet, as shown and described in Exhibit ”A-1”.

4.        Rent:

Months	Rent/SF/Mo./NNN
01 – 12	$	56,634.00
13 – 24	$	58,333.00
25 – 36	$	60,083.00
37 – 48	$	61,885.00
49 – 60	$	63,742.00
61 – 661/2	$	65,654.00

5.        Operating Expenses:

Sublessee shall reimburse Zamba Corporation monthly as additional rent, its pro-rata share of all direct operating expenses as per the Master Lease.

6.        Security Deposit:

Sublessee shall provide a security deposit equal to six (6) months rent upon execution of the sublease agreement.  The security deposit shall be in a form of an irrevocable Letter of Credit in the amount of four (4) months and two (2) months rent in cash.  The additional security deposit shall be released provided that Sublessee is not in default of the sublease and the following conditions (pursuant to GAAP) have been met by Sublessee:

A.            There have been four (4) consecutive quarter of profitability (excluding depreciation and amortization).

B.            Shareholders equity is positive.

7.        Rights of Access and Use:

7.1               Use:

Sublessee shall use the Subleased Premises only for those purposes permitted in the Master Lease.

8.        Sublease Term:

8.1               Sublease Term:

The Sublease Term shall be for the period commencing on March 1, 2002 and continuing until June 14, 2007.  In no event shall the Sublease Term extend beyond the Term of the Master Lease.  Sublessor and Sublessee shall cohabitate within Premises until May 31, 2002 (see Paragraph No. 13), and prorate all rents during such times.

8.2               Inability to Deliver Possession:

In the event Sublessor is unable to deliver possession of the Subleased Premises at the commencement of the term, Sublessor shall not be liable for any damage caused thereby nor shall this Sublease be void or voidable, but Sublessee shall not be liable for Rent until such time as Sublessor offers to deliver possession of the Subleased Premises to Sublessee, but the term hereof shall not be extended by such delay.  If Sublessee, with Sublessor’s consent, takes possession prior to commencement of the term, Sublessee shall do so subject to all the covenants and conditions hereof and shall pay Rent for the period ending with the commencement of the term at the same rental as that prescribed for the first month of the term prorated at the rate of 1/30th thereof per day.  In the event Sublessor

2

has been unable to deliver possession of the Subleased Premises within 30 days from the commencement date, Sublessee, at Sublessee’s option, may terminate this Sublease.

8.3               Accessibility:

Sublessee shall access the premises effective February 23, 2002 in order to install all necessary business equipment, phones, etc.

9.        Notices:

All notices, demands, consents and approvals which may or are required to be given by either party to the other hereunder shall be given in the manner provided in the Master Lease at the addresses shown below.  Sublessor shall notify Sublessee of any Event of Default under the Master Lease, or of any other event of which Sublessor has actual knowledge which will impair Sublessee’s ability to conduct its normal business at the Subleased Premises, as soon as reasonably practicable following Sublessor’s receipt of notice from the Lessor of an Event of Default or actual knowledge of such impairment.  If Sublessor elects to terminate the Master Lease, Sublessor shall so notify Sublessee by giving at least 60 days notice prior to the effective date of such termination.

Sublessor’s Address:	Mike Carrel	Sublessee’s Address:	Mr. Wayne Catlett
	Zamba Corporation		Mr. William Manak
	3033 Excelsior Boulevard, Suite 200		Purlight LLC
	Minneapolis, MN 55416		655 Campbell Technology Park
			Campbell, CA  95008
Phone Number:	(612) 844-3113	Phone Number:	(916) 988-4790
Fax Number:	(612) 893-3948	Fax Number:	(916) 549-8071

10.      Broker Fee:

Upon execution of the Sublease, Sublessor shall pay Cornish & Carey Commercial, a licensed real estate broker, fees set forth in a separate agreement between Sublessor and Broker or in the event there is no separate agreement between Sublessor and Broker, the sum per separate agreement for brokerage services rendered by Broker to Sublessor in these transactions.

11.      Broker Representation:

The only Brokers involved in this Sublease are Cornish & Carey Commercial representing both parties and both parties consent thereto.

12.      Furniture:

Sublessee shall have the right to use all existing cubicle systems, wiring, and all furniture that currently exist in the facility at no additional charge.  In addition, Sublessor shall install, at Sublessor’s sole cost, the balance of the workstation including comparable wiring throughout the current vacant area to match the currently occupied space.  This will be completed by the Sublessor as quickly as reasonably possible, but may not be complete by the move-in date of March 1, 2002.  The current lease contract with Herman Miller expires September 2004.  Sublessee at no additional charge to Sublessor shall be responsible to negotiate with the furniture providers at that time to:  (i) extend and pay for leasing all the existing furniture and cubicle for dates beyond he current lease obligations noted in the previous sentences, or (ii) return all the existing furniture and cubicle as appropriate and outlined in the Sublessors agreements with Herman Miller and other lessors of the equipment, or (iii) buy all the existing furniture and cubicle as outlined in the Sublessors agreements with Herman Miller and other Lessor of the equipment.

3

13.      Shared Tenancy:

Following the Commencement Date, Sublessee shall occupy Suite 175 (approximately 12,456 rentable square foot) and Sublessor shall occupy Suite 100 of the Premises (approximately 15,861 rentable square foot) as shown on Exhibit “A-1” attached hereto (the “Shared Space”); provided that Sublessor’s right to remain in the Shared Space shall not extend later than May 31, 2002.  Additionally, Sublessor shall retain the right to use the Personal Property currently assembled and configured within the Shared Space and the parties agree to share the access to phone and network system on terms reasonably established by Sublessor.  In addition to the Shared Space, the common areas of the Subleased Premises, including, without limitation, the lobby, the restrooms, the kitchen, and the conference rooms, shall be available for use by both Sublessor and Sublessee on terms reasonably established by Sublessor.  In exchange for Sublessee’s use of the Shared Space, Sublessor shall be entitled to deduct from the Rent (includes Base Rent and Additional Rent) an amount equal to Sublessee’s proportionate share of (i) such Rent, and (ii) the utilities, HVAC and other building services used at such shared space; provided that such deduction shall only be permitted for the actual period of time that Sublessor remains in any portion of the Shared Space.  Sublessor and Sublessee hereby agree that Sublessor’s proportionate share shall equal Forty-Four (44%) Percent of Sublessee’s proportionate share as set forth in Section 4.2 above.  Sublessee hereby agrees and acknowledges that Sublessor shall have no obligation to construct a demising wall or other physical separation between the Shared Space and the remainder of the Subleased Premises.  Sublessor and Sublessee hereby agree that such shared use of the Subleased Premises shall be subject to whatever security and use restrictions are reasonably required by the other party in order to ensure that each party’s business operations at the Subleased Premises are not interrupted or impaired by such shared use, provided that Sublessee shall not be required to incur any expense or liability in connection with Sublessor’s restrictions.  Sublessor and Sublessee also acknowledge and agree that the business operations of each party hereto in such shared space are of a confidential nature and neither party hereto, nor their employees, directors, agents or officers shall disclose to any third party any of such confidential information about the other party hereto learned through the joint use of such shared space.  Sublessor shall provide ten (10) days written notice to Sublessee of its plan to vacate the Shared Space.  If Sublessor does not vacate the Shared Space at the time required by this Sublease, and in the manner required by the Master Lease, then Sublessee shall be entitled to deduct against the Rent owing under this Sublease and amount equal to two (2) times the base rent which would otherwise be due and owing from Sublessee hereunder pursuant to the terms of Paragraph 1 of this Sublease for each such day until the entire Shared Space is surrendered by

Sublessor.

14.      Contingency:

This proposal is contingent upon Sublessee’s review and approval of the Master Lease and assumability of Furniture Lease Agreement.  In addition, this proposal is contingent upon Sublessee’s closing/completing a major round of financing on or approximately on February 28, 2002.

15.      Toxic Contamination Disclosure:

Sublessor and Sublessee each acknowledge that they have been advised that numerous federal, state, and/or local laws, ordinances and regulations (Laws) affect the existence and removal, storage, disposal, leakage of and contamination by materials designated as hazardous or toxic (Toxics).  Many materials, some utilized in everyday business activities and property maintenance, are designated as hazardous or toxic.

Some of the Laws require that Toxics be removed or cleaned up by landowners, future landowners or former landowners without regard to whether the party required to pay for “clean up” caused the contamination, owned the property at the time the contamination occurred or even knew about the contamination.  Some items, such as asbestos or PCBs, which

4

were legal when installed, now are classified as Toxics and are subject to removal requirements.  Civil lawsuits for damages resulting from Toxics may be filed by third parties in certain circumstances.

Sublessor and Sublessee each acknowledge that Broker has no specific expertise with respect to environmental assessment or physical condition of the Subleased Premises, including, but not limited to, matters relating to:  (i) problems which may be posed by the presence or disposal of hazardous or toxic substances on or from the Subleased Premises, (ii) problems which may be posed by the Subleased Premises being within the Special Studies Zone as designated under the Alquist-Priolo Special Studies Zone Act (Earthquake Zones), Section 2621-2630, inclusive of California Public Resources Code, and (iii) problems which may be posed by the Subleased Premises being within a HUD Flood Zone as set forth in the U.S. Department of Housing and Urban Development “Special Flood Zone Area Maps,” as applicable.

Sublessor and Sublessee each acknowledge that Broker has not made an independent investigation or determination of the physical or environmental condition of the Subleased Premises, including, but not limited to, the existence or nonexistence of any underground tanks, sumps, piping, toxic or hazardous substances on the Subleased Premises.  Sublessee agrees that it will rely solely upon its own investigation and/or the investigation of professionals retained by it or Sublessor, and neither Sublessor nor Sublessee shall rely upon Broker to determine the physical and environmental condition of the Subleased Premises or to determine whether, to what extent or in what manner, such condition must be disclosed to potential sublessees, assignees, purchasers or other interested parties.

16.      Tenant Improvements:

Sublessee shall accept the Premises in “as is” condition with all building operating systems in good working order as of sublease commencement.

Sublessor:		ZAMBA CORPORATION
By:	/s/ Michael H. Carrel		Date:	2/20/02

Sublessee:		PURLIGHT LLC a Nevada Limited Liability Corporation
By:	/s/ William T. Manak		Date:	2/19/02

NOTICE TO SUBLESSOR AND SUBLESSEE:  CORNISH & CAREY COMMERCIAL, IS NOT AUTHORIZED TO GIVE LEGAL OR TAX ADVICE; NOTHING CONTAINED IN THIS SUBLEASE OR ANY DISCUSSIONS BETWEEN CORNISH & CAREY COMMERCIAL AND SUBLESSOR AND SUBLESSEE SHALL BE DEEMED TO BE A REPRESENTATION OR RECOMMENDATION BY CORNISH & CAREY COMMERCIAL, OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL

5

EFFECT OR TAX CONSEQUENCES OF THIS DOCUMENT OR ANY TRANSACTION RELATING THERETO.  ALL PARTIES ARE ENCOURAGED TO CONSULT WITH THEIR INDEPENDENT FINANCIAL CONSULTANTS AND/OR ATTORNEYS REGARDING THE TRANSACTION CONTEMPLATED BY THIS PROPOSAL.

Exhibit “A” Master Lease

Exhibit “B” Premises

LESSOR CONSENT

The undersigned, Lessor under the Master Lease attached as Attachment I, hereby consents to the subletting of the Subleased Premises described herein on the terms and conditions contained in this Sublease.  This Consent shall apply only to this Sublease and shall not be deemed to be a consent to any other Sublease.

If the master lease is terminated for any reason, the Sublease at Lessors sole discretion, may be terminated.

Lessor:
By:	Date:

EX-10.59

EXHIBIT 10.59

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is made and entered into as of the 25^th day of March, 2002, by and between Zamba Corporation, a Delaware corporation (the “Company”), and Joseph B. Costello (the “Purchaser”).

WHEREAS, the Company owns 2,400,000 shares of Series A preferred stock, $.0001 par value per share (“Zamba’s NextNet Stock”) of NextNet Wireless, Inc., a Delaware corporation (“NextNet”), which represents approximately 33% of the outstanding capital stock of NextNet; and

WHEREAS, the Purchaser is the Chairman of the Company’s Board of Directors and the Chairman of NextNet’s Board of Directors, and therefore is thoroughly familiar with the Company’s and NextNet’s business, financial condition and prospects; and

WHEREAS, pursuant to a Stock Purchase Agreement dated February 26, 2002 (the “February Stock Purchase Agreement”), the Purchaser has previously agreed to purchase from the Company and the Company has agreed to sell certain of its shares of Zamba’s NextNet Stock; and

WHEREAS, the Purchaser desires to purchase additional shares (the “Shares”) of Zamba’s NextNet Stock pursuant to the terms of this Agreement; and

WHEREAS, the Purchaser acknowledges that there is no established trading market or other current valuation for Zamba’s NextNet Stock or the Shares to be issued hereunder; and

WHEREAS, Purchaser agrees that the number of Shares to be issued to the Purchaser hereunder shall be determined in accordance with the procedures set forth in Section 1(b) below.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1.             Purchase and Sale of Preferred Stock.  In consideration of this Agreement, the Company hereby agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase from the Company, the Shares in accordance with the following terms:

(a)           Purchaser agrees to pay to the Company an aggregate purchase price of $400,000 (the “Purchase Price”) for the Shares.  Promptly following the execution of this Agreement, the Purchaser shall pay the full amount of the Purchase Price to the Company by wire transfer in immediately available funds to an account designated in writing by the Company.

(b)           In order to determine the number of Shares to be received by the Purchaser from the Company in exchange for the Purchase Price, the Company and the

Purchaser hereby agree that the number of Shares shall be determined by dividing the Purchase Price by the price per share of Zamba’s NextNet Stock, with the price per share determined by the first to occur of the following events:

(i)            the price per share of Zamba’s NextNet Stock determined upon the merger, consolidation, sale of all or substantially all of the assets or any other change-in-control of NextNet in which NextNet is not the continuing corporation after such merger, consolidation, sale of all or substantially all of the assets or other such change-in-control;

(ii)           the price per share of Zamba’s NextNet Stock established upon the Company’s sale of any shares of Zamba’s NextNet Stock to any third party;

(iii)          if the events specified in (i) or (ii)above have not occurred by December 31, 2002, the Company and the Purchaser shall agree to engage an independent accountant, valuation expert or other entity experienced in the valuation of companies substantially similar to NextNet to prepare a valuation of Zamba’s NextNet Stock, which valuation shall be binding upon the Company and the Purchaser.

(c)           Notwithstanding the foregoing, if the valuation determined pursuant to Section 1(b) above would otherwise result in the issuance of a greater number of shares of Zamba’s NextNet Stock than the number of shares of Zamba’s NextNet Stock then owned by the Company, after subtracting the number of shares to be provided to the Purchaser pursuant to the February Stock Purchase Agreement, the number of Shares to be issued to the Purchaser under this Agreement shall be limited to the number of shares of Zamba’s NextNet Stock then owned by the Company.

(d)           Within ten business days after the determination of the number of Shares to be issued to the Purchaser in accordance with the provisions set forth in Section 1(b) above, the Company shall deliver to NextNet a notice pursuant to the Right of First Offer set forth in Section 1.1 of the Right of First Refusal Agreement (the “Refusal Agreement”) dated September 21, 1998 by and among Zamba Corporation (“Zamba”) (formerly known as “Racotek, Inc.”), NextNet Wireless, Inc. (“NextNet”) (formerly known as “NextNet, Inc.”) and the holders of the Series B Preferred Stock of NextNet.

(e)           If NextNet elects to exercise its right of first refusal pursuant to Section 1(d) above, the Purchase Price shall be refunded to the Purchaser within ten business days of the Company’s receipt of full payment from NextNet for the Shares, and the Purchaser shall not receive any of the Shares.  If NextNet declines to exercise its right of first refusal, the Company shall, within ten business days after the Company’s receipt of NextNet’s notice to decline its right, notify each investor in NextNet eligible under the Refusal Agreement of its opportunity to exercise its pro rata right of first refusal pursuant to the Refusal Agreement.

(f)            If any of the eligible investors in NextNet  elects to exercise its pro rata right of first refusal pursuant to Section 1(e) above, the Company will forward to the

2

Purchaser the payments the Company receives from such investor(s) within ten business days of the Company’s receipt of such payment, and the number of Shares that the Purchaser will receive pursuant to this Agreement shall be reduced on a pro rata basis.  Within ten business days after the expiration of the investor refusal period, and subject to the limitations set forth in Section 1(c) above, the Company shall deliver to the Purchaser a certificate registered in the Purchaser’s name representing the number of Shares purchased.

2.             Representations and Warranties of the Purchaser.  As a material inducement for the Company’s issuance and sale of the Shares, the Purchaser represents, warrants, covenants and acknowledges to the Company that:

(a)           The Purchaser understands that the issuance of the Shares has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws.  Instead, the Company is issuing the Shares pursuant to exemptions from such laws and in doing so is and would be relying on, among other things, the Purchaser’s representations, warranties, covenants and acknowledgements contained herein.

(b)           The Purchaser qualifies as an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act.

(c)           As the Chairman of the Company’s and NextNet’s Board of Directors, the Purchaser has detailed knowledge of the Company’s and NextNet’s business, financial condition and prospects.  In addition, the Purchaser has been provided with or given access to such additional information as the Purchaser has requested from the Company and has utilized such information to his satisfaction for the purpose of obtaining information regarding the Company’s and NextNet’s business, financial condition and prospects.

(d)           The Purchaser is acquiring the Shares for his own account, for investment purposes only, and without the intention of reselling or redistributing the Shares;

(e)           The Purchaser is aware that, in the view of the Securities and Exchange Commission, a purchase of the Shares with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market values, or any change in NextNet’s condition, or in connection with a contemplated liquidation or settlement of any loan obtained for the acquisition of the Shares and for which the Shares were pledged, would constitute an intent inconsistent with the foregoing representation.

(f)            If, contrary to the Purchaser’s foregoing intentions, he should later desire to dispose of or transfer any of the Shares in any manner, the undersigned shall not do so without (i) first obtaining an opinion of counsel satisfactory to the Company and NextNet that such proposed disposition or transfer may lawfully be made without registration pursuant to the Securities Act and applicable state securities laws or (ii) registering the resale of the Shares under the Securities Act and applicable state securities laws.

3

(g)           Neither the Company nor NextNet has any obligation to register the Shares for resale under the Securities Act or any applicable state securities laws, or to take any other action which would facilitate the availability of federal or state registration exemptions in connection with any resale of the Shares.  Accordingly, the Purchaser may be prohibited by law from selling or otherwise transferring or disposing of the Shares and may have to bear the economic risk of his investment in NextNet for an indefinite period.

3.             Representations and Warranties of the Company.  As a material inducement for the Purchaser’s purchase of the Shares, the Company represents, warrants, covenants and acknowledges to the Purchaser that:

(a)           The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own its properties and to carry on its business as now being conducted and presently proposed to be conducted.

(b)           The Shares are being transferred to the Purchaser free and clear of any liens, encumbrances or other restrictions, other than restrictions on transfer imposed by applicable securities laws.

4.             Merger, Consolidation or Other Change in Control of the Company or NextNet.

(a)           If the Company shall at any time consolidate with or merge into to another corporation (where the Company is not the continuing corporation after such merger, consolidation, sale of all or substantially all of its assets or other change-in-control), or the Company shall sell, transfer or lease all or substantially all of its assets, then, in any such case, the Purchaser thereupon (and thereafter) shall continue to be entitled to be bound by the terms of this Agreement and shall be entitled to receive the number of Shares determined in accordance with Section 1(b) above.

(b)           If NextNet shall at any time consolidate with or merge into another corporation (where NextNet is not the continuing corporation after such merger, consolidation or other change-in-control), or NextNet shall sell, transfer or lease all or substantially all of its assets, then, in any such case, the Purchaser thereupon (and thereafter) shall be entitled to receive the number of Shares (or the proceeds resulting from the sale of such Shares in connection with such merger, consolidation, or other change-in-control) determined in accordance with Section 1(b)(ii) above.

5.             Insolvency or Bankruptcy of the Company or NextNet.  Upon the insolvency or bankruptcy (whether voluntary or involuntary) of the Company or NextNet, or the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or NextNet or any substantial part of the Company’s or NextNet’s property, or any general assignment for the benefit of creditors of the Company or NextNet, the Purchaser shall be an unsecured general creditor of the Company or NextNet, as applicable, and shall not have any security interest or other rights in connection with this Agreement or the Shares purchased hereunder.

4

6.             Miscellaneous.

(a)           Binding Effect.  This Agreement shall be binding upon and inure to the benefit of and be enforceable against the parties hereto and their respective successors and permitted assigns.

(b)           Governing Law.  This Agreement shall in all respects be governed by, and enforced and interpreted in accordance with, the laws of the State of Minnesota, except with respect to its rules relating to conflicts of laws.

(c)           Legend.  The Shares issued to the Purchaser pursuant to this Agreement shall contain the following legend:

THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.  ACCORDINGLY, THESE SHARES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT (i) AN OPINION OF COUNSEL SATISFACTORY TO ZAMBA CORPORATION THAT SUCH SALE, TRANSFER OR OTHER DISPOSITION MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH REGISTRATION.

(d)           Notices.  All notices, consents, requests, demands, instructions or other communications provided for herein shall be in writing and shall be deemed validly given, made and served when (a) delivered personally, (b) sent by certified or registered mail, postage prepaid, (c) sent by reputable overnight delivery service, or (d) sent by telephonic facsimile transmission, and, pending the designation of another address, addressed as follows:

If to the Company:	Zamba Corporation
	3033 Excelsior Blvd., Suite 200
	Minneapolis, Minnesota 55416
	Attn:  Chief Financial Officer
	Fax: (952) 893-3948
If to the Purchaser:	Joseph B. Costello
	2880 Lakeside Drive, Suite 250
	Santa Clara, California 95054
	Fax: (408) 727-0235

(e)           Entire Agreement and Counterparts.  This Agreement evidences the entire agreement between the Company and the Purchaser relating to the subject matter hereof and supersedes in all respects any and all prior oral or written agreements or

5

understandings.  This Agreement may not be amended or modified, and no provisions hereof may be waived, except by written instrument signed by both the Company and the Purchaser.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one Agreement.

(f)            Headings.  Section headings used in this Agreement have no legal significance and are used solely for convenience of reference.

(g)           Expenses.  Each party shall pay for its own legal, accounting and other similar expenses incurred in connection with the transaction contemplated by this Agreement.

6

            IN WITNESS WHEREOF, the Company and the Purchaser have executed this Agreement as of the date set forth in the first paragraph.

THE COMPANY:		THE PURCHASER:
ZAMBA CORPORATION
By:	/s/ Michael H. Carrel	/s/ Joseph B. Costello
Name:	Michael H. Carrel	Joseph B. Costello
Title:	CFO

7

EX-10.60

EXHIBIT 10.60

AMENDMENT NO. 1. TO

STOCK PURCHASE AGREEMENT

DATED FEBRUARY 26, 2002

This Amendment No. 1 (“Amendment”) to the Stock Purchase Agreement dated February 26, 2002 (“Agreement”) is made and entered into as of the 25^th day of March, 2002, by and between Zamba Corporation, a Delaware corporation (“Zamba”), and Joseph B. Costello (the “Purchaser”).

WHEREAS, the parties intend by this Amendment to clarify the understanding between them that the shares referred to in the Agreement are those that are owned by Zamba;

NOW, THEREFORE, the parties agree as follows:

1.                The defined term “NextNet Preferred Stock” shall be removed from the Agreement and replaced in each location where it appears with the defined term “Zamba’s NextNet Stock.”

2.                Section 1(b)(i) shall be modified by deleting, from the first and second lines, the phrase “received by the shareholders of NextNet,” and replacing this phrase with the following: “determined.”

3.                Except as set forth herein, the terms and conditions of the Agreement shall continue in full force and effect.

IN WITNESS WHEREOF, the Company and the Purchaser have executed this Agreement as of the date set forth in the first paragraph.

ZAMBA CORPORATION		THE PURCHASER:
By:	/s/ Michael H. Carrel	/s/ Joseph B. Costello
Name:	Michael H. Carrel	Joseph B. Costello
Title:	CFO

EX-23.01

Exhibit 23.01

Independent Auditors’ Consent

The Board of Directors

ZAMBA Corporation:

We consent to incorporation by reference in registration statements No. 333-62783, 333-66021, and 333-52082 on Form S-8 of ZAMBA Corporation of our reports dated January 23, 2002, except as to Note 4, which is as of February 21, 2002, and except as to Notes 2 and 17, which are as of March 26, 2002, relating to the consolidated balance sheets of ZAMBA Corporation and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2001, and the related financial statement schedule, which reports are included in the 2001 annual report on Form 10-K of ZAMBA Corporation.

Our reports dated January 23, 2002, except as to Note 4, which is as of February 21, 2002 and except as to Notes 2 and 17, which are as of March 26, 2002 contain an explanatory paragraph that states that the Company, among other matters, has incurred significant losses and negative cash flows from operations, which raise substantial doubt about its ability to continue as a going concern.  The consolidated financial statements and financial statement schedule do not include any adjustments that might result from the outcome of that uncertainty.

	/s/ KPMG LLP
Minneapolis, Minnesota
April 1, 2002

EX-99.01

Exhibit 99.01

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Zamba Corporation desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and is filing this cautionary statement in connection with the Reform Act. This Annual Report on Form 10-K and any other written or oral statements made by or on our behalf may include forward-looking statements that reflect our current views with respect to future events and financial performance. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “could,” “may” and other similar expressions identify forward-looking statements.

We wish to caution you that any forward-looking statements made by or on our behalf are subject to uncertainties and other factors that could cause such statements to be wrong. Some of these uncertainties and other factors are listed under the caption “Risk Factors” below (many of which we have discussed in prior SEC filings). Though we have attempted to list comprehensively these important factors, we wish to caution investors that other factors may prove to be important in the future in affecting our operating results. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact each factor or combination of factors may have on our business.

You are further cautioned not to place undue reliance on those forward-looking statements because they speak only of our views as of the date the statements were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

RISK FACTORS

Our revenues in 2001 decreased by 20.2% from the revenues we recorded in 2000, and we might not be able to reverse the recent declines and grow our business effectively.

Our past growth and recent losses have placed significant demands on our management and other resources.  Our annual revenues in 2001 decreased 20.2% to $33.3 million in 2001. Our future success will depend on our ability to reverse the recent declines and then grow our business and manage our growth effectively, including by:

•      developing and improving our operational, financial and other internal systems;

•      integrating and managing acquired businesses, joint ventures and strategic investments;

•      training, motivating and managing our employees;

•      estimating fixed-price fees and project timeframes accurately;

•      attaining high rates of employee utilization; and

•      maintaining project quality and client satisfaction.

If we are unable to grow our business and manage our growth and projects effectively, the quality of our services, our ability to retain key personnel, and our business, financial condition and results of operations may be materially adversely affected.  Additionally, if our financial performance causes us to violate the covenants in our secured revolving credit facility with Silicon Valley Bank or adversely affects the amount of our eligible accounts receivable, and we are unable to obtain additional financing, we may not be able to meet our cash requirements beyond April 30, 2002.

We may not realize expected benefits from our recent restructuring actions.

In the second quarter of 2001, we made certain changes to our operations in order to focus on business on core operations and improve our operating performance by restructuring and streamlining our operations.  In the restructuring process, we incurred a restructuring charge of approximately $2.19 million, which includes a $1.173 million charge for facility closing and other leasehold termination costs, $777,000 for severance payments relating to employee severance payments, $123,000 for other employee-related costs and $115,000 for other related restructuring charges.  In this restructuring, we reduced our employee headcount by 89 employees, which represented approximately 28% of our workforce.  Of these 89 employees, 62 employees (or approximately 70%) were billable consultants and 27 employees (or approximately 30%) were non-billable staff.  We cannot predict whether we will receive expected synergies and improved operating performance as a result of these restructuring and streamlining actions.  We also cannot predict whether our restructuring and streamlining changes will adversely affect our ability to retain key employees, which, in turn, would adversely affect our business, financial condition and results of operations.

We may not realize benefits from our alliance with HCL.

During the first quarter of 2002, we entered into a Strategic Alliance Agreement with HCL Technologies America, Inc. (“HCL America”) and HCL Technologies Limited, India (“HCL”), in which we will work with HCL and HCL America to pursue service opportunities in certain identified markets.  Although HCL and HCL America will provide the initial funding for the sales and marketing activities of the alliance, we will dedicate several of our senior-level sales and delivery employees to the alliance.  If the alliance is not successful in developing its own business, we will have lost the opportunity cost of these employees, who could otherwise have been attempting to obtain business directly for us.  Also, our executive management may dedicate a significant amount of their time to alliance activities, which may distract them from our continuing business, which, in turn, could adversely affect our business, financial condition and results of operations.

2

The recent sale of the customer relationship management products developed by Clarify could have a significant adverse impact on our business.

A substantial portion of our revenue has been derived from implementation and customization of the customer relationship management (“CRM”) products developed by Clarify, which until recently was a business unit of Nortel Networks, Inc.  On October 2, 2001, Nortel Networks sold Clarify to Amdocs Limited.  We are currently unsure about Amdocs’ plans for the Clarify suite of products.  Amdocs focuses its other products on a limited number of industries, particularly communications and IP service providers.   If Amdocs decides to limit the Clarify products to such industries, the scope of clients to which we could provide services for Clarify products could be limited, and we would need to quickly increase the portion of our revenues that are derived from providing services for competitive or alternative CRM products, such as Siebel, PeopleSoft, Oracle, SAP and Kana.  To do so, we would need to retrain our Clarify service personnel, which could affect our utilization because consultants may not be able to work on billable projects while undergoing training.  Training programs may also require us to incur expenses if we have to obtain the training services externally from the software developer or hire independent contractors to conduct internal training.  If we fail in any of these respects, this failure could have a material adverse effect on our business, financial condition and results of operations.

The services we sell may not attract customers or meet their demands due to the risks that we face.

We focus on selling system integration services to clients in a small number of markets, such as sales force automation, contact centers, marketing and analytics, field service and content and commerce.  We sell these services through our direct sales force.  Although we believe that specializing in these services will increase our market presence, customer base and profitability, we may fail to obtain customers, effectively deliver services or meet customer demands in one or more of these markets.  Our services are based upon third party software applications that are purchased by our clients directly from the third party developer.  We must remain continually vigilant to changes in market preference for these third party developers, and strive to maintain good relationships with the providers whose products are currently being purchased as well as develop good relationships with developers of new products.  Developing relationships with the developers of new products may cause conflicts with the existing products for which we provide services.

The technology consulting industry is rapidly changing and evolving, and we may not be able to adjust our mix of services to meet the needs of the market.

The technology consulting industry is rapidly changing, and our future growth will be dependent in part on our ability to successfully develop and commercially introduce new services for this market.  The growth in the market for technology consulting services is also dependent on the use of technology consultants by our current and prospective customers.  The recent downturn in the economy in general and the technology sector in particular has affected our customers’ ability to engage technology

3

consultants for CRM services, which has affected our business as well as others in the CRM industry.  In addition, the technology consulting industry in general presents several risks, many of which are outside of our control.  As the market changes, we may need to redefine our company, which is a complex, time-consuming and expensive process.  It could involve changing strategies, changing management and employees, redefining the types of services we offer, and focusing on new markets and customers.  We could spend considerable amounts of money and commit resources, but ultimately receive little or no return on our investment.  Customers may not be receptive, and competitors may already be established in the new markets, making it difficult for us to gain a sustainable market share or acquire new customers.

Demand for our CRM services may decrease if we are unable to anticipate and adapt to rapidly changing technology.

The CRM industry and the technologies used in our CRM solutions are characterized by rapid technological change.  We expect to derive a substantial portion of our revenues from providing solutions that are based upon leading technologies that are capable of adapting to future technologies.  As a result, our success will depend on our ability to offer services that keep pace with continuing changes in technology, evolving industry standards and changing client preferences.  We may not be successful in addressing future developments on a timely basis.  Our failure to keep pace with the latest technological developments would have a material adverse effect on our business, financial condition and results of operations.

In addition, the development of new services often requires long-term forecasting of market trends, development and implementation of new technologies and processes, and a substantial capital commitment.  We may experience difficulties that could delay or prevent the successful design, development, introduction or marketing of new solutions.  In addition, these new solutions must meet the requirements of our current and prospective customers and must achieve market acceptance.  If we fail to anticipate or respond on a cost-effective and timely basis to technological developments, changes in industry standards or customer requirements, or if we have any significant delays in developing or introducing new services, our business, financial condition and results of operations could be materially adversely affected.

Competition in the technology consulting industry is intense, and many of our competitors have substantially greater resources and name recognition than Zamba.

The CRM consulting and systems integration industry is highly competitive and served by numerous national, regional and local firms.  The CRM market includes participants from a variety of market segments, including consulting and systems integration firms, contract programming companies, application software firms and their professional services groups, and e-business solution providers.  Our primary competitors can be classified into three groups:

•      large systems integrators (e.g., Accenture, PricewaterhouseCoopers, IBM, EDS);

4

•      eServices companies (e.g., Sapient, Scient); and

•      CRM consulting companies (e.g., E-Loyalty, One).

We also face competition from service organizations within potential clients.  Some of these competitors, particularly large systems integrators, may have a pre-existing relationship with many of our potential customers, either through non-CRM services that they provide to such customers or, in the case of large management consulting firms, through audit or other non-audit services those management consulting firms provide to our current or potential clients.  We differ from nearly all of our competitors by our exclusive focus on CRM services.

In addition to facing a large number of potential competitors, many of our competitors also have certain advantages over us, including:

•      better name recognition;

•      a broader range of products and services;

•      greater sales, marketing, distribution and technical capabilities;

•      significantly greater revenues and financial resources; and

•      established market positions.

We may not be able to compete effectively with these companies.  In addition, competitors with greater financial resources may be able to respond more quickly to new or emerging technologies and changes in customer requirements that may render our services obsolete or make it more difficult for us to compete with these companies.  In addition, the recent economic downturn has put downward pressure on pricing, and competitors with greater economic resources may be more willing to perform services under reduced prices, which could negatively affect our ability to obtain and retain customers, particularly if customers decide to differentiate among vendors on the basis of price.  We cannot predict whether we will be able to compete successfully with our existing and new services or with current and future competitors.   In addition, we believe that technological change will continue to cause rapid evolution in the competitive environment.  The full scope and nature of these changes are difficult to predict at this time, but increased competition could lead to reduced gross margins and diminished market share, which could have a material adverse effect on our business, financial condition and results of operations.

Changes in the general economy and the technology sector could affect the demand for the type of services we provide.

The unexpected economic slowdown has caused our prospective clients to defer their CRM implementations.  In recent quarters, our operating results have been adversely affected by a slowdown in the technology sector, which has reduced the

5

spending of our current and potential customers on CRM services and solutions.  Future changes in the economy, including the impact of any acts of terrorism, or general economic or political conditions that affect the general buying habits of our current or prospective customers, could continue to cause customers to defer or decide against implementing or upgrading their CRM systems.  If the economic conditions in the United States and globally do not improve, or if we experience a further worsening in the global economic slowdown, the market for CRM services could continue to decrease, which would have a material adverse effect on our business, financial condition and results of operations.

We need to attract and retain quality employees in order to develop and expand our business.

Our business is labor-intensive and requires highly skilled employees.   Most of our consultants possess extensive expertise in information technology, strategy, project management, sales and marketing.   To continue to serve our client base, we must continue to recruit and retain qualified personnel with expertise in each of these areas.   Although we and many other consulting businesses have reduced our workforces in the past several months, intense competition still exists for certain employees who have specialized skills or significant experience in business and technology consulting.  We compete for such personnel with management consulting firms, software firms and other businesses.  Many of these entities have substantially greater financial and other resources than we do.   In the past, we have had difficulty recruiting a sufficient number of qualified personnel to serve existing and new clients.  If we fail to recruit and retain a sufficient number of qualified personnel in the future, our ability to expand our client base or services could be impaired and our business, financial condition and results of operations could be adversely affected.

Our operating results may fluctuate significantly from quarter-to-quarter.

A high percentage of our operating expenses, particularly personnel and related costs, depreciation, office rent and occupancy costs, are fixed in advance of any particular quarter.   As a result, unanticipated variations in the number, or progress toward completion, of our projects may cause significant variations in operating results in any particular quarter and could result in losses for that quarter.   Our net revenue and operating results may fluctuate significantly due to a number of other factors, some of which are outside our control.  These factors may include:

•      the loss of key personnel and other employees;

•      any fluctuations in market demand for our services, consultant hiring and utilization;

•      the contractual terms and timing of completion of projects;

•      any delays incurred in connection with projects;

6

•      the accuracy of our estimates of resources required to complete projects;

•      any uncertainties or changes in our sales cycle;

•      the adequacy of provisions for losses;

•      the costs of obtaining or losing customers and accounts;

•      an increase in competition and pricing pressures;

•      any changes in our or our competitors’ business strategies, pricing and billing policies;

•      the time and expense of consummating an acquisition; and

•      the costs of integrating acquired operations.

One or more of the foregoing factors may cause our operating expenses to be disproportionately high during any given period.  Based on the preceding factors, we may experience a shortfall in revenue or earnings or otherwise fail to meet public market expectations, which could materially adversely affect our business, financial condition or results of operations.

Our revenues are difficult to predict because they are generated on a project-by-project basis.

We derive our revenues primarily from fees for services generated on a project-by-project basis.   These projects vary in size and scope.   Therefore, a client that accounts for a significant portion of our revenues in a given period may not generate a similar amount of revenues, if any, in subsequent periods.   In addition, after we complete a project, we have no assurance that the client will retain us in the future.

We also have clients who may terminate their agreements with us, whether time-and-materials or fixed-fee based, without any prior written notice.   Clients may terminate projects before completion.   If our clients terminate existing agreements, our business, financial condition and results of operations could suffer material harm.

The loss of a significant client could impact our operations.

We derive a substantial part of our revenues from a small number of clients.   During fiscal 2001, 73% of our revenues came from our top ten customers and 50% came from our top five customers.  During fiscal 2001, three clients – Best Buy Corporation (12%), Nortel Networks (10%) and Enbridge Services (10%) – each comprised more than 10% of our revenues.  The loss of one or more of these clients could materially adversely affect our business, financial condition and results of operations.  Our services often involve the implementation of complex information systems that are critical to our clients’ operations.  Our failure to meet client expectations in the performance of our services may damage our reputation and adversely affect our ability to attract and retain

7

clients.  If a client is not satisfied with our services, we will generally spend additional human and other resources at our own expense to ensure client satisfaction.  Such expenditures will typically result in a lower margin on such engagements and could materially adversely affect our business, financial condition and results of operations.

We could be subject to liability claims.

In the course of providing services, we may recommend the use of software and hardware products developed by third parties.  These products may not perform as expected or may contain defects.  If this occurs, our reputation could be damaged, and we could be subject to liability.  We attempt to limit our exposure to potential liability claims.  Such limitations may not be effective.  A successful liability claim brought against us may adversely affect our reputation and could have a material adverse effect on our business, financial condition and results of operations.  Our inability to obtain new clients or large-scale implementation and integration projects could materially and adversely affect the growth of our business.

We may not be able to protect our intellectual capital.

We rely on a combination of copyright, trade secret and trademark laws, and third party nondisclosure agreements to protect our intellectual property rights.  It may be possible for unauthorized third parties to obtain and use information that we regard as proprietary or to develop equivalent implementation methodologies independently.  From time to time, third parties may assert patent, copyright and other intellectual property claims against us.  Litigation, which could result in substantial cost to us, and diversion of our resources, may be necessary to enforce patents or our other intellectual property rights or to defend ourselves against claimed infringement of the rights of others.  If we are found to have infringed the intellectual property rights of others, we may be prohibited from using this intellectual property or might be required to license this intellectual property from others.  A successful infringement claim could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to reuse technology that we develop for specific clients.

A portion of our business involves the development of technology solutions for specific client engagements.  Ownership of these solutions is the subject of negotiation and is frequently assigned to the client, although we may retain a license for certain uses.   Some clients have prohibited us from marketing the applications developed for them for specified periods of time or to specified third parties.  Clients may demand similar or other restrictions in the future.  Issues relating to the ownership of and rights to use solutions can be complicated and disputes may arise that affect our ability to resell or reuse these solutions.   Any limitation on our ability to resell or reuse a solution could require us to incur additional expenses to develop new solutions for future projects.

Our stock price is volatile.

Technology companies, including Zamba, frequently experience volatility in their common stock prices.  Factors creating such volatility include:

8

•      quarterly fluctuations in results of operations and achievement of key business metrics;

•      changes in earnings estimates by securities analysts;

•      announcements of technological innovations or the introduction of new products;

•      market reaction to any acquisitions, joint ventures or strategic investments announced by us or our competitors; and

•extreme price and volume fluctuations in the general stock market, which have particularly affected the market price for many technology companies (in some cases unrelated to the operating performance of those companies) and may materially adversely affect the market price of our common stock.

These factors may have a significant adverse impact on the market price of our common stock.  If revenues or earnings in any quarter fail to meet the expectations of the investment community, there could be an immediate and material adverse impact on our stock price.

We could be delisted from the Nasdaq Stock Market.

Our stock is currently traded on the Nasdaq National Market.  If we no longer meet the requirements to continue our listing on the Nasdaq National Market, our market value and liquidity of the public float of our common stock may decrease.  To remain listed on the Nasdaq National Market, we must satisfy a number of requirements, including the following:

•      our net tangible assets must be greater than $4,000,000;

•      we must have a public float of at least 750,000 shares with a minimum market value of $5,000,000;

•      we must have at least two market-makers in our stock;

•      we must have at least 400 holders of our stock; and

•      we must have a minimum bid price of $1.00 per share.

As of March 29, 2002, our common stock was trading at less than $1.00 per share.  We have received a notification letter from Nasdaq stating that our common stock had closed below the minimum $1.00 per share for 30 consecutive trading days.  Nasdaq has given us until May 15, 2002, to regain compliance.  We are in the process of applying to transfer our common stock listing to the Nasdaq SmallCap Market (the “SmallCap Market”).  To transfer,we must comply with the requirements for continued listing for the SmallCap Market.  These requirements include the following:

9

•our stockholders’ equity must be at least $2.5 million, or our market capitalization must be at least $35 million, or we must have net income of $500,000 (excluding extraordinary or non-recurring items) in our most recently completed fiscal year or in two of our last three most recently completed fiscal years;

•      we must have a public float of at least 500,000 shares with a minimum market value of $1,000,000;

•      we must have at least two market-makers in our stock;

•      we must have at least 300 round-lot holders of our stock; and

•      we must have a minimum bid price of $1.00 per share.

As of December 31, 2001, we met the requirements for continued listing on the SmallCap Market, except for the minimum bid price requirement.  However, if our transfer application is approved, we will be allowed until August 13, 2002, to meet the $1.00 minimum bid price requirement.  If Nasdaq rejects our application to transfer to the SmallCap Market, and we become ineligible to trade on the Nasdaq National Market, our stock would be traded on a less liquid over-the-counter market.  As a result, investors in our common stock would be less able to sell stock holdings or receive accurate stock price quotations.   Consequently, the market value of our common stock could decrease.

We do not pay cash dividends on our common stock.

We currently do not pay any cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future.  We intend to retain future earnings, if any, to finance the expansion of our operations and for general corporate purposes.