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, 2002

oTransition 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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  YES o  NO ý

The aggregate market value of the registrant’s common stock held by non-affiliates was approximately $6,800,000 as of June 28, 2002, based on the closing sale price on the NASDAQ National Market for that date.  For purposes of this disclosure, shares of common stock beneficially held by the registrant’s directors, executive officers, and holders of more than 10% of the outstanding shares of the registrant’s common stock are assumed to be affiliates.

The number of shares outstanding of the registrant’s common stock, as of March 21, 2003, was 38,822,679 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the registrant’s Annual Meeting of Stockholders to be held on June 5, 2003, 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 than we have, our ability to obtain large-scale consulting services agreements, client decision-making processes, changes in expectations regarding the information technology industry, our ability to fund operations, 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, changes in information technology spending within companies, changes in the global geopolitical situation, sales of our NextNet shares, and other factors identified in our filings with the Securities and Exchange Commission, including the factors set forth on Exhibit 99.01 to this Annual Report on Form 10-K.

Item 1.  Business.

Our Company

Our mission is to be the premier customer care services company and help our clients be more successful in acquiring, servicing, and retaining their customers

ZAMBA Corporation is a customer care services company.  We help our clients be more successful in acquiring, servicing, and retaining their customers.  Having served over 300 clients, ZAMBA is focused exclusively on customer-centric services by leveraging best practices and best-in-class technologies to enable insightful, consistent interactions across all customer touch points.  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.  Based on our expertise and experience, we have created a framework of interdependent processes and technologies to help our clients, including strategy, analytics and marketing, contact center, content and commerce, field sales, field service and enterprise integration.  These help 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 specific solution offerings include:

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

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•Customer Care Diagnostic – This helps organizations assess their progress toward achieving the desired customer centric model and identify ways to generate tangible business benefits for their investments.

•Analytics & Marketing – This 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 – This advances brand awareness and enhances multiple touch points 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 – This helps organizations 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 – This 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 – This helps organizations 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  – This enables the design and implementation of unified business processes and technology systems across the extended enterprise in order to link customer facing 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.  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.  Since 1999, less than 1% of our revenue was derived from the sale of proprietary hardware and software.  We now exclusively provide customer care services as described above.

We currently derive a portion of our revenue from sales outside the United States. Approximately 11% of our 2002 revenues and 10% of our 2001 revenues were derived from customers located in Canada, including Enbridge Services, which is one of our larger accounts.  In 2000, less than 1% of our revenues were derived from Enbridge, and we received no other revenue from customers outside the United States.  Any long-lived assets located in foreign countries were immaterial for the past three fiscal years.

Industry Background

Customer-centric business strategies are 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 Customer-centric business strategies 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 tools and best practices to 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 an enterprise-wide strategic vision, business process management skills and technology expertise.  To meet this challenge, organizations are seeking assistance from third party service providers.  However, in the past twelve to

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eighteen months, there has been a pronounced decline in customer spending for information technology consulting services.  There is no assurance that expenditures for information technology consulting services will return to their former levels.

Clients

We primarily target large and mid-size corporations. We have proven our expertise by implementing solutions for over 300 clients since 1998. Best Buy, Blue Cross Blue Shield, Enbridge Services and Union Bank of California, each accounted for over 10% of our revenues in 2002.  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.

Relationships With Leading Technology Providers

In order to deliver best-in-class solutions, we have established alliances with some of the world’s leading software companies and technology providers. Some of the companies that we have worked with in the past year include Amdocs, Art Technology Group, Aspect Communications, Genesys, Informatica, Interwoven, Microsoft, PeopleSoft, and Siebel Systems.  We also have a relationship with HCL Technologies (“HCL”), a technology consulting company based in India, under which we have used HCL’s lower-cost offshore consultants to provide services to our clients.  This relationship grew out of a prior strategic alliance with HCL that we entered into during the first quarter of 2002.  We mutually agreed with HCL to terminate our strategic alliance during the fourth quarter of 2002.

At the present time, we do not have material contracts with any of these companies. However, some of these relationships are important to us for the referrals they may provide.  Currently, our most significant alliances in terms of revenue opportunities are with Amdocs, Aspect, Microsoft and PeopleSoft.  In many instances, these companies sell their software packages to customers, and we then provide customization and systems integration.  In other cases, our clients request that we assist in determining the most appropriate software and technology packages to meet their needs.

Ownership in NextNet Wireless, Inc.

We own a material share of 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.  Additionally, another director of Zamba, Sven Wehrwein, is a consultant for NextNet.  We originally recorded our NextNet holdings at $0 because it was uncertain whether we would ever realize any value from our holdings.

As described in Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K, we received approximately $5.22 million from various parties for selling a portion of our NextNet stock holdings during 2002.  Our ownership of NextNet was approximately 1.3 million shares of Series A Preferred Stock at December 31, 2002 and 2.4 million shares of Series A Preferred Stock at December 31, 2001.  Our ownership of NextNet also decreased by approximately 177,000 shares of Series A Preferred Stock in the first quarter of 2003 from sales to two private investors totaling $750,000.  Of our remaining shares, we have placed an aggregate of 583,333 in an escrow account as collateral for our loan from Entrx Corporation.  In addition, we issued a warrant to an investor affiliated with a prior purchaser of NextNet shares from us, to purchase 125,000 additional shares of our Series A Preferred Stock in NextNet from us at $6.00 per share, any time prior to the close of business on May 17, 2004.

Competition

The 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.

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We believe that our primary competitors include:

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

•CRM consulting companies (e.g., Akibia, Braun, E-Loyalty, Inforte)

In addition to these external competitors, we also face competition from the professional service organizations of customer care product vendors and the information technology departments 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-customer-centric 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 customer centric services.  Our highly skilled consultants work closely with clients to implement industry best practices 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 clients, and industry consolidation or new entrants will continue to cause a rapid evolution in the competitive environment of the 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, 2002, we had 63 employees, mainly throughout North America. Of that total, 44 individuals were in our professional staff, and 19 were in administrative roles and business development.  During 2002 and 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 2002 and 2001 is contained in Item 7 of this report.

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.  The value that we provide to our clients is more dependent on our ability to help our clients identify strategic business benefits and to provide project management and delivery skills than it

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is on any particular piece of technology that we have developed.  We rely upon a combination of trade secret, nondisclosure and other contractual arrangements and technical measures 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.

One component of our services is to develop 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.

Web Site Access to SEC Filings

Our Web site address is www.zambasolutions.com.  We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K and all amendments to those reports available free of charge on our Web site as soon as reasonably practicable after such material is electronically filed with the SEC.

Item 2.  Properties.

Our headquarters facility consists of approximately 10,000 square feet located in Minneapolis, Minnesota.  The facility is leased pursuant to an agreement that expires in December 2005.  We also maintain approximately 1,000 square feet of executive office space under short-term leases in San Jose, California and Toronto, Canada.

During 2002, we completed the significant reduction of our office space begun in 2001.  We reduced the size of our headquarters facility, which had been approximately 27,000 square feet, by returning approximately 17,000 to our landlord.  We also terminated leases for approximately 75,000 square feet in Campbell and Pleasanton, California; Colorado Springs and Parker, Colorado; Boston, Massachusetts; St. Paul, Minnesota, and Toronto, Ontario.  We also transferred a facility in Chennai, India to HCL Technologies.  Had they run to full term, the leases for the North American facilities that we terminated would have expired at various times through June 2007.  With the exception of the lease for the Parker, Colorado, facility, which terminated at the end of September 2002, we negotiated buyouts of all of the leases for these facilities during 2002.

We accrued various charges related to our lease terminations, including the following amounts in the quarter indicated: $1.17 million in the second quarter of 2001, $175,000 in the fourth quarter of 2001, $1.34 million in the first quarter of 2002, and $1.19 million in the second quarter of 2002.  As a result, future obligations for our office leases have decreased to approximately $1.85 million as of December 31, 2002, including $850,000 owed for lease termination settlements to be paid in 2003.  This is a decrease of approximately $11.06 million or 86% from the approximately $12.91 million of future facility obligations that we were responsible for as of December 31, 2001.

Further information regarding our lease termination agreements for facilities is contained in Note 7 to the consolidated financial statements included in this Annual Report on Form 10-K.

Additional information about our remaining 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.  The following is a summary of our current legal proceedings.

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On August 5, 2002, our former president and CEO, Doug Holden, notified us that he believes we breached his severance agreement with us following the separation of his employment.  Mr. Holden has requested continued payroll and benefits and continued vesting of stock options for six months from June 27, 2002, the date of his separation.  Mr. Holden’s annual salary at the time of his separation was $240,000. Mr. Holden has offered to resolve this matter for $120,000, plus the value of his benefits and continued vesting of his options.  We believe that we have valid defenses to Mr. Holden’s claims and/or that Mr. Holden is not entitled to the items he is requesting.  The timing and ultimate resolution of Mr. Holden’s claims are uncertain at this time.

We are also subject to other various legal proceedings and claims that we do not believe are material either separately or in the aggregate.

In addition to these matters, we settled other actual or threatened legal proceedings during 2002.  These settlements were discussed in our quarterly reports on Form 10-Q for the quarters ended June 30 and September 30, 2002.  The settlements discussed in the September 30 quarterly report include the items described below.

On March 13, 2003, we reached an agreement with Key Equipment Finance, to terminate our lease for office furniture and settle related litigation.  Under the agreement, we will pay a total of $145,000 in various installment payments from the settlement date through December 2003.  Key had previously filed a complaint against us in Hennepin County District Court in Minneapolis, Minnesota alleging that we had breached leases for office furniture.  This action was dismissed with prejudice upon settlement.

On October 10, 2002, we reached an agreement with Army Corps Operating Associates (“Army Corps”), to terminate our lease for a facility in St. Paul, Minnesota, and settle related litigation.  Under the termination and release for this facility, we will pay a total of $500,000 in various installment payments from October 2002 through September 2003.  As of March 15, 2003, we have paid $225,000 of the settlement amount.

On October 10, 2002, we reached an agreement with WTA Campbell Technology Park LLC (“WTA”), to terminate our lease for a facility in Campbell, California, and settle related litigation.  Under the termination and release for this facility, we will pay a total of $729,300 in various installment payments from October 2002 through August 2003.  As of March 15, 2003, we have paid $411,000 of the settlement amount.

On September 27, 2002, we entered into a settlement agreement with a furniture lessor, Fidelity Equipment Leasing, that had threatened to bring an action against us for an alleged breach of five equipment leases.  We agreed to pay a total of $120,000 from September 2002 through April 2003 in exchange for termination of the lease and a release of Fidelity’s claims.  As of March 15, 2003, we have paid $105,000 of the settlement amount.

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 2002.

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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 under the symbol “ZMBA.”  As of July 1, 2002, our stock began trading on the Over-The-Counter Bulletin Board (“OTC BB”).

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.

	High		Low
2001
First Quarter	$	4.00	$	1.61
Second Quarter	1.99		0.77
Third Quarter	1.20		0.42
Fourth Quarter	0.62		0.34
2002
First Quarter	$	0.70	$	0.29
Second Quarter	0.63		0.17
Third Quarter	0.34		0.06
Fourth Quarter	0.25		0.06

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 21, 2003, the last reported sale price of our common stock on the OTC BB was $0.20.  As of March 21, 2003, we had approximately 5,600 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)

	2002			2001			2000			1999			1998
Revenues:
Professional services	$	10,184		$	33,302		$	41,740		$	29,030		$	9,373
Reimbursable expenses	915			3,486			4,426			2,489			592
Total revenues	11,099			36,788			46,166			31,519			9,965
Costs and expenses:
Project and personnel costs	9,366			20,036			20,549			15,225			4,513
Reimbursable expenses	915			3,486			4,426			2,489			592
Sales and marketing	1,750			5,824			5,791			2,695			2,187
General and adminsistrative	7,291			14,503			14,624			9,435			3,638
Restructuring charges and non-recurring items	3,321			2,188			753			—			—
Research and development	—			—			—			—			1,069
Amortization of intangibles	—			231			2,881			3,771			936
Loss from operations	(11,544		)	(9,480		)	(2,858		)	(2,096		)	(2,970		)
Other income (expense), net	4,931			(49		)	182			(10		)	188
Net loss	$	(6,613	)	$	(9,529	)	$	(2,676	)	$	(2,106	)	$	(2,782	)
Net loss per share - basic and diluted	$	(0.17	)	$	(0.28	)	$	(0.08	)	$	(0.07	)	$	(0.10	)
Weighted average common shares outstanding - basic and diluted	38,419			33,568			31,572			30,628			26,792

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CONSOLIDATED BALANCE SHEET DATA (as of December 31)

(In thousands)

	2002			2001			2000		1999		1998
Cash, cash equivalents and short - term investments	$	549		$	1,326		$	4,843	$	7,973	$	3,054
Working capital (deficit)	(2,635		)	(45		)	7,143		6,707		4,173
Total assets	2,821			7,668			16,513		16,511		14,383
Long-term debt, less current	164			194			469		816		1,333
Total stockholders’ equity (deficit)	(2,330		)	2,088			9,062		10,251		11,196

Quarterly Financial Information (Unaudited)

(In thousands, except per share data)

	March 31, 2001			June 30, 2001			September 30, 2001			December 31, 2001
Revenues	$	13,083		$	9,160		$	8,203		$	6,213
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		)

	March 31, 2002			June 30, 2002			September 30, 2002			December 31, 2002
Revenues	$	3,235		$	2,513		$	2,617		$	2,734
Operating loss	(5,279		)	(4,641		)	(1,255		)	(370		)
Net income (loss)	(5,336		)	(2,042		)	(1,038		)	2,173
Net income (loss) per share:
Basic	(0.14		)	(0.05		)	(0.03		)	0.05
Diluted	(0.14		)	(0.05		)	(0.03		)	0.05

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

Overview

ZAMBA Corporation is a premier customer care services company.  We help our clients be more successful in: acquiring, servicing, and retaining their customers.  We work with our clients to help them 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 expertise and experience, we have created solutions that we believe address each aspect of a customer-centric, including strategy, marketing and analytics, content and commerce, contact center, field sales, field service and enterprise integration.  We also own approximately 12% 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 of our directors, Dixon Doll, is also a director and a shareholder of NextNet Wireless, Inc.  Additionally, another director of Zamba, Sven Wehrwein, is a consultant for NextNet.

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.

We incurred significant losses and negative cash flows from operations during the year ended December 31, 2002.  We also had a negative working capital of $2.64 million and a stockholders’ deficit of $2.33 million at December 31, 2002.  To fund operations we raised $9.40 million in funding in 2002 and the first quarter of 2003.  This is discussed in more detail in the Liquidity and Capital Resources section of this report.

Restructuring Charges and Non-Recurring Items

We incurred unusual charges in the first and second quarters of 2002 that, in the aggregate, were equivalent to approximately 30% of our 2002 revenue.  In the first quarter of 2002, we incurred unusual charges of $1.69 million for facility and employment matters, and in the second quarter of 2002, we incurred unusual charges of $1.64 million for facility and non-cash compensation matters.  Included in the first quarter charges was a  $1.34 million charge related to the leases for our Campbell, California, and Colorado Springs, Colorado, facilities, and included in the second quarter charges this amount was a $1.19 million charge for facility closings and lease termination costs.  The second quarter facility charges included $190,000 for closing our Boston, Massachusetts, facility, $290,000 for reducing the amount of space we occupy in Minneapolis, Minnesota, and $713,000 for increasing the accrual for terminating our St. Paul, Minnesota and Campbell, California facilities to amounts consistent with buy-out offers made by our landlords.   We subsequently reached termination agreements with our St. Paul and Campbell landlords.  Upon completion of the termination payments to our St. Paul and Campbell landlords during the third quarter of 2003, we expect to realize annual savings of approximately $2.8 million related to all of the facility terminations and reductions described above.  We also incurred a $350,000 charge during the first quarter of 2002 for severance pay relating to the reduction in headcount, including the separation of three vice presidents, which have resulted in annualized savings of approximately $3.5 million.  The second quarter unusual charge also included a $443,000 non-cash compensation charge arising out of the exercise

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by Paul Edelhertz of his right to assign to us an aggregate of 250,000 shares of our common stock in exchange for our cancellation of a promissory note issued to us by Mr. Edelhertz bearing a principal balance of $500,000 and accrued interest through the date of cancellation of $43,250.  This transaction relates to an agreement dated December 26, 2000, as amended on August 2, 2001. Mr. Edelhertz is a member of our board of directors and was our president and CEO from October 1998 through October 2000 and a vice president from August 1996 through October 1998.

We also incurred restructuring and unusual charges in 2001 and 2000.  We undertook a restructuring action in the second quarter of 2001, when we recorded a restructuring charge of $2.19 million.  We made other headcount reductions in the third and fourth quarters of 2001, and took further cost-reduction measures in the first and second quarters of 2002, as described above.  Our restructuring charge in the second quarter of 2001 represented approximately 6% of our revenue for 2001, and was composed of $777,000 for severance payments, $123,000 for other employee-related costs (including continued medical benefits for the terminated employees), $1.173 million for facility closings and other lease termination costs, $87,000 to resolve 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.  The facilities portion of the restructuring charge in the second quarter of 2001 includes new and additional lease termination costs and other expenses associated with our decisions to consolidate our operations and close unproductive or duplicative office locations in St. Paul, Minnesota and Pleasanton and Carlsbad, California.

Non-recurring charges of $753,000 were recorded in 2000. This represents approximately 2% of the revenue for 2000.  The items consist of severance expenses for senior management departures, 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.

Restructuring activities through December 31, 2002, were as follows:

	Facility Closings and Lease Termination Costs			Severance and Other Employee Related Costs			Other			Total
Fourth Quarter 2000 Provision	$	240,000		$	307,000		$	206,000		$	753,000
2000 Utilized	—			(137,000		)	(206,000		)	(343,000		)
Balance as of December 31, 2000	240,000			170,000			—			410,000
Second Quarter 2001 Provision	1,173,000			900,000			115,000			2,188,000
Additional facility related accruals in the fourth quarter of 2001	175,000			—			—			175,000
2001 Utilized	(786,000		)	(1,070,000		)	(115,000		)	(1,971,000		)
Balance as of December 31, 2001	802,000			—			—			802,000
First Quarter 2002 Provision	1,335,000			350,000			—			1,685,000
Second Quarter 2002 Provision	1,193,000			—			443,000			1,636,000
Additional severance related accruals in the second quarter of 2002	—			100,000			—			100,000
2002 Utilized	(1,804,000		)	(315,000		)	(443,000		)	(2,562,000		)
Balance as of December 31, 2002	$	1,526,000		$	135,000		$	—		$	1,661,000

We expect to pay approximately $1.49 million of the balance from these restructuring activities in 2003, $85,000 in 2004 and $85,000 in 2005.

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Results of Operations

Year Ended December 31, 2002, Compared to Year Ended December 31, 2001

Revenues

Revenues decreased approximately 70% to $11.1 million in 2002 compared to $36.8 million in 2001. Revenues before reimbursement of expenses decreased approximately 69% to $10.2 million in 2002 compared to $33.3 million in 2001.  This decrease was due principally to the continued significant reduction in the demand for information technology consulting services, which is the result of a general slowdown in the economy. Many companies have either delayed decisions on information technology consulting projects, or cancelled the projects altogether, resulting in an industry-wide decrease in services revenue. We are also experiencing strong downward pricing pressures, which is adversely impacting our revenue.

Project and Personnel Costs

Project costs consist primarily of payroll and payroll related expenses for personnel dedicated to client assignments and is directly associated, and varies with, the level of client services being delivered.  These costs represent the most significant expense we incur in providing our services.  Project costs were $9.4 million, or 84% of net revenues, in 2002, compared to $20.0 million, or 54% of net revenues, in 2001.  The decrease in project costs between these periods was due primarily to the decrease in our headcount from 122 billable consultants as of December 31, 2001, to 44 billable consultants as of December 31, 2002.  However, these costs represented an increased percentage of our overall revenue in 2002, because our revenue decreased at a greater rate than we reduced project and personnel costs.  Additionally, we are experiencing strong downward pricing pressures, which is not only adversely impacting our revenue as described above, but also our gross margins.

Reimbursable Expenses

Reimbursable expenses consist of out-of-pocket expenses incurred while providing services that are reimbursed by our clients. Pursuant to Financial Accounting Standards Board Staff Announcement (Topic No. D-103), which was effective for reporting periods beginning after December 15, 2001, reimbursable expenses are separate line items in both revenue and cost of revenue. Prior to implementation of this Announcement, we had accounted for reimbursable expenses by offsetting the amounts we were paid against project and personnel costs.  Reimbursable expenses decreased approximately 74% to $915,000 in 2002 compared to $3.5 million in 2001. The decrease is due to the overall decline in revenue and services performed during the same time period.

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 $1.8 million, or 16% of net revenues in 2002, compared to $5.8 million, or 16% of net revenues, in 2001. The decrease in dollar terms between these periods was due to a reduction in the number of sales and marketing personnel, as well as lower commission expenses resulting from the decrease in revenue.

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 $7.3 million, or 66% of net revenues, in 2002, compared to $14.5 million, or 39% of net revenues, in 2001.  The increase as a percentage of revenue was primarily due to revenue being much lower than anticipated in 2002, along with not being able to reduce our fixed costs accordingly.  The decrease in the dollar amount was due to our many cost savings initiatives.  Salaries and related payroll taxes and benefits decreased by $2.56 million in 2002 as compared

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to 2001 due to a decrease in the number of general and administrative personnel from 28 at December 31, 2001, to 15 at December 31, 2002.  Outside services costs decreased by $740,000 in 2002 as compared to 2001, mainly due to recruiting fees paid for new hires in 2001.  Phone and network charges decreased by $640,000 in 2002 as compared to 2001, mainly due to rate negotiations and office closures.  Office rent decreased $630,000 in 2002 as compared to 2001 due to lease buyouts in 2002. Bad-debt expense decreased by $400,000 in 2002 as compared to 2001, mainly due to having no large bad-debt write-offs in 2002.  Travel and entertainment costs decreased by $380,000 in 2002 as compared to 2001, mainly because we had fewer employees and undertook cost-savings initiatives.  Equipment rent decreased by $310,000 in 2002 as compared to 2001 due to buyouts of some of our equipment leases during 2002.

Amortization of Intangibles

Amortization of intangibles was $0 in 2002 compared to $231,000 in 2001.  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 were fully amortized as of December 31, 2001.

Gain on Sale of NextNet Shares

We realized a gain on the sale of a portion of our investment in NextNet of $5.22 million in 2002.  We did not sell any of our NextNet shares in 2001. Our 2002 gain represents the proceeds from sales of approximately 1.1 million shares of our Series A Preferred Stock in NextNet to various parties, which are more fully described in Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K.

Interest Income

Interest income was $12,000 in 2002 compared to $139,000 in 2001.  The decrease is interest income is primarily due to our having significantly smaller balances of cash and investments during 2002 in comparison to 2001.

Interest Expense

Interest expense in 2002 was $280,000 compared to $188,000 in 2001.  The increase in interest expense is due to our increased borrowing needs in 2002, increased interest rates under our accounts receivable funding agreement, which was signed in July 2002, and the predecessor line of credit facility, and higher amortization of issuance costs related to the accounts receivable funding agreement and the credit facility.

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, 2002, we had approximately $87 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.

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

Net Revenues

Revenues decreased approximately 20% to $36.8 million in 2001 compared to $46.2 million in 2000. Revenues before reimbursement of expenses decreased approximately 20% to $33.3 million in 2001 compared to $41.7 million in 2000.  This decrease was due principally to the continued significant reduction in the demand for information technology consulting services, which is the result of the general slowdown in the economy. Many companies have either delayed decisions on information technology consulting projects, or cancelled the projects altogether, resulting in an industry-wide decrease in services revenue. We are also experienced strong downward pricing pressures, which adversely impacted our revenue.

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 approximately 54% of revenues, in 2001, compared to $20.5 million, or approximately 45% of revenues, in 2000.  The increase in the percentage of costs compared to revenues was primarily from decreased revenues due to a significant reduction in demand for information technology consulting services in 2001. Further, our revenue decreased at a greater rate than we reduced project and personnel costs, resulting in project costs being an increased percentage of our overall revenues.

Reimbursable Expenses

Reimbursable expenses consist of out-of-pocket expenses incurred while providing services that are reimbursed by our clients. Reimbursable expenses decreased approximately 21% to $3.5 in 2001 compared to $4.4 million in 2000. The decrease is due to the overall decline in revenue and services performed during the same time period.

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 approximately 16% of net revenues in 2001, compared to $5.8 million, or approximately 13% 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 approximately 39% of revenues, in 2001, compared to $14.6 million, or 32% 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 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

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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 were fully amortized as of December 31, 2001.

Interest Income

Interest income was $139,000 in 2001 compared to $251,000 in 2000.  The decrease in interest income is primarily due to our having significantly smaller balances of cash and investments during 2001 in comparison to 2000.

Interest Expense

Interest expense in 2001 was $188,000 compared to $69,000 in 2000.  The increase in interest expense is due to establishing, and using a line of credit with Silicon Valley Bank in 2001.

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.

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 are 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

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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.  We have binding contractual agreements with our customers to support our revenue.

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-off rates, customer credit-worthiness, current economic trends and changes in our customer payment terms.  If we have information that the customer may have an 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 $662,000, net of allowance for doubtful accounts of $144,000, as of December 31, 2002.

Holdings in NextNet Wireless, Inc.  On September 21, 1998, we transferred our “NextNet” wireless data technology to an entity now known as “NextNet Wireless, Inc.”, and certain of our employees became NextNet employees.  In exchange for this technology, we received an equity stake in NextNet Wireless.  We originally recorded our NextNet holdings at $0 because it was uncertain whether we would ever realize any value from our holdings.

We have accounted for our NextNet holdings using the equity method of accounting because we have “significant influence” (usually defined as owning 20% or more of the outstanding voting stock, and may also include other factors, such as the level of representation the equity holder has on the Board of Directors of the issuing company) over NextNet’s operations.  The equity method requires us to recognize our proportionate share of income and losses from NextNet’s operations, and to make equivalent adjustments to the valuation of our holdings, provided that losses are not to be recognized after the valuation of our holdings are written down to $0.  Because the original basis of the investment was $0, and because NextNet has incurred losses since its inception, we have not recognized any of the losses by NextNet.  Our NextNet holdings continue to be valued at $0 as of December 31, 2002.

If we did not have “significant influence” over NextNet’s operations, and NextNet did not have a “readily determinable fair value,” then we would account for our NextNet holdings using the cost method of accounting (investment carried at the original cost basis), which would result in the same valuation of $0 as we currently have, because we had expensed all amounts related to NextNet before NextNet Wireless was formed.  However, if we did not have “significant influence” over NextNet’s operations, but NextNet did have a “readily determinable fair value,” then we would account for our NextNet holdings at the then fair value.  Because our holdings now represent less than 20% of the outstanding voting stock, we will no longer have significant influence over NextNet’s operations.  NextNet is not a publicly traded company, so it does not have a readily determinable fair value.  Therefore we will continue to value our NextNet

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holdings at our original cost basis of $0.  “Readily determinable fair value” is defined under FASB Statement No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, (SFAS 115), as existing when sales prices or bid-and-asked quotations are currently available on a securities exchange registered with the SEC or in the over-the-counter market.

As described in Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K, we received approximately $5.22 million from various parties for selling a portion of our NextNet holdings in 2002.

We do not have any obligation to provide future funding to NextNet. We owned approximately 1.3 million shares and 2.4 million shares of NextNet Series A Preferred Stock as of December 31, 2002 and 2001, respectively.  Our ownership of NextNet also decreased by approximately 177,000 shares of Series A Preferred Stock in the first quarter of 2003 from sales to two private investors totaling $750,000.  Of our remaining shares, we have placed an aggregate of 583,333 in an escrow account as collateral for our loan from Entrx Corporation.  In addition, we issued a warrant to an investor affiliated with a prior purchaser of NextNet shares from us, to purchase 125,000 additional shares of our Series A Preferred Stock in NextNet from us at $6.00 per share, any time prior to the close of business on May 17, 2004.

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, 2002, we had approximately $549,000 in cash and cash equivalents compared to $1.33 million at December 31, 2001.  As of December 31, 2002, we had a negative working capital of $2.64 million, and a stockholder’s deficit of $2.33 million.

Cash used in operating activities was $8.4 million for the year ended December 31, 2002, and resulted primarily from an overall net loss, not including our gains on sales of NextNet shares, of approximately $11.8 million, offset by an increase in accrued expenses of $925,000, a decrease in accounts receivable of $900,000, and a decrease in notes receivable of $535,000. 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 provided by investing activities was $5.4 million for the year ended December 31, 2002, and resulted primarily from proceeds from sales of a portion of our NextNet shares.  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 provided by financing activities was $2.2 million for the year ended December 31, 2002, and consisted primarily of proceeds from sale of common stock of $1.7 million and proceeds from a short-term loan of $1.0 million, but was partially offset by a decrease in the line of credit balance of $802,000.  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.

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Future payments due under debt and lease obligations, as of December 31, 2002, are as follows (in thousands):

Year Ending December 31,	Bank Line Of Credit		Short - Term Loan		Notes Payable		Non Cancelable Operating Leases		Accrued Lease Settlements		Total
2003	$	298	$	1,000	$	266	$	944	$	938	$	3,446
2004					164		747		—		911
2005					—		388		—		388
Total	$	298	$	1,000	$	430	$	2,079	$	938	$	3,807

We have a loan agreement, as amended, with Entrx Corporation (“Entrx”), under which Entrx agreed to lend us up to $1.75 million.  We received the first advance of $1 million on November 4, 2002 and we received $750,000 from Entrx in the first quarter of 2003.  Entrx must elect, at any time on or before March 31, 2003, to convert all or part of the outstanding advances into shares of Series A Preferred Stock we hold in NextNet at $6.00 per share.  This conversion price is subject to downward adjustment through June 30, 2003, if NextNet or Zamba sell NextNet shares at a lower per share price, assuming that all shares are converted to NextNet common stock.  Further, if we default under the loan agreement, the per share conversion price of the Series A Preferred Stock we hold in NextNet will be reduced to $3.00 per share, unless there is at the same time a default under the loan agreement by Entrx.  In connection with the loan agreement, we also entered into a Pledge and Escrow Security Agreement with Entrx pursuant to which we placed in escrow a stock certificate for an aggregate of 583,333 shares of Series A Preferred Stock in NextNet as security for the loan through June 30, 2003.

On February 17, 2003, we entered into stock purchase agreements to sell 125,000 shares of our Series A Preferred Stock in NextNet to  two private investors at $6.00 per share, for a total of $750,000.  We received the full amount on February 17, 2003.  This investor group may also receive more of our NextNet shares if, at any time prior to March 31, 2003, NextNet sells any preferred shares for an aggregate purchase price equal to or in excess of Two Hundred Fifty Thousand Dollars ($250,000) at a per share purchase price that is less than $6.00 per share.  In such event, we will provide these investors with an amount of additional NextNet shares that causes the per share purchase price paid to be equivalent to the lower per share price of the subsequent sale.  In accordance with this provision, we provided these two investors with an additional 52,305 shares in March 2003.  Also in connection with this sale, we issued a warrant to a third party affiliated with a prior purchaser of NextNet shares to purchase 125,000 additional shares of our Series A Preferred Stock in NextNet from us at $6.00 per share, any time prior to the close of business on May 17, 2004.

We partly fund our operations through an Accounts Receivable Purchase Agreement with Silicon Valley Bank.  We entered into this agreement on July 29, 2002.  This agreement entitles us to borrow up to a maximum of $2.0 million based on eligible receivables, and is secured by virtually all of our assets.  The balance outstanding under this line of credit was $298,000 at December 31, 2002.  Based on eligible receivables, an additional $325,000 was available for borrowing at December 31, 2002.  Prior to July 29, 2002, we maintained a line of credit with Silicon Valley Bank. Although there are no financial covenants in the new agreement with Silicon Valley Bank, the bank may still declare default in certain circumstances, including our default under any leases or contracts.

We believe that our existing cash and cash equivalents at December 31, 2002, in addition to cash we have received subsequent to December 31, 2002 under our loan agreement with Entrx Corporation and from the sale of shares of Series A Preferred Stock in NextNet, as well as cash we obtain on a regular basis under our Accounts Receivable Purchase Agreement with Silicon Valley Bank, will be sufficient to meet our working capital and capital expenditure requirements through at least December 31, 2003.  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 remaining investment in NextNet.

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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.  Previously, we classified these out-of-pocket expense reimbursements as a reduction of project and personnel costs.  This Staff Announcement was effective for financial reporting periods beginning after December 15, 2001, and accordingly, we implemented it on January 1, 2002.  We adjusted revenue for all periods reported to include out-of-pocket expense reimbursements.  This change in classification had no effect on current or previously reported net income (loss) or earnings (loss) per share.

In June 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities.”  SFAS No. 146 supersedes EITF No. 94-3.  The principal difference between SFAS No. 146 and EITF No. 94-3 relates to when an entity can recognize a liability related to exit or disposal activities.  SFAS No. 146 requires a liability be recognized for a cost associated with an exit or disposal activity when the liability is incurred.  EITF No. 94-3 allowed a liability related to an exit or disposal activity, to be recognized at the date an entity commits to an exit plan.  The provisions of SFAS No. 146 are effective on January 1, 2003. Accordingly, we will apply this standard to all exit or disposal activities initiated after January 1, 2003.

Controls and Procedures

In order to ensure that the information we must disclose in our filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and principal financial officer have reviewed and evaluated our disclosure controls and procedures as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of a date within 90 days prior to the filing date of this report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective in bringing to their attention on a timely basis material information relating to Zamba required to be included in our periodic filings under the Exchange Act.

Since the Evaluation Date, there have not been any significant changes in our internal controls, or in other factors that could significantly affect these controls subsequent to the Evaluation Date.

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 $430,000, our accounts receivable purchase agreement of $298,000, and our note payable to Entrx of $1.0 million at December 31, 2002.  As discussed in Note 10 to the consolidated financial statements, the annualized interest rates charged on our debt obligations range from 8.0% to 10.0%, and the obligations mature monthly and quarterly through December 2003.  As discussed in Note 8 to our consolidated financial statements, the interest rate charged on borrowings against our accounts receivable purchase agreement is 1% per month, plus an administrative fee of 0.25%. As discussed in Note 9 to the consolidated financial statements, the interest rate charged on the note payable to Entrx is 8%, and is payable monthly.  On February 19, 2003, this loan agreement was amended.  A second advance of $750,000 was paid in the first quarter of 2003 and the obligation of Entrx to pay a third installment was waived.  Entrx also waived its rights to convert all outstanding advances into shares of our common stock, and terminated its option to purchase additional shares of our NextNet stock.  Entrx also agreed to waive interest charges after December 2003.  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 market interest rates should not have a material effect on our financial condition or results of operations.

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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:

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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 5, 2003, 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.

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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, 2002 and 2001

•Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000

•Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000

•Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2002, 2001 and 2000

•Notes to Consolidated Financial Statements

•Supplemental Schedule – Schedule II Valuation and Qualifying Accounts

•Independent Auditors’ Report

(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

3.01	Registrant’s Fifth Amended and Restated Certificate of Incorporation, dated August 3, 2001 (Incorporated by reference to Exhibit 3.01 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2001).
3.02	Certificate 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 Current Report on Form 8-K that was filed with the Securities and Exchange Commission on September 15, 1994, and incorporated herein by reference).
3.03	Registrant’s Bylaws, as amended (Filed as an Exhibit to the Registrant’s Current Report on Form 8-K that was filed with the Securities and Exchange Commission on September 15, 1994, and incorporated herein by reference).
4.01	Form 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).
4.02	Rights Agreement dated September 12, 1994, and amended on December 20, 2002, 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, to Exhibit 4.01 to the Registrant’s Form 10-Q for the quarterly period ended June 30, 2002, and to Exhibit 1 to the Registrant’s filing on Form 8-A/A on December 20, 2002).
4.03	Amendment No. 1 to Rights Agreement dated January 29, 2002, by and among Zamba Corporation and Wells Fargo Bank Minnesota, N.A. f/k/a Norwest Bank Minnesota, N.A., as Rights Agent (Incorporated by reference to Exhibit 4.02 to

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	the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002).
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).
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 Annual Report on Form 10-K for the year ended December 31, 1997).**
10.03	Registrant’s 1993 Directors Stock Plan, as amended, and related documents, as amended through November 14, 1995 (Incorporated by reference to Exhibit 10.03to the Registrant’s Annual Report on 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 Annual Report on 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	Lease 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 Annual Report on Form 10-K for the year ended December 31, 1998).
10.09	Lease 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 Annual Report on Form 10-K for the year ended December 31, 1998).
10.10*	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 Quarterly Report on Form 10-Q for the period ended June 30, 1999).
10.11*	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 Quarterly Report on Form 10-Q for the period ended June 30, 1999).

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10.12	Lease dated January 4, 2000, between the Registrant and WTA Campbell Technology Park LLC (Incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1999).
10.13	Work 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 Annual Report on Form 10-K for the year ended December 31, 1999).
10.14	Lease 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 Quarterly Report on Form 10-Q for the period ended June 30, 2000).
10.15	Lease 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 Quarterly Report on Form 10-Q for the period ended June 30, 2000).
10.16*	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).
10.17*	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).
10.18*	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).
10.19	Loan 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 Annual Report on Form 10-K for the year ended December 31, 2000).
10.20	Registration Rights Agreement dated February 27, 2001, between the Registrant and Silicon Valley Bank (Incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000).
10.21	Warrant 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 Annual Report on 10-K for the year ended December 31, 2000).
10.22	Stock 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).
10.23*	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).

24

10.24*	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 Quarterly Report on Form 10-Q for the period ended June 30, 2001).
10.25	Amendment 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 Quarterly Report on Form 10-Q for the period ended June 30, 2001).
10.26	Warrant 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 Quarterly Report on Form 10-Q for the period ended June 30, 2001).
10.27	Amendment to Loan Document as of December 31, 2001, between Registrant and Silicon Valley Bank (Incorporated by reference to Exhibit 10.44 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.28	Warrant to Purchase Stock dated December 31, 2001, between the Registrant and Silicon Valley Bank (Incorporated by reference to Exhibit 10.45 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.29	Registration Rights Agreement dated December 31, 2001, between the Registrant and Silicon Valley Bank (Incorporated by reference to Exhibit 10.46 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.30	Stock 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).
10.31	Warrant 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).
10.32	Form 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).
10.33	Form 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).
10.34	Third Amendment Lease dated February 6, 2002, between Zamba Corporation and Square 24 Associates (Incorporated by reference to Exhibit 10.51 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.35	Sublease Consent and Agreement dated February 7, 2002, between Zamba Corporation, Square 24 Associates and Park Place Associates (Incorporated by

25

	reference to Exhibit 10.52 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.36	Sublease Agreement dated January 9, 2002, between Zamba Corporation and Park Place Capital Corporation (Incorporated by reference to Exhibit 10.53 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.37	Sublease Agreement dated February 19, 2002, between Zamba Corporation and Purlight LLC (Incorporated by reference to Exhibit 10.54 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.38	Strategic 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).
10.39	Stock 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).
10.40	Warrant 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).
10.41	Stock 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).
10.42	Stock Purchase Agreement dated March 25, 2002, between Zamba Corporation and Joseph B. Costello (Incorporated by reference to Exhibit 10.59 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.43	Amendment No. 1 to the Stock Purchase Agreement date February 26, 2002, dated March 25, 2002, between Zamba Corporation and Joseph B. Costello (Incorporated by reference to Exhibit 10.60 to the Registrant’s Form Annual Report on 10-K for the year ended December 31, 2001).
10.44	Stock Purchase Agreement between Jafco America Ventures, Inc. and Zamba Corporation, dated April 30, 2002 (Incorporated by reference to Exhibit 10.01 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30,2002).
10.45	Lease Termination Agreement between EOP-England Executive Park, LLC and Zamba Corporation, dated May 31, 2002 (Incorporated by reference to Exhibit b10.01 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002)

26

10.46	Stock Purchase Agreement between Robert S. Colman Trust and Zamba Corporation, dated May 29, 2002 (Incorporated by reference to Exhibit 10.02 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002)
10.47	Stock Purchase Agreement between Doll Technology Investment Fund and Zamba Corporation, dated June 7, 2002 (Incorporated by reference to Exhibit 10.03 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002)
10.48	Stock Purchase Agreement between Doll Technology Affiliates Fund and Zamba Corporation, dated June 7, 2002 (Incorporated by reference to Exhibit 10.04 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002).
10.49	Stock Purchase Agreement between Doll Technology Side Fund L.P. and Zamba Corporation, dated June 7, 2002 (Incorporated by reference to Exhibit 10.05 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002)
10.50	Stock Purchase Agreement between Thomas Magne and Zamba Corporation, dated June 13, 2002 (Incorporated by reference to Exhibit 10.05 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002).
10.51	Zamba Corporation Second Amendment to Lease Agreement between Acky-Calhoun, LLC and Zamba Corporation, dated July 11, 2002 (Incorporated by reference to Exhibit 10.07 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002).
10.52	Accounts Receivable Purchase Agreement between Silicon Valley Bank and Zamba Corporation, dated July 29, 2002 (Incorporated by reference to Exhibit 10.08 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2002).
10.53	Stock Purchase Agreement between John T. Johnson and Zamba Corporation, dated August 9, 2002 (Incorporated by reference to Exhibit 10.01 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2002).
10.54	Stock Purchase Agreement between Bob Tallard and Zamba Corporation, dated August 9, 2002 (Incorporated by reference to Exhibit 10.02 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2002).
10.55	Stock Purchase Agreement between Herbert P. Koch and Zamba Corporation, dated August 13, 2002 (Incorporated by reference to Exhibit 10.03 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2002).
10.56	Stock Purchase Agreement between Brian Lawton and Zamba Corporation, dated August 19, 2002 (Incorporated by reference to Exhibit 10.04 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2002).

27

10.57	Settlement Agreement and Release between Fidelity Leasing, Zamba Corporation and Michael H. Carrel, dated September 24, 2002 (Incorporated by reference to Exhibit 10.06 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2002).
10.58	Settlement Agreement and Release by and between WTA Campbell Technology Park, LLC, and Zamba Corporation, dated October 9, 2002 (Incorporated by reference to Exhibit 10.07 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2002).
10.59	Lease Termination Agreement and Release, by and between Army Corps Centre Operating Associates, LP, a New Mexico Limited Partnership, a/k/a Army Corps Operating Associates, LP, a New Mexico Limited Partnership, successor-in-interest to CC Commercial LP (“Army Corps”), Zamba Corporation, a Delaware Corporation (“Zamba”) and ZCA Corporation, a Minnesota Corporation f/k/a Camworks, Inc. (“ZCA”), dated October 10, 2002 (Incorporated by reference to Exhibit 10.08 to the Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 2002).
10.60	Loan Agreement by and between Entrx Corporation and Zamba Corporation, dated November 5, 2002 (Incorporated by reference to the Registrant’s Current Report on Form 8-K dated November 5, 2002).
10.61*	Change in Control Employment and Severance Agreement between Norman D. Smith and Zamba Corporation, dated November 26, 2002.
10.62*	Change in Control Employment and Severance Agreement between Paul McLean and Zamba Corporation, dated January 14, 2003.
10.63	Settlement Agreement and Release between Todd Fitzwater and Zamba Corporation, dated January 27, 2003.
10.64	Stock Purchase Agreement between John Schwieters and Zamba Corporation, dated February 12, 2003.
10.65	Stock Purchase Agreement between John Schwieters and Zamba Corporation, dated February 12, 2003.
10.66	Stock Purchase Agreement between Joel Schwieters and Zamba Corporation, dated February 14, 2003.
10.67	Warrant to Purchase Shares of Series A Preferred Stock of NextNet Wireless, Inc. between Morgan Street Partners, LLC and Zamba Corporation, dated February 17, 2003.
10.68	Amendment No. 1 to Loan Agreement between Entrx Corporation and Zamba Corporation, dated February 19, 2003.
10.69	Settlement Agreement and Release between Key Equipment Finance and Zamba Corporation, dated March 13, 2003.
23.01	Consent of KPMG LLP.
24.01	Power of Attorney (included on signature page to this report).
99.01	Cautionary Statement Regarding Forward-Looking Statements.

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99.02	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*	Management contract or compensatory plan required to be filed as an exhibit to Form 10-K.

(b)  Reports on Form 8-K

On February 26, 2003, we filed a report on Form 8-K to report the following:

On February 26, 2003, we issued a press release in conjunction with Entrx Corporation to announce that we had received another $750,000 from Entrx Corporation under the financing arrangement that we had previously announced on November 5, 2002, and also received an additional $750,000 from third party purchasers of some of our shares of NextNet Wireless, Inc. Series A Preferred Stock.

(c)Exhibits - See Item 14 (a) (3).

(d)Financial Statement Schedules - See Item 14(a)(2).

29

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, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002, 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.

/s/ KPMG LLP

Minneapolis, Minnesota

January 22, 2003, except as to note 10, which is as of January 27, 2003, notes 2, 9, 11 and 18, which are as of February 19, 2003, and note 17, which is as of March 13, 2003

30

ZAMBA CORPORATION

CONSOLIDATED BALANCE SHEETS

December 31, 2002 and 2001

(In thousands, except share and per share data)

	2002			2001
ASSETS
Current assets:
Cash and cash equivalents	$	549		$	1,326
Accounts receivable, net	662			1,556
Unbilled receivables	470			608
Notes receivable	—			560
Notes receivable - related parties	—			310
Prepaid expenses and other current assets	507			737
Total current assets	2,188			5,097
Property and equipment, net	531			1,799
Restricted cash	—			471
Other assets	102			301
Total assets	$	2,821		$	7,668
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Line of credit	$	298		$	1,100
Note payable	1,000			—
Current installments of long-term debt	266			392
Accounts payable	584			1,059
Accrued expenses	2,593			2,490
Deferred revenue	57			101
Deferred gain on sale of investment	25			—
Total current liabilities	4,823			5,142
Long-term debt, less current installments	164			194
Other long-term liabilities	164			244
Commitments and contingencies (Notes 4 and 17)
Total liabilities	5,151			5,580
Stockholders’ equity (deficit) :
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, 38,822,679 and 35,007,063 issued and outstanding at December 31, 2002 and 2001, respectively	388			350
Additional paid-in capital	86,060			84,403
Note receivable from director	—			(500		)
Accumulated deficit	(88,778		)	(82,165		)
Total stockholders’ equity (deficit)	(2,330		)	2,088
Total liabilities and stockholders’ equity	$	2,821		$	7,668

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

31

ZAMBA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2002, 2001 and 2000

(In thousands, except share and per share data)

	2002				2001				2000
Revenues
Professional services	$	10,184			$	33,302			$	41,740
Reimbursable expenses	915				3,486				4,426
Total revenue	11,099				36,788				46,166
Costs and expenses:
Project and personnel costs	9,366				20,036				20,549
Reimbursable expenses	915				3,486				4,426
Sales and marketing	1,750				5,824				5,791
General and administrative	7,291				14,503				14,624
Restructuring charges and non-recurring items	3,321				2,188				753
Amortization of intangibles	—				231				2,881
Loss from operations	(11,544			)	(9,480			)	(2,858			)
Other income (expense):
Gain of sale of NextNet shares	5,199				—				—
Interest income	12				139				251
Interest expense	(280			)	(188			)	(69			)
Other income (expense), net	4,931				(49			)	182
Net loss	$		(6,613	)	$		(9,529	)	$		(2,676	)
Net loss per share - basic and diluted	$		(0.17	)	$		(0.28	)	$		(0.08	)
Weighted average common shares outstanding	38,419,440				33,567,564				31,571,549

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

32

ZAMBA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2002, 2001 and 2000

(In thousands)

	2002			2001			2000
Cash flows from operating activities:
Net loss	$	(6,613	)	$	(9,529	)	$	(2,676	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	438			987			3,916
Loss on disposal of fixed assets	(2		)	18			63
Provision for bad debts	20			423			965
Non-cash compensation – forgiveness of director loan	443			—			—
Gain on sale of NextNet shares	(5,199		)	—			—
Changes in operating assets and liabilities:
Accounts receivable	899			4,027			(3,164		)
Unbilled receivables	137			(182		)	(152		)
Notes receivable	535			1,276			(1,979		)
Prepaid expenses and other assets	430			(75		)	(590		)
Accounts payable	(410		)	(530		)	510
Accrued expenses	925			(571		)	277
Deferred revenue	(44		)	(1,379		)	717
Net cash used in operating activities	(8,441		)	(5,535		)	(2,113		)
Cash flows from investing activities:
Purchase of property and equipment	(115		)	(748		)	(1,433		)
Proceeds from sale of NextNet shares	5,224			—			—
Notes receivable - related parties	310			45			(356		)
Proceeds from sale of property and equipment	4			—			—
Net cash provided by (used in) investing activities	5,423			(703		)	(1,789		)
Cash flows from financing activities:
Proceeds from line of credit, net	(802		)	1,100			—
Proceeds from note payable	1,000			—			—
Proceeds from exercises of options and warrants	13			57			984
Proceeds from sale of common stock	1,714			2,261			255
Proceeds from debt	—			—			113
Payments on debt	(155		)	(490		)	(426		)
Changes in restricted cash	471			(207		)	(154		)
Net cash provided by financing activities	2,241			2,721			772
Net decrease in cash and cash equivalents	(777		)	(3,517		)	(3,130		)
Cash and cash equivalents, beginning of year	1,326			4,843			7,973
Cash and cash equivalents, end of year	$	549		$	1,326		$	4,843
Supplemental Schedule of Disclosures of Cash Flow Information:
Cash paid during the year for interest	$	221		$	185		$	149

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

33

ZAMBA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Years ended December 31, 2002, 2001 and 2000

(In thousands, except share data)

	Common Stock					Additional Paid-In Capital			Note Receivable From Director			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares		Par Value
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
Exercise of stock options	30,018		—			13			—			—			13
Issuance of common stock	4,035,598		40			1,674			—			—			1,714
Put option exercise by director	(250,000	)	(2		)	(55		)	500			—			443
Amortization of Non-cash compensation	—		—			25			—			—			25
Net loss	—		—			—			—			(6,613		)	(6,613		)
Balances at December 31, 2002	38,822,679		$	388		$	86,060		$	—		$	(88,778	)	$	(2,330	)

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

34

ZAMBA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Business Description:

ZAMBA Corporation is a customer care services company.  We help our clients be more successful in acquiring, servicing, and retaining their customers.  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.  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. All inter-company 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.  Revenue also includes reimbursable expenses, as per Financial Accounting Standards Board (FASB) Staff Announcement, Topic No. D-103.

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 five 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.  The cost and accumulated depreciation relating to leasehold improvements in facilities that are terminated earlier than the original lease terms, are written off at the time of lease termination.  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.

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

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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 0, 5,045 and 2,730,584 assumed conversion shares for the years ended December 31, 2002, 2001 and 2000, 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.  Previously, we classified these out-of-pocket expense reimbursements as a reduction of project and personnel costs.  This Staff Announcement was effective for financial reporting periods beginning after December 15, 2001, and accordingly, we implemented this Staff Announcement on January 1, 2002.  We adjusted revenue for all periods reported to include out-of-pocket expense reimbursements.  This change in classification had no effect on current or previously reported net loss or loss per share.

In June 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities.”  SFAS No. 146 supersedes EITF No. 94-3.  The principal difference between SFAS No. 146 and EITF No. 94-3 relates to when an entity can recognize a liability related to exit or disposal activities.  SFAS No. 146 requires a liability be recognized for a cost associated with an exit or disposal activity when the liability is incurred.  EITF No. 94-3 allowed a liability related to an exit or disposal activity, to be recognized at the date an entity commits to an exit plan.  The provisions of SFAS No. 146 are effective on January 1, 2003. Accordingly, we will apply this standard to any exit or disposal activities initiated after January 1, 2003.

2.LIQUIDITY AND GOING CONCERN MATTERS:

We incurred significant losses and negative cash flows from operations during the year ended December 31, 2002, and continued to incur losses in the first two months of fiscal 2003.  We also had a negative working capital of $2.64 million and a stockholders’ deficit of $2.33 million at December 31, 2002.  To fund operations, we raised $9.40 million in funding in 2002 and the first quarter of 2003, as described below.  Our ability to continue as a going concern depends upon our ability to continue to access our line of credit facility, achieve sustained profitability and raise cash from further sales of our investment in NextNet Wireless, Inc.  The accompanying financial statements have been prepared on a going concern basis, which

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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.

To fund our operations, we received approximately $7.90 million in financing in 2002. This amount includes approximately $5.22 million in exchange for selling some of our NextNet Wireless, Inc. (“NextNet”) stock, a loan in the amount of $1 million (as described in the next paragraph), and an additional $1.68 million in exchange for selling some of our own common stock.

We received $750,000 in additional funding in the first quarter of 2003 from Entrx Corporation (“Entrx”), to fund our working capital needs.  This funding was through a loan agreement under which Entrx agreed to lend us up to $2.5 million in three separate advances.  We received the first advance of $1 million on November 4, 2002.  The second advance was to be made on December 15, 2002 and third advance was to be made on February 15, 2003, upon the achievement of certain prescribed business milestones by us.  This agreement was amended on February 19, 2003, and the obligation of Entrx to pay the third installment was waived.  See Note 9 for additional discussion.

We also received $750,000 on February 17, 2003, when we entered into stock purchase agreements with two private investors, which resulted in our transferring to them approximately 177,000 shares of our Series A Preferred Stock in NextNet.  In connection with this sale, we issued a warrant to an investor affiliated with a prior purchaser of NextNet shares from us to purchase 125,000 additional shares of our Series A Preferred Stock in NextNet from us at $6.00 per share, any time prior to the close of business on May 17, 2004.

We believe that our existing cash and cash equivalents at December 31, 2002, cash we have received subsequent to December 31, 2002 from Entrx and from the sale of a portion of our Series A preferred stock in NextNet, and cash that we can obtain under our Accounts Receivable Purchase Agreement with Silicon Valley Bank will be sufficient to meet our working capital and capital expenditure requirements through at least December 31, 2003.  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 remaining investment in NextNet.

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3.             SELECTED BALANCE SHEET INFORMATION:

(in thousands)	December 31, 2002			December 31, 2001
Accounts receivable, net:
Accounts receivable	$	806		$	1,739
Less allowance for doubtful accounts	(144		)	(183		)
Totals	$	662		$	1,556
Property and equipment, net:
Computer equipment	$	802		$	1,695
Furniture and equipment	286			614
Leasehold improvements	60			1,189
Totals	1,148			3,498
Less accumulated depreciation and amortization	(617		)	(1,699		)
Totals	$	531		$	1,799
Accrued Expenses:
Payroll related	$	175		$	242
Vacation	327			672
Restructuring costs/Accrued lease charges	1,526			627
Interest payable	20			17
Professional fees	313			325
Subcontractor fees	87			4
Other	309			847
Total	2,757			2,734
Other long term liabilities	164			244
Accrued expenses	$	2,593		$	2,490

4.             LEASE COMMITMENTS:

We maintain our corporate headquarters in Minneapolis, Minnesota under terms of a non-cancelable operating lease, which expires in December 2005.  This lease requires us to pay a pro rata share of the lessor’s operating costs.  We also lease executive offices in San Jose, California and Toronto, Ontario, both of which are under lease commitments of less than one year.  In addition to the office space leases, we also have non-cancelable operating leases for furniture and equipment.  The leases require us to provide security deposits.

Total rental expense, including a pro rata share of the lessor’s operating costs, were $2,607,884, $3,546,144 and $2,247,000, for the years ended December 31, 2002, 2001 and 2000, respectively.

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

Year Ending December 31,	Operating Leases
2003	$	944
2004	747
2005	388
Total	$	2,079

5.             NOTE RECEIVABLE:

As of December 31, 2001, we had a note receivable from a customer totaling $560,000.  The note carried an interest rate of 12.0% per annum and was paid in 2002.

6.             NOTES RECEIVABLE - RELATED PARTIES:

As of December 31, 2001, we had notes receivable - related parties totaling $310,000, representing amounts due from two employees. These notes were due in 2002, with interest at 9.0%, and were paid in 2002.

7.             RESTRUCTURING CHARGES AND NON-RECURRING ITEMS:

We incurred unusual charges in the first and second quarters of 2002 that, in the aggregate, were equivalent to approximately 30% of our 2002 revenue.  In the first quarter of 2002, we incurred unusual charges of $1.69 million for facility and employment matters, and in the second quarter of 2002, we incurred unusual charges of $1.64 million for facility and non-cash compensation matters.  Included in the first quarter charges was a  $1.34 million charge related to the leases for our Campbell, California, and Colorado Springs, Colorado, facilities, and included in the second quarter charges this amount was a $1.19 million charge for facility closings and lease termination costs.  The second quarter facility charges included $190,000 for closing our Boston, Massachusetts facility, $290,000 for reducing the amount of space we occupy in Minneapolis, Minnesota, and $713,000 for increasing the accrual for terminating our St. Paul, Minnesota and Campbell, California facilities to amounts consistent with buy-out offers made by our landlords.   We subsequently reached termination agreements with our St. Paul and Campbell landlords.  Upon completion of the termination payments to our St. Paul and Campbell landlords during the third quarter of 2003, we expect to realize annual savings of approximately $2.8 million.  We also incurred a $350,000 charge during the first quarter for severance pay relating to the reduction in headcount, including the separation of three vice presidents, which have resulted in annualized savings of approximately $3.5 million.  The second quarter unusual charge also included a $443,000 non-cash compensation charge arising out of the exercise by Paul Edelhertz of his right to assign to us an aggregate of 250,000 shares of our common stock in exchange for our cancellation of a promissory note issued to us by Mr. Edelhertz bearing a principal balance of $500,000 and accrued interest through the date of cancellation of $43,250.  This transaction relates to an agreement dated December 26, 2000, as amended on August 2, 2001. Mr. Edelhertz is a member of our board of directors and was our president and CEO from October 1998 through October 2000 and a vice president from August 1996 through October 1998.

We also incurred restructuring and unusual charges in 2001 and 2000.  We undertook a restructuring action in the second quarter of 2001, when we recorded a restructuring charge of $2.19 million.  We made other headcount reductions in the third and fourth quarters of 2001.  Our restructuring charge in the second quarter of 2001 was composed of $777,000 for severance payments, $123,000 for other employee-related costs (including continued medical benefits for the terminated employees), $1.173 million for facility closings and other lease termination costs, $87,000 to resolve a contract dispute with a vendor, and $28,000

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of other related restructuring charges.  No non-cash write-offs were incurred in connection with the restructuring charge.  The facilities portion of the restructuring charge in the second quarter of 2001 includes new and additional lease termination costs and other expenses associated with our decisions to consolidate our operations and close unproductive or duplicative office locations in St. Paul, Minnesota and Pleasanton and Carlsbad, California.

Non-recurring charges of $753,000 were recorded in 2000. The items consist of severance expenses for senior management departures, 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.

Restructuring activities through December 31, 2002, were as follows:

	Facility Closings and Lease Termination Costs			Severance and Other Employee Related Costs			Other			Total
Fourth Quarter 2000 Provision	$	240,000		$	307,000		$	206,000		$	753,000
2000 Utilized	—			(137,000		)	(206,000		)	(343,000		)
Balance as of December 31, 2000	240,000			170,000			—			410,000
Second Quarter 2001 Provision	1,173,000			900,000			115,000			2,188,000
Additional facility related accruals in the fourth quarter of 2001	175,000			—			—			175,000
2001 Utilized	(786,000		)	(1,070,000		)	(115,000		)	(1,971,000		)
Balance as of December 31, 2001	802,000			—			—			802,000
First Quarter 2002 Provision	1,335,000			350,000			—			1,685,000
Second Quarter 2002 Provision	1,193,000			—			443,000			1,636,000
Additional severance related accruals in the second quarter of 2002	—			100,000			—			100,000
2002 Utilized	(1,804,000		)	(315,000		)	(443,000		)	(2,562,000		)
Balance as of December 31, 2002	$	1,526,000		$	135,000		$	—		$	1,661,000

We expect to pay approximately $1.49 million of the balance in 2003, $85,000 in 2004 and $85,000 in 2005.

8.             ACCOUNTS RECEIVABLE PURCHASE AGREEMENT:

On July 29, 2002, we entered into an Accounts Receivable Purchase Agreement with Silicon Valley Bank to replace a prior revolving credit facility we had established with Silicon Valley Bank.  This agreement entitles us to borrow up to a maximum of $2.0 million based on eligible receivables, and is secured by virtually all of our assets.  Borrowings under this agreement bear interest at a monthly rate of 1% of the average daily balance outstanding during the period.  Additionally, on each reconciliation date, we pay an administrative fee equal to 0.25% of the face amount of each receivable purchased by Silicon Valley Bank during that reconciliation period.  Although there are no financial covenants in the new agreement with Silicon Valley Bank, they may still declare default in certain circumstances, including our default under any leases or contracts. Our alleged default under a lease for furniture as set forth more fully in Note 17 is technically an “Event of Default” under the Accounts Receivable Purchase Agreement.  Upon default, Silicon Valley Bank may elect from remedies including declaring all amounts paid to us under the agreement due and payable in full, or ceasing to buy receivables from us.  Silicon Valley Bank has not elected to enforce this provision.  If Silicon Valley Bank decides to enforce this provision, or otherwise does not purchase receivables from us, our ability to fund our operations could be materially harmed.  This facility expires on July 29, 2003.  The amount outstanding under this agreement was $298,000 at December 31, 2002.

The Accounts Receivable Purchase Agreement replaced a secured revolving credit facility that we established with Silicon Valley Bank on February 27, 2001, and amended on August 2, 2001 and December 31, 2001. The secured revolving credit facility entitled us to borrow up to a maximum of $5.0 million based

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on eligible collateral.  Borrowings under this line of credit bore interest at the bank’s prime rate plus 2.0%, and were payable monthly.  The amended agreement required, among other things, that we comply with minimum tangible net worth and profitability covenants. This facility was to expire on December 31, 2002, but was replaced by the Accounts Receivable Purchase Agreement.  Amounts outstanding under the revolving credit facility were converted to being outstanding under the Accounts Receivable Purchase Agreement.  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.

9.             NOTE PAYABLE:

On November 5, 2002, we entered into a loan agreement with Entrx Corporation (“Entrx”), under which Entrx agreed to lend us up to $2.5 million in three separate advances.  We received the first advance of $1 million in November 2002.  On February 19, 2003, this loan agreement was amended.  In connection with the amendment, we received the second advance of $750,000 but waived the third advance.  Entrx also waived its rights to convert all outstanding advances into shares of our common stock, and terminated an option under the original agreement to purchase additional shares of our NextNet stock.  Entrx also agreed to waive interest charges after December 2003.

The loan is in the form of a collateralized convertible note.  The loan is collateralized with shares of NextNet Wireless, Inc. stock owned by us. The loan is not repayable in cash, but at Entrx’s option, may be repaid by conversion at any time into shares of our NextNet Wireless stock at a conversion price that is the lesser of $6.00 per share or such lower initial per share price (on a common share equivalent basis, without giving effect to differences in rights or to anti-dilution provisions or any other purchase price adjustments set forth in the NextNet financing agreement) that NextNet agrees to receive for any sale of other preferred stock in an amount that is at least one million dollars ($1,000,000.00) before June 30, 2003.  Interest on this note is computed at 8% and is payable monthly.  Principal and accrued interest underthis note will be converted to NextNet stock on or before March 31, 2003.

Entrx also has the right to appoint one representative to become a member of our Board of Directors.

10.          LONG-TERM DEBT:

As part of a 1998 acquisition of QuickSilver, Inc., we issued $2.16 million in promissory notes payable.  Interest on the notes is computed at 7% to 10% of the outstanding balance and is due quarterly on the final day of each quarter, commencing December 31, 1999, and ending September 30, 2004.  Principal payments are due quarterly, in 16 installments.  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 2002, 2001 or 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.

We also had debt related to loan obligations from other acquisitions.  Loan payments were made monthly and consisted of principal and interest, which was computed at rates ranging between 8.5% and 10.0%.  The remainder of these obligations was paid in 2002.

Aggregate annual maturities of the long-term debt, subsequent to December 31, 2002, are as follows:

Year Ending December 31	Payments on Notes
	(in thousands)
2003	$	266
2004	164

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Approximately $423,000 of the remaining amount of this long-term debt is payable to one individual.  On January 27, 2003, we entered into an agreement with this individual to terminate the debt owed to him in exchange for a termination payment of $165,000 and a transfer of 16,667 shares of our Series A Preferred Stock in NextNet.  As a result, we will report an extraordinary gain on debt extinquishment of approximately $187,000 in the first quarter of 2003.  We will also report a gain on sale of NextNet shares of $71,000 upon transfer of the shares to this individual.

11.          NEXTNET:

On September 21, 1998, we transferred our “NextNet” wireless data technology to an entity now known as NextNet Wireless, Inc. (“NextNet”), and certain of our employees became NextNet employees.  In exchange for this technology, we received an equity stake in NextNet Wireless.  Our equity holdings are carried at $0 because of uncertainty surrounding our ability to realize value from them. We do not have any obligation to provide further funding for NextNet.

NextNet is 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. Another of our directors, Dixon Doll, is also a director and a shareholder of NextNet.  Additionally, another director of Zamba, Sven Wehrwein, is a consultant for NextNet.  Except as described herein, there have been no other relationships or business transactions between the two companies since January 1, 2000.

In the second, third and fourth quarters of 2002, we entered into several transactions with private investors in which we sold portions of our equity holdings in NextNet for an aggregate total of $5.22 million.  We have recognized a gain on sale our NextNet holdings in the amount of $5.20 million in 2002.  As of December 31, 2002, we have recorded $25,200 as a deferred gain on sale of investment.  We will report the gain on sale of investment during the first quarter of 2003, when the shares are transferred to the private investors.  Also, we have not yet received $46,000 from an agreed-to purchase of 7,667 of our shares of Series A Preferred Stock in NextNet.

We initially sold a small portion of our shares of Series A Preferred Stock in NextNet for $3.00 per share, but most of our sales were at a price of $6.00 per share.  We determined the sales price for our NextNet shares from various sources, including: a) discussions with potential investors, wireless telecommunications industry experts, investment bankers, and venture capitalists, b) looking at a proposed sale of NextNet stock, with similar rights as ours, that NextNet itself had considered immediately prior to our first sale to an outside investor, c) analyzing and comparing publicly held securities in related industries, d) considering our immediate cash needs, and e) the stage of development that NextNet was at as a company, at the time of the transactions. Another major factor in establishing the sales price was our determination of what an arms-length purchaser would pay for our NextNet shares.  We had approached potential buyers of our NextNet shares since June 2001, but we were unable to find any interest, for many reasons including the facts that NextNet had not yet obtained any significant orders and investors were not interested in the telecommunications sector in general.  On April 8, 2002, NextNet announced its first significant client, MVS Comunicaciones.  Based on this announcement, some potential buyers became more interested in purchasing NextNet stock from us.

Based on our analysis, we determined that we would offer our NextNet shares at $6.00 per share.  However, as we discussed in our Annual Report on Form 10-K, which we filed on April 1, 2002, we had only enough cash to meet our financial requirements through April 30, 2002.  We therefore had an immediate desire to obtain approximately $600,000 by mid-to-late April for payroll and other immediate cash needs.  The larger potential investors included Imagine Capital Partners, The Rahn Group, Blake Capital and Wyncrest Capital, which eventually participated in both the first and second series of transactions. This group told us that they would not pay more than $3.00 per share if we wanted to raise money in such a short time frame.  Other than several smaller participants in our first round, none of the other potential purchasers we had contacted indicated any interest in buying any of our NextNet shares at any price.  Therefore, for our initial series of sales of NextNet stock, we agreed to sell 200,000 shares at

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$3.00 per share.  Because Mr. Costello’s agreements to buy some of our NextNet shares, which were signed in February and March 2002, before any third party was willing to buy any of our NextNet stock, at any price, called for his shares to be valued at the per share price established upon our sale of any shares of our NextNet stock to any third party, the shares he purchased were then also valued at $3.00 per share.  In the next two series of investments, we were able to offer more desirable and flexible payment terms, and therefore, we were able to sell 281,664 shares at $6.00 per share from late April to early June.

The first series of transactions occurred between April 10 and April 16, 2002, when we entered into stock purchase agreements with six private investors, in which the investors purchased an aggregate of 200,000 shares of our Series A Preferred Stock in NextNet.  The investors paid us an aggregate amount of $600,000 for the shares, which were sold at a per share price of $3.00.  As a result of this first series of transactions, the NextNet shares that we had agreed to sell to our chairman, Joseph B. Costello, pursuant to two earlier stock purchase agreements, one dated February 26, 2002, and amended on March 25, 2002, and the second dated March 25, 2002, were valued at $3.00 per share. As of March 31, 2002, Mr. Costello had paid us $700,000 pursuant to these two purchase agreements, which means that as a result of the $3.00 per share valuation, Mr. Costello received 233,333 of our NextNet shares.

The second series of transactions occurred between April 10 and April 30, 2002. During this second series, we entered into stock purchase agreements with seven private investors, in which we sold an aggregate of 229,997 shares of our Series A Preferred Stock in NextNet for an aggregate consideration of $1,380,000.  Of this amount, $880,000 was received in April and $500,000 was received in May.  All of the shares were sold at a per share price of $6.00.  In connection with the second series of sales of NextNet shares in April 2002, we entered into stock purchase agreements with two private investors, pursuant to which we agreed to sell an aggregate of 133,332 shares of our Series A Preferred Stock in NextNet for an aggregate consideration of $800,000.  Of this amount, $600,000 was received in September 2002 and $154,000 was received in October 2002, and remaining $46,000 is to be received at a later date.  The price for these shares is also $6.00 per share.  We recorded a deferred gain on sale of investment when we received the cash from these transactions, and a gain on sale of investment will be recorded when the shares are transferred to the private investors.

The third series of transactions occurred between May 29, 2002 and June 13, 2002. During this third series, we entered into stock purchase agreements with two private investors and three private investment funds managed by Dr. Doll, a director of our company and NextNet, in which we sold an aggregate of 51,667 shares of our Series A Preferred Stock in NextNet for an aggregate consideration of $310,000.  Of this consideration, the entities managed by Dr. Doll purchased an aggregate of 25,000 of our NextNet shares for an aggregate consideration of $150,000.  We received the cash for these shares in June.  All of the shares were sold at a per share price of $6.00.

In the third quarter of 2002, we entered into stock purchase agreements with four private investors, in which we sold an aggregate of 30,002 shares of our Series A Preferred Stock in NextNet for an aggregate consideration of $180,012. We received the cash for these shares in August and September.  All of the shares were sold at a per share price of $6.00.  We recorded a deferred gain on sale of investment when we received the cash from these transactions, and a gain on sale of investment will be recorded when the shares are transferred to the private investors.

In addition to the above transactions, in order to make payroll and other critical vendor payments, Joseph B. Costello, our chairman, advanced $450,000 to us in June 2002, and $850,000 in July 2002.  In consideration of these advances, our Board of Directors has agreed to transfer a total of 216,668 of our shares of NextNet Series A Preferred Stock valued at $6.00 per share.

In the fourth quarter of 2002, we entered into stock purchase agreements with two private investors, in which we sold an aggregate of 4,200 shares of our Series A Preferred Stock in NextNet for an aggregate consideration of $25,200.  All of the shares were sold at a per share price of $6.00.  We recorded a deferred gain on sale of investment when we received the cash from these transactions, and a gain on sale of investment will be recorded when the shares are transferred to the private investors.

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All of the NextNet shares that we sell, including those sold to Mr. Costello, are subject to the right of first refusal on the parts of NextNet and the holders of the Series B Preferred Stock of NextNet.

A summary of our NextNet investment activity is as follows:

	Series A Preferred Stock	Cash Received
Balance as of December 31, 2001 and 2000	2,400,000
Shares sold at $3.00 per share in 2002 to related parties	233,333	$	700,000
Shares sold at $3.00 per share in 2002 to other investors	200,000	600,000
Shares sold at $6.00 per share in 2002 to related parties	241,666	1,450,000
Shares sold at $6.00 per share in 2002 to other investors	416,533	2,499,000
Referral fees paid in 2002		(25,000		)
Totals for 2002	1,091,532	$	5,224,000
Balance as of December 31, 2002	1,308,468

As of December 31, 2002, our remaining ownership of Series A Preferred Stock in NextNet, represents approximately 12% of the equity in NextNet.  Of our remaining shares, we have placed an aggregate of 583,333 in an escrow account as collateral for our loan from Entrx Corporation.  See Note 9 for further discussion regarding the loan from Entrx.

As described in Note 10, on January 27, 2003, we entered into an agreement to terminate debt owed to an individual.  As a part of this debt extinquishment, we agreed to transfer 16,667 shares of our Series A Preferred Stock in NextNet to this individual.

On February 17, 2003, we entered into stock purchase agreements with two private investors which resulted in our transferring to them approximately 177,000 shares of our Series A Preferred Stock in NextNet for a total of $750,000.  In connection with this sale, we issued a warrant to an investor affiliated with a prior purchaser of NextNet shares from us to purchase 125,000 additional shares of our Series A Preferred Stock in NextNet from us at $6.00 per share, any time prior to the close of business on May 17, 2004.

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 6,244,603, 3,508,045, and 2,948,590, as of December 31, 2002, 2001 and 2000, 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:

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	Options		Price Per Option		Weighted Average Exercise Price
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
Granted	6,908,843		0.1000  -  0.7000		0.21
Exercised	(30,018	)	0.4200  -  0.4200		0.42
Canceled	(7,658,324	)	0.1500  -  20.1250		2.38
Balances, December 31, 2002	10,108,615		0.1000  -  20.1250		1.46
Options exercisable at December 31, 2002	4,620,028		$	0.1500  -  $20.1250	$	2.50

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 2002, 2001, and 2000, our net loss and net loss per share would have increased to the pro forma amounts indicated below:

(In thousands, except per share amounts)

		2002			2001			2000
Net loss	As reported	$	(6,613	)	$	(9,529	)	$	(2,676	)
	Pro forma	(14,214		)	(19,131		)	(9,004		)
Net loss per share -	As reported	(0.17		)	(0.28		)	(0.08		)
Basic and diluted	Pro forma	(0.37		)	(0.57		)	(0.29		)

The aggregate fair value of options granted during 2002, 2001, and 2000, respectively, was $603,000, $150,000, and $8.37 million for the 1993 Equity Incentive Plan, $17,000, $69,000, and $1.90 million for the 1993 Directors Option Plan,  $94,000, $0, and $1.85 million, for the 1998 Non-Officer Option Plan, $14,000, $0, and $5.04 million, for the 1999 Non-Officer Plan, $0, $446,000, and $6.51 million, for the 2000 Non-Officer Plan, and $476,000, $2.76 million, and $5.71 million, for the 2000 Non-Qualified Option Plan.  No options were granted in 2002, 2001, and 2000 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	2002		2001		2000
Risk-free interest rates	3.02%-4.84		3.96%-5.13		5.52%-6.76
Volatility	124	%	115	%	133	%
Expected lives (months)	60		60		60

The following table summarizes information about fixed-price stock options outstanding at December 31, 2002:

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		Options Outstanding				Options Exercisable
Range of Exercise Prices		Number Outstanding at December 31, 2002	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable at December 31, 2002	Weighted- Average Exercise Price
$	0.10- $0.15	4,356,750	9.65	$	0.15	333,815	$	0.15
	0.29-   0.99	1,011,152	8.95	0.42		174,449	0.74
	1.00-   1.99	1,687,877	7.18	1.57		1,561,252	1.60
	2.00-   5.00	2,490,748	6.66	2.85		2,170,493	2.79
	5.03- 20.13	562,088	7.13	6.95		380,019	7.50
Totals		10,108,615				4,620,028

Stock-Based Compensation:

We 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 $25,000, $237,000 and $248,000 for the years ended December 31, 2002, 2001, and 2000.  The remaining deferred compensation related to these options is $11,000, and will be recognized in 2003 (remainder of the 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.  There were no preferred shares issued or outstanding as of December 31, 2002, 2001, or 2000.

Warrants:

We sold some of our common stock on three occasions during the first quarter of 2002.  In connection with each of these sales or group of sales, we issued warrants to purchase additional shares of our common stock to the purchasers.  The first sale occurred on January 31, 2002, when Joe Costello, our chairman, purchased an aggregate 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 Mr. Costello’s purchase, we issued him 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 an aggregate of 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 a total consideration of $380,000.  The purchase price is equal to 90% of the average closing bid prices of our common stock 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 an aggregate of 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 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, in connection with a Strategic Alliance Agreement with HCL Technologies America, Inc. (“HCL America”) and HCL Technologies Limited, India (“HCL”), HCL America purchased an aggregate of 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

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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.

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

We also issued warrants to purchase shares of our common stock to Mr. Costello and Silicon Valley Bank in 2001.  On June 29, 2001, we sold 2,352,942 shares of our common stock at the average closing bid price of our common stock 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.  We issued warrants to Silicon Valley Bank upon the establishment of the loan agreement and upon each of its amendments.  In connection with the establishment of the credit facility, we issued a warrant to purchase 35,000 shares of our common stock at an exercise price of $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 our 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 additional interest 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

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Except for the warrants described above, no other warrants are outstanding as of December 31, 2002 or 2001.

A summary of the warrants outstanding at December 31, 2002 is as follows:

	Date Warrants Issued	Date Warrants Expire	Number of Warrants Issued	Exercise Price of Warrants
Joe Costello	June 29, 2001	June 29, 2007	1,176,471	$	1.063
HCL America	February 22, 2002	February 21, 2007	615,006	$	0.610
Group of seven individual investors	February 1, 2002	February 1, 2007	396,691	$	0.599
Joe Costello	January 31, 2002	January 31, 2007	313,252	$	0.599
Silicon Valley Bank	February 27, 2001	February 26, 2006	35,000	$	2.800
Silicon Valley Bank	August 2, 2001	August 1, 2006	35,000	$	0.860
Silicon Valley Bank	December 31, 2001	December 30, 2006	20,000	$	0.510
Total			2,591,420

Stockholder Rights Plan:

On September 7, 1994, our Board of Directors adopted a Stockholder Rights Plan (the “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.  Our Board of Directors amended the Plan on January 29, 2002, and November 26, 2002.

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.  In the January 29 amendment, our Board of Directors revised the definition of Acquiring Person to exclude our Chairman, Joseph B. Costello (“Costello”) or any person who, following the death of Costello, acquires his shares pursuant to a last will and testament or pursuant to the laws of descent and distribution applicable to his estate, unless Costello, or any person acquiring his shares in the manner described above, becomes the beneficial owner of 49.99% or more of our common shares then outstanding.  In the November 26 amendment, our Board of Directors revised the definition of Acquiring Person to exclude Entrx Corporation if it acquires any of our shares with respect to or on its conversion of the Convertible Secured Promissory Note, dated November 4, 2002, we issued to it, unless Entrx or any of its “Affiliates” or “Associates” becomes the beneficial owner of 39.99% or more of our common shares then outstanding.

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

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 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.

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 156,000 shares were issued under the ESPP at an average price of $0.22 per share in 2002, 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.  Approximately 199,000 shares remain available for issuance under this ESPP at December 31, 2002.

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, 2002, we have approximately $87 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 of 34%, as follows:

	2002			2001
Expected federal benefit	$	(2,200,000	)	$	(2,710,000	)
Change in valuation allowance	2,500,000			3,160,000
State taxes, net	(300,000		)	(450,000		)
Amortization	—			75,000
Stock compensation	—			(35,000		)
Other	—			(40,000		)
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, 2002 and 2001.

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

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	2002			2001
Deferred tax assets:
Net operating loss carry forwards	$	33,900,000		$	31,400,000
Tax credits	750,000			750,000
Other, principally depreciation and amortization	785,000			785,000
Valuation allowance	(35,435,000		)	(32,935,000		)
Net deferred tax asset	$	—		$	—

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 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, 2002, 2001 and 2000 as follows:

	2002		2001		2000
Customer 1	19	%	12	%	16	%
Customer 2	14	%	4	%	0	%
Customer 3	11	%	10	%	2	%
Customer 4	11	%	8	%	0	%
Customer 5	0	%	10	%	7	%

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.          LITIGATION:

We are subject to various legal proceedings and claims that arise in the ordinary course of business.  The following is a summary of our current legal proceedings.

On August 5, 2002, our former president and CEO, Doug Holden, notified us that he believes we breached his severance agreement with us following the separation of his employment.  Mr. Holden has requested continued payroll and benefits and continued vesting of stock options for six months from June 27, 2002, the date of his separation.  Mr. Holden’s annualized salary at the time of his separation was $240,000. Mr. Holden has requested approximately $120,000 to settle this matter, plus the value of his benefits and continued vesting of his options.  We believe that we have valid defenses to Mr. Holden’s claims and/or that Mr. Holden is not entitled to the items he is requesting.  The timing and ultimate resolution of Mr. Holden’s claims are uncertain at this time.

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We are also subject to other various legal proceedings and claims that we do not believe are material either separately or in the aggregate.

In addition to these matters, we settled other actual or threatened legal proceedings during 2002.  These settlements were discussed in our quarterly reports on Form 10-Q for the quarters ended June 30 and September 30, 2002.  The settlements discussed in the September 30 quarterly report include the items described below.

On March 13, 2003, we reached an agreement with Key Equipment Finance, to terminate our lease for office furniture and settle related litigation.  Under the agreement, we will pay a total of $145,000 in various installment payments from the settlement date through December 2003. Key had previously filed a complaint against us in Hennepin County District Court in Minneapolis, Minnesota alleging that we had breached leases for office furniture.  This lawsuit was dismissed with prejudice in connection with the settlement.

On October 10, 2002, we reached an agreement with Army Corps Operating Associates (“Army Corps”), to terminate our lease for a facility in St. Paul, Minnesota, and settle related litigation.  Under the termination and release for this facility, we will pay a total of $500,000 in various installment payments from October 2002 through September 2003.  As of December 31, 2002, we have paid $135,000 of the settlement amount and the remaining $365,000 is included in accrued expenses on the balance sheet.

On October 10, 2002, we reached an agreement with WTA Campbell Technology Park LLC (“WTA”), to terminate our lease for a facility in Campbell, California, and settle related litigation.  Under the termination and release for this facility, we will pay a total of $729,000 in various installment payments from October 2002 through August 2003.  As of December 31, 2002, we have paid $216,000 of the settlement amount and and remaining $513,000 is included in accrued expenses on the balance sheet.

On September 27, 2002, we entered into a settlement agreement with a furniture lessor, Fidelity Equipment Leasing, that had threatened to bring an action against us for an alleged breach of five equipment leases.  We agreed to pay a total of $120,000 from September 2002 through April 2003 in exchange for termination of the lease and a release of Fidelity’s claims.  As of December 31, 2002, we have paid $60,000 of the settlement amount and the remaining $60,000 is included in accrued expenses on the balance sheet.

18.          SUBSEQUENT EVENTS:

On January 27, 2003, we entered into an agreement with Todd Fitzwater, in which we paid $165,000 and transferred 16,667 shares of our Series A Preferred Stock in NextNet, in exchange for a termination of the remaining debt obligation, as described in Note 10. The amount owed Mr. Fitzwater was approximately $423,000 at December 31, 2002.  As a result, we will report an extraordinary gain on debt extinquishment of approximately $187,000 in the first quarter of 2003.  We will also report a gain on sale of NextNet shares of $71,000 upon transfer of the shares to Mr. Fitzwater.

On February 17, 2003, we entered into stock purchase agreements with two private investors, which resulted in our transferring to them approximately 177,000 shares of our Series A Preferred Stock in NextNet for a total of $750,000.  In connection with this sale, we issued a warrant to an investor affiliated with a prior purchaser of NextNet shares from us to purchase 125,000 additional shares of our Series A Preferred Stock in NextNet from us at $6.00 per share, any time prior to the close of business on May 17, 2004.

On February 19, 2003, the loan agreement with Entrx, as described in Note 9, was amended.  The second advance of $750,000 was paid in the first quarter of 2003 and the obligation of Entrx to pay the third installment of $750,000 was waived.  Entrx also waived its rights to convert all outstanding advances into shares of our common stock, terminated its option to purchase additional shares of our NextNet stock, and agreed to waive interest charges that might otherwise accrue after December 2003.

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Zamba Corporation

Schedule II

Valuation and Qualifying Accounts

(in thousands)

Column A	Column B		Column C		Column D			Column E
Description	Balance at Beginning of Period		Additions Charged to Expense		Deductions from Allowance			Balance at End of Period
Year ended December 31, 2002 Allowance for doubtful accounts (deducted from accounts receivable)	$	183	$	20	$	(59	)	$	144
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

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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:  March 31, 2003	By	/s/ Norman D. Smith
	Norman D. Smith
	President and Chief Executive Officer

Each person whose signature appears below constitutes and appoints Norman D. Smith 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/ Norman D. Smith	President and Chief	March 31, 2003
Norman D. Smith	Executive Officer (Principal
	Executive Officer)
/s/ Michael H. Carrel	Executive Vice President	March 31, 2003
Michael H. Carrel	and Chief Financial Officer
	(Principal Financial and
	Accounting Officer)
OTHER DIRECTORS:
/s/ Joseph B. Costello	Chairman of the Board	March 31, 2003
Joseph B. Costello
/s/ Dixon R. Doll	Director	March 31, 2003
Dixon R. Doll
/s/ Paul D. Edelhertz	Director	March 31, 2003
Paul D. Edelhertz
/s/ Sven A. Wehrwein	Director	March 31, 2003
Sven A.Wehrwein

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I, Norman D. Smith, certify that:

1.   I have reviewed this Annual Report on Form 10-K of Zamba Corporation;

2.   Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.   Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.   The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.   The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.   The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:	March 31, 2003
	/s/ Norman D. Smith
	Chief Executive Officer

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I, Michael H. Carrel, certify that:

1.   I have reviewed this Annual Report on Form 10-K of Zamba Corporation;

2.   Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.   Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.   The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.   The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.   The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:	March 31, 2003
	/s/ Michael H. Carrel
	Chief Financial Officer

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EX-10.61

Exhibit 10.61

CHANGE IN CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT

This Change in Control Employment and Severance Agreement (the “AGREEMENT”) is entered into this 26th day of November, 2002, between Norman D. Smith (“Executive”) and Zamba Corporation, a Delaware corporation (the “COMPANY”).  This Agreement is intended to provide Executive with the compensation and benefits described herein upon the occurrence of specific events following a Change in Control (as hereinafter defined).

Certain capitalized terms used in this Agreement are defined in Article VII.

The Company and Executive hereby agree as follows:

ARTICLE I

EMPLOYMENT BY THE COMPANY

1.1          Executive is currently employed as the President and Chief Executive Officer of the Company.

1.2          This Agreement shall become effective upon the occurrence of a Change in Control.

1.3          The Company and Executive each agree and acknowledge that Executive is employed by the Company as an “at will” employee and that either Executive or the Company has the right at any time to terminate Executive’s employment with the Company, with or without cause or advance notice, for any reason or for no reason.  The Company and Executive wish to set forth the compensation and benefits which Executive shall be entitled to receive in the event that Executive’s employment with the Company terminates under the circumstances described in Article II of this Agreement.

1.4          The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive’s continued employment with the Company and Executive’s execution of the general waiver and release described in Section 4.3.

ARTICLE II

TRIGGERING EVENTS

2.1          Involuntary Termination of Employment During Term

(a)           If Executive’s employment is involuntarily terminated by the Company without Cause during the Term, such termination of employment will be a Triggering Event, and the Company shall pay or provide Executive the compensation and benefits described in Article III.

(b)           If Executive’s employment is involuntarily terminated by the Company for Cause during the Term, such termination of employment will not be a Triggering Event, and Executive will not be entitled to receive any compensation or benefits under the provisions of this Agreement except as otherwise specifically set forth herein.

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2.2          Voluntary Termination of Employment During Term.

(a)           Executive may voluntarily terminate his employment with the Company at any time during the Term.  If Executive voluntarily terminates his employment for Good Reason during the Term, such termination of employment will be a Triggering Event, and the Company shall pay or provide Executive the compensation and benefits described in Article III.

(b)           If Executive voluntarily terminates his employment for any reason other than Good Reason during the Term, such termination of employment will not be a Triggering Event, and Executive will not be entitled to receive any compensation or benefits under the provisions of this Agreement except as otherwise specifically set forth herein.

2.3          Death or Disability During Term.  If Executive’s employment with the Company terminates on account of death or disability during the Term, such termination of employment will be a Triggering Event, and the Company shall pay or provide Executive the compensation and benefits described in Article III.

2.4          Employment Through Term.  If Executive’s employment continues through the end of the Term, such continuation of employment will be a Triggering Event, and the Company shall pay Executive the compensation and benefits described in Article III.

ARTICLE III

COMPENSATION AND BENEFITS

3.1          Right to Compensation and Benefits.  If a Triggering Event occurs during the Term, Executive shall be entitled to receive the compensation and benefits described in this Agreement subject to the restrictions and limitations set forth in Article IV.  If a Triggering Event does not occur during the Term, Executive shall not be entitled to receive any compensation and benefits described in this Agreement, except as otherwise specifically set forth herein.

3.2          Severance Payment.  Upon the occurrence of a Triggering Event or, if later, upon the termination of Executive’s employment with the Company during the Term following a Triggering Event, Executive shall receive a lump sum severance payment equal to the amount of Executive’s Base Salary that would have been paid with respect to the period beginning on the date of the Triggering Event and ending with the last day of the Term.  Such lump sum amount shall be paid no later than thirty (30) days following the date of the Triggering Event or, if later, the date of termination of Executive’s employment with the Company and shall be subject to all applicable tax withholding.

3.3          Health Insurance Coverage.  Upon the occurrence of a Triggering Event or, if later, upon the termination of Executive’s employment with the Company during the Term following a Triggering Event, to the extent permitted by the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and by the Company’s group health insurance policy, Executive and his covered dependents will be eligible to continue their health insurance benefits at their own expense. If Executive elects COBRA continuation coverage, the Company shall pay Executive’s and covered dependents’ COBRA continuation premiums for six (6) months following the date Executive’s coverage as an active employee under the Company’s group health policy ceases, provided that the Company’s obligation to make such payments shall terminate immediately if Executive becomes eligible for other health insurance benefits at the expense of a new employer.  Executive agrees to notify the Company, in writing, immediately upon acceptance of any employment which provides health insurance benefits.  This Section 3.3 provides only for the Company’s payment of COBRA continuation premiums for the period specified above.  This Section 3.3 is not intended to affect, nor does it affect, the rights of

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Executive, or Executive’s covered dependents, under any applicable law with respect to health insurance continuation coverage.

3.4          Stock Option Acceleration.  Executive’s stock options under the Company’s stock option plans which are outstanding as of the date of the Triggering Event (the “Stock Options”) shall become fully vested and exercisable upon the occurrence of a Triggering Event or upon the termination of Executive’s employment during the Term which does not otherwise constitute a Triggering Event, notwithstanding the then existing provisions of the relevant Stock Option agreements, which provisions are expressly modified by this Agreement.  The period of time during which the Stock Options shall remain exercisable, and all other terms and conditions of the Stock Options, shall be as specified in the relevant Stock Option agreements.

3.5          Mitigation.  Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by retirement benefits after the date of the Triggering Event, or otherwise.

ARTICLE IV

LIMITATIONS AND CONDITIONS ON BENEFITS; AMENDMENT OF AGREEMENT

4.1          Other Severance Benefits; Withholding of Taxes.  The benefits provided under this Agreement are in lieu of any other benefit provided under any employment contract or severance plan of the Company in effect at the time of a Triggering Event.  The Company shall withhold appropriate federal, state or local income and employment taxes from any payments hereunder.

4.2          Obligations of Executive.  During the Term, Executive agrees not to personally solicit any of the Company’s employees to become employed elsewhere or provide the names of such employees to any other company which Executive has reason to believe will solicit such employees.

4.3          Employee Agreement and Release Prior to Receipt of Certain Benefits.  Prior to the receipt of any benefits under Section 3.2 above, Executive shall execute an effective employee agreement and release in the form attached hereto as Exhibit A.  Such employee agreement and release shall specifically relate to all of Executive’s rights and claims in existence at the time of its execution.  It is understood that Executive has twenty-one (21) days to consider whether to execute such employee agreement and release and Executive may revoke such employee agreement and release within seven (7) days after execution of such employee agreement and release.  If Executive does not execute such employee agreement and release within the twenty-one (21) day period, or if Executive revokes such employee agreement and release within the seven (7) day period, no benefits shall be payable under Section 3.2 above.  Nothing in this Agreement shall limit the scope or time of applicability of such employee agreement and release once it is executed and not timely revoked.

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4.4          Certain Additional Payments.  If it shall be determined, either by the Company or by a final determination of the Internal Revenue Service, that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement (including, without limitation, the value ascribed to option acceleration pursuant to Section 3.4 above) or otherwise (the “Payments”), would cause Executive to become subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall pay to Executive, within the later of ninety (90) days of the date of the Triggering Event or ninety (90) days of the date of determination referred to above, an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of any Excise Tax and any federal (and state and local) income and employment taxes on the Gross-Up Payment, shall be equal to the Payments.  For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal, state and local income taxes at the highest nominal marginal rate of federal, state and local income taxation in the calendar year in which the Gross-Up Payment is made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  If the Excise Tax is subsequently determined, whether by the Company or by a final determination of the Internal Revenue Service, to be less than the amount taken into account to determine the amount of the Gross-Up Payment, then Executive shall repay to the Company at that time the portion of the Gross-Up Payment attributable to such reduction (plus an amount equal to any tax reduction, whether of the Excise Tax, any applicable income tax, or any applicable employment tax, which Executive may enjoy as a result of such initial repayment).  If the Excise Tax is subsequently determined, whether by the Company or by a final determination of the Internal Revenue Service, to be more than the amount taken into account to determine the amount of the Gross-Up Payment, then the Company shall pay to Executive an additional amount, which shall be determined using the same methods as were used for calculating the Gross-Up Payment, with respect to such excess.  For purposes of this Section 4.4, a determination of the Internal Revenue Service as to the amount of Excise Tax for which Executive is liable shall not be treated as final until the time that either (i) the Company agrees to acquiesce in the determination of the Internal Revenue Service or (ii) the determination of the Internal Revenue Service has been upheld in a court of competent jurisdiction and the Company decides not to appeal such judicial decision or such decision is not appealable.  If the Company chooses to contest the determination of the Internal Revenue Service, then all costs, attorneys’ fees, and other expenses shall be paid by the Company.

4.5          Amendment or Termination.  This Agreement may be amended or terminated only upon the mutual written consent of the Company and Executive.

ARTICLE V

OTHER RIGHTS AND BENEFITS NOT AFFECTED

5.1          Nonexclusivity.  Nothing in the Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company and for which Executive may otherwise qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any stock option or other agreements with the Company; provided, however, that in accordance with Section 4.1 above, any benefits provided hereunder shall be in lieu of any other severance payments to which Executive may otherwise be entitled, including, without limitation, under any employment contract or severance plan, and benefits under this Agreement shall be offset to the extent necessary to give effect to this proviso.  Except as otherwise expressly provided herein, amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company at or subsequent to the effective date of a Change in Control shall be payable in accordance with such plan, policy, practice or program.

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5.2          Employment Status.  This Agreement does not constitute a contract of employment, nor does it impose on Executive any obligation to remain as an employee or on the Company any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at will employee, or (iii) to change the Company’s policies regarding termination of employment.

ARTICLE VI

NON-ALIENATION OF BENEFITS

No benefit hereunder shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void.

ARTICLE VII

DEFINITIONS

For purposes of the Agreement, the following terms shall have the meanings set forth below:

7.1          “Agreement” means this Change in Control Severance Agreement.

7.2          “Base Salary” means Executive’s salary (excluding bonus, any other incentive or other payments and stock option exercises) at the rate paid by the Company in consideration for Executive’s service on the day prior to the effective date of a Change in Control or at such higher rate as may be in effect during the Term and which is includable in the gross income of Executive for federal income tax purposes or which would have been includable in gross income except for an election either under Section 125 or 402(e)(3) of the Code or under the terms of a nonqualified deferred compensation arrangement sponsored by the Company.

7.3          “Cause” means either of the following: (i) an intentional or grossly negligent act by Executive causing material harm to the Company or (ii) Executive’s conviction of, or plea of “guilty” or “no contest” to, a felony.

7.4          “Change in Control” means the consummation of any one of the following events:  (i) a sale of all or substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation (other than a transaction the principal purpose of which is to change the state of the Company’s incorporation or a transaction in which the voting securities of the Company are exchanged for beneficial ownership of at least fifty percent (50%) of the voting securities of the controlling acquiring corporation); (iii) a merger or consolidation in which the Company is the surviving corporation and less than fifty percent (50%) of the voting securities of the Company which are outstanding immediately after the consummation of such transaction are beneficially owned, directly or indirectly, by the persons who owned such voting securities immediately prior to such transaction; (iv) any transaction or series of related transactions after which any person (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934), other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company, becomes the beneficial owner of voting securities of the Company representing fifty percent (50%) or more of the combined voting power of all of the voting securities of the Company; or (v) the liquidation or dissolution of the Company.

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

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7.6          “Company” means Zamba Corporation, a Delaware corporation, and any successor thereto.

7.7          “Disability” means a disability which qualifies Executive as disabled for purposes of receiving benefits under the Company’s long term disability plan applicable to Executive.

7.8          “Good Reason” means that any one of the following actions has been taken by the Company without Executive’s express written consent and such action has not been promptly reversed within thirty (30) days following written notice from Executive to the Company:  (i) a material reduction in Executive’s job responsibilities given Executive’s prior position and responsibilities with the Company, it being deemed that a position with a different title but providing similar activities, given the size of the combined company, shall not be considered a material reduction in Executive’s job responsibilities; (ii) any reduction in Executive’s compensation and aggregate benefits as in effect immediately prior to such reduction; (iii) relocation of Executive’s workplace to a facility or location more than twenty-five (25) miles from Executive’s workplace immediately prior to such relocation; (iv) any purported termination of Executive’s employment which is not effected by reason of death, disability, or Cause; (v) the failure or refusal of a successor to the Company to assume the Company’s obligations under this Agreement, as provided in Section 8.7 below; or (vi) a material breach by the Company or any successor to the Company of any of the material provisions of this Agreement

7.9          “Term” means the period beginning on the effective date of a Change in Control and ending thirteen (13) months thereafter.

7.10        “Triggering Event” means an event described in Section 2.1(a), 2.2(a), 2.3 or 2.4 above.  No other event shall be a Triggering Event for purposes of this Agreement.

ARTICLE VIII

GENERAL PROVISIONS

8.1          Notices.  Any notices provided hereunder must be in writing and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by telex or facsimile) or the third day after mailing by first class mail, to the Company at its primary office location and to Executive at his address as listed in the Company’s payroll records.  Any payments made by the Company to Executive under the terms of this Agreement shall be delivered to Executive either in person or at his address as listed in the Company’s payroll records.

8.2          Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

8.3          Waiver.  If either party should waive any breach of any provisions of this Agreement, he or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

8.4          Complete Agreement.  This Agreement, including Exhibit A, constitutes the entire agreement between Executive and the Company and it is the complete, final, and exclusive embodiment

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of their agreement with regard to this subject matter.  It is entered into without reliance on any promise or representation other than those expressly contained herein.

8.5          Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

8.6          Headings.  The headings of the Articles and Sections hereof are inserted for convenience only and shall neither be deemed to constitute a part hereof nor to affect the meaning thereof.

8.7          Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not delegate any of his duties hereunder and he may not assign any of his rights hereunder without the written consent of the Company, which consent shall not be withheld unreasonably.

8.8          Attorneys’ Fees.  If either party hereto brings any action to enforce his or its rights hereunder, the prevailing party in any such action shall be entitled to recover his or its reasonable attorneys’ fees and costs incurred in connection with such action.

8.9          Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of Minnesota.

8.10        Construction of Plan.  In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year written above.

ZAMBA CORPORATION, a Delaware corporation		NORMAN D. SMITH Executive
By:	/s/ Michael H. Carrel	/s/ Norman D. Smith
Name: Michael H. Carrel
Title: CFO
Exhibit A: Employee Agreement and Release

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EXHIBIT A

EMPLOYEE AGREEMENT AND RELEASE

I understand and agree completely to the terms set forth in the foregoing agreement.

Except as otherwise set forth in this Agreement, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date I sign this Agreement, including but not limited to:  all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Americans with Disabilities Act of 1990; state laws comparable to the foregoing federal laws; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company’s Indemnification Agreement.

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA.  I also acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise after the date I sign this Agreement; (B) I have the right to consult with an attorney prior to executing this Agreement; (C) I have twenty-one (21) days to consider this Agreement (although I may choose to voluntarily execute this Agreement earlier); (D) I have seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; and (E) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is executed by me, provided that the Company has also executed this Agreement by that date (“Effective Date”).

By:

Date:

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EX-10.62

Exhibit 10.62

CHANGE IN CONTROL EMPLOYMENT AND SEVERANCE AGREEMENT

This Change in Control Employment and Severance Agreement (the “AGREEMENT”) is entered into this 14^th day of January 2003, between Paul McLean (“Executive”) and Zamba Corporation, a Delaware corporation (the “COMPANY”).  This Agreement is intended to provide Executive with the compensation and benefits described herein upon the occurrence of specific events following a Change in Control (as hereinafter defined).

Certain capitalized terms used in this Agreement are defined in Article VII.

The Company and Executive hereby agree as follows:

ARTICLE I
EMPLOYMENT BY THE COMPANY

1.1          Executive is currently employed as the Executive Vice President of Delivery Services of the Company.

1.2          This Agreement shall become effective upon the occurrence of a Change in Control.

1.3          The Company and Executive each agree and acknowledge that Executive is employed by the Company as an “at will” employee and that either Executive or the Company has the right at any time to terminate Executive’s employment with the Company, with or without cause or advance notice, for any reason or for no reason.  The Company and Executive wish to set forth the compensation and benefits which Executive shall be entitled to receive in the event that Executive’s employment with the Company terminates under the circumstances described in Article II of this Agreement.

1.4          The duties and obligations of the Company to Executive under this Agreement shall be in consideration for Executive’s continued employment with the Company and Executive’s execution of the general waiver and release described in Section 4.3.

ARTICLE II
TRIGGERING EVENTS

2.1          Involuntary Termination of Employment During Term

(a)           If Executive’s employment is involuntarily terminated by the Company without Cause during the Term, such termination of employment will be a Triggering Event, and the Company shall pay or provide Executive the compensation and benefits described in Article III.

(b)           If Executive’s employment is involuntarily terminated by the Company for Cause during the Term, such termination of employment will not be a Triggering Event, and Executive will not be entitled to receive any compensation or benefits under the provisions of this Agreement except as otherwise specifically set forth herein.

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2.2          Voluntary Termination of Employment During Term.

(a)           Executive may voluntarily terminate his employment with the Company at any time during the Term.  If Executive voluntarily terminates his employment for Good Reason during the Term, such termination of employment will be a Triggering Event, and the Company shall pay or provide Executive the compensation and benefits described in Article III.

(b)           If Executive voluntarily terminates his employment for any reason other than Good Reason during the Term, such termination of employment will not be a Triggering Event, and Executive will not be entitled to receive any compensation or benefits under the provisions of this Agreement except as otherwise specifically set forth herein.

2.3          Death or Disability During Term.  If Executive’s employment with the Company terminates on account of death or disability during the Term, such termination of employment will be a Triggering Event, and the Company shall pay or provide Executive the compensation and benefits described in Article III.

2.4          Employment Through Term.  If Executive’s employment continues through the end of the Term, such continuation of employment will be a Triggering Event, and the Company shall pay Executive the compensation and benefits described in Article III.

ARTICLE III

COMPENSATION AND BENEFITS

3.1          Right to Compensation and Benefits.  If a Triggering Event occurs during the Term, Executive shall be entitled to receive the compensation and benefits described in this Agreement subject to the restrictions and limitations set forth in Article IV.  If a Triggering Event does not occur during the Term, Executive shall not be entitled to receive any compensation and benefits described in this Agreement, except as otherwise specifically set forth herein.

3.2          Severance Payment.  Upon the occurrence of a Triggering Event or, if later, upon the termination of Executive’s employment with the Company during the Term following a Triggering Event, Executive shall receive a lump sum severance payment equal to the amount of Executive’s Base Salary that would have been paid with respect to the period beginning on the date of the Triggering Event and ending with the last day of the Term.  Such lump sum amount shall be paid no later than thirty (30) days following the date of the Triggering Event or, if later, the date of termination of Executive’s employment with the Company and shall be subject to all applicable tax withholding.

3.3          Health Insurance Coverage.  Upon the occurrence of a Triggering Event or, if later, upon the termination of Executive’s employment with the Company during the Term following a Triggering Event, to the extent permitted by the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and by the Company’s group health insurance policy, Executive and his covered dependents will be eligible to continue their health insurance benefits at their own expense. If Executive elects COBRA continuation coverage, the Company shall pay Executive’s and covered dependents’ COBRA continuation premiums for six (6) months following the date Executive’s coverage as an active employee under the Company’s group health policy ceases, provided that the Company’s obligation to make such payments shall terminate immediately if Executive becomes eligible for other health insurance benefits at the expense of a new employer.  Executive agrees to notify the Company, in writing, immediately upon acceptance of any employment which provides health insurance benefits.  This Section 3.3 provides only for the Company’s payment of COBRA continuation premiums for the period specified above.  This Section 3.3 is not intended to affect, nor does it affect, the rights of

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Executive, or Executive’s covered dependents, under any applicable law with respect to health insurance continuation coverage.

3.4          Stock Option Acceleration.  Executive’s stock options under the Company’s stock option plans which are outstanding as of the date of the Triggering Event (the “Stock Options”) shall become fully vested and exercisable upon the occurrence of a Triggering Event or upon the termination of Executive’s employment during the Term which does not otherwise constitute a Triggering Event, notwithstanding the then existing provisions of the relevant Stock Option agreements, which provisions are expressly modified by this Agreement.  The period of time during which the Stock Options shall remain exercisable, and all other terms and conditions of the Stock Options, shall be as specified in the relevant Stock Option agreements.

3.5          Mitigation.  Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by retirement benefits after the date of the Triggering Event, or otherwise.

ARTICLE IV

LIMITATIONS AND CONDITIONS ON BENEFITS; AMENDMENT OF AGREEMENT

4.1          Other Severance Benefits; Withholding of Taxes.  The benefits provided under this Agreement are in lieu of any other benefit provided under any employment contract or severance plan of the Company in effect at the time of a Triggering Event.  The Company shall withhold appropriate federal, state or local income and employment taxes from any payments hereunder.

4.2          Obligations of Executive.  During the Term, Executive agrees not to personally solicit any of the Company’s employees to become employed elsewhere or provide the names of such employees to any other company which Executive has reason to believe will solicit such employees.

4.3          Employee Agreement and Release Prior to Receipt of Certain Benefits.  Prior to the receipt of any benefits under Section 3.2 above, Executive shall execute an effective employee agreement and release in the form attached hereto as Exhibit A.  Such employee agreement and release shall specifically relate to all of Executive’s rights and claims in existence at the time of its execution.  It is understood that Executive has twenty-one (21) days to consider whether to execute such employee agreement and release and Executive may revoke such employee agreement and release within seven (7) days after execution of such employee agreement and release.  If Executive does not execute such employee agreement and release within the twenty-one (21) day period, or if Executive revokes such employee agreement and release within the seven (7) day period, no benefits shall be payable under Section 3.2 above.  Nothing in this Agreement shall limit the scope or time of applicability of such employee agreement and release once it is executed and not timely revoked.

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4.4          Certain Additional Payments.  If it shall be determined, either by the Company or by a final determination of the Internal Revenue Service, that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement (including, without limitation, the value ascribed to option acceleration pursuant to Section 3.4 above) or otherwise (the “Payments”), would cause Executive to become subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Company shall pay to Executive, within the later of ninety (90) days of the date of the Triggering Event or ninety (90) days of the date of determination referred to above, an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of any Excise Tax and any federal (and state and local) income and employment taxes on the Gross-Up Payment, shall be equal to the Payments.  For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal, state and local income taxes at the highest nominal marginal rate of federal, state and local income taxation in the calendar year in which the Gross-Up Payment is made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  If the Excise Tax is subsequently determined, whether by the Company or by a final determination of the Internal Revenue Service, to be less than the amount taken into account to determine the amount of the Gross-Up Payment, then Executive shall repay to the Company at that time the portion of the Gross-Up Payment attributable to such reduction (plus an amount equal to any tax reduction, whether of the Excise Tax, any applicable income tax, or any applicable employment tax, which Executive may enjoy as a result of such initial repayment).  If the Excise Tax is subsequently determined, whether by the Company or by a final determination of the Internal Revenue Service, to be more than the amount taken into account to determine the amount of the Gross-Up Payment, then the Company shall pay to Executive an additional amount, which shall be determined using the same methods as were used for calculating the Gross-Up Payment, with respect to such excess.  For purposes of this Section 4.4, a determination of the Internal Revenue Service as to the amount of Excise Tax for which Executive is liable shall not be treated as final until the time that either (i) the Company agrees to acquiesce in the determination of the Internal Revenue Service or (ii) the determination of the Internal Revenue Service has been upheld in a court of competent jurisdiction and the Company decides not to appeal such judicial decision or such decision is not appealable.  If the Company chooses to contest the determination of the Internal Revenue Service, then all costs, attorneys’ fees, and other expenses shall be paid by the Company.

4.5          Amendment or Termination.  This Agreement may be amended or terminated only upon the mutual written consent of the Company and Executive.

ARTICLE V
OTHER RIGHTS AND BENEFITS NOT AFFECTED

5.1          Nonexclusivity.  Nothing in the Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company and for which Executive may otherwise qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under any stock option or other agreements with the Company; provided, however, that in accordance with Section 4.1 above, any benefits provided hereunder shall be in lieu of any other severance payments to which Executive may otherwise be entitled, including, without limitation, under any employment contract or severance plan, and benefits under this Agreement shall be offset to the extent necessary to give effect to this proviso.  Except as otherwise expressly provided herein, amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company at or subsequent to the effective date of a Change in Control shall be payable in accordance with such plan, policy, practice or program.

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5.2          Employment Status.  This Agreement does not constitute a contract of employment, nor does it impose on Executive any obligation to remain as an employee or on the Company any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at will employee, or (iii) to change the Company’s policies regarding termination of employment.

ARTICLE VI
NON-ALIENATION OF BENEFITS

No benefit hereunder shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void.

ARTICLE VII

DEFINITIONS

For purposes of the Agreement, the following terms shall have the meanings set forth below:

7.1          “Agreement” means this Change in Control Severance Agreement.

7.2          “Base Salary” means Executive’s salary (excluding bonus, any other incentive or other payments and stock option exercises) at the rate paid by the Company in consideration for Executive’s service on the day prior to the effective date of a Change in Control or at such higher rate as may be in effect during the Term and which is includable in the gross income of Executive for federal income tax purposes or which would have been includable in gross income except for an election either under Section 125 or 402(e)(3) of the Code or under the terms of a nonqualified deferred compensation arrangement sponsored by the Company.

7.3          “Cause” means either of the following: (i) an intentional or grossly negligent act by Executive causing material harm to the Company or (ii) Executive’s conviction of, or plea of “guilty” or “no contest” to, a felony.

7.4          “Change in Control” means the consummation of any one of the following events:  (i) a sale of all or substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation (other than a transaction the principal purpose of which is to change the state of the Company’s incorporation or a transaction in which the voting securities of the Company are exchanged for beneficial ownership of at least fifty percent (50%) of the voting securities of the controlling acquiring corporation); (iii) a merger or consolidation in which the Company is the surviving corporation and less than fifty percent (50%) of the voting securities of the Company which are outstanding immediately after the consummation of such transaction are beneficially owned, directly or indirectly, by the persons who owned such voting securities immediately prior to such transaction; (iv) any transaction or series of related transactions after which any person (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934), other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company, becomes the beneficial owner of voting securities of the Company representing fifty percent (50%) or more of the combined voting power of all of the voting securities of the Company; or (v) the liquidation or dissolution of the Company.

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

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7.6          “Company” means Zamba Corporation, a Delaware corporation, and any successor thereto.

7.7          “Disability” means a disability which qualifies Executive as disabled for purposes of receiving benefits under the Company’s long term disability plan applicable to Executive.

7.8          “Good Reason” means that any one of the following actions has been taken by the Company without Executive’s express written consent and such action has not been promptly reversed within thirty (30) days following written notice from Executive to the Company:  (i) a material reduction in Executive’s job responsibilities given Executive’s prior position and responsibilities with the Company, it being deemed that a position with a different title but providing similar activities, given the size of the combined company, shall not be considered a material reduction in Executive’s job responsibilities; (ii) any reduction in Executive’s compensation and aggregate benefits as in effect immediately prior to such reduction; (iii) relocation of Executive’s workplace to a facility or location more than twenty-five (25) miles from Executive’s workplace immediately prior to such relocation; (iv) any purported termination of Executive’s employment which is not effected by reason of death, disability, or Cause; (v) the failure or refusal of a successor to the Company to assume the Company’s obligations under this Agreement, as provided in Section 8.7 below; or (vi) a material breach by the Company or any successor to the Company of any of the material provisions of this Agreement

7.9          “Term” means the period beginning on the effective date of a Change in Control and ending thirteen (13) months thereafter.

7.10        “Triggering Event” means an event described in Section 2.1(a), 2.2(a), 2.3 or 2.4 above.  No other event shall be a Triggering Event for purposes of this Agreement.

ARTICLE VIII

GENERAL PROVISIONS

8.1          Notices.  Any notices provided hereunder must be in writing and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by telex or facsimile) or the third day after mailing by first class mail, to the Company at its primary office location and to Executive at his address as listed in the Company’s payroll records.  Any payments made by the Company to Executive under the terms of this Agreement shall be delivered to Executive either in person or at his address as listed in the Company’s payroll records.

8.2          Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

8.3          Waiver.  If either party should waive any breach of any provisions of this Agreement, he or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

8.4          Complete Agreement.  This Agreement, including Exhibit A, constitutes the entire agreement between Executive and the Company and it is the complete, final, and exclusive embodiment

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of their agreement with regard to this subject matter.  It is entered into without reliance on any promise or representation other than those expressly contained herein.

8.5          Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

8.6          Headings.  The headings of the Articles and Sections hereof are inserted for convenience only and shall neither be deemed to constitute a part hereof nor to affect the meaning thereof.

8.7          Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not delegate any of his duties hereunder and he may not assign any of his rights hereunder without the written consent of the Company, which consent shall not be withheld unreasonably.

8.8          Attorneys’ Fees.  If either party hereto brings any action to enforce his or its rights hereunder, the prevailing party in any such action shall be entitled to recover his or its reasonable attorneys’ fees and costs incurred in connection with such action.

8.9          Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of Minnesota.

8.10        Construction of Plan.  In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year written above.

ZAMBA CORPORATION, a Delaware corporation		PAUL MCLEAN Executive
By:	/s/ Michael H. Carrel	/s/ Paul McLean
Name: Michael H. Carrel
Title: CFO
Exhibit A: Employee Agreement and Release

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EXHIBIT A

EMPLOYEE AGREEMENT AND RELEASE

I understand and agree completely to the terms set forth in the foregoing agreement.

Except as otherwise set forth in this Agreement, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the date I sign this Agreement, including but not limited to:  all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the federal Americans with Disabilities Act of 1990; state laws comparable to the foregoing federal laws; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; emotional distress; and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to release the Company from its obligation to indemnify me pursuant to the Company’s Indemnification Agreement.

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA.  I also acknowledge that the consideration given for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled.  I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise after the date I sign this Agreement; (B) I have the right to consult with an attorney prior to executing this Agreement; (C) I have twenty-one (21) days to consider this Agreement (although I may choose to voluntarily execute this Agreement earlier); (D) I have seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; and (E) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is executed by me, provided that the Company has also executed this Agreement by that date (“Effective Date”).

By:

Date:

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EX-10.63

EXHIBIT 10.63

SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release (“Agreement”) is entered into as of January 27, 2003, by ZAMBA Corporation d/b/a Zamba Solutions (“Zamba”) and Todd Fitzwater (“Fitzwater”).

F A C T S

A.            On or about September 18, 1998, Zamba and Fitzwater entered into a Subordinated Convertible Promissory Note (the “Note”), which was amended by Amendment No. 1 dated March 26, 2002 (the “Amendment”), which was incorporated into and became part of the Note.

B.            Zamba and Fitzwater have agreed to terminate the Note, and any amendments or modifications thereto, on the terms and conditions set forth below.

Now, therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.             Termination of Note.  By execution of this Agreement, the parties wish to memorialize their agreement regarding the termination of the Note.

2.             Termination Payment.  In consideration for Fitzwater’s agreement to terminate the Note, Zamba shall pay to Fitzwater the sum of One Hundred Sixty-five Thousand Dollars ($165,000) (the “Termination Cash Payment”).  The Termination Cash Payment shall be payable within three (3) business days of the latter of the Effective Date and Zamba’s receipt of the entire Seven Hundred Fifty Thousand Dollar payment owed to it on December 15, 2002, pursuant to its Loan Agreement dated November 4, 2002, with Entrx Corporation (the “Entrx Loan”).   The Termination Cash Payment shall be delivered to Fitzwater in the form of a wire transfer in accordance with wire transfer instructions provided by Fitzwater to Zamba on the Effective Date.  Additionally, as further consideration of Fitzwater’s agreement to terminate the Note, Zamba shall transfer to either Fitzwater or the Fitzwater Family 1999 Trust (“Family Trust”), in accordance with written instructions to be provided by Fitzwater prior to the transfer, an aggregate of 16,667 shares of NextNet Wireless, Inc. (“NextNet”) Series A Preferred Stock owned by Zamba (the “Termination NextNet Transfer”), pursuant to the provisions described in Section 3 of this Agreement.

3.             NextNet Transfer Provisions.  Within three (3) business days of the Effective Date, Zamba shall begin the Termination NextNet Transfer at a deemed purchase price of $6.00 per share.  Promptly following the Effective Date, Zamba 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 dated as of September 21, 1998 among Zamba, NextNet and the Series B purchasers identified therein (the “Right of First Refusal Agreement”).

If NextNet elects to exercise its right of first refusal pursuant to the Right of First Refusal Agreement, the amount paid by NextNet shall be paid to Fitzwater within five business days of Zamba’s receipt of full payment from NextNet for the shares subject to the Termination NextNet Transfer (the “Shares”), and Fitzwater shall not receive any of the Shares, provided that Zamba shall pay to Fitzwater the difference between $6.00 per share and the price per share paid by NextNet, if any.  If NextNet declines to exercise its right of first refusal, Zamba shall, within five business days after Zamba’s receipt of NextNet’s notice to decline its right or the expiration of the period of time in which NextNet has the right to exercise first refusal, notify each investor in NextNet eligible under the Right of First Refusal Agreement of its opportunity to exercise its pro rata right of first refusal pursuant to the Right of First Refusal Agreement.

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If any of the eligible investors in NextNet elects to exercise its pro rata right of first refusal, Zamba will forward to Fitzwater the payments Zamba receives from such investor(s) within five business days of Zamba’s receipt of such payment(s), and the number of Shares that Fitzwater will receive pursuant to this Agreement shall be reduced on a share-for-share basis , provided that Zamba shall pay to Fitzwater the difference between $6.00 per share and the price per share paid by such investor(s), if any.  Promptly after the expiration of the investor pro rata right of first refusal period, Zamba shall cause NextNet to deliver to Fitzwater a certificate registered in Fitzwater’s name representing the Shares transferred.

4.             Share Legends.  The Shares issued to Fitzwater shall contain the following legends:

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 NEXTNET WIRELESS, INC. 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.

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG NEXTNET WIRELESS, INC. AND CERTAIN STOCKHOLDERS OF THE COMPANY (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AGREEMENT BY AND BETWEEN THE STOCKHOLDER, NEXTNET WIRELESS, INC. AND CERTAIN HOLDERS OF PREFERRED STOCK OF THE CORPORATION.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.

5.             Zamba Release.  Zamba, for itself and for its affiliated corporations and partnerships, officers, directors, shareholders, agents, representatives, employees, attorneys, shareholders, successors in interest, personal representatives, heirs, assigns and each of them, absolutely, fully and forever releases and discharges Fitzwater and Fitzwater’s respective partners, agents, representatives, employees, servants, attorneys, successors in interest, assigns and each of them, whether past, present or future, of and from any and all claims, demands, liabilities, obligations, losses, controversies, costs, expenses, attorneys’ fees and damages of every kind, nature, character or description whatsoever, whether in law or in equity, and whether known or unknown, suspected or unsuspected, arising out of, connected with, or in any way related to the Note.  Zamba acknowledges and agrees that the release set forth above applies to all claims relating to the Note whether those claims are known or unknown, foreseen or unforeseen.

6.             Fitzwater Release.  Except for the obligations of Zamba expressly set forth herein, and subject to the provisions of Section 11 of this Agreement, Fitzwater, for himself and for his partners, family agents, representatives, employees, attorneys, shareholders, successors in interest, personal representatives, heirs, assigns and each of them, absolutely, fully and forever releases and discharges Zamba and its officers, directors, shareholders, agents, representatives, employees, servants, attorneys, successors in interest, assigns and each of them, whether past, present or future, of and from any and all claims, demands, liabilities, obligations, losses, controversies, costs, expenses, attorneys’ fees and damages of every kind, nature, character or description whatsoever, whether in law or in equity, and

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whether known or unknown, suspected or unsuspected, arising out of, connected with, or in any way related to the Note.  Fitzwater acknowledges and agrees that the release set forth above applies to all claims relating to the Note whether those claims are known or unknown, foreseen or unforeseen.

7.             Representations and Warranties of Fitzwater.  As a material inducement for Zamba’s issuance and transfer of the Shares, Fitzwater represents, warrants, covenants and acknowledges to Zamba that:

(a)           Fitzwater understands that the Shares and their transfer to Fitzwater have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws.  Instead, Zamba is transferring the Shares pursuant to exemptions from such laws and in doing so is relying on, among other things, Fitzwater’s representations, warranties, covenants and acknowledgements contained herein.

(b)           Fitzwater is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and as further represented in Section 8 of this Agreement.

(c)           Fitzwater has sufficient knowledge and experience in financial and business matters that Fitzwater is capable of evaluating the merits and risks of investing in the Shares.

(d)           Fitzwater has been provided with or given access to such information concerning NextNet, including, but not limited to, its business, financial condition and prospects (collectively, “NextNet’s Business”), as Fitzwater has requested and/or deems necessary and has utilized such information to Fitzwater’s satisfaction for the purpose of making an investment in the Shares pursuant to the terms hereof and determining the value of the Shares.  Fitzwater hereby acknowledges that he has made his own independent investigation of NextNet’s Business to his satisfaction and that it is not relying on any information which may been provided by Zamba, including, but not limited to, Zamba’s officers, directors, employees, agents and other representatives (each of whom, a “Company Representative”), in connection with his acquisition of the Shares or the determination of their value.  Fitzwater hereby agrees to indemnify and hold harmless each Company Representative in connection with any loss, claim or demand which Fitzwater now has or in the future may have in connection with or related to his acquisition of the Shares pursuant to the terms hereof except for claims by Fitzwater for any breach by Zamba of its representations or warranties under Section 9 of this Agreement.

(e)           Fitzwater understands that the acquisition of the Shares is a highly speculative investment and involves a high degree of risk.  Fitzwater acknowledges that he may not ever be able to resell the Shares acquired pursuant to the terms hereof, whether at the deemed price or otherwise.  Fitzwater believes that the investment in the Shares is suitable based upon Fitzwater’s investment objectives and financial needs and Fitzwater has adequate means of providing for current financial needs and personal contingencies, has no need for liquidity of investment with respect to the Shares and can afford a complete loss of such investment.

(f)            Fitzwater is acquiring the Shares for his own account, for investment purposes only, and without the intention of reselling or redistributing the same.

(g)           Fitzwater is aware that, in the view of the Securities and Exchange Commission, a acquisition 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 such shares were pledged, would constitute an intent inconsistent with the foregoing representation.

(h)           If, contrary to Fitzwater’s foregoing intentions, he should later desire to dispose of or transfer any of the Shares in any manner, he shall not do so without (i) first obtaining an opinion of counsel satisfactory to 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

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of such shares under the Securities Act and applicable state securities laws.

(i)            Neither Zamba 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 such shares.  Accordingly, Fitzwater may be prohibited by law from selling or otherwise transferring or disposing of the Shares and likely will have to bear the economic risk of his investment in NextNet for an indefinite period.

(j)            Except as provided in this Agreement, to the knowledge of Fitzwater, no other individual or entity needs to consent to this Agreement or the transactions contemplated hereunder, and Fitzwater has obtained all necessary authorizations to enter into this Agreement and the transactions contemplated hereunder,

(k)           This Agreement is a legal, valid, and binding obligation of Fitzwater enforceable in accordance with its terms.

(l)            There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Fitzwater who might be entitled to any fee or commission from Zamba or NextNet upon consummation of the transactions contemplated by this Agreement.

(m)          Fitzwater agrees to be bound by the transfer restrictions described in Section 3.6 of the Series A Preferred Stock Purchase Agreement dated as of September 21, 1998 between Zamba and NextNet (the “Zamba Acquisition Agreement”).

(n)           Fitzwater acknowledges that the provisions of the Right of First Refusal Agreement shall continue to apply to the Shares.

(o)           Fitzwater acknowledges that he has already received a copy of the Amended and Restated Investors’ Rights Agreement dated as of July 10, 2000 among the Company, NextNet and the investors and founders identified therein (the “Investors’ Rights Agreement”).  Fitzwater understands that, pursuant to the terms of the Investors’ Rights Agreement, the registration rights described in Section 1 and the right of first offer described in Section 2.6 thereof have not been assigned to Fitzwater by Zamba.  Accordingly, Fitzwater is not entitled to any registration rights or rights of first offer with respect to Fitzwater’s ownership of the Shares acquired pursuant to the terms hereof.

(p)           Fitzwater acknowledges that the Shares shall continue to be subject to the terms and conditions of the Zamba Acquisition Agreement, the Investors’ Rights Agreement, and the Voting Agreement dated September 21, 1998, among NextNet, the Company and certain other investors (the “Voting Agreement”), except for the provisions of those agreements that, by their nature, are not transferable or assignable to Fitzwater.

(q)           Until such time as Zamba beneficially holds fewer than 100,000 shares of NextNet Series A Preferred Stock, Fitzwater agrees to vote or act with respect to any of its shares of NextNet Series A Preferred Stock so as to elect the nominee of Zamba to be the representative of the Series A shareholders on the NextNet Board of Directors.

(r)            All representations made and obligations undertaken by Fitzwater in this Agreement regarding NextNet shares shall also be binding upon Family Trust as if such representations were made and obligations undertaken by Family Trust.  Fitzwater has the full right and authority to validly enter into such obligations on behalf of Family Trust.

8.             Representation Regarding Accredited Investor Status.

(a)           Fitzwater is an “accredited investor” as defined in Rule 501(a) of Regulation D of the Securities Act, because Fitzwater meets at least one of the following criteria (please check one):

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o            Fitzwater is a natural person whose individual net worth, or joint net worth with his or her spouse, exceeds $1,000,000 at the time of Fitzwater’s acquisition; or

o            Fitzwater is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with Fitzwater’s spouse in excess of $300,000 in each of those years and who reasonably expects to reach the same income level in the current year; or

o            Fitzwater is either (i) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity, any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (ii) an insurance company as defined in Section 2(13) of the Securities Act, (iii) an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of such Act, (iv) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, or (v) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which plan fiduciary is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are accredited investors; or

o            Fitzwater is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; or

o            Fitzwater is an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000; or

o            Fitzwater is a director or executive officer of NextNet; or

o            Fitzwater is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose acquisition is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D of the Securities Act; or

o            Fitzwater is any entity in which all of the equity owners are accredited investors.

(b)           Family Trust is an “accredited investor” as defined in Rule 501(a) of Regulation D of the Securities Act, because Family Trust meets at least one of the following criteria (please check one):

ý            Family Trust is a natural person whose individual net worth, or joint net worth with his or her spouse, exceeds $1,000,000 at the time of Family Trust’s acquisition; or

o            Family Trust is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with Family Trust’s spouse in excess of $300,000 in each of those years and who reasonably expects to reach the same income level in the current year; or

o            Family Trust is either (i) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity, any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (ii) an insurance company as defined in Section 2(13) of the Securities Act, (iii) an investment company registered under the Investment

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Company Act of 1940 or a business development company as defined in Section 2(a)(48) of such Act, (iv) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, or (v) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which plan fiduciary is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are accredited investors; or

o            Family Trust is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; or

o            Family Trust is an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000; or

o            Family Trust is a director or executive officer of NextNet; or

o            Family Trust is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose acquisition is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D of the Securities Act; or

o            Family Trust is any entity in which all of the equity owners are accredited investors.

9.             Representations and Warranties of Zamba.  As a material inducement for Fitzwater’s and Family Trust’s acquisition of the Shares to be acquired pursuant to the terms hereof, Zamba represents, warrants, covenants and acknowledges to Fitzwater and Family Trust that:

(a)           Zamba 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 and is duly authorized to enter into this Agreement and consummate the transactions contemplated herein.

(b)           The Shares being transferred to Fitzwater or Family Trust pursuant to the terms hereof will be transferred to Fitzwater or Family Trust free and clear of any liens, encumbrances or other restrictions, other than restrictions on transfer that are contained in the Zamba Acquisition Agreement, the Right of First Refusal Agreement, the Investors Rights Agreement, the Voting Agreement, all of which as they may be amended from time to time, or are otherwise set forth herein or imposed by applicable securities laws, provided that Zamba will comply with all of such restrictions so that the Shares will be validly transferred to Fitzwater or Family Trust.

10.           Merger, Consolidation or Other Change in Control of Zamba or NextNet.

(a)           If prior to the delivery of the Shares Zamba shall at any time consolidate with or merge into to another corporation (where Zamba is not the continuing corporation after such merger, consolidation, sale of all or substantially all of its assets or other change-in-control), or Zamba shall sell, transfer or lease all or substantially all of its assets, then, in any such case, Fitzwater or Family Trust thereupon (and thereafter) shall continue to be entitled to require Zamba to be bound by the terms of this Agreement and shall be entitled to receive the number of Shares determined in accordance with Section 3 above.

(b)           If prior to the delivery of the Shares 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,

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then, in any such case, Fitzwater or Family Trust 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 3 above.

11.           Effective Date.  This Agreement shall be effective upon execution by all parties (the “Effective Date”).  Notwithstanding the foregoing, if within 91 days of the execution of this Agreement, Zamba becomes a debtor under the Bankruptcy Code or makes any assignment for the benefit of its creditors and Fitzwater  is required to return the Termination Cash Payment to Zamba or its successor or assignee, then the release set forth in Section 6 of this Agreement shall become void and the Note shall not have been terminated but will remain in full force and effect as if this Agreement had not been entered into by the parties.  The purpose of the foregoing is to allow Fitzwater to seek all potential remedies and damages from Zamba in the event Zamba becomes a debtor in a bankruptcy case (either voluntarily or involuntarily) or makes an assignment for the benefit of its creditors and the consideration for this Agreement fails because the Termination Cash Payment is required to be returned by Fitzwater.  In the absence of either such event within the 91-day period or the return of the Termination Cash Payment, however, the release set forth in Section 6 of this Agreement shall remain in full force and effect and the Note shall remain terminated.

12.           Voluntary Agreement.  Both Zamba and Fitzwater enter into this Agreement voluntarily, after having had the opportunity to review it and consult with advisors, including legal counsel, of their choice.  This Agreement sets forth the entire agreement between the parties regarding the subject matter herein, superseding all other agreements, understandings, memoranda, or proposals, either written or oral, regarding the same subject matter.  This Agreement may only be modified or amended by a writing signed by all parties.

13.           Governing Law.  This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of Minnesota, except for its choice of laws principles.  Any action regarding or relating to this Agreement shall be venued in a state or federal court located in Hennepin in the State of Minnesota.

14.           No Assignment of Claims. The parties hereto represent and warrant that they have not transferred or otherwise assigned, either by contract or operation of law, any of the claims released under this Agreement.

15.           No Reliance on Representations.  Each party to this Agreement represents and acknowledges that in executing this Agreement that party does not rely and has not relied upon any representation or statement made by the other party or by any of such other party’s agents, attorneys, or representatives with regard to the subject matter, basis or effect of this Agreement or otherwise, other than those representations and statements specifically stated in this written Agreement.

16.           Counterparts and Facsimiles. This Agreement may be executed in one or more counterparts, which shall be deemed effective upon full execution of this Agreement by all parties.  Each counterpart shall be deemed an original, but all of which together shall constitute one and the same instrument and agreement.  In addition, a copy of this Agreement executed by a party hereto and telecopied to the other party shall be deemed to constitute delivery of an originally executed copy of this Agreement to the other party.  A facsimile signature shall be enforceable to the same extent as an original signature.

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17.           Authority.  The parties executing this Agreement represent that they each have authority to enter into this Agreement, and that this Agreement is binding on such party and enforceable in accordance with its terms.  The persons executing this Agreement on behalf of the parties to this Agreement represent and warrant that they individually have authority to enter into this Agreement on behalf of such parties.

IN WITNESS WHEREOF, the parties hereby execute this Agreement.

FITZWATER				ZAMBA
Todd Fitzwater				ZAMBA Corporation
By:	/s/ Todd Fitzwater			By:	/s/ Michael H. Carrel
Name:			Todd Fitzwater	Name:			Michael H. Carrel
Title:				Title:		CFO
Date:		1/23/03		Date:		1/27/03

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EX-10.64

EXHIBIT 10.64

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is made and entered into as of the 12 day of Feb, 2003, by and between Zamba Corporation, a Delaware corporation (the “Company”), and John Schwieters (the “Purchaser”).

WHEREAS, the Company owns shares of Series A Preferred Stock, $.0001 par value per share (“Zamba’s NextNet Stock”), of NextNet Wireless, Inc., a Delaware corporation (“NextNet”), pursuant to the Series A Preferred Stock Purchase Agreement dated as of September 21, 1998 between Zamba and NextNet (the “Zamba Purchase Agreement”); and

WHEREAS, Zamba’s NextNet Stock can be converted into common shares of NextNet at the exchange ratio of three shares of NextNet common stock for every one share of Zamba’s NextNet Stock; and

WHEREAS, Zamba’s NextNet Stock is also subject to the Second Amended and Restated Investors’ Rights Agreement dated as of November 14, 2002 among the Company, NextNet and the investors and founders identified therein (the “Investors’ Rights Agreement”), Right of First Refusal Agreement dated as of September 21, 1998 among the Company, NextNet and the Series B purchasers identified therein (the “Right of First Refusal Agreement”), and the Second Amended and Restated Voting Agreement dated November 14, 2002, among NextNet, the Company and certain other investors (the “Voting Agreement”); and

WHEREAS, the Purchaser is thoroughly familiar with NextNet’s business, financial condition and prospects; and

WHEREAS, the Purchaser desires to purchase from the Company and the Company desires to sell to the Purchaser certain of its shares of Zamba’s NextNet Stock; and

WHEREAS, the Purchaser acknowledges that there is no established trading market or other current valuation for Zamba’s NextNet Stock;

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, shares of Zamba’s NextNet Stock in accordance with the following terms:

(a)           The Company hereby sells to the Purchaser, and the Purchaser hereby purchases from the Company, a number of shares of Zamba’s NextNet Stock (the “Shares”) that is determined by dividing the aggregate purchase price of $250,000 by a per share purchase price that is the lesser of $6.00 per share or such lower per share price (on a common share equivalent basis, without giving effect to differences in rights) that

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NextNet receives on sales of other preferred stock  for aggregate consideration of at least $250,000 on or before March 31, 2003.  Promptly upon execution of this Agreement, and as a condition to the Company taking the steps outlined in subparagraph (b) below, the Purchaser shall pay the full amount of the purchase price to the Company by check or wire transfer in immediately available funds to an account designated in writing by the Company.

(b)           Promptly upon receipt of the purchase price, 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.

(c)           If NextNet elects to exercise its right of first refusal pursuant to Section 1.1 of the Right of First Refusal Agreement, the purchase price shall be refunded to the Purchaser within five business days of the Company’s receipt of full payment from NextNet for the Shares, without interest, and the Purchaser shall not receive any of the purchased shares of Zamba’s NextNet Stock.  If NextNet declines to exercise its right of first refusal, the Company shall, within five business days after the Company’s receipt of NextNet’s notice to decline its right, notify each investor in NextNet eligible under the Right of First Refusal Agreement of its opportunity to exercise its pro rata right of first refusal pursuant to the Right of First Refusal Agreement.

(d)           If any of the eligible investors in NextNet elects to exercise its pro rata right of first refusal pursuant to Section 1.1 of the Right of First Refusal Agreement, the Company will forward to the Purchaser the payments the Company receives from such investor(s) within five business days of the Company’s receipt of such payment, and the number of shares of Zamba’s NextNet Stock that the Purchaser will receive pursuant to this Agreement shall be reduced on a share-for-share basis basis.  Promptly after the expiration of the investor pro rata right of first refusal period, the Company shall deliver to the Purchaser a certificate registered in the Purchaser’s name representing the number of shares of Zamba’s NextNet Stock purchased.

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

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

(b)           The Purchaser is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and as further represented in Section 3 of this Agreement.

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(c)           The Purchaser has sufficient knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of investing in the shares of Zamba’s NextNet Stock.

(d)           The Purchaser has been provided with or given access to such information concerning NextNet, including, but not limited to, its business, financial condition and prospects (collectively, “NextNet’s Business”), as the Purchaser has requested and/or deems necessary and has utilized such information to the Purchaser’s satisfaction for the purpose of making an investment in the shares of Zamba’s NextNet Stock pursuant to the terms hereof.  The Purchaser hereby acknowledges that it has made its own independent investigation of NextNet’s Business and that it is not relying on any information which may been provided by the Company, including, but not limited to, the Company’s officers, directors, employees, agents and other representatives (collectively, the “Company Representatives”), in connection with its purchase of the shares of Zamba’s NextNet Stock.  The Purchaser hereby agrees to indemnify and hold harmless each Company Representative in connection with any loss, claim or demand which the Purchaser now has or in the future may have in connection with its purchase of the shares of Zamba’s NextNet Stock pursuant to the terms hereof.

(e)           The Purchaser understands that the purchase of the shares of Zamba’s NextNet Stock is a highly speculative investment and involves a high degree of risk.  The Purchaser acknowledges that it may not ever be able to resell the shares of Zamba’s NextNet Stock purchased pursuant to the terms hereof, whether at the price paid by the Purchaser or otherwise.  The Purchaser believes that the investment in the shares of Zamba’s NextNet Stock is suitable based upon the Purchaser’s investment objectives and financial needs and the Purchaser has adequate means of providing for current financial needs and personal contingencies, has no need for liquidity of investment with respect to the shares of Zamba’s NextNet Stock and can afford a complete loss of such investment.

(f)            The Purchaser is acquiring the shares of Zamba’s NextNet Stock for its own account, for investment purposes only, and without the intention of reselling or redistributing the same.

(g)           The Purchaser is aware that, in the view of the Securities and Exchange Commission, a purchase of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock and for which such shares were pledged, would constitute an intent inconsistent with the foregoing representation.

(h)           If, contrary to the Purchaser’s foregoing intentions, it should later desire to dispose of or transfer any of the shares of Zamba’s NextNet Stock in any manner, the undersigned shall not do so without (i) first obtaining an opinion of counsel satisfactory to NextNet that such proposed disposition or transfer may lawfully be made without registration pursuant to the Securities Act and applicable state securities laws or

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(ii) registering the resale of such shares under the Securities Act and applicable state securities laws.

(i)            Neither the Company nor NextNet has any obligation to register the shares of Zamba’s NextNet Stock 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 such shares.  Accordingly, the Purchaser may be prohibited by law from selling or otherwise transferring or disposing of the Shares and likely will may have to bear the economic risk of its investment in NextNet for an indefinite period.

(j)            The Purchaser, if other than an individual, represents that (a) the Purchaser was not organized for the specific purpose of acquiring the shares of Zamba’s NextNet Stock; and (b)         this Agreement has been duly authorized by all necessary action on the part of the Purchaser, has been duly executed by an authorized officer or representative of the Purchaser, and is a legal, valid, and binding obligation of the Purchaser enforceable in accordance with its terms.

(k)           There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser who might be entitled to any fee or commission from the Company or NextNet upon consummation of the transactions contemplated by this Agreement.

(l)            Purchaser agrees to be bound by the transfer restrictions described in Section 3.6 of the Zamba Purchase Agreement.

(m)          Purchaser acknowledges that the provisions of the Right of First Refusal Agreement shall continue to apply to the shares of Zamba’s NextNet Stock owned by Purchaser.

(n)           Purchaser acknowledges that he or she has already received a copy of the  Investors’ Rights Agreement.  Purchaser understands that, pursuant to the terms of the Investors’ Rights Agreement, the registration rights described in Section 1 and the right of first offer described in Section 2.6 thereof have not been assigned to the Purchaser by the Company.  Accordingly, the Purchaser is not entitled to any registration rights or rights of first offer with respect to the Purchaser’s ownership of the shares of Zamba’s NextNet Stock purchased pursuant to the terms hereof.

(o)           Purchaser acknowledges that the shares of Zamba’s NextNet Stock shall continue to be subject to the terms and conditions of the Zamba Purchase Agreement, the Investors’ Rights Agreement, and the Voting Agreement, except for the provisions of those agreements that, by their nature, are not transferable or assignable to Purchaser.

(p)           Until such time as Zamba beneficially holds fewer than 100,000 shares of NextNet Series A Preferred Stock, Purchaser shall vote or act with respect to any and all of its shares of NextNet Series A Preferred Stock so as to elect the nominee of Zamba to be the representative of the Series A shareholders on the NextNet Board of Directors.

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3.             Accredited Investor Status.  The Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D of the Securities Act, because the Purchaser meets at least one of the following criteria (please check one):

ý            The Purchaser is a natural person whose individual net worth, or joint net worth with his or her spouse, exceeds $1,000,000 at the time of the Purchaser’s purchase; or

ý            The Purchaser is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with the Purchaser’s spouse in excess of $300,000 in each of those years and who reasonably expects to reach the same income level in the current year; or

o            The Purchaser is either (i) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity, any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (ii) an insurance company as defined in Section 2(13) of the Securities Act, (iii) an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of such Act, (iv) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, or (v) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which plan fiduciary is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are accredited investors; or

o            The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; or

o            The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the shares of Zamba’s NextNet Stock, with total assets in excess of $5,000,000; or

o            The Purchaser is a director or executive officer of NextNet; or

o            The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the shares of Zamba’s NextNet Stock, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D of the Securities Act; or

o            The Purchaser is any entity in which all of the equity owners are accredited investors.

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4.             Representations and Warranties of the Company.  As a material inducement for the Purchaser’s purchase of the shares of Zamba’s NextNet Stock to be purchased pursuant to the terms hereof, 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 of Zamba’s NextNet Stock being sold to the Purchaser pursuant to the terms hereof will be transferred to the Purchaser free and clear of any liens, encumbrances or other restrictions, other than restrictions on transfer that are contained in the Zamba Purchase Agreement, the Right of First Refusal Agreement, the Investors Rights Agreement, the Voting Agreement, all of which as they may be amended from time to time, or are otherwise set forth herein or imposed by applicable securities laws.

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

(a)           If prior to the delivery of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock determined in accordance with Section 1 above.

(b)           If prior to the delivery of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock (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 above.

6.             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 of Zamba’s NextNet Stock to be purchased hereunder.

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7.             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)           Legends.  The shares of Zamba’s NextNet Stock issued to the Purchaser pursuant to this Agreement shall contain the following legends:

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 NEXTNET WIRELESS, INC. 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.

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG NEXTNET WIRELESS, INC. AND CERTAIN STOCKHOLDERS OF THE COMPANY (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AGREEMENT BY AND BETWEEN THE STOCKHOLDER, NEXTNET WIRELESS, INC. AND CERTAIN HOLDERS OF PREFERRED STOCK OF THE CORPORATION.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.

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(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:
	Fax:

(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 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)            The Purchaser and the Company understand the meaning and legal consequences of the agreements, representations and warranties contained herein.  The Purchaser and the Company agree that such agreements, representations and warranties shall survive and remain in full force and effect after the execution hereof and payment for the shares of Zamba’s NextNet Stock to be purchased pursuant to the terms hereof.

(g)           Any controversy or claim arising out of or relating to this Agreement, the Purchaser’s purchase of the shares of Zamba’s NextNet Stock or any breach of this Agreement, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Securities Arbitration Rules, and judgment on the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

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

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

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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/ John Schwieters
Name:	Michael H. Carrel	Name: John Schwieters
Title:	Chief Financial Officer

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EX-10.65

EXHIBIT 10.65

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is made and entered into as of the 12 day of Feb, 2003, by and between Zamba Corporation, a Delaware corporation (the “Company”), and John Schwieters (the “Purchaser”).

WHEREAS, the Company owns shares of Series A Preferred Stock, $.0001 par value per share (“Zamba’s NextNet Stock”), of NextNet Wireless, Inc., a Delaware corporation (“NextNet”), pursuant to the Series A Preferred Stock Purchase Agreement dated as of September 21, 1998 between Zamba and NextNet (the “Zamba Purchase Agreement”); and

WHEREAS, Zamba’s NextNet Stock can be converted into common shares of NextNet at the exchange ratio of three shares of NextNet common stock for every one share of Zamba’s NextNet Stock; and

WHEREAS, Zamba’s NextNet Stock is also subject to the Second Amended and Restated Investors’ Rights Agreement dated as of November 14, 2002 among the Company, NextNet and the investors and founders identified therein (the “Investors’ Rights Agreement”), Right of First Refusal Agreement dated as of September 21, 1998 among the Company, NextNet and the Series B purchasers identified therein (the “Right of First Refusal Agreement”), and the Second Amended and Restated Voting Agreement dated November 14, 2002, among NextNet, the Company and certain other investors (the “Voting Agreement”); and

WHEREAS, the Purchaser is thoroughly familiar with NextNet’s business, financial condition and prospects; and

WHEREAS, the Purchaser desires to purchase from the Company and the Company desires to sell to the Purchaser certain of its shares of Zamba’s NextNet Stock; and

WHEREAS, the Purchaser acknowledges that there is no established trading market or other current valuation for Zamba’s NextNet Stock;

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, shares of Zamba’s NextNet Stock in accordance with the following terms:

(a)        The Company hereby sells to the Purchaser, and the Purchaser hereby purchases from the Company, a number of shares of Zamba’s NextNet Stock (the “Shares”) that is determined by dividing the aggregate purchase price of $250,000 by a per share purchase price that is the lesser of $6.00 per share or such lower per share price (on a common share equivalent basis, without giving effect to differences in rights) that

NextNet receives on sales of other preferred stock  for aggregate consideration of at least $250,000 on or before March 31, 2003.  Promptly upon execution of this Agreement, and as a condition to the Company taking the steps outlined in subparagraph (b) below, the Purchaser shall pay the full amount of the purchase price to the Company by check or wire transfer in immediately available funds to an account designated in writing by the Company.

(b)        Promptly upon receipt of the purchase price, 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.

(c)        If NextNet elects to exercise its right of first refusal pursuant to Section 1.1 of the Right of First Refusal Agreement, the purchase price shall be refunded to the Purchaser within five business days of the Company’s receipt of full payment from NextNet for the Shares, without interest, and the Purchaser shall not receive any of the purchased shares of Zamba’s NextNet Stock.  If NextNet declines to exercise its right of first refusal, the Company shall, within five business days after the Company’s receipt of NextNet’s notice to decline its right, notify each investor in NextNet eligible under the Right of First Refusal Agreement of its opportunity to exercise its pro rata right of first refusal pursuant to the Right of First Refusal Agreement.

(d)        If any of the eligible investors in NextNet elects to exercise its pro rata right of first refusal pursuant to Section 1.1 of the Right of First Refusal Agreement, the Company will forward to the Purchaser the payments the Company receives from such investor(s) within five business days of the Company’s receipt of such payment, and the number of shares of Zamba’s NextNet Stock that the Purchaser will receive pursuant to this Agreement shall be reduced on a share-for-share basis basis.  Promptly after the expiration of the investor pro rata right of first refusal period, the Company shall deliver to the Purchaser a certificate registered in the Purchaser’s name representing the number of shares of Zamba’s NextNet Stock purchased.

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

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

(b)        The Purchaser is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and as further represented in Section 3 of this Agreement.

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(c)        The Purchaser has sufficient knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of investing in the shares of Zamba’s NextNet Stock.

(d)        The Purchaser has been provided with or given access to such information concerning NextNet, including, but not limited to, its business, financial condition and prospects (collectively, “NextNet’s Business”), as the Purchaser has requested and/or deems necessary and has utilized such information to the Purchaser’s satisfaction for the purpose of making an investment in the shares of Zamba’s NextNet Stock pursuant to the terms hereof.  The Purchaser hereby acknowledges that it has made its own independent investigation of NextNet’s Business and that it is not relying on any information which may been provided by the Company, including, but not limited to, the Company’s officers, directors, employees, agents and other representatives (collectively, the “Company Representatives”), in connection with its purchase of the shares of Zamba’s NextNet Stock.  The Purchaser hereby agrees to indemnify and hold harmless each Company Representative in connection with any loss, claim or demand which the Purchaser now has or in the future may have in connection with its purchase of the shares of Zamba’s NextNet Stock pursuant to the terms hereof.

(e)        The Purchaser understands that the purchase of the shares of Zamba’s NextNet Stock is a highly speculative investment and involves a high degree of risk.  The Purchaser acknowledges that it may not ever be able to resell the shares of Zamba’s NextNet Stock purchased pursuant to the terms hereof, whether at the price paid by the Purchaser or otherwise.  The Purchaser believes that the investment in the shares of Zamba’s NextNet Stock is suitable based upon the Purchaser’s investment objectives and financial needs and the Purchaser has adequate means of providing for current financial needs and personal contingencies, has no need for liquidity of investment with respect to the shares of Zamba’s NextNet Stock and can afford a complete loss of such investment.

(f)         The Purchaser is acquiring the shares of Zamba’s NextNet Stock for its own account, for investment purposes only, and without the intention of reselling or redistributing the same.

(g)        The Purchaser is aware that, in the view of the Securities and Exchange Commission, a purchase of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock and for which such shares were pledged, would constitute an intent inconsistent with the foregoing representation.

(h)        If, contrary to the Purchaser’s foregoing intentions, it should later desire to dispose of or transfer any of the shares of Zamba’s NextNet Stock in any manner, the undersigned shall not do so without (i) first obtaining an opinion of counsel satisfactory to NextNet that such proposed disposition or transfer may lawfully be made without registration pursuant to the Securities Act and applicable state securities laws or

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(ii) registering the resale of such shares under the Securities Act and applicable state securities laws.

(i)         Neither the Company nor NextNet has any obligation to register the shares of Zamba’s NextNet Stock 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 such shares.  Accordingly, the Purchaser may be prohibited by law from selling or otherwise transferring or disposing of the Shares and likely will may have to bear the economic risk of its investment in NextNet for an indefinite period.

(j)         The Purchaser, if other than an individual, represents that (a) the Purchaser was not organized for the specific purpose of acquiring the shares of Zamba’s NextNet Stock; and (b)         this Agreement has been duly authorized by all necessary action on the part of the Purchaser, has been duly executed by an authorized officer or representative of the Purchaser, and is a legal, valid, and binding obligation of the Purchaser enforceable in accordance with its terms.

(k)        There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser who might be entitled to any fee or commission from the Company or NextNet upon consummation of the transactions contemplated by this Agreement.

(l)         Purchaser agrees to be bound by the transfer restrictions described in Section 3.6 of the Zamba Purchase Agreement.

(m)       Purchaser acknowledges that the provisions of the Right of First Refusal Agreement shall continue to apply to the shares of Zamba’s NextNet Stock owned by Purchaser.

(n)        Purchaser acknowledges that he or she has already received a copy of the  Investors’ Rights Agreement.  Purchaser understands that, pursuant to the terms of the Investors’ Rights Agreement, the registration rights described in Section 1 and the right of first offer described in Section 2.6 thereof have not been assigned to the Purchaser by the Company.  Accordingly, the Purchaser is not entitled to any registration rights or rights of first offer with respect to the Purchaser’s ownership of the shares of Zamba’s NextNet Stock purchased pursuant to the terms hereof.

(o)        Purchaser acknowledges that the shares of Zamba’s NextNet Stock shall continue to be subject to the terms and conditions of the Zamba Purchase Agreement, the Investors’ Rights Agreement, and the Voting Agreement, except for the provisions of those agreements that, by their nature, are not transferable or assignable to Purchaser.

(p)        Until such time as Zamba beneficially holds fewer than 100,000 shares of NextNet Series A Preferred Stock, Purchaser shall vote or act with respect to any and all of its shares of NextNet Series A Preferred Stock so as to elect the nominee of Zamba to be the representative of the Series A shareholders on the NextNet Board of Directors.

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3.        Accredited Investor Status.     The Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D of the Securities Act, because the Purchaser meets at least one of the following criteria (please check one):

ý       The Purchaser is a natural person whose individual net worth, or joint net worth with his or her spouse, exceeds $1,000,000 at the time of the Purchaser’s purchase; or

ý       The Purchaser is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with the Purchaser’s spouse in excess of $300,000 in each of those years and who reasonably expects to reach the same income level in the current year; or

o       The Purchaser is either (i) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity, any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (ii) an insurance company as defined in Section 2(13) of the Securities Act, (iii) an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of such Act, (iv) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, or (v) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which plan fiduciary is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are accredited investors; or

o       The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; or

o       The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the shares of Zamba’s NextNet Stock, with total assets in excess of $5,000,000; or

o       The Purchaser is a director or executive officer of NextNet; or

o       The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the shares of Zamba’s NextNet Stock, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D of the Securities Act; or

o       The Purchaser is any entity in which all of the equity owners are accredited investors.

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4.        Representations and Warranties of the Company.  As a material inducement for the Purchaser’s purchase of the shares of Zamba’s NextNet Stock to be purchased pursuant to the terms hereof, 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 of Zamba’s NextNet Stock being sold to the Purchaser pursuant to the terms hereof will be transferred to the Purchaser free and clear of any liens, encumbrances or other restrictions, other than restrictions on transfer that are contained in the Zamba Purchase Agreement, the Right of First Refusal Agreement, the Investors Rights Agreement, the Voting Agreement, all of which as they may be amended from time to time, or are otherwise set forth herein or imposed by applicable securities laws.

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

(a)        If prior to the delivery of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock determined in accordance with Section 1 above.

(b)        If prior to the delivery of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock (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 above.

6.        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 of Zamba’s NextNet Stock to be purchased hereunder.

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7.        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)        Legends.  The shares of Zamba’s NextNet Stock issued to the Purchaser pursuant to this Agreement shall contain the following legends:

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 NEXTNET WIRELESS, INC. 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.

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG NEXTNET WIRELESS, INC. AND CERTAIN STOCKHOLDERS OF THE COMPANY (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AGREEMENT BY AND BETWEEN THE STOCKHOLDER, NEXTNET WIRELESS, INC. AND CERTAIN HOLDERS OF PREFERRED STOCK OF THE CORPORATION.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.

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(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:
	Fax:

(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 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)         The Purchaser and the Company understand the meaning and legal consequences of the agreements, representations and warranties contained herein.  The Purchaser and the Company agree that such agreements, representations and warranties shall survive and remain in full force and effect after the execution hereof and payment for the shares of Zamba’s NextNet Stock to be purchased pursuant to the terms hereof.

(g)        Any controversy or claim arising out of or relating to this Agreement, the Purchaser’s purchase of the shares of Zamba’s NextNet Stock or any breach of this Agreement, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Securities Arbitration Rules, and judgment on the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

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

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

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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/ John Schwieters
Name:	Michael H. Carrel	Name: John Schwieters
Title:	Chief Financial Officer

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EX-10.66

EXHIBIT 10.66

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is made and entered into as of the 14 day of Feb, 2003, by and between Zamba Corporation, a Delaware corporation (the “Company”), and Joel Schwieters (the “Purchaser”).

WHEREAS, the Company owns shares of Series A Preferred Stock, $.0001 par value per share (“Zamba’s NextNet Stock”), of NextNet Wireless, Inc., a Delaware corporation (“NextNet”), pursuant to the Series A Preferred Stock Purchase Agreement dated as of September 21, 1998 between Zamba and NextNet (the “Zamba Purchase Agreement”); and

WHEREAS, Zamba’s NextNet Stock can be converted into common shares of NextNet at the exchange ratio of three shares of NextNet common stock for every one share of Zamba’s NextNet Stock; and

WHEREAS, Zamba’s NextNet Stock is also subject to the Second Amended and Restated Investors’ Rights Agreement dated as of November 14, 2002 among the Company, NextNet and the investors and founders identified therein (the “Investors’ Rights Agreement”), Right of First Refusal Agreement dated as of September 21, 1998 among the Company, NextNet and the Series B purchasers identified therein (the “Right of First Refusal Agreement”), and the Second Amended and Restated Voting Agreement dated November 14, 2002, among NextNet, the Company and certain other investors (the “Voting Agreement”); and

WHEREAS, the Purchaser is thoroughly familiar with NextNet’s business, financial condition and prospects; and

WHEREAS, the Purchaser desires to purchase from the Company and the Company desires to sell to the Purchaser certain of its shares of Zamba’s NextNet Stock; and

WHEREAS, the Purchaser acknowledges that there is no established trading market or other current valuation for Zamba’s NextNet Stock;

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, shares of Zamba’s NextNet Stock in accordance with the following terms:

(a)           The Company hereby sells to the Purchaser, and the Purchaser hereby purchases from the Company, a number of shares of Zamba’s NextNet Stock (the “Shares”) that is determined by dividing the aggregate purchase price of $250,000 by a per share purchase price that is the lesser of $6.00 per share or such lower per share price (on a common share equivalent basis, without giving effect to differences in rights) that

NextNet receives on sales of other preferred stock  for aggregate consideration of at least $250,000 on or before March 31, 2003.  Promptly upon execution of this Agreement, and as a condition to the Company taking the steps outlined in subparagraph (b) below, the Purchaser shall pay the full amount of the purchase price to the Company by check or wire transfer in immediately available funds to an account designated in writing by the Company.

(b)           Promptly upon receipt of the purchase price, 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.

(c)           If NextNet elects to exercise its right of first refusal pursuant to Section 1.1 of the Right of First Refusal Agreement, the purchase price shall be refunded to the Purchaser within five business days of the Company’s receipt of full payment from NextNet for the Shares, without interest, and the Purchaser shall not receive any of the purchased shares of Zamba’s NextNet Stock.  If NextNet declines to exercise its right of first refusal, the Company shall, within five business days after the Company’s receipt of NextNet’s notice to decline its right, notify each investor in NextNet eligible under the Right of First Refusal Agreement of its opportunity to exercise its pro rata right of first refusal pursuant to the Right of First Refusal Agreement.

(d)           If any of the eligible investors in NextNet elects to exercise its pro rata right of first refusal pursuant to Section 1.1 of the Right of First Refusal Agreement, the Company will forward to the Purchaser the payments the Company receives from such investor(s) within five business days of the Company’s receipt of such payment, and the number of shares of Zamba’s NextNet Stock that the Purchaser will receive pursuant to this Agreement shall be reduced on a share-for-share basis basis.  Promptly after the expiration of the investor pro rata right of first refusal period, the Company shall deliver to the Purchaser a certificate registered in the Purchaser’s name representing the number of shares of Zamba’s NextNet Stock purchased.

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

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

(b)           The Purchaser is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and as further represented in Section 3 of this Agreement.

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(c)           The Purchaser has sufficient knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of investing in the shares of Zamba’s NextNet Stock.

(d)           The Purchaser has been provided with or given access to such information concerning NextNet, including, but not limited to, its business, financial condition and prospects (collectively, “NextNet’s Business”), as the Purchaser has requested and/or deems necessary and has utilized such information to the Purchaser’s satisfaction for the purpose of making an investment in the shares of Zamba’s NextNet Stock pursuant to the terms hereof.  The Purchaser hereby acknowledges that it has made its own independent investigation of NextNet’s Business and that it is not relying on any information which may been provided by the Company, including, but not limited to, the Company’s officers, directors, employees, agents and other representatives (collectively, the “Company Representatives”), in connection with its purchase of the shares of Zamba’s NextNet Stock.  The Purchaser hereby agrees to indemnify and hold harmless each Company Representative in connection with any loss, claim or demand which the Purchaser now has or in the future may have in connection with its purchase of the shares of Zamba’s NextNet Stock pursuant to the terms hereof.

(e)           The Purchaser understands that the purchase of the shares of Zamba’s NextNet Stock is a highly speculative investment and involves a high degree of risk.  The Purchaser acknowledges that it may not ever be able to resell the shares of Zamba’s NextNet Stock purchased pursuant to the terms hereof, whether at the price paid by the Purchaser or otherwise.  The Purchaser believes that the investment in the shares of Zamba’s NextNet Stock is suitable based upon the Purchaser’s investment objectives and financial needs and the Purchaser has adequate means of providing for current financial needs and personal contingencies, has no need for liquidity of investment with respect to the shares of Zamba’s NextNet Stock and can afford a complete loss of such investment.

(f)            The Purchaser is acquiring the shares of Zamba’s NextNet Stock for its own account, for investment purposes only, and without the intention of reselling or redistributing the same.

(g)           The Purchaser is aware that, in the view of the Securities and Exchange Commission, a purchase of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock and for which such shares were pledged, would constitute an intent inconsistent with the foregoing representation.

(h)           If, contrary to the Purchaser’s foregoing intentions, it should later desire to dispose of or transfer any of the shares of Zamba’s NextNet Stock in any manner, the undersigned shall not do so without (i) first obtaining an opinion of counsel satisfactory to NextNet that such proposed disposition or transfer may lawfully be made without registration pursuant to the Securities Act and applicable state securities laws or

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(ii) registering the resale of such shares under the Securities Act and applicable state securities laws.

(i)            Neither the Company nor NextNet has any obligation to register the shares of Zamba’s NextNet Stock 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 such shares.  Accordingly, the Purchaser may be prohibited by law from selling or otherwise transferring or disposing of the Shares and likely will may have to bear the economic risk of its investment in NextNet for an indefinite period.

(j)            The Purchaser, if other than an individual, represents that (a) the Purchaser was not organized for the specific purpose of acquiring the shares of Zamba’s NextNet Stock; and (b) this Agreement has been duly authorized by all necessary action on the part of the Purchaser, has been duly executed by an authorized officer or representative of the Purchaser, and is a legal, valid, and binding obligation of the Purchaser enforceable in accordance with its terms.

(k)           There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser who might be entitled to any fee or commission from the Company or NextNet upon consummation of the transactions contemplated by this Agreement.

(l)            Purchaser agrees to be bound by the transfer restrictions described in Section 3.6 of the Zamba Purchase Agreement.

(m)          Purchaser acknowledges that the provisions of the Right of First Refusal Agreement shall continue to apply to the shares of Zamba’s NextNet Stock owned by Purchaser.

(n)           Purchaser acknowledges that he or she has already received a copy of the  Investors’ Rights Agreement.  Purchaser understands that, pursuant to the terms of the Investors’ Rights Agreement, the registration rights described in Section 1 and the right of first offer described in Section 2.6 thereof have not been assigned to the Purchaser by the Company.  Accordingly, the Purchaser is not entitled to any registration rights or rights of first offer with respect to the Purchaser’s ownership of the shares of Zamba’s NextNet Stock purchased pursuant to the terms hereof.

(o)           Purchaser acknowledges that the shares of Zamba’s NextNet Stock shall continue to be subject to the terms and conditions of the Zamba Purchase Agreement, the Investors’ Rights Agreement, and the Voting Agreement, except for the provisions of those agreements that, by their nature, are not transferable or assignable to Purchaser.

(p)           Until such time as Zamba beneficially holds fewer than 100,000 shares of NextNet Series A Preferred Stock, Purchaser shall vote or act with respect to any and all of its shares of NextNet Series A Preferred Stock so as to elect the nominee of Zamba to be the representative of the Series A shareholders on the NextNet Board of Directors.

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3.             Accredited Investor Status.  The Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D of the Securities Act, because the Purchaser meets at least one of the following criteria (please check one):

ý    The Purchaser is a natural person whose individual net worth, or joint net worth with his or her spouse, exceeds $1,000,000 at the time of the Purchaser’s purchase; or

ý    The Purchaser is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with the Purchaser’s spouse in excess of $300,000 in each of those years and who reasonably expects to reach the same income level in the current year; or

o    The Purchaser is either (i) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity, any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (ii) an insurance company as defined in Section 2(13) of the Securities Act, (iii) an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of such Act, (iv) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, or (v) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which plan fiduciary is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are accredited investors; or

o    The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; or

o    The Purchaser is an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the shares of Zamba’s NextNet Stock, with total assets in excess of $5,000,000; or

o    The Purchaser is a director or executive officer of NextNet; or

o    The Purchaser is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the shares of Zamba’s NextNet Stock, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D of the Securities Act; or

o    The Purchaser is any entity in which all of the equity owners are accredited investors.

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4.             Representations and Warranties of the Company.  As a material inducement for the Purchaser’s purchase of the shares of Zamba’s NextNet Stock to be purchased pursuant to the terms hereof, 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 of Zamba’s NextNet Stock being sold to the Purchaser pursuant to the terms hereof will be transferred to the Purchaser free and clear of any liens, encumbrances or other restrictions, other than restrictions on transfer that are contained in the Zamba Purchase Agreement, the Right of First Refusal Agreement, the Investors Rights Agreement, the Voting Agreement, all of which as they may be amended from time to time, or are otherwise set forth herein or imposed by applicable securities laws.

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

(a)           If prior to the delivery of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock determined in accordance with Section 1 above.

(b)           If prior to the delivery of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock (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 above.

6.             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 of Zamba’s NextNet Stock to be purchased hereunder.

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7.             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)           Legends.  The shares of Zamba’s NextNet Stock issued to the Purchaser pursuant to this Agreement shall contain the following legends:

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 NEXTNET WIRELESS, INC. 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.

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG NEXTNET WIRELESS, INC. AND CERTAIN STOCKHOLDERS OF THE COMPANY (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AGREEMENT BY AND BETWEEN THE STOCKHOLDER, NEXTNET WIRELESS, INC. AND CERTAIN HOLDERS OF PREFERRED STOCK OF THE CORPORATION.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.

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(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:
	Fax:

(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 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)            The Purchaser and the Company understand the meaning and legal consequences of the agreements, representations and warranties contained herein.  The Purchaser and the Company agree that such agreements, representations and warranties shall survive and remain in full force and effect after the execution hereof and payment for the shares of Zamba’s NextNet Stock to be purchased pursuant to the terms hereof.

(g)           Any controversy or claim arising out of or relating to this Agreement, the Purchaser’s purchase of the shares of Zamba’s NextNet Stock or any breach of this Agreement, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Securities Arbitration Rules, and judgment on the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

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

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

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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/ Joel Schwieters
Name:	Michael H. Carrel		Name: Joel Schwieters
Title:	Chief Financial Officer

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EX-10.67

Exhibit 10.67

THIS WARRANT HAS 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, THIS WARRANT 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.

ZAMBA CORPORATION

WARRANT
TO PURCHASE
SHARES OF SERIES A PREFERRED STOCK
OF NEXTNET WIRELESS, INC.

Date:       February 17, 2003

Minneapolis, Minnesota

FOR VALUE RECEIVED, Morgan Street Partners, LLC, or its successors or assigns (“Holder”), is entitled to purchase from Zamba Corporation, a Delaware corporation (the “Company”), up to125,000 fully paid and nonassessable shares of NextNet Wireless Series A Preferred Stock held by the Company or such greater or lesser number of such shares as may be determined by application of the anti-dilution provisions of this Warrant, at the price of $6.00 per share, subject to adjustments as noted below (the “Warrant Exercise Price”).  This Warrant is issued in conjunction with Stock Purchase Agreements (the “Stock Purchase Agreements”) executed on or around the date of this Warrant by individuals who are not affiliates of Holder.

This Warrant may be exercised by Holder at any time or from time to time prior to the close of business on May 17, 2004.

RECITALS:

A.            The Company owns shares of Series A Preferred Stock, $.0001 par value per share (“Zamba’s NextNet Stock”), of NextNet Wireless, Inc., a Delaware corporation (“NextNet”), pursuant to the Series A Preferred Stock Purchase Agreement dated as of September 21, 1998 between Zamba and NextNet (the “Zamba Purchase Agreement”); and Zamba’s NextNet Stock can be converted into common shares of NextNet at the exchange ratio of three shares of NextNet common stock for every one share of Zamba’s NextNet Stock.

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B.            Zamba’s NextNet Stock is also subject to the Second Amended and Restated Investors’ Rights Agreement dated as of November 14, 2002 among the Company, NextNet and the investors and founders identified therein (the “Investors’ Rights Agreement”), the Right of First Refusal Agreement dated as of September 21, 1998 among the Company, NextNet and the Series B purchasers identified therein (the “Right of First Refusal Agreement”), and the Second Amended and Restated Voting Agreement dated as of November 14, 2002, among NextNet, the Company and certain other investors (the “Voting Agreement”).

This Warrant is subject to the following terms and conditions:

1.             Exercise.  The rights represented by this Warrant may be exercised by the Holder, in whole or in part, by written election, in the form set forth below, by the surrender of this Warrant (properly endorsed if required) at the principal office of the Company, by payment to it by cash, certified check or bank draft of the Warrant Exercise Price for the shares to be purchased and by delivery of a subscription agreement, an investment letter and/or similar documents acceptable to the Company demonstrating that the sale of the shares to be purchased is exempt from registration under the Securities Act of 1933, as amended, and any state securities law.  The shares so purchased shall be deemed to be issued as of the close of business on the date on which this Warrant has been exercised by payment to the Company of the Warrant exercise price; provided, however, that this Warrant shall be exercisable only for whole shares, and cash will be paid to Holder in lieu of any fractional shares.  Certificates for the shares of stock so purchased, bearing an appropriate restrictive legend, shall be delivered to the Holder promptly after the rights represented by this Warrant shall have been so exercised, subject to any remaining requirements or time necessary to clear the right of first refusal set forth in Section 2(b), and, unless this warrant has expired, a new Warrant representing the number of shares, if any, with respect to which this Warrant has not been exercised shall also be delivered to the Holder hereof within such time.  No fractional shares shall be issued upon the exercise of this Warrant.

2.             Shares.

(a)           All shares that may be issued upon the exercise of the rights represented by this Warrant shall, upon issuance, be duly authorized and issued, fully paid and nonassessable shares and free and clear of all liens, security interests, charges and other encumbrances, other than restrictions on transfer that are contained in the Zamba Purchase Agreement, the Right of First Refusal Agreement, the Investors Rights Agreement, the Voting Agreement, all of which as they may be amended from time to time, or are otherwise set forth herein or imposed by applicable securities laws.  During the period within which the rights represented by this Warrant may be exercised, the Company shall at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Zamba’s NextNet Stock to provide for the exercise of the rights represented by this Warrant.

(b)           Promptly upon receipt of the purchase price under the Stock Purchase Agreements, the Company shall deliver to NextNet a notice regarding the shares covered by the Stock Purchase Agreements and this Warrant pursuant to the Right of First Offer set forth in the

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Right of First Refusal Agreement.  If NextNet elects to exercise its right of first refusal for the shares covered by the Stock Purchase Agreements, the shares and rights covered by this Warrant shall be assigned to NextNet, and the Holder shall not receive any shares of Zamba’s NextNet Stock pursuant to the Stock Purchase Agreements or this Warrant.  If NextNet declines to exercise its right of first refusal, the Company shall, within five business days after the Company’s receipt of NextNet’s notice to decline its right, notify each investor in NextNet eligible under the Right of First Refusal Agreement of its opportunity to exercise its pro rata right of first refusal pursuant to the Right of First Refusal Agreement.  If any of the eligible investors in NextNet elects to exercise its pro rata right of first refusal, a pro rata portion of the shares covered by this Warrant will be assigned to the respective investor(s), and the number of shares of Zamba’s NextNet Stock that the Holder will be eligible to acquire pursuant to this Warrant shall be reduced on a share-for-share basis basis.

3.             Adjustment.  The Warrant Exercise Price shall be subject to adjustment from time to time as hereinafter provided in this Section 3:

(a)           If prior to the delivery of the shares of Zamba’s NextNet Stock 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 Holder 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 of Zamba’s NextNet Stock set forth in the first paragraph of this Warrant.

(b)           If prior to the delivery of the shares of Zamba’s NextNet Stock 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 Holder thereupon (and thereafter) shall be entitled to receive the number of shares of Zamba’s NextNet Stock (or the proceeds resulting from the sale of such shares in connection with such merger, consolidation, or other change-in-control) set forth in the first paragraph of this Warrant.

4.             Representations and Warranties of the Holder.  As a material inducement for the Company’s entrance into this Warrant, the Holder represents, warrants, covenants and acknowledges to the Company that:

(a)           The Holder understands that the acquisition of the shares of Zamba’s NextNet Stock pursuant to the terms hereof has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws.  Instead, Holder will acquire the Shares pursuant to exemptions from such laws and in doing so is relying on, among other things, the Holder’s representations, warranties, covenants and acknowledgements contained herein.

(b)           The Holder is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and as further represented in Section 5 of this Agreement.

(c)           The Holder has sufficient knowledge and experience in financial and business matters that the Holder is capable of evaluating the merits and risks of investing in the shares of

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Zamba’s NextNet Stock, and the Holder is thoroughly familiar with NextNet’s business, financial condition and prospects.

(d)           The Holder has been provided with or given access to such information concerning NextNet, including, but not limited to, its business, financial condition and prospects (collectively, “NextNet’s Business”), as the Holder has requested and/or deems necessary and has utilized such information to the Holder’s satisfaction for the purpose of making an investment in the shares of Zamba’s NextNet Stock pursuant to the terms hereof.  The Holder hereby acknowledges that it has made its own independent investigation of NextNet’s Business and that it is not relying on any information which may been provided by the Company, including, but not limited to, the Company’s officers, directors, employees, agents and other representatives (collectively, the “Company Representatives”), in connection with its acquisition of this Warrant and of the shares of Zamba’s NextNet Stock.  The Holder hereby agrees to indemnify and hold harmless each Company Representative in connection with any loss, claim or demand which the Holder now has or in the future may have in connection with its acquisition of the shares of Zamba’s NextNet Stock pursuant to the terms hereof.

(e)           The Holder understands that the acquisition of the shares of Zamba’s NextNet Stock is a highly speculative investment and involves a high degree of risk.  The Holder acknowledges that it may not ever be able to resell the shares of Zamba’s NextNet Stock purchased pursuant to the terms hereof, whether at the price paid by the Holder or otherwise.  The Holder believes that the investment in the shares of Zamba’s NextNet Stock is suitable based upon the Holder’s investment objectives and financial needs and the Holder has adequate means of providing for current financial needs and personal contingencies, has no need for liquidity of investment with respect to the shares of Zamba’s NextNet Stock and can afford a complete loss of such investment.

(f)            The Holder is acquiring the shares of Zamba’s NextNet Stock for its own account, for investment purposes only, and without the intention of reselling or redistributing the same.

(g)           The Holder is aware that, in the view of the Securities and Exchange Commission, a purchase of the shares of Zamba’s NextNet Stock 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 of Zamba’s NextNet Stock and for which such shares were pledged, would constitute an intent inconsistent with the foregoing representation.

(h)           If, contrary to the Holder’s foregoing intentions, it should later desire to dispose of or transfer any of the shares of Zamba’s NextNet Stock in any manner, the undersigned shall not do so without (i) first obtaining an opinion of counsel satisfactory to 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 such shares under the Securities Act and applicable state securities laws.

(i)            Neither the Company nor NextNet has any obligation to register the shares of Zamba’s NextNet Stock for resale under the Securities Act or any applicable state securities

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laws, or to take any other action which would facilitate the availability of federal or state registration exemptions in connection with any resale of such shares.  Accordingly, the Holder may be prohibited by law from selling or otherwise transferring or disposing of the Shares and likely will may have to bear the economic risk of its investment in NextNet for an indefinite period.

(j)            The Holder, if other than an individual, represents that (a) the Holder was not organized for the specific purpose of acquiring the shares of Zamba’s NextNet Stock; and (b) this Agreement has been duly authorized by all necessary action on the part of the Holder, has been duly executed by an authorized officer or representative of the Holder, and is a legal, valid, and binding obligation of the Holder enforceable in accordance with its terms.

(k)           There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Holder who might be entitled to any fee or commission from the Company or NextNet upon consummation of the transactions contemplated by this Agreement.

(l)            Holder agrees to be bound by the transfer restrictions described in Section 3.6 of the Zamba Purchase Agreement.

(m)          Holder acknowledges that the provisions of the Right of First Refusal Agreement shall continue to apply to the shares of Zamba’s NextNet Stock acquired by Holder.

(n)           Holder acknowledges that he or she has already received a copy of the Investors’ Rights Agreement.  Holder understands that, pursuant to the terms of the Investors’ Rights Agreement, the registration rights described in Section 1 and the right of first offer described in Section 2.6 thereof have not been assigned to the Holder by the Company.  Accordingly, the Holder is not entitled to any registration rights or rights of first offer with respect to the Holder’s ownership of the shares of Zamba’s NextNet Stock purchased pursuant to the terms hereof.

(o)           Holder acknowledges that the shares of Zamba’s NextNet Stock shall continue to be subject to the terms and conditions of the Zamba Purchase Agreement, the Investors’ Rights Agreement, and the Voting Agreement, except for the provisions of those agreements that, by their nature, are not transferable or assignable to Holder.

(p)           Until such time as Zamba beneficially holds fewer than 100,000 shares of NextNet Series A Preferred Stock, Holder shall vote or act with respect to any and all of its shares of NextNet Series A Preferred Stock acquired hereunder so as to elect the nominee of Zamba to be the representative of the Series A shareholders on the NextNet Board of Directors.

(q)           Holder has informed the purchasers under the Stock Purchase Agreements of the rights granted to Holder pursuant to this Warrant, including the number of shares Holder is eligible to purchase, the exercise price of the Warrant, and the term of the Warrant.

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5.             Accredited Investor Status.               The Holder is an “accredited investor” as defined in Rule 501(a) of Regulation D of the Securities Act, because the Holder meets at least one of the following criteria (please check one):

o            The Holder is a natural person whose individual net worth, or joint net worth with his or her spouse, exceeds $1,000,000 at the time of the Holder’s purchase; or

o            The Holder is a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with the Holder’s spouse in excess of $300,000 in each of those years and who reasonably expects to reach the same income level in the current year; or

o            The Holder is either (i) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity, any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, (ii) an insurance company as defined in Section 2(13) of the Securities Act, (iii) an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of such Act, (iv) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, or (v) an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which plan fiduciary is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons who are accredited investors; or

o            The Holder is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; or

o            The Holder is an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the shares of Zamba’s NextNet Stock, with total assets in excess of $5,000,000; or

o            The Holder is a director or executive officer of NextNet; or

o            The Holder is a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the shares of Zamba’s NextNet Stock, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D of the Securities Act; or

o            The Holder is any entity in which all of the equity owners are accredited investors.

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6.             No Rights as Shareholder.  This Warrant shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company or NextNet.

7.             Transfer.  This Warrant and all rights hereunder shall not be transferable, in whole or in part, by the holder hereof without the prior written consent of the Company or NextNet, which consent shall not be unreasonably withheld; provided, however, that any such proposed transfer must be in compliance with applicable securities laws and in compliance with the legend set forth above.  The bearer of this Warrant, when endorsed, may be treated by NextNet and all other persons dealing with this Warrant as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant.

8.             Miscellaneous.

(a)           Binding Effect.  This Warrant 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 Warrant 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)           Legends.  The shares of Zamba’s NextNet Stock issued to the Holder pursuant to this Warrant shall contain the following legends:

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 NEXTNET WIRELESS, INC. 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.

THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG NEXTNET WIRELESS, INC. AND CERTAIN STOCKHOLDERS OF THE COMPANY (A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT.

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THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AGREEMENT BY AND BETWEEN THE STOCKHOLDER, NEXTNET WIRELESS, INC. AND CERTAIN HOLDERS OF PREFERRED STOCK OF THE CORPORATION.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.

(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 Holder:
	Fax:

(e)           Entire Agreement and Counterparts.  This Agreement evidences the entire agreement between the Company and the Holder relating to the subject matter hereof and supersedes in all respects any and all prior oral or written agreements or 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 Holder.  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)            The Holder and the Company understand the meaning and legal consequences of the agreements, representations and warranties contained herein.  The Holder and the Company agree that such agreements, representations and warranties shall survive and remain in full force and effect after the execution hereof and payment for the shares of Zamba’s NextNet Stock to be purchased pursuant to the terms hereof.

(g)           Any controversy or claim arising out of or relating to this Warrant, the Holder’s acquisition of the shares of Zamba’s NextNet Stock or any breach of this Agreement, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Securities Arbitration Rules, and judgment on the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

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

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

IN WITNESS WHEREOF, the Company and the Holder have executed this Warrant as of the date set forth above.

ZAMBA CORPORATION
By:	/s/ Michael H. Carrel
	Name: Michael H. Carrel
	Title: CFO

MORGAN STREET PARTNERS, LLC

By: /s/ Ronald Eibensteiner
Name: Title: President
Address:	800 Nicollet Mall, Suite 2690
	Minneapolis, MN 55402

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WARRANT EXERCISE

(To be signed only upon exercise of this warrant)

The undersigned, the Holder of the foregoing warrant, hereby irrevocably elects to exercise the purchase right represented by such warrant for, and to purchase thereunder,                 shares of common stock of Zamba Corporation, to which such warrant relates and herewith makes payment of $                    therefor in cash, certified check or bank draft and requests that the certificates for such shares be issued in the name of, and be delivered to                , whose address is set forth below the signature of the undersigned.

Dated:
	Signature
If shares are to be issued other than to Holder:	Social Security or other Tax Identification No.

Please print present name and address

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WARRANT ASSIGNMENT

(To be signed only upon transfer of this warrant in accordance with Section 6)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                      the right represented by the foregoing warrant to purchase the shares of common stock of Zamba Corporation and appoints                                           attorney to transfer such right on the books of Zamba Corporation, with full power of substitution in the premises.

Dated:
		Signature
	Social Security or other Tax Identification No.

Please print present name and complete address

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EX-10.68

Exhibit 10.68

AMENDMENT NO. 1 TO LOAN AGREEMENT

THIS AMENDMENT NO. 1 (“Amendment”) is made and entered into as of February 19, 2003, by and between ZAMBA CORPORATION and ENTRX CORPORATION and modifies the Loan Agreement (“Loan”) dated November 4, 2002, between the parties.  Except as expressly set forth herein, the terms and conditions of the Loan sTOhall continue in full force and effect.  All references to section numbers below refer to the respective section numbers in the Loan.  Capitalized terms shall bear the meanings for such terms set forth in the Loan.

1.Section 3.1.4 is modified by adding the following to the end of the Section: “Subject to Borrower’s receipt from Lender of $450,000 on or prior to February 19, 2003, and $200,000 on or prior to March 15, 2003, representing the entire remaining balance of the Second Advance, Lender shall be entitled to convert the aggregate principal amount of the First Advance and the Second Advance that have been provided to Borrower, as well as $6,888.89 of interest that has accrued prior to this Amendment, into shares of NextNet Wireless, Inc. (“NextNet”) Series A Preferred Stock held by Borrower (the “Shares”) at a per share conversion price that is the lesser of $6.00 per share or such lower initial per share price (on a common share equivalent basis, without giving effect to differences in rights or to anti-dilution provisions or any other purchase price adjustments set forth in the NextNet financing agreement) that NextNet agrees to receive for any sale of other preferred stock in an amount that is at least one million dollars ($1,000,000.00) before June 30, 2003.  A prior election by Lender to convert the Advances it provided and eligible interest under this Agreement  shall not affect its eligibility to receive the benefit of conversion at a lower initial per share price from a subsequent NextNet financing agreement if Lender would have otherwise been eligible pursuant to this Agreement to obtain such lower initial per share price if it had waited until the NextNet financing agreement was completed to exercise its conversion rights.  If Borrower does not receive the entire remaining balance of the Second Advance by remittances from Lender to Borrower of the amounts of $450,000 on or prior to February 19, 2003, and $200,000 on or prior to March 15, 2003, the remedies set forth above that have not already been effectuated pursuant to provisions of this Amendment shall apply.  Notwithstanding the above, each party acknowledges that Lender’s receipt of the Shares, at any price, may be subject to the rights of first refusal on the parts of NextNet and certain of its investors as set forth in the Right of First Refusal Agreement.”

2.Section 3.1.5 is modified by inserting, at the end of the paragraph, the following: “No interest shall accrue or become due during any period in which there exists an Event of Default by Lender.  Any interest not paid prior to the date of this Amendment shall not be due if during such period there was an Event of Default by Lender.”

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3.Section 3.1.3 is eliminated in its entirety and Borrower hereby expressly waives the obligation of Lender to advance the Third Advance, and Section 6.2 is eliminated in its entirety and Lender expressly waives its rights to convert all outstanding Advances under the Note into shares of Borrower’s common stock.

4.Section 3.3 of the Loan is deleted and the parties acknowledge that all of Borrower’s rights and Lender’s obligations related to the Option set forth in the Loan are terminated upon execution of this Amendment, including but not limited to any obligation of Borrower to reserve a sufficient amount of Shares for exercise of the Option.

5.Section 4.12 is modified by deleting “1,083,333” from the sixth line and replacing same with “583,333.”

6.Section 6.1.1 is modified by adding, prior to “The NextNet Conversion Rate” in the eighth line, the following: “Subject to Borrower’s receipt from Lender of $450,000 on or prior to February 19, 2003, and $200,000 on or prior to March 15, 2003, representing the entire remaining balance of the Second Advance, . . .”

7.Section 6.3.1 is modified by deleting the third paragraph and replacing it with the following: “Upon execution of this Amendment, the parties shall instruct the Collateral Agent to return 250,000 shares of Series A Preferred Stock of NextNet from the Collateral to Borrower.  On July1, 2003, the Collateral Agent shall return to Borrower all shares of Collateral not previously issued or returned.”

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered the date and year first above written.

ZAMBA CORPORATION,
a Delaware corporation
By		/s/ Michael H. Carrel
Name: Michael H. Carrel
Title: Chief Financial Officer
ENTRX CORPORATION,
a Delaware corporation
By	/s/ Brian Niebur
Name: Brian Niebur
Title: Chief Financial Officer

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EX-10.69

Exhibit 10.69

SETTLEMENT AGREEMENT AND RELEASE

THIS AGREEMENT is entered into as of March 11, 2003 between Key Equipment Finance (“Key”), a division of Key Corp. Capital, Inc., a Michigan Corporation with its principal place of business at 127 Public Square, Cleveland, Ohio, and the successor-in-interest to Leasetec Corp., and Zamba Corporation (“Zamba”), a Minnesota corporation with principal offices at 3033 Excelsior Boulevard, Suite 200, Minneapolis, Minnesota.  Key is the Plaintiff incorrectly identified as Key Equipment Finance International, Inc. in the pending Hennepin County action, Key Equipment Finance International, Inc. v. Zamba Corporation, Court File: CT 02-017418.

Key and Zamba have entered into a long-term Equipment Leasing Contract on October 11, 2000 consisting of a Master Equipment Lease Agreement and three Equipment Schedules (“Lease”).  A dispute has arisen between Zamba and Key as to the remaining obligations under the Lease.

NOW, THEREFORE, KEY AND ZAMBA AGREE AS FOLLOWS:

1.             Promptly following receipt of this Settlement and Release Agreement signed by Key, Zamba will sign and forward to Key a Promissory Note and a Verified Confession of Judgment in the form of such documents attached to this Settlement and Release Agreement as Exhibits A and B, respectively.

2.             In consideration of the execution and delivery of the Promissory Note and the Verified Confession of Judgment and payment as described therein, Key, on behalf of itself and its parent, affiliated and subsidiary companies, does hereby release and forever discharge Zamba, its parent, affiliated and subsidiary companies and their respective directors, officers, employees, insurers, successors and assigns, from any and all past and

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future claims, liability, losses, costs and damages, known and unknown, arising out of or in any way related to the Lease, including but not limited to lease payments, claims related to the equipment that was leased or any other claims.  This release includes but is not limited to any liability in contract or in tort for negligence, strict liability, breach of contract, breach of warranty or other product liability and any liability for punitive damages.  In consideration of this release, Zamba, on behalf of itself and its parent, affiliated and subsidiary companies, does hereby release and forever discharge Key, its parent, affiliated and subsidiary companies and their respect directors, officers, employees, insurers, successors and assigns, from any and all past and future claims, liability, losses, costs and damages, known and unknown, arising out of or in any way relating to the Lease, including but not limited to lease payments, claims related to the equipment that was leased or any other claims.  Key and Zamba, warrant that as of the date of their signature below they are unaware of any claim that may exist between Key and Zamba and their parents, subsidiaries, and affiliates, whether or not arising out of or in any way related to the Lease, except those claims being released herein.  This release includes but is not limited to any liability in contract or in tort for negligence, strict liability, breach of contract, breach of warranty or other product liability for punitive damages.

In executing this release, the parties intend to, and hereby do, terminate the Lease.

3.             This Settlement Agreement and Release, including attached exhibits, supersedes all prior agreements, negotiations or understandings, whether written or oral, between Zamba and Key.  Neither party has relied on any promise, agreement, statement or representation not expressed herein. This Settlement Agreement and Release may be modified only by written agreement signed by the parties hereto.

4.             Upon execution of this Settlement Agreement and Release and the corresponding Promissory Note and Verified Confession of Judgment, the parties authorize

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their respective counsel to stipulate without costs, disbursements or attorney’s fees to either side to the dismissal with prejudice of the pending action in Hennepin County, captioned, Key Equipment Finance International, Inc. v. Zamba Corporation, Court File: CT 02-017418.

5.             The stipulation of dismissal with prejudice of the pending action above-referenced shall not impede Key’s ability to enforce the Verified Confession of Judgment should Zamba not satisfy the conditions of the Promissory Note.

6.             Each party warrants and represents that the person signing below has authority to enter this contract.  In addition, each party warrants and represents that it is in full and exclusive possession of any claims to be waived, and that it has not assigned any of such claims to any third party.  Key further warrants and represents that it is the successor in interest to the assets and liabilities of Leasetec Corporation (“Leasetec”) and that Leasetec assigned to Key all of its interests in the Lease.  Key agrees to indemnify Zamba, including pay all costs, disbursements, attorneys’ fees and judgments, for any claim brought against Zamba by Leasetec or an assignee of the Lease.

7.             This Settlement Agreement and Release shall be construed and interpreted in accordance with the laws of the State of Minnesota.

8.             This Agreement may be executed simultaneously in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, authorized representatives of the parties have executed this agreement on the date(s) set forth below, to be effective as of the date first set forth above.

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	Key Equipment Finance
March 13, 2003	By:	/s/ Sal Boschia
Date	Its:	Manager Special Accounts
	Zamba Corp.
March 17, 2003	By:	/s/ Michael H. Carrel
Date	Its:	CFO

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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 report dated January 22, 2003, except as to note 10, which is as of January 27, 2003, notes 2, 9, 11 and 18, which are as of February 19, 2003, and note 17, which is as of March 13, 2003, relating to the consolidated balance sheets of ZAMBA Corporation and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the years in the three-year period ended December 31, 2002, and the related financial statement schedule, which report appears in the 2002 annual report on Form 10-K of ZAMBA Corporation.

	/s/ KPMG LLP
Minneapolis, Minnesota
March 28, 2003

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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 future financial performance. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “could,” “may,” and the negatives of such words, and other similar expressions identify forward-looking statements.

We wish to caution you that any forward-looking statements made by us 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).  Although we have attempted to list comprehensively these important factors, we also 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

If we do not grow our revenues enough to become profitable, we will have to obtain other financing to continue operations.

Although we significantly reduced our cost structure during 2002, with our quarterly losses decreasing from $4.64 million in the second quarter to $370,000 in the fourth quarter, our revenues were nearly flat over that period, only increasing from $2.5 million to $2.7 million.  To fund our operations in 2002, we received approximately $7.95 million, from sales of our common stock and shares of our holdings of Series A Preferred Stock in NextNet Wireless, Inc., and obtained an additional $1 million pursuant to a loan agreement with Entrx Corporation (“Entrx”).  During 2003, we have received an additional $750,000 under the Entrx loan and another $750,000 from sales of additional shares of NextNet Series A Preferred Stock.  We have also supported our operations by borrowing funds under our banking relationship with Silicon Valley Bank, which since July 29, 2002, has been in the form of an Accounts Receivable Purchase Agreement.

If we are unable to grow revenue sufficiently to become profitable, or become unable to continue to sell portions of our holdings in NextNet or borrow under our Accounts Receivable Purchase Agreement with Silicon Valley Bank, we may not be able to continue as a going concern.  If we need to sell more of our shares of NextNet preferred stock, there is no assurance that we will be able to find additional purchasers or that such sales will be on advantageous terms.  The number of potential purchasers of our NextNet holdings is quite limited, for many reasons, including the fact that investors have not been generally interested in telecommunications products companies over the past few years.  Under our Accounts Receivable Purchase Agreement with Silicon Valley Bank, Silicon Valley Bank advances us amounts up to 80% of the invoice value for eligible accounts receivable, to a maximum accounts receivable balance of $2.5 million.  Silicon Valley Bank can reject any or all of the invoices we submit, which could cause us to be dependent upon the timeliness of our collections from our clients.

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If our operations do not become profitable and we are unable to borrow a sufficient amount of money from Silicon Valley Bank or otherwise obtain additional financing, we may become unable to meet our current obligations beyond December 31, 2003.  If we are unable to increase in revenues, grow our business and manage our growth and projects effectively, we may realize a material adverse effect in the quality of our services and products, our ability to retain key personnel, and our business, financial condition and results of operations.

We could be classified as an inadvertent investment company.

Our holdings of NextNet may constitute investment securities under the Investment Company Act of 1940.  We will suffer adverse consequences if we are deemed to be an investment company under the Investment Company Act of 1940.  A company may be deemed to be an investment company if it owns investment securities with a value exceeding 40% of its total assets, subject to certain exclusions.  We have not held ourselves out as an investment company, but if we were to be deemed an investment company, we would become subject to registration and regulation as an investment company under the Investment Company Act of 1940.  If we failed to register, we would be prohibited from engaging in business or issuing our securities and might be subject to civil and criminal penalties for noncompliance.  In addition, certain of our contracts might be voidable, and a court-appointed receiver could take control of our company and liquidate our business.  If we registered as an investment company, we would be subject to restrictions regarding our operations, investments, capital structure, governance and reporting of our results of operations, among other things, and our ability to operate as we have in the past would be adversely affected.

Unless an exclusion or safe harbor were available to us, in certain circumstances, we would have to attempt to reduce our investment securities as a percentage of our total assets in order to avoid becoming subject to the requirements of the Investment Company Act of 1940.  This reduction can be attempted in a number of ways, including the disposition of investment securities and the acquisition of non-investment security assets.  If we were required to sell investment securities, we may sell them sooner than we otherwise would, which may require that those securities be sold at a substantial discount, and we may never realize anticipated benefits from, or may incur losses on, these investments.  Further, if only a portion of the shares of NextNet that we own are sold at a discount, the value of the remaining shares may be adversely affected.  Some investments may not be sold due to contractual or legal restrictions or the inability to locate a suitable buyer.  Moreover, we may incur tax liabilities when we sell assets.

We are in the process of applying to the Securities and Exchange Commission (“SEC”) to seek an order declaring Zamba to be engaged in a business other than that of owning or holding securities based on our historical development, the activities of our officers, directors and employees, how we represent Zamba’s business, the nature of our assets and sources of our income.  We can give no assurance, however, that the SEC will issue this order.

The market for our stock is subject to rules and risks relating to low-priced stock.

Our common stock is currently listed for trading on the NASD Over-The-Counter Bulletin Board and is subject to the “penny stock rules” adopted pursuant to Section 15(g) of the Securities Exchange Act of 1934, as amended.  In general, the penny stock rules apply to non-Nasdaq or non-national stock exchange companies whose common stock trades at less than $5.00 per share or which have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years).  Such rules require, among other things, that brokers who trade “penny stock” to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document, quote information, broker’s commission information and rights and remedies available to investors in penny stocks.  Many brokers have decided not to trade “penny stock” because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited.  The “penny stock rules,” therefore, may have an adverse impact on the market for our common stock and may affect our ability to attract competitive funding.  Further, because our stock is currently listed on the Over-The-Counter Bulletin Board, this means that, among other things,

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our stock is less liquid as compared to when it was listed on the Nasdaq stock market.  As a result, investors in our common stock will be less able to sell stock holdings or receive accurate stock price quotations.

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 2002, 86% of our revenues came from our top ten customers and 63% came from our top five customers.  During 2002, four clients — Best Buy Corporation (19%), Union Bank of California (14%) Blue Cross Blue Shield (11%) and Enbridge Services (11%) — 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.

There may be a conflict of interest among Zamba’s directors with regard to our holdings in NextNet Wireless, Inc.

Two of our directors, Joe Costello and Dixon Doll, are also shareholders and directors of NextNet.   Mr. Costello is Chairman of both companies.  We have sold approximately $5.2 million of our NextNet preferred stock during 2002 to fund operations, including sales of approximately $2.0 million to Mr. Costello and $150,000 to investment entities managed by Dr. Doll.  Additionally, another director of Zamba, Sven Wehrwein, is a consultant for NextNet.  In their roles as directors of Zamba and directors or consultants for NextNet, these directors may be faced with situations that require them to recuse themselves from voting on matters affecting our company.

We face additional risks that are incidental to our business.

•We may experience decreasing margins on the sale of our services, which may impair our ability to achieve profitability or positive cash flow.

•The markets we face are highly competitive and we may not be able to compete effectively, especially against competitors with greater resources or market identification.

•Our business may suffer unless economic conditions improve.

•The price of our common stock could fluctuate significantly, which may result in losses for investors.

•Anti-takeover effects of Delaware law, our Stockholder Rights Plan, and our change in control severance arrangements could prevent a change in control of our company.

•Our success depends on our retention of certain key personnel, our ability to hire additional key personnel and the maintenance of good relations with our employees.

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