Exhibit 10 – Stock Purchase Agreement

 

STOCK PURCHASE AGREEMENT

 

THIS AGREEMENT is dated as of July 14, 2005, by and among HEARTLAND, INC.
("Buyer"), a Maryland corporation; STEVEN PERSINGER ("Persinger") an individual;
and PERSINGER’S EQUIPMENT, INC. ("Persinger Equipment"), a Minnesota
corporation.

 

WHEREAS, Persinger ("Seller") owns all of the outstanding capital stock of
Persinger Equipment (the "Stock"), which is engaged in the business of selling
agricultural equipment and related products; and

 

WHEREAS, Seller wants to sell and Buyer wants to buy all of the Stock upon the
terms and subject to the conditions set forth in this Agreement; and

 

WHEREAS, the parties to this Agreement desire to make certain representations,
warranties and agreements in connection with such sale and also to prescribe
various conditions to such sale;

 

NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained in this Agreement, the parties to this
Agreement agree as follows:

 

ARTICLE 1.

DEFINITIONS

 

1.1)       Specific Definitions. As used in this Agreement, the following terms
will have the meanings set forth or as referenced below:

 

"Affiliate" of any person means any other person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the first person. Control will mean owning 50 percent or
more of the total voting power of the entity.

 

"Agreement" means this Agreement and all Exhibits and Schedules to this
Agreement.

 

"Building Purchase Agreement" means as defined in Section 6.7.

 

"Businesses" means the agricultural equipment businesses conducted by Persinger
Equipment from time to time.

 

"Buyer's Deductible" means as defined in Section 10.3.

 

"Buyer's Indemnifiable Losses" mean as defined in Section 10.1.

 

"Closing" and "Closing Date" mean as defined in Section 8.1.

 

"Closing Date Interest" means as defined in Section 2.2.

 

"Code" means the Internal Revenue Code of 1986, as amended.

 

"Confidentiality Agreement" means as defined in Section 5.4.

 

"Consideration Ratio" means as defined in Section 3.5.

 

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"Employee Plans" means any health care plan or arrangement; life insurance or
other death benefit plan; deferred compensation or other pension or retirement
plan; stock option, bonus or other incentive plan; severance or early retirement
plan; or other fringe or employee benefit plan or arrangement; or any employment
or consulting contract or executive compensation agreement; whether the same are
written or otherwise, formal or informal, voluntary or required by law or by
Persinger Equipment's policies or practices, including, without limitation, any
"pension plan" as defined in Section 3(2) of ERISA that is not a Multiemployer
Plan, and any "welfare plan" as defined in Section 3(1) of ERISA (whether or not
any of the foregoing is funded), (i) to which Persinger Equipment is a party or
by which Persinger Equipment is bound; (ii) that Persinger Equipment has at any
time established or maintained for the benefit of or relating to present or
former employees, leased employees, consultants, agents, and/or their
dependents, or directors of Persinger Equipment; or (iii) with respect to which
Persinger Equipment has made any payments or contributions.

 

"Environmental Laws or Regulations" means any one or more of the following: the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §9601 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seg.; the
Hazardous Materials Transportation Act, 49 U.S.C. § 1802 et seg.; the Toxic
Substances Control Act, 15 U.S.C. §2601 et seg.; the Federal Water Pollution
Control Act, 33 U.S.C. § 1251 et seq.; the Clean Water Act, 33 U.S.C. §1321 et
seg.; the Clean Air Act, 42 U.S.C. §7401 et seg.; the Minnesota Environmental
Response and Liability Act, Minn. Stat. Chap. 11513; the Minnesota Petroleum
Tank Release Cleanup Act, Minn. Stat. Chap. 115C; any other federal, state,
county, municipal, local or other statute, law, ordinance or regulation that may
relate to pesticides, agricultural or industrial chemicals, wastes, Hazardous
Substances (as defined in this Agreement), human health or the environment; all
regulations promulgated by a regulatory body pursuant to any of the foregoing
statutes, laws, regulations, or ordinances and all as may from time to time be
amended or subsequently enacted.

 

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

 

"Hazardous Substance" means asbestos, urea formaldehyde. polychlorinated
biphenyls, nuclear fuel or materials, chemical waste. radioactive materials,
explosives, known carcinogens, petroleum products, pesticides, fertilizers, or
any other substance that is toxic or hazardous, or that is a pollutant,
contaminant, chemical, material or substance defined as hazardous or as a
pollutant or contaminant in, or the use, transportation, storage, release or
disposal of which is regulated by, any Environmental Laws or Regulations.

 

"Intellectual Property" means letters patent and patent applications; trade
names; trademarks, service marks and registrations thereof and applications
therefor; copyrights and copyright registrations and applications; and/or
discoveries, ideas, technology, know-how, trade secrets, processes, formulas,
drawings and designs, computer programs or software; and all amendments,
modifications, and improvements to any of the foregoing.

 

"Inventories" means parts and equipment held for sale.

 

"IRS" means the United States Internal Revenue Service.

 

"Liens" means liens, mortgages, charges, security interests, claims, voting
trusts, pledges, encumbrances, options, assessments, restrictions, or third
party or spousal interests of any nature.

 

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"Persinger Equipment Options" means all outstanding options or other rights to
purchase shares of Stock or other securities of Persinger Equipment held by any
person.

 

"Multiemployer Plan" means as defined in Section 3(37) of ERISA.

 

“Persinger Employment Agreement” means as defined in Section 6.9.

 

"Product Liability" means any liability, claim or expense (including attorneys'
fees) arising in whole or in part out of a breach of any product warranty
(whether express or implied), strict liability in tort, negligent manufacture of
product, negligent provision of services, product recall, or any other liability
arising from the manufacturing, packaging, labeling (including instructions for
use), or sale of products.

 

"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated under the
Securities Act.

 

"Seller's Deductible" means as defined in Section 10.3.

 

"Seller’s Indemnifiable Losses" mean as defined in Section 10.2.

 

"Separate Noncompetition Agreement" means as defined in Section 6.6.

 

"Stock" means as defined in the Recitals of this Agreement.

 

"Taxes" means all taxes, penalties, interest, fines, duties, withholdings,
assessments, and charges assessed or imposed by any federal, state, local or
foreign governmental authority. "Tax" will also include any liability arising as
a result of being (or ceasing to be) a member of any affiliated, consolidated,
combined, or unitary group as well as any liability under any tax allocation,
tax sharing, tax indemnity or similar agreement.

 

1.2)

Definitional Provisions.

 

(a)     Terms defined in the singular will have a comparable meaning when used
in the plural, and vice-versa.

 

(b)     References to an "Exhibit" or to a "Schedule" are, unless otherwise
specified, to one of the Exhibits or Schedules attached to or referenced in this
Agreement, and references to an "Article" or a "Section" are, unless otherwise
specified, to one of the Articles or Sections of this Agreement.

 

(c)     The term "person" includes any individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any department
or agency thereof..

 

 

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ARTICLE 2.

PURCHASE AND SALE; PURCHASE PRICE

 

2.1)       Purchase and Sale. Subject to the terms and conditions of this
Agreement, effective as of the Closing, Seller will sell, transfer and assign to
Buyer, and Buyer will purchase from Seller, an aggregate of 4,000 shares of the
Stock representing all of the outstanding issued stock of Persinger Equipment.

 

2.2)

Purchase Price; Allocation.

 

(a)

The presently determinable total consideration (the "Purchase Price") for the
Stock is Four Million Seven Hundred Thirty-five Thousand Dollars
($4,735,000.00), payable as follows: Two Million Dollars ($2,000,000.00) cash on
or before February 1, 2006. There shall be no transfer of shares until said Two
Million Dollars ($2,000,000.00) is paid in full. If the downpayment of Two
Million Dollars ($2,000,000.00) is not paid by February 1, 2006, this Purchase
Agreement and Contract is null and void. At Buyer’s option, the balance of Two
Million Seven Hundred Thirty-five Thousand Dollarsl ($2,735,000.00) can be paid
either in cash or 911,667 shares of common stock, which are not restricted,
would be issued by Buyer to Seller at closing (the “New Stock”). Should the
common stock of Buyer not be trading at a minimum of Three Dollars ($3.00) per
share twelve (12) months after Closing (the “Adjustment Date”), then at Seller’s
option Seller shall be compensated for the difference in additional stock or
receive cash of $2,735,000.00. At the Adjustment Date, the difference in
additional stock would be the number of additional shares necessary to
compensate for the difference between the then share value and $3.00 per share.
Said shares would be issued within ten (10) days of the Adjustment Date. As
earnest money herein, Buyer shall deposit with Seller 100,000 shares of
non-restricted stock of Buyer to be held pending the closing herein. In the
event that Buyer defaults on this Purchase Agreement, the shares shall then
remain the property of Seller herein. At closing, these shares shall represent a
portion of the shares to be delivered to Seller by Buyer herein. In the event
that this Purchase Agreement cannot be completed to the contingencies as set
forth in paragraph (c) below, then said stock shall be returned to Buyer by
Seller herein. See * below

 

(b)

The portions of the Purchase Price payable by Buyer to Seller under this Section
will be paid by wire transfer of funds to an account designated by Seller, which
designation will be made at least 2 business days prior to the Closing Date.

 

(c)

The purchase and sale herein are contingent upon Buyer obtaining financing
acceptable to Buyer and Seller obtaining all necessary approvals relative to the
ownership transfer of the stock of Persinger Equipment, Inc. The financing
contingency shall be null and void 30 days after the sucessful filing of the SB2
by Buyer herein.

 

(d)

Buyer herein will enter into an employment agreement with Steven Persinger for a
period of at least five (5) years with an annual base salary of $120,000.00 per
year with said employment agreement to also include incentive provisions based
on performance of the company allowing for an incentive payment or bonus and
Persinger shall also be entitled to participate

 

*

The restricted stock certificate given to Seller by Buyer shall be replaced with
nonrestricted stock within 60 days of the date of this Agreement.

 

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in the fringe benefits presently being offered by Persinger Equipment,
including, but not limited to, health care benefits and retirement benefits. In
the event that a mutually agreeable employment agreement cannot be worked out by
and between the parties hereto satisfactory to Persinger, then and in that event
this Agreement shall be null and void. It is anticipated that the parties will
resolve the employment agremeent within 45 days of the execution of this
purchase and sale agreement.

 

(e)

Buyer and Seller agree that the employment agreement enetered into pursuant to
subdivision 2.2(e) above, shall include a non-solicitation clause and a
non-compete clause acceptable to the Buyer and valid for the term of the
employment agreement, notwithstanding earlier termination of the employment
agreement.

 

(f)

Persinger has leased certain real estate to Persinger Equipment, a copy of said
lease agreement being provided to Buyer by Seller herein. Said lease agreement
shall continue under its present terms and conditions so long as Persinger is
employed by Persinger Equipment relative to the employment agreement referred to
herein. Any time during said employment agreement, Persinger Equipment shall
have the right and option to purchase the real estate at a purchase price of
$600,000.00. In the event of the termination of any employment agreement between
Persinger Equipment and Persinger for any reason whatsoever, then in that event,
Persinger Equipment agrees to purchase and Persinger agrees to sell the leased
real estate for a purchase price of $600,000.00 with said closing to be
completed within sixty days of the termination of the employment agreement as
set forth herein.

 

(g)

It is agreed between Seller and Buyer that until the adjustment date and the
option by Seller to either receive additional shares or cash for the outstanding
amounts due Seller by Buyer, Buyer will not encumber the assets of Persinger
Equipment except in the ordinary course of business and shall grant to Seller a
security interest in the assets of Persinger Equipment satisfactory to Seller to
ensure that the adjustment date payment or stock is paid or distributed to
Seller by Buyer herein.

 

2.3)       Persinger Equipment Options. Each Persinger Equipment Option that is
outstanding on the Closing Date will be cancelled without liability to Buyer or
Persinger Equipment and at the cost and expense of Seller, if any.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except as set forth in the Schedules, Seller represents and warrants to Buyer as
of the date of this Agreement as follows:

 

3.1)       Listing of Certain Assets and Data. Attached to this Agreement as
Schedules 3.1A through 3.1 L are lists, which are true and complete in all
material respects as of the date of this Agreement, of the matters set forth in
the following subsections (a) through (1).

 

(a)     Real Property. Schedule 3.1A sets forth a description of all real
property owned by Persinger or Persinger Equipment or otherwise used by
Persinger Equipment in

 

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the conduct of its businesses, stating the ownership status and a brief
description of all buildings and structures located or planned for construction
thereon. Prior to the date of this Agreement, Seller has made available to Buyer
true and complete copies of the descriptions and shall provide updated abstracts
relating to such real property.

 

(b)     Equipment. Schedule 3.1B sets forth a list of all material items of
machinery, equipment, tools and dies, furniture, fixtures, spare parts, vehicles
and other similar property and assets owned or otherwise used by Persinger
Equipment specifically identifying and describing, those items with an original
cost to, or total lease payments by, Persinger Equipment in excess of
$10,000.00, setting forth with respect to all such listed property a summary
description of all Liens relating thereto (other than liens for taxes due but
not yet payable), identifying the parties thereto, the rental or other payment
terms, expiration date and cancellation and renewal terms thereof. Prior to the
date of this Agreement, Seller has made available to Buyer true and complete
copies of all currently effective leases, conditional sales agreements or other
similar documents concerning the items listed in Schedule 3.1B.

 

(c)     Patents, Trademarks, Formulas, Etc. Schedule 3.1C sets forth a list of
all of Persinger Equipment’s patents, trade names, material trademarks, material
service marks, material copyrights, and applications or registrations for any of
the foregoing, and any licenses pursuant to which any of the foregoing is used.
Prior to the date of this Agreement, Seller has made available to Buyer true and
complete copies of all issuances, registrations, applications and certificates
regarding such intellectual property, true and complete copies of the form of
all contracts with employees or others relating in whole or in part to
disclosure, assignment or patenting of inventions or discoveries, confidential
or proprietary information, product formulas or other know-how, and true and
complete copies of all patent, trademark, trade name, copyright, trade secret or
other intellectual property licenses granted at any time by or to Persinger
Equipment.

 

(d)     Certain Leases, Agreements, Etc. Schedule 3.1D sets forth a list
(including, in the case of oral arrangements, a written description of all
material terms thereof of each lease, contract, agreement or other commitment,
written or otherwise, to which Persinger Equipment is a party (other than
leases, contracts, agreements or commitments furnished pursuant to other
paragraphs of this Section) and which is in any way not yet performed,
involving:

 

(i)      The purchase of any services, raw materials, supplies or equipment,
exclusive of (x) any purchase order for the purchase of products or services
required in the ordinary course of business involving payment of less than
$10,000.00 per annum or an aggregate of less than $20,000.00, and (y) any
purchase order not in the ordinary course of business involving payment of less
than $5,000.00;

 

(ii)     The sale of assets, products or services involving a value estimated at
more than $10,000.00, or any contract for provision of service warranties, sales
credits, product returns, or discounts, warehouse allowances, advertising
allowances or promotional services; or

 

(iii)     Any distributor or sales representative or similar broker, dealer or
agent of Persinger Equipment products.

 

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Prior to the date of this Agreement, Seller has made available to Buyer true and
complete copies of all written agreements identified in Schedule 3.1D.

 

(e)     Permits, Licenses, Etc. Schedule 3.1E sets forth a list of all material
permits, licenses, approvals or similar permissions, held by Persinger Equipment
or by any distributor, sales representative or similar broker, dealer or agent
of Persinger Equipment products. Prior to the date of this Agreement, Seller has
made available to Buyer true and complete copies of all permits, licenses,
approvals or other documents identified in Schedule 3.1E.

 

(f)      Banks and Depositories. Schedule 3.1F sets forth a list of each bank,
broker or other depository with which Persinger Equipment has an account or safe
deposit box, the names and numbers of such accounts or boxes and the names of
all persons authorized to draw or execute transactions on such accounts.

 

(g)     Loans and Credit Agreements. Etc. Schedule 3.1G sets forth a list of all
outstanding mortgages, promissory notes, evidences of indebtedness, deeds of
trust, indentures, loan or credit agreements or similar instruments for money
borrowed, excluding normal trade credit, to which Persinger Equipment is a party
(as lender or borrower), written or otherwise, and all amendments or
modifications, if any, thereof. Prior to the date of this Agreement, Seller has
made available to Buyer true and complete copies of all documents identified in
Schedule 3.1G.

 

(h)     Insurance Policies and Claims. Schedule 3.1H sets forth a list,
including the term, coverages, premium rates, limits and deductibles thereof, of
all policies of insurance maintained by Persinger Equipment and covering any of
their officers, directors, employees, agents, properties, buildings, machinery,
equipment, furniture, fixtures or operations and a description of each claim
made by Persinger Equipment under any such policy of insurance during the
preceding five (5) year period describing such claim and the amount of it. Prior
to the date of this Agreement, Seller has made available to Buyer true and
complete copies of all policies of insurance identified in Schedule 3.1H, and
true and complete copies of all documentation regarding claims made under them.

 

(i)      Certain Employees. Schedule 3.1I sets forth (i) the name and current
annual salary rate of each director, officer or employee of Persinger Equipment
whose total remuneration for Persinger Equipment’s last fiscal year was, or for
the current year has been set at, in excess of $20,000, together with a summary
of the bonuses, additional compensation and other benefits, if any, paid or
payable to such persons as of the date of this Agreement or in the future: (ii)
the name of each employee and each individual to whom employment has been
offered and who has accepted such offer, including scheduled starting date, and
(iii) the names of all former employees whose employment has terminated either
voluntarily or involuntarily during the preceding 12-month period.

 

(j)      Employee Plans. Schedule 3.1J sets forth a list of all Employee Plans
and any related insurance contracts and trust and custodial agreements. Prior to
the date of this Agreement. Seller has made available to Buyer true and complete
copies of all documents listed in Schedule 3.1J.

 

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(k)     Powers of Attorney. Schedule 3.1K sets forth the names of all persons,
if any, holding powers of attorney from Persinger Equipment and a description of
the scope of each such power of attorney.

 

(1)     Taxes. Schedule 3.1L sets forth a list of (i) all tax, assessment or
information reports and returns filed by or on behalf of Persinger Equipment or
their predecessors with any jurisdiction during the last 7 years, and (ii) a
list of all tax or assessment elections of Persinger Equipment in effect. Prior
to the date of this Agreement, Seller has made available to Buyer true and
complete copies of all documents listed in Schedule 3.1L and all material
correspondence to or from taxing authorities during the preceding 7 year period,
and have made available to Buyer for review and copying all working papers of
persons who prepared any of the documents listed in Schedule 3.1L.

 

3.2)       Organization; Directors and Officers. Persinger Equipment is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota, and has all necessary corporate power and authority
to own its properties and assets and conduct the business presently being
conducted by it. Seller has previously made available to Buyer complete and
correct copies of the Articles of Incorporation and Bylaws of Persinger
Equipment and all amendments thereto.

 

3.3)       Capital Stock. Persinger Equipment 's authorized capital stock
consists of 4,000 shares of common stock, of which 4,000 shares of Stock are
issued and outstanding as of the date of this Agreement. All Stock is owned by
Seller, free and clear of any Liens. Except as set forth in Schedule 3.3, there
are no outstanding Persinger Equipment Options, and there are no plans,
contracts or commitments providing for the issuance or granting of Stock,
Persinger Equipment Options or other securities of Persinger Equipment. There is
no indebtedness of Persinger Equipment convertible into Stock or other
securities of Persinger Equipment. All issued and outstanding shares of Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable.

 

3.4)       Subsidiaries. Persinger Equipment has no ownership or equity
interest, direct or indirect, in any other business, corporation, joint venture,
partnership or proprietorship except as set forth on Schedule 3.4.

 

3.5)       Authorization and Binding Obligation. The execution, delivery and
performance by Seller and Persinger Equipment of this Agreement and the
transactions and agreements contemplated by this Agreement have been duly and
validly authorized and approved by all requisite corporate action on the part of
Persinger Equipment and by all requisite action on the part of Seller. Each of
Persinger Equipment and Seller has all requisite power and authority to do and
perform all acts and things required to be done by it under this Agreement and
the agreements contemplated by this Agreement. This Agreement constitutes and,
when executed, the agreements contemplated by this Agreement will constitute,
the valid and binding obligations of Persinger Equipment and Seller, enforceable
in accordance with its and his respective terms except as may be limited by laws
affecting creditors rights generally or by judicial limitations on the right to
specific performance or other equitable remedies.

 

3.6)       Consents Required. Except for any items set forth in Schedule 3.6,
the execution and delivery of this Agreement and the agreements contemplated by
this Agreement, the sale and purchase of the Stock, the cancellation of any
Persinger Equipment Options and the consummation of the transactions
contemplated by this Agreement in compliance with the terms and provisions of
this Agreement by Persinger Equipment or Seller will not:

 

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(a)     Conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under the Articles of Incorporation or
Bylaws or other governing instruments of Persinger Equipment or of Seller, or
any material agreement, mortgage, lease, judgment, order, award, decree or other
instrument or restriction to which Persinger Equipment or Seller is a party or
by which Persinger Equipment or Seller or any of their assets is bound or
affected;

 

(b)     Violate in any material respect any statute, rule, regulation, order or
decree of any federal, state, local or foreign body or authority by which
Persinger Equipment or Seller or any of their properties or assets may be bound;

 

(c)     Require any material approval, consent, authorization or other order or
action of any court, governmental authority, regulatory body, creditor or any
other person: or

 

(d)     Give any party with rights under any such material agreement, mortgage,
lease, judgment, order, award, decree or other instrument or restriction the
right to terminate, modify or otherwise materially change the rights or
obligations of Persinger Equipment thereunder.

 

3.7)       Financial Statements. Attached as Schedule 3.7 is a true and complete
copy of (i) Persinger Equipment 's consolidated unaudited financial statements
as of and for the month ended October 31, 2004 (the "Unaudited Financial
Statements"; the balance sheet included in the Unaudited Financial Statements is
the "Unaudited Balance Sheet"), and (ii) Persinger Equipment's consolidated
financial statements for the year ended November 30, 2003, together with notes
thereto (the "Financial Statements"; the balance sheet included in the Financial
Statements is the "Balance Sheet"). The Unaudited Financial Statements have been
prepared in accordance with generally accepted accounting principles except for
(i) the absence of footnote disclosures, (ii) the need for normal year-end audit
adjustments, and (iii) as described on Schedule 3.7. The Unaudited Financial
Statements have been derived from the internal books and records of Persinger
Equipment which have been maintained in accordance with generally accepted
accounting principles.

 

3.8)       Taxes. Except as set forth in Schedule 3.8: (i) Persinger Equipment
has timely filed all tax or assessment reports and tax returns (including any
applicable information returns) that may be required by any law or regulation of
any jurisdiction to be filed, and all such reports and returns are true, correct
and complete in all material respects; (ii) Persinger Equipment has duly paid,
deposited or accrued on their respective books of account, all material Taxes
pursuant to such reports and returns, or assessed against Persinger Equipment or
that Persinger Equipment is obligated to withhold from amounts owing to any
employee; (iii) Persinger Equipment has no liability for any Taxes materially in
excess of the amounts stated in the Financial Statements with respect to all
time periods or portions thereof ending on or before the dates thereof; (iv)
neither the assessment of any additional material Taxes that by law should have
been reported or paid or in accordance with generally accepted accounting
principles should have been accrued, nor any investigation or audit, is pending,
threatened or expected; and (v) no taxing or assessment authority has indicated
to Persinger Equipment or Seller any intent to conduct an audit or other
investigation or asserted any unresolved deficiencies with respect to Tax
liabilities of Persinger Equipment for any period and there are no facts or
circumstances that would give rise thereto.

 

3.9)       Absence of Undisclosed Liabilities. To Seller’s knowledge, there are
no material debts, liabilities, or claims against Persinger Equipment or legal
basis therefor, whether accrued, absolute, contingent, or otherwise, and whether
due or to become due, including, but not limited to, liabilities on account of
taxes, other governmental charges, duties, penalties, interest or fines, except:

 

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(a)  

Liabilities, to the extent set forth or reserved against in the Balance Sheet;

 

(b)        Liabilities incurred in the ordinary course of business (and in
compliance with this Agreement) since the date of the Balance Sheet; or

 

(c)        Liabilities disclosed in Schedule 3.9 or specifically disclosed in
any other schedule to this Agreement.

 

3.10)     Absence of Certain Changes and Events. Except as set forth in Schedule
3.10, since the date of the Balance Sheet, Persinger Equipment has not (i) sold
or otherwise disposed of any of its real properly or real property leases, or
entered into any renewals or extensions of such existing leases or entered into
any new leases; (ii) made any material increase in the compensation or benefits
payable or to become payable by Persinger Equipment to any officers, employees
or consultants whose total remuneration for the last fiscal year was, or for the
current fiscal year is expected to be after any such increase, more than
$20,000, or paid or accrued any bonus, percentage of compensation, severance
benefit or other like benefit to, or for the credit of, any officer, employee or
consultant, except in accordance with such plans and arrangements as were in
effect prior to the date of the Balance Sheet or are set forth in Schedule 3.11;
(iii) entered into, amended, terminated or received notice of termination of any
material contract, license, franchise, commitment or other arrangement other
than in the ordinary course of business; (iv) altered or revised its accounting
principles, procedures, methods or practices except as required by law; (v)
changed their credit policies as to sales of Inventories, discounts, product
returns, warranties or collection of receivables; (vi) transferred or otherwise
disposed of any material assets except Inventory in the ordinary course of
business; (vii) incurred, discharged or satisfied any material liability
(absolute or contingent), mortgage, lien, security interest or encumbrance other
than in the ordinary course of business; (viii) except as set forth on the
Balance Sheet, declared or paid any dividend or other distribution in cash or
securities, or redeemed, repurchased or otherwise acquired any capital stock or
other securities of Persinger Equipment; (ix) issued or committed to issue any
securities of, or other ownership interests in, Persinger Equipment; (x) made
any purchase commitment in excess of the normal, ordinary and usual requirements
of their businesses, or made any change in their selling, pricing, advertising
or personnel practices inconsistent with its prior practice; (xi) written off or
down as uncollectible any notes or accounts receivable or portion thereof except
in amounts that in the aggregate are not materially in excess of preexisting
reserves therefor, or taken, set aside or increased any reserves or charges on
its books against earnings or assets; (xii) failed to replenish their
Inventories in a normal and customary manner consistent with their prior
practices and prudent business practices prevailing in Persinger Equipment’s
industry; (xiii) entered into any compromise or settlement of or suffered any
judgment in any litigation, proceeding, or governmental investigation relating
to them or their assets, properties, rights or businesses; (xiv) suffered any
material damage, destruction or loss whether or not covered by insurance; (xv)
made any capital expenditures or commitment therefor in excess of $20,000.00; or
(xvi) entered into any written or oral agreement, other than this Agreement, to
do any of the things enumerated in (i) through (xv) of this Section.

 

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3.11)     Assets. The fixtures, equipment, facilities and operating assets of
Persinger Equipment are suitable for the uses for which intended, except as set
forth in Schedule 3.11, free from defects and in good operating condition
(ordinary wear and tear excepted) in all material respects; all such assets are
being and have been properly and regularly serviced and maintained by Persinger
Equipment in a manner that would not void or limit the coverage of any warranty
thereon; and all improvements and modifications of such facilities by Persinger
Equipment’s uses of such facilities and all such facilities and their uses
conform in all material respects to all applicable zoning and building laws.
Persinger Equipment has good, marketable and insurable title to, or, in the case
of leases, valid and subsisting leasehold interests in, all assets used in the
operations (as presently conducted) of Persinger Equipment, free and clear of
any material Liens except Liens for current taxes or assessments not yet due and
payable. On Schedule 3.11 under the heading "Non-Company Assets" Seller has
listed assets on the premises of Persinger Equipment which Buyer and Seller has
agreed are personal assets of Persinger.

 

3.12)     Trademarks. Patents and Trade Secrets. Except as set forth in Schedule
3.12, all Intellectual Property that is necessary to Persinger Equipment’s
operations as presently conducted or in the production of any of Persinger
Equipment’s products (the " Persinger Equipment Intellectual Property") is owned
by or licensed to Persinger Equipment. Except as set forth in Section 3.12,
neither Persinger Equipment, its business or any of its products infringes or
misappropriates the Intellectual Property rights of others. No present or former
employee or consultant of Persinger Equipment has violated any noncompetition,
confidentiality, or assignment of inventions covenant or obligation by reason of
such employee's or consultant's employment with or consulting to Persinger
Equipment. Except as set forth in Schedule 3.12, the Persinger Equipment
Intellectual Property has not been challenged in any judicial or administrative
proceeding. All Persinger Equipment Intellectual Property listed in Schedule
3.1C have the status indicated therein and all applications are still pending in
good standing and have not been abandoned. No person or entity nor such person's
or entity's business nor any of its products has infringed or misappropriated
the Persinger Equipment Intellectual Property rights or currently is infringing
or misappropriating such rights. Except as set forth on Schedule 3.12, no
employee or consultant of Persinger Equipment is subject to or otherwise
restricted by any employment, nondisclosure, assignment of inventions,
nonsolicitation of employees or noncompetition agreement between such employee
or consultant and a third party.

 

3.13)     Accounts Receivable. All accounts and notes receivable shown on the
Balance Sheet and all accounts and notes receivable of Persinger Equipment
created up to the Closing Date will be collected within the credit terms
applicable to the customer after the Closing in the ordinary course of business,
net of the reserve set forth on the Balance Sheet which has not been used as of
the date of this Agreement. All accounts and notes receivable shown on the
Balance Sheet are, except to the extent already paid, valid and collectible
obligations owing to Persinger Equipment, not subject to any defenses or
set-offs. Persinger Equipment does not have any notes or accounts receivable
owed to Persinger Equipment from any director, officer or Seller.

 

3.14)     Inventories. All Inventories of Persinger Equipment consist of items
of merchantable quality and quantity usable or salable in the ordinary course of
Persinger Equipment's business, and are salable at prevailing market prices not
less than the book value amounts thereof. All Inventories of Persinger Equipment
conform to the specifications established therefor and have been manufactured in
accordance with any applicable regulatory requirements. The quantities of all
Inventories (net of allowance for obsolete or excess Inventory consistent with
past practice) are not obsolete, damaged, slow moving, defective or excessive,
and are reasonable in the circumstances of Persinger Equipment business.
Schedule 3.1A sets forth a complete list of the addresses of all warehouses or
other facilities owned or leased by Persinger Equipment and in which Persinger
Equipment's Inventories are located.

 

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3.15)     Licenses; Compliance with Laws, Regulations, Etc. Persinger Equipment
possesses all necessary governmental approvals, and all material permits,
licenses and other approvals and authorizations that are necessary for the
conduct of their businesses as presently conducted, and all of such licenses,
permits and other approvals and authorizations are in good standing, full force
and effect. All such licenses, permits, approvals or authorizations will
continue to be in full force and effect immediately after the consummation of
the transactions contemplated in this Agreement and not be affected by the
transactions contemplated in this Agreement. Persinger Equipment and its
actions, properties, products, practices and procedures, and any agreements to
which Persinger Equipment is a party or is bound, have complied, and is in
compliance, in all material respects with all applicable laws (including common
law and the Americans with Disabilities Act), statutes, ordinances, orders,
decrees, rules, regulations, interpretations and requirements promulgated by
governmental or other authorities. No statute, rule, regulation, order or
interpretation has been enacted, entered or deemed applicable by any domestic or
foreign government or governmental or administrative agency or court that would
make consummation by Persinger Equipment and Seller of the transactions
contemplated by this Agreement illegal.

 

3.16)     Litigation. Except as set forth in Schedule 3.16, there is no action,
lawsuit, claim, proceeding, or investigation of any kind pending or threatened
against, by or affecting Persinger Equipment that if decided adversely against
Persinger Equipment would have a material adverse effect upon the businesses of
Persinger Equipment. Persinger Equipment is not in default with respect to any
order, writ, injunction, or decree of any court or of any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, materially affecting or relating to their
businesses or assets. No suit, action or other proceeding is pending or
threatened by or before any court or governmental agency in which it is sought
to restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated by this
Agreement, and no investigation that might eventuate in any such suit, action or
other proceeding is pending or overtly threatened.

 

3.17)     Warranties, Leases, Contracts. All products manufactured or sold, and
all services provided, by Persinger Equipment have complied, and are in
compliance, in all material respects with all contractual requirements,
warranties or covenants, express or implied, applicable thereto, and with all
applicable governmental, trade association or regulatory specifications therefor
or applicable thereto. The terms of Persinger Equipment‘s product and service
warranties and product return, discount, demo sales and credit policies are set
forth in Schedule 3.17. Persinger Equipment has performed all material
obligations required to be performed by it and is not in default under any
material lease, contract, mortgage, promissory note, evidence of indebtedness or
other agreement or commitment to which Persinger Equipment is a party or by
which Persinger Equipment is bound, and the same are in full force and effect on
the date of this Agreement and valid and enforceable by Persinger Equipment in
accordance with its respective terms except as may be limited by laws affecting
creditors' rights generally or by judicial limitations on the right to specific
performance or other equitable remedies. There has not been any event of default
(or any event or condition that with notice or the lapse of time, both or
otherwise, would constitute an event of default) on the part of Persinger
Equipment or any party to any thereof that is expected to have a material
adverse effect on Persinger Equipment. Performance of any such lease, contract,
mortgage, promissory note, evidence of indebtedness or other agreement is not
expected to have a material adverse effect on Persinger Equipment.

 

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3.18)     Insurance Policies. All policies of insurance listed in Schedule IIH
are in full force and effect, and have been issued for the benefit of Persinger
Equipment. Persinger Equipment has promptly and properly notified its insurance
carriers of any and all claims known to them with respect to their operations or
products for which they are insured.

 

3.19)     Labor Agreements. Persinger Equipment is not a party to any collective
bargaining agreement with any labor organization. There is not currently pending
or threatened a demand for recognition from any labor union with respect to, and
Seller has no knowledge of any attempt that has been made or is being made to
organize, any of the persons employed by Persinger Equipment. There has never
been and is not now any strike, slow-down, work stoppage or lockout, or any
threat thereof, by or with respect to any of the employees of Persinger
Equipment.

 

3.20)

Benefit Plans.

 

(a)     Except as set forth in Schedule 3.1J, Persinger Equipment does not
sponsor, maintain, or contribute to any "employee pension benefit plan"
("Pension Plan"), as such term is defined in Section 3(2) of ERISA, including,
solely for the purpose of this subsection, a plan excluded from coverage by
Section 4(b)(5) of ERISA. Any such Pension Plan presently maintained by
Persinger Equipment is, in all material respects, in compliance with applicable
provisions of ERISA, the Code and other applicable law.

 

(b)     Persinger Equipment does not sponsor, maintain, contribute to any
Pension Plan that is a "Multiemployer Plan" within the meaning of Section
4001(a)(3) of ERISA.

 

(c)     Except as set forth in Schedule 3.1J, Persinger Equipment does not
sponsor, maintain, or contribute to any "employee welfare benefit plan"
("Welfare Plan"), as such term is defined in Section 3(1) of ERISA, whether
insured or otherwise, and any such Welfare Plan presently maintained by
Persinger Equipment is, in all material respects, in compliance with the
provisions of ERISA, the Code and all other applicable laws, including, but not
limited to, Section 4980B of the Code, the regulations under such Section and
Part 6 of Title I of ERISA. Except as set forth in Schedule 3.1J, Persinger
Equipment has not established or contributed to any "voluntary employees'
beneficiary association" within the meaning of Section 501(c)(9) of the Code.

 

(d)     Persinger Equipment does not sponsor, maintain or contribute to a
"self-insured medical reimbursement plan" within the meaning of Section 105(h)
of the Code and the regulations under such Section.

 

(e)     Except as set forth in Schedule 3.1J, Persinger Equipment does not
currently maintain or contribute to any oral or written bonus, profitsharing,
compensation (incentive or otherwise), commission, stock option or other
stockbased compensation, retirement, severance, vacation, sick or parental
leave, dependent care, deferred compensation, cafeteria, disability,
hospitalization, medical, death, retiree, insurance or other benefit or welfare
or other similar plan, agreement, trust, fund or arrangement providing for the
remuneration or benefit of all or any employees or shareholders, that is neither
a Pension Plan nor a Welfare Plan (collectively, the "Compensation Plans").

 

 

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(f)      Neither any Pension Plans or Welfare Plans nor any trust created or
insurance contract issued there under nor any trustee. fiduciary, custodian, or
administrator thereof, nor any officer, director or employee of Persinger
Equipment, custodian or any other "disqualified person" within the meaning of
Section 4975(e)(2) of the Code, or "party in interest" within the meaning of
Section 3(14) of ERISA, with respect to any such plan has engaged in any act or
omission that could reasonably be expected to subject Persinger Equipment,
either directly or indirectly, to a tax or penalty on prohibited transactions
imposed by Sections 4975 of the Code or 406 of ERISA, a liability for breach of
fiduciary duties under ERISA or a civil penalty imposed by Section 502 of ERISA.

 

(g)     Full payment has been made of all amounts that Persinger Equipment is
required, under applicable law, with respect to any Pension Plan, Welfare Plan
or Compensation Plan, or any agreement relating to any Pension Plan, Welfare
Plan or Compensation Plan, to have paid as a contribution to each Pension Plan,
Welfare Plan or Compensation Plan. To the extent required by generally accepted
accounting principles, Persinger Equipment has made adequate provisions for
reserves to meet contributions that have not been made because they are not yet
due under the terms of any Pension Plan, Welfare Plan or Compensation Plan or
related agreements. There will be no change on or before the Closing Date in the
operation of any Pension Plan, Welfare Plan or Compensation Plan or documents
under which any such plan is maintained that will result in an increase in the
benefit liabilities under such plan, except as may be required by law. The IRS
has issued favorable determination letters, or applications for favorable
determination letters have been timely submitted and no unfavorable
determination letters have been received, with respect to Persinger Equipment
Pension Plans that are intended to be qualified under Section 401 (a) of the
Code.

 

(h)     Schedule 3.1J lists all Pension Plans, Welfare Plans and Compensation
Plans, and prior to the date of this Agreement, Seller has made available to
Buyer complete and accurate copies of all of such Pension Plans, Welfare Plans,
Compensation Plans and related agreements, annual reports (Form 5500), favorable
determination letters, current summary plan descriptions, and all employee
handbooks or manuals.

 

3.21)

Employees.

 

(a)     Except as set forth in Schedule 3.21 or in the Balance Sheet, Persinger
Equipment has no obligations and the transactions contemplated by this Agreement
will give rise to no obligations to its directors, officers, employees,
consultants, or agents other than obligations arising in the ordinary course of
business since the date of the Balance Sheet on account of wages, salaries,
commissions and bonuses for prior services performed or business produced.

 

(b)     Except as set forth in Schedule 3.21, there have been no lawsuits or
claims brought by any employee or consultant or former employee or consultant of
Persinger Equipment against Persinger Equipment during the preceding 5 years.

 

(c)     Except as set forth in Schedule 3.21, there are no severance or early
retirement payments that are or were due from Persinger Equipment under the
terms of any agreement, oral or written.

 

3.22)     No Finders. No act of Persinger Equipment or Seller has given or will
give rise to any valid claim against any of the parties to this Agreement for a
brokerage commission, finder's fee or other like payment in connection with the
transactions contemplated in this Agreement with the acceptions of finders fees
paid by buyer.

 

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3.23)     Contracts with Related Parties. Except as set forth in Schedules 3.11,
3.21 or 3.23, there are no contracts between Persinger Equipment and any of its
officers or directors or between Persinger Equipment and Seller or between
Persinger Equipment and any entity in which any Persinger Equipment officers or
directors owns a more than 5% equity interest.

 

3.24)     Relations with Suppliers and Customers. No material current supplier
of Persinger Equipment has cancelled any contract or order for provision of, and
there has been no information to the effect that any such supplier may not
provide, raw materials, products, supplies, or services to the business of
Persinger Equipment either prior to or following the Closing Date. Except as set
forth in Schedule 3.24, Persinger Equipment has not received any information
from any customer to the effect that such customer intends to materially
decrease the amount of business such customer does with Persinger Equipment
either prior to or following the Closing Date.

 

3.25)     Product Liability Claims. All products that Persinger Equipment has in
Inventory or have sold have been and are in all material respects merchantable,
free from material defects in material or workmanship, and suitable for the
purpose for which they are sold. Except as set forth in Schedule 3.25, Persinger
Equipment has never incurred any uninsured or insured Product Liability. Except
as set forth in Schedule 3.25, Persinger Equipment has never received a claim
based upon alleged Product Liability, and no basis for any such claim exists.

 

3.26)     Environmental Matters. Except as set forth on Schedule 3.26, Persinger
Equipment has obtained, and are in material compliance with, all permits,
licenses or other approvals necessary under the Environmental Laws or
Regulations with respect to the Persinger Equipment’s business or assets, and
are in material compliance with all Environmental Laws or Regulations, except
for those permits, licenses or other approvals the absence of which, and except
for Environmental Laws or Regulations the noncompliance with which. would not
have a material adverse effect on Persinger Equipment. Persinger Equipment’s
business and assets comply fully with all Environmental Laws or Regulations
except those Environmental Laws or Regulations the noncompliance with which
would not have a material adverse effect on Persinger Equipment. Neither
Persinger Equipment’s business or assets have been or are subject to any actual
or threatened investigations, administrative proceedings, litigation, regulatory
hearings, or other actions threatened, proposed or pending that allege (i)
actual or threatened violation of or noncompliance with any Environmental Law or
Regulation; or (ii) actual or threatened personal injury or property damage or
contamination of any kind resulting from a release or threatened release of a
Hazardous Substance by Persinger Equipment with respect to Persinger Equipment‘s
businesse or assets. With respect to the real property used in connection with
Persinger Equipment business and assets, (i) no above-ground or underground
storage tanks are or were present on such real property or any improvements on
structures thereon; (ii) such real property is not listed on the federal CERCLIS
or on any local, state or federal list of hazardous waste sites; (iii) no Lien
in favor of any governmental authority in response to a release or threatened
release of any Hazardous Substance has been filed or attached to such real
property; and (iv) there has been no past or present use, manufacture,
generation, storage, transportation or disposal by Persinger Equipment of any
Hazardous Substance at or under such real property except in compliance with all
Environmental Laws or Regulations (excluding those Environmental Laws or
Regulations the noncompliance with which would not have a material adverse
effect on Persinger Equipment).

 

3.27)     Absence of Certain Business Practices. Neither Persinger Equipment or
any officer, employee or agent of Persinger Equipment, or any other person
acting on their respective behalves has directly or indirectly, during the
preceding 7 years, given or agreed to give any material gift or similar benefit
to any customer, supplier, governmental employee or other person who is or may
be in a position to help or hinder the business of Persinger Equipment (or
assist Persinger Equipment in connection with any actual or proposed
transaction), except Persinger Equipment and/or its officers, employees and
agents have engaged in lawful customer entertainment and business promotion
activities.

 

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3.28)     Corporate Records. The minute books of Persinger Equipment are
complete and correctly reflect in all material respects, all corporate actions
taken by them at all meetings or through written action and correctly record all
resolutions of the Board of Directors of Persinger Equipment, as the case may
be.

 

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as of the date of this Agreement as
follows:

 

4.1)       Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Maryland.

 

4.2)       Authorization and Binding Obligation. The execution, delivery and
performance by Buyer of this Agreement and the transactions and agreements
contemplated by this Agreement have been duly and validly authorized and
approved by all requisite corporate action on the part of Buyer. Buyer has all
requisite power and authority to do and perform all acts and things required to
be done by it under this Agreement and the agreements contemplated by this
Agreement. This Agreement constitutes and, when executed, the agreements
contemplated by this Agreement will constitute, the valid and binding obligation
of Buyer. enforceable in accordance with its and their respective terms except
as may be limited by laws affecting creditors' rights generally or by judicial
limitations on the right to specific performance or other equitable remedies.

 

4.3)       Consents Required. Except for any items set forth in Schedule 4.3,
the executioni and delivery of this Agreement and the agreements contemplated by
this Agreement, the sale and purchase of the Stock and the consummation of the
transactions contemplated by this Agreement in compliance with the terms and
provisions of this Agreement by Buyer will not:

 

(a)     Conflict with or result in a breach of the terms, conditions or
provisions of or constitute a default under the Articles of Incorporation or
Bylaws or other governing instruments of Buyer, or any material agreement,
mortgage, lease, judgment, order, award, decree or other instrument or
restriction to which Buyer is a party or by which Buyer or any of its assets is
bound or affected;

 

(b)     Violate any material statute, rule, regulation, order or decree of any
federal, state, local or foreign body or authority by which Buyer or any of its
properties or assets may be bound.

 

(c)     Require any material approval, consent, authorization or other order or
action of any court, governmental authority, regulatory body, creditor or any
other person; or

 

(d)     Give any party with rights under any such material agreement, mortgage,
lease, judgment, order, award, decree or other instrument or restriction the
right to terminate, modify or otherwise materially change the rights or
obligations of Buyer there under.

 

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4.4)       Finders. The Good one Inc is a finder in this transaction and
Heartland will provide the cominsation for this fee.

 

4.5)       Investment Purpose in Acquiring the Stock. Buyer is acquiring the
Stock for its own account for investment purposes only and not with a view to
their resale or distribution in violation of the Securities Act. Buyer has the
requisite investment intent to satisfy Section 4(2) of the Securities Act. Buyer
is an "accredited investor" as such term is used in Rule 501 under the
Securities Act.

 

ARTICLE 5.

COVENANTS

 

5.1)       Approvals and Consents. Seller will use all reasonable efforts to
obtain all material approvals and consents of all third parties necessary on the
part of Persinger Equipment or Seller to consummate the transactions
contemplated in this Agreement. Buyer agrees to cooperate with Persinger
Equipment and Seller in connection with obtaining such approvals and consents.

 

5.2)       Preserve Accuracy of Representations and Warranties. Each of
Persinger Equipment, Seller and Buyer will refrain from knowingly taking any
action, except with the prior written consent of the other parties, that would
render any representation, warranty or agreement of such party in this Agreement
inaccurate or breached as of the Closing (as though made at and as of the
Closing) in any material respect. At all times prior to the Closing, each party
will promptly inform the others in writing with respect to any matters arising
after the date of this Agreement that, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in the
Schedules pursuant to Article 3.

 

5.3)       Maintain Persinger Equipment As A Going Concern. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Closing Date, Seller will use all reasonable efforts to cause
Persinger Equipment to conduct its operations according to the ordinary and
usual course of business and consistent with past practices, and Seller will use
all reasonable efforts, to the extent that it is within Seller’s control, to
preserve intact Persinger Equipment’s business organizations, to maintain its
business in the ordinary course, to keep available the services of its
respective officers and employees and to maintain satisfactory relationships
with licensors, licensees, suppliers, contractors, distributors, customers and
others having business relationships with Persinger Equipment. Seller will
promptly advise Buyer orally and in writing of any materially adverse change in
the business of Persinger Equipment and permit Buyer to consult with Seller with
respect to any material changes in Persinger Equipment’s business. Except as
otherwise expressly provided in or contemplated by this Agreement or to the
extent specifically disclosed on the Schedules to this Agreement, during the

 

period from the date of this Agreement to the Closing Date, Seller will not
cause or permit Persinger Equipment to, without the prior written consent of
Buyer:

 

(a)

amend its Articles of Incorporation or Bylaws;

 

(b)     authorize for issuance, issue, sell, or deliver (whether through the
issuance or granting of additional options (other than in the ordinary course of
business and consistent with past practice), warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
securities convertible into shares of Stock or other securities of Persinger
Equipment;

 

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(c)     split, combine or reclassify any shares of Stock or other securities of
Persinger Equipment, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of the Stock or other securities of Persinger Equipment; or redeem or
otherwise acquire any shares of Stock or other securities of Persinger
Equipment; or amend or alter any material term of any of the Stock or other
securities of Persinger Equipment;

 

(d)     create, incur or assume any material indebtedness for borrowed money
(except under current credit facilities), or assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the material obligations of any other person, other than in the
ordinary course of business and consistent with past practice; or make any
material loans, advances or capital contributions to, or investments in, any
other person; or create, incur or assume any material Lien on any material
asset;

 

(e)     (i) materially increase the compensation of any of their directors,
officers, employees, shareholders or consultants, except in the ordinary course
of business and consistent with past practice or pursuant to contractual
obligations existing on the date of this Agreement, or accelerate the payment of
any such compensation (whether or not any such acceleration is consistent with
past practice); (ii) accelerate or otherwise materially modify the payment,
vesting, exercisability, or other feature or requirement of any pension,
retirement allowance, severance pay, stock option or other employee benefit not
required by any existing plan, agreement or arrangement or by applicable law to
any such director, officer, employee, shareholder or consultant, whether past or
present; or (iii) except in accordance with their customary past practices,
commit themselves to any additional pension, profit-sharing, bonus, incentive,
deferred compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or to any employment or consulting agreement with or
for the benefit of any person, or amend in any material manner any of such plans
or any of such agreements in existence on the date of this Agreement;

 

(f)      except in the ordinary course of business and consistent with past
practice or pursuant to contractual obligations existing on the date of this
Agreement, (i) sell, transfer, mortgage, or otherwise dispose of or encumber any
material real or personal property, except pursuant to the Building Purchase
Agreement; (ii) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), or (iii) cancel any
material debts or waive any material claims or rights that involve payments or
commitments to make payments that individually exceeds $5,000.00 or, in the
aggregate, exceed $25,000.00;

 

(g)     change their credit policies as to sales of Inventories or collection of
receivables or their Inventory consignment practices;

 

(h)     remove or permit to be removed from any building, facility or real
property any material machinery, equipment, fixture, vehicle or other personal
property or parts thereof, except in the ordinary course of business and except
for movement from one facility of Persinger Equipment to another such facility;

 

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(i)         alter or revise their accounting principles, procedures, methods or
practices, except as may be required by generally accepted accounting
principles;

 

(j)      institute, settle or compromise any claim, action, suit or proceeding
pending or threatened by or against it involving amounts in excess of
$20,000.00, at law or in equity or before any federal, state, local, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality; or

 

(k)

agree, whether in writing or otherwise, to do any of the foregoing.

 

5.4)       Access to Information and Records Before Closing. During the period
from the date of this Agreement through the Closing, Seller will afford to
Buyer, and to Buyer's accountants, officers, directors, employees, counsel and
other representatives, reasonable access during normal business hours, to all of
Persinger Equipment’s properties, books, contracts, commitments and records,
and, during such period, Seller will furnish promptly to Buyer all information
concerning Persinger Equipment's business, prospects, properties, results of
operations, condition (financial or otherwise) or personnel as Buyer may
reasonably request. Buyer will hold in confidence all such nonpublic
information.

 

5.5)       Regulatory Approvals. Buyer and Seller will take all such action as
may be necessary for, and will file and, if appropriate, use all reasonable
efforts to have declared effective or approved all documents and notifications
with governmental or regulatory bodies that they deem necessary or appropriate
for, the consummation of the transactions as contemplated by this Agreement and
each party will give the other information reasonably requested by such other
party pertaining to it and its Affiliates to enable such other party to take
such actions.

 

ARTICLE 6.

CONDITIONS TO BUYER'S OBLIGATIONS

 

Buyer's obligations under this Agreement will, at Buyer's option, be subject to
the satisfaction, on or prior to the Closing Date, of all of the following
conditions:

 

6.1)       Truth of Representations and Warranties. The representations and
warranties of Seller in this Agreement will be true in all material respects on
the Closing Date with the same effect as though made at such time, except for
changes expressly contemplated by this Agreement or changes that do not have a
material adverse effect on the businesses of Persinger Equipment and except for
any particular representation and warranty that specifically addresses matters
only as of a particular date (which will remain true as of such date). Seller
will have performed all of Seller’s material obligations and complied with all
of Seller’s material covenants and conditions prior to or as of the Closing
Date.

 

6.2)       Required Consents. Seller will have obtained all material permits,
authorizations, consents and approvals required to be obtained by it pursuant to
this Agreement, in form and substance reasonably satisfactory to Buyer, and
Buyer will have received evidence satisfactory to Buyer of the receipt of such
permits, authorizations, consents and approvals.

 

 

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6.3)       Litigation Affecting Closing. No material suit, action or other
proceeding will be pending or threatened by any third party or by or before any
court or governmental agency in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement.

 

6.4)       Legislation. No statute, rule, regulation, order, or interpretation
will have been enacted, entered or deemed applicable by any domestic or foreign
government or governmental or administrative agency or court that would make the
transactions contemplated by this Agreement illegal.

 

6.5)       Separate Noncompetition Agreement. At the Closing, Persinger will
have executed and delivered to Buyer a noncompetition agreement in the form
attached as Exhibit B (the "Separate Noncompetition Agreement").

 

6.6)       At the Closing, Persinger will have executed and delivered to Buyer
an employment agreement with Persinger Equipment in the form attached as Exhibit
E (the "Persinger Employment Agreement").

 

ARTICLE 7.

CONDITIONS TO SELLER’S OBLIGATIONS

 

Seller's obligations under this Agreement will, at Seller's option, be subject
to the satisfaction, on or prior to the Closing Date, of all of the following
conditions:

 

7.1)       Truth of Representations and Warranties. The representations and
warranties of Buyer in this Agreement will be true in all material respects on
the Closing Date with the same effect as though made at such time, except for
changes expressly contemplated by this Agreement and except for any particular
representation and warranty that specifically addresses matters only as of a
particular date (which will remain true as of such date). Buyer will have
performed all of Buyer's material obligations and complied with all of Buyer's
material covenants and conditions prior to or as of the Closing Date.

 

7.2)       Consents. Buyer will have obtained all material permits,
authorizations, consents and approvals required to be obtained by them pursuant
to this Agreement, in form and substance reasonably satisfactory to Seller, and
Seller will have received evidence satisfactory to it of the receipt of such
permits, authorizations, consents and approvals.

 

7.3)       Litigation Affecting Closing. No material suit, action or other
proceeding will be pending or threatened by any third party or by or before any
court or governmental agency in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement.

 

7.4)       Legislation. No statute, rule, regulation or order or interpretation
will have been enacted, entered or deemed applicable by any domestic or foreign
government or governmental or administrative agency or court that would make the
transactions contemplated by this Agreement illegal.

 

 

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ARTICLE 8.

CLOSING

 

8.1)       Closing Date. The consummation of the transactions provided for in
this Agreement (the "Closing") will take place at 10:00 a.m. (local time) on
February 1, 2006, or as soon thereafter as all conditions to Closing have been
satisfied or waived, or on such other date and/or at such other time as the
parties to this Agreement may agree upon (the "Closing Date"). The Closing will
take place at the law offices of Adams, Rizzi & Sween, P.A., 300 First Street
NW, Austin, MN 55912 or at such other place or in such other manner (e.g., by
telecopy exchange of signature pages with originals to follow by overnight
delivery) as the parties may agree.

 

8.2)       Closing Deliveries of Seller. In addition to, and without limiting
any other provisions of this Agreement, Seller will deliver to Buyer the
following, in form reasonably satisfactory to Buyer and Buyer's counsel:

 

(a)     Stock certificate(s) representing all of the Stock, together with stock
powers duly executed by Seller transferring such Stock to Buyer.

 

(b)     All of the documents, certificates and instruments required to be
delivered to Buyer under Article 6.

 

8.3)       Closing Deliveries of Buyer. In addition to, and without limiting any
other provisions of this Agreement, Buyer will, at the Closing, deliver to
Seller the following, in form reasonably satisfactory to Seller and Seller’s
counsel:

 

(a)     The portions of the Purchase Price to Seller as required by and set out
in Section 2.2.

 

(b)     All of the documents, certificates and instruments required to be
delivered to Seller under Article 7.

 

8.4)       Closing Deliveries of Persinger Equipment. Persinger Equipment will,
at the Closing, upon completion of the deliveries required by Section 8.2 and
Section 8.3

 

(a)

Execute and deliver to Persinger the Persinger Employment Agreement.

 

8.5)       Proceedings. No proceedings will be deemed taken nor any documents
executed or delivered until all proceedings have been taken and all documents
have been executed and delivered. All proceedings taken and all documents
executed and delivered by the parties to this Agreement at the Closing will be
deemed to have been taken and executed simultaneously.

 

ARTICLE 9.

TERMINATION

 

9.1)       Termination. This Agreement may be terminated at any time prior to
the Closing Date, only:

 

(a)

by mutual consent of Seller and Buyer;

 

(b)

failure of either party to meet contingencies listed in subdivision 2.2(c);

 

 

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(c)     by Buyer if any of the conditions specified in Article 6 has not been
waived by Buyer or met and it is not reasonably foreseeable that such condition
could ever be satisfied; or

 

(d)     by Seller if any of the conditions specified in Article 7 has not been
waived by Seller or met and it is not reasonably foreseeable that such condition
could ever be satisfied.

 

9.2)       Procedure and Effect of Termination. In the event of termination of
this Agreement by Buyer and/or by Seller pursuant to Section 9.1, written notice
thereof will immediately be given to the other parties and this Agreement will
terminate and the transactions contemplated by this Agreement will be abandoned,
without further action by any of the parties. Persinger Equipment agrees that
any termination by Seller will be conclusively binding upon Persinger Equipment,
whether given expressly on its behalf or not, and Buyer will have no further
obligation with respect to Persinger Equipment. If this Agreement is terminated
as provided in this Agreement, no party to this Agreement will have any
liability under this Agreement or further obligation under this Agreement to any
other party, except as set forth in Section 9.3 and, provided, however. that
nothing in this Article will relieve any party of liability for breach of any
representation, warranty condition precedent or agreement; and, in such a case,
the breaching party will be liable to the non-breaching party for such breach.
This Section any the other Sections of this Agreement which are said expressly
to survive such termination will survive any termination of this Agreement.

 

ARTICLE 10.

INDEMNIFICATION; REMEDIES

 

10.1)     Indemnification by Seller. Seller will indemnify and hold Buyer
harmless at all times after the date of this Agreement against and in respect of
any damage, deficiency, claim or expense resulting from: (i) any
misrepresentation, breach of warranty, breach of agreement or covenant or
non-observance of any condition on the part of such Seller under this Agreement;
(ii) from any misrepresentation in or omission from any other instrument to be
furnished by such Seller under this Agreement; and (iii) all actions, suits.
proceedings, demands, assessments, judgments, reasonable attorneys' fees and
other related costs incident to any of the foregoing ("Buyer's Indemnifiable
Losses").

 

Buyer's Indemnifiable Losses will not include: (i) any tax liabilities arising
by reason of any reduction or disallowance of deductions from taxable income in
one taxable year, to the extent such reduction or disallowance results in a
corresponding increase in allowable deductions from income in another taxable
year, (ii) the shifting of items of income from one taxable year to another or
(iii) the capitalization of amounts which were expenses, but only if such
capitalized amounts are subject to amortization or depreciation or recovery in
cost of goods sold, inventory or materials, provided, however, that Buyer's
Indemnifiable Losses may include any damage attributable to the lost time value
of money with respect to any of such matters.

 

Seller will reimburse Buyer, after reasonable notice and opportunity to defend
against any such claim, for any Buyer's Indemnifiable Losses experienced or
incurred by Buyer at any time after the Closing Date in respect of any liability
to which the foregoing indemnity applies, subject to the Deductible. If a claim
is asserted against Buyer which Buyer knows or has reason to believe will result
in any liability of any Seller under this indemnity, Buyer will promptly notify
the affected Seller in writing and afford such Seller the opportunity to defend
against such claim.

 

 

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10.2)     Indemnification by Buyer. Buyer will indemnify and hold Seller
harmless at all times after the date of this Agreement against and in respect of
any damage, deficiency, claim or expense resulting from: (i) any
misrepresentation, breach of warranty, breach of agreement or covenant or
non-observance of any condition on the part of Buyer under this Agreement; (ii)
from any misrepresentation in or omission from any other instrument to be
furnished by Buyer under this Agreement; and (iii) all actions, suits,
proceedings, demands, assessments, judgments, reasonable attorneys' fees and
other related costs incident to any of the foregoing ("Seller’s Indemnifiable
Losses").

 

Buyer will reimburse Seller, after reasonable notice and opportunity to defend
against any such claim, for any Seller’s Indemnifiable Losses experienced or
incurred by Seller at any time after the Closing Date in respect of any
liability to which the foregoing indemnity applies, subject to the Deductible.
If a claim is asserted against Seller which Seller knows or has reason to
believe will result in any liability of Buyer under this indemnity, Seller will
promptly notify Buyer in writing and afford Buyer the opportunity to defend
against such claim.

 

10.3)     Deductibles. The indemnification provided for in Section 10.1 will not
apply unless, and will apply only to the extent that a Buyer's Indemnifiable
Loss exceeds $10,000.00 and that the aggregate of Buyer's Indemnifiable Losses
without regard to the amount of any single Buyer's Indemnifiable Loss exceeds
$50,000.00 ("Seller’s Deductible"). Notwithstanding the preceding sentence, if
the aggregate of Buyer's Indemnifiable Losses without regard to the amount of
any single Buyer's Indemnifiable Loss equals or exceeds $50,000.00, Seller will
have the obligations respecting indemnifying and holding Buyer harmless under
Section 10.1 for all Buyer's Indemnifiable Losses aggregating in excess of
$50,000.00. Notwithstanding the first sentence of this Section, Seller’s
obligations respecting indemnifying and holding Buyer harmless with respect to
Buyer's Indemnifiable Losses, if any, arising with respect to Section 3.3 will
not be limited by the Seller’s Deductible.

 

The indemnification provided for in Section 10.2 will not apply unless, and will
apply only to the extent that a Seller’s Indemnifiable Loss exceeds $10,000.00
and that the aggregate of Seller’s Indemnifiable Losses without regard to the
amount of any single Seller's Indemnifiable Loss exceeds $50,000.00 ("Buyer's
Deductible"). Notwithstanding the preceding sentence, if the aggregate of
Seller's Indemnifiable Losses without regard to the amount of any single
Seller’s Indemnifiable Loss equals or exceeds $100,000, Buyer will have the
obligations respecting indemnifying and holding Seller harmless under Section
10.2 for all Seller’s Indemnifiable Losses aggregating in excess of $50,000.00.

 

10.4)     Remedies. Each party will be entitled to specific performance of their
respective obligations to purchase and sell the Stock as set forth in this
Agreement and such relief will be in addition to and not in limitation of any
and all other remedies each party may have in law and at equity for the
enforcement of such party's rights under this Agreement.

 

10.5)

Survival. This Article will survive any termination of this Agreement.

 

 

 

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ARTICLE 11.

OTHER PROVISIONS

 

11.1)     Further Assurances. At such time and from time to time on and after
the Closing Date upon request by another party, Seller and Buyer will execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances that may be required for transferring,
assigning, and delivering to Buyer, or to Buyer's respective successors and
assigns, all of the Stock or to otherwise carry out the purposes of this
Agreement.

 

11.2)     Complete Agreement. The Schedules and Exhibits to this Agreement will
be construed as an integral part of this Agreement to the same extent as if they
had been set forth verbatim in this Agreement. This Agreement and the Schedules
and Exhibits to this Agreement, constitute the entire agreement between the
parties to this Agreement with respect to the subject matter of this Agreement
and supersede all prior agreements, whether written or oral, relating to this
Agreement. Seller may, in Seller’s discretion and for Seller’s convenience,
include in the Schedules to this Agreement items that are not material, and such
inclusions will not be deemed to be an agreement or admission by Seller,
Persinger Equipment, or Buyer that such items are material or otherwise be used
to interpret the meaning of such term for purposes of this Agreement or
otherwise. Information disclosed in any Schedule will be deemed disclosed and
incorporated into any other representation, warranty and Schedule where such
disclosure would be appropriate. No representation, warranty, promise,
inducement or statement of intention made by any party that is not embodied in
this Agreement may be relied upon for any purpose by any party.

 

11.3)     Survival. The representations, warranties, covenants and agreements
contained in this Agreement will survive the Closing but, other than those
respecting title to the Stock, expire at the end of 18 months after the Closing
Date. Expiration of a representation, warranty, covenant or agreement pursuant
to this Section shall not limit or otherwise affect the right of a party to
indemnification under Article 10 if notice was sent to the party from whom
indemnification is sought of the basis for such claim to indemnification prior
to such expiration.

 

11.4)     Waiver, Discharge, Amendment, Etc. The failure of any party to this
Agreement to enforce at any time any of the provisions of this Agreement,
including the election of such party to proceed with the Closing despite a
failure of any condition to such party's closing obligations to occur, will in
no way be construed to be a waiver of any such provision, nor in any way to
affect the validity of this Agreement or any part thereof or the right of the
party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement will be held to be a waiver of any other or subsequent
breach. This Agreement may be amended by Buyer and Seller at any time prior to
the Closing Date. Any amendment to this Agreement must be in writing and signed
by Buyer and Seller.

 

11.5)     Notices. Any notice required or permitted under this Agreement will be
deemed sufficiently given or served when personally delivered (in person, by
commercial courier service, by facsimile with confirmed transmission, or
otherwise) or forty-eight (48) hours after mailed by registered or certified
mail to the parties at:

 

 

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if to Seller, to:

 

Steven Persinger

P.O. Box 98

Austin, MN 55912

 

and if to Buyer, to:

 

Heartland, Inc.

Suite #180

3300 Fernbrook Lane

Plymouth, MN 55441

 

and any party may by like written notice at any time designate a different
address to which notices will subsequently be sent.

 

11.6)     Public Announcement. The parties intend all future statements or
communications to the public or press regarding this Agreement or the
transactions contemplated by this Agreement made on or before the Closing Date
will be mutually agreed upon by them. Neither party will on or before the
Closing Date, without such mutual agreement or the prior consent of the other,
issue any statement or communication to the public or to the press regarding
this Agreement, or any of the terms, conditions or other matters with respect to
this Agreement, except as required by law or the rules of all relevant exchanges
and then only: (a) upon the advice of such party's legal counsel; (b) to the
extent required by law or the rules of Exchange; and (c) following prior notice
to, and consultation with, the other party (which notice will include a copy of
the proposed statement or communication to be issued to the press or public).

 

11.7)     Expenses. Buyer will pay all expenses of Buyer incident to this
Agreement and the preparation for, documentation of and consummation of, the
transactions provided for in this Agreement, Seller will pay all expenses of
Seller incident to this Agreement and the preparation for, documentation of and
consummation of, the transactions contemplated by this Agreement.

 

11.8)     Governing Law. This Agreement will be governed by and interpreted in
accordance with the laws of the State of Minnesota, including all matters of
construction, validity, performance and enforcement..

 

11.9)     Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of the parties to this Agreement and the successors or assigns of
the parties to this Agreement.

 

11.10)   Titles and Headings; Construction. The Table of Contents, titles and
headings to the Articles and Sections in this Agreement are inserted for the
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. This Agreement will be
construed without regard to any presumption or other rule requiring construction
of this Agreement against the party causing this Agreement to be drafted.

 

11.11)   Benefit. Nothing in this Agreement, expressed or implied, is intended
to confer on any person other than the parties to this Agreement or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

 

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11.12)   Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed as original and all of which together
will constitute one instrument.

 

11.13)   Time of Essence. Time is of the essence of any rights or obligations of
the parties under this Agreement where a time period is specified.

 

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
in the manner appropriate for each, and to be dated as of the date written on
the first page of this Agreement.

 

/S/ Steven Persinger______________

Steven Persinger

 

PERSINGER EQUIPMENT, INC.

 

By_/S/ Steven Persinger___________

Steven Persinger, Its President

 

 

Heartland, Inc.

 

By_/S/ Trent Sommerville_________

Trent Sommerville

Its Chief Exectuive Officer

 

 

 

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