Document:

EXHIBIT 4.3

                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION  RIGHTS AGREEMENT,  dated as of February 13,
2002, between the investor or investors signatory hereto (each an "Investor" and
together  the  "Investors"),  and  PurchasePro.com,  a Nevada  corporation  (the
"Company").

                  WHEREAS,  simultaneously  with the  execution  and delivery of
this  Agreement,  the Investor is  purchasing  from the  Company,  pursuant to a
Common  Stock  and  Warrants  Purchase  Agreement  dated  the date  hereof  (the
"Purchase Agreement"),  shares of the Company's Common Stock and Warrants (terms
not defined  herein  shall have the  meanings  ascribed to them in the  Purchase
Agreement); and

                  WHEREAS,  the Company  desires to grant to the  Investors  the
registration  rights set forth herein with respect to the shares of Common Stock
purchased pursuant to the Purchase Agreement and shares of Common Stock issuable
upon  exercise of the  Warrants or  adjustment  of the  Warrants as provided for
therein (hereinafter referred to as the "Stock" or "Securities" of the Company).

                  NOW, THEREFORE, the parties hereto mutually agree as follows:

                  Section 1.  REGISTRABLE  SECURITIES.  As used  herein the term
"Registrable Security" means the Securities until (i) the Registration Statement
has been declared  effective by the  Commission,  and all  Securities  have been
disposed of pursuant to the  Registration  Statement,  (ii) all Securities  have
been sold under  circumstances  under which all of the applicable  conditions of
Rule 144 (or any  similar  provision  then in force)  under the  Securities  Act
("Rule 144") are met,  (iii) all Securities  have been otherwise  transferred to
holders who may trade such Securities  without  restriction under the Securities
Act,  and the  Company  has  delivered a new  certificate  or other  evidence of
ownership for such Securities not bearing a restrictive legend or (iv) such time
as, in the opinion of counsel to the Company,  all Securities may be sold at any
time,  without volume or manner of sale limitations  pursuant to Rule 144(k) (or
any  similar  provision  then in  effect)  under the  Securities  Act.  The term
"Registrable  Securities" means any and/or all of the securities  falling within
the  foregoing  definition  of a  "Registrable  Security."  In the  event of any
merger,  reorganization,  consolidation,  recapitalization  or other  change  in
corporate  structure affecting the Common Stock, such adjustment shall be deemed
to be made in the  definition of  "Registrable  Security" as is  appropriate  in
order to prevent any dilution or enlargement  of the rights granted  pursuant to
this Agreement.

                  Section   2.   RESTRICTIONS   ON   TRANSFER.   Each   Investor
acknowledges and understands that prior to the registration of the Securities as
provided herein,  the Securities are "restricted  securities" as defined in Rule
144 promulgated under the Act. Each Investor  understands that no disposition or
transfer of the Securities may be made by such Investor in the absence of (i) an
opinion  of  counsel  to  the  Investor,   in  form  and  substance   reasonably
satisfactory to the Company, that such transfer may be made without registration
under the Securities Act or (ii) such registration.

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                  With  a  view  to  making  available  to  the   Investors  the
benefits  of Rule 144 under the  Securities  Act or any  other  similar  rule or
regulation of the  Commission  that may at any time permit the Investors to sell
securities of the Company to the public without  registration  ("Rule 144"),  so
long as any Investor holds any Registrable Securities, the Company agrees to:

                    (a) comply with the  provisions of paragraph  (c)(1) of Rule
144; and

                    (b) file with the  Commission in a timely manner all reports
and other documents required to be filed with the Commission pursuant to Section
13 or 15(d)  under  the  Exchange  Act by  companies  subject  to either of such
sections,  irrespective of whether the Company is then subject to such reporting
requirements.

                  Section 3. REGISTRATION RIGHTS WITH RESPECT TO THE SECURITIES.

                    (a) The Company agrees to use its reasonable best efforts to
prepare and file with the Securities and Exchange Commission  ("Commission"),  a
registration statement (on Form S-1, or other appropriate registration statement
form)  under  the  Securities  Act  (the  "Registration  Statement")  as soon as
practical  after the Closing Date, at the sole expense of the Company (except as
provided in Section 3(c) hereof), in respect of the Investors, so as to permit a
non-underwritten  public offering and resale of the Registrable Securities under
the  Securities  Act  by  the  Investors  as  selling  stockholders  and  not as
underwriters.

                    The Company shall use its  reasonable  best efforts to cause
such Registration Statement to become effective within ninety (90) days from the
Closing  Date or, if earlier,  within five (5) days of SEC  clearance to request
acceleration  of   effectiveness.   The  number  of  shares  designated  in  the
Registration  Statement to be registered shall include all of the Shares and the
Warrant Shares, and shall include  appropriate  language regarding reliance upon
Rule 416 to the extent permitted by the Commission.  The Company will notify the
Investors of the effectiveness of the Registration  Statement within one Trading
Day of such event.  In the event that the number of shares so  registered  shall
prove to be insufficient  to register the resale of all of the Securities,  then
the Company  shall be obligated to file,  within thirty (30) days of notice from
any Investor, a further Registration Statement registering such remaining shares
and shall use reasonable best efforts to prosecute such additional  Registration
Statement to effectiveness within ninety (90) days of the date of such notice.

                    (b) The Company will maintain the Registration  Statement or
post-effective  amendment  filed  under  this  Section  3  effective  under  the
Securities  Act until the  earlier  of (i) the date that none of the  Securities
covered by such Registration Statement are or may become issued and outstanding,
(ii) the  date  that all of the  Securities  have  been  sold  pursuant  to such
Registration  Statement,  (iii) the date the  Investors  receive  an  opinion of
counsel to the Company,  which  counsel  shall be  reasonably  acceptable to the
Investors,  that the  Securities  may be sold under the  provisions  of Rule 144
without  limitation  as to  volume,  (iv) all  Securities  have  been  otherwise
transferred to persons who may trade such shares without  restriction  under the

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Securities  Act,  and the  Company  has  delivered  a new  certificate  or other
evidence of ownership for such securities not bearing a restrictive  legend,  or
(v) all  Securities  may be sold at any time,  without  volume or manner of sale
limitations  pursuant  to Rule 144(k) or any  similar  provision  then in effect
under the Securities Act in the opinion of counsel to the Company, which counsel
shall be reasonably acceptable to the Investor (the "Effectiveness Period").

                    (c) All fees,  disbursements and out-of-pocket  expenses and
costs incurred by the Company in connection  with the  preparation and filing of
the  Registration  Statement  under  subparagraph  3(a)  and in  complying  with
applicable  securities and Blue Sky laws  (including,  without  limitation,  all
attorneys'  fees of the Company)  shall be borne by the Company.  The  Investors
shall  bear  the  cost of  underwriting  and/or  brokerage  discounts,  fees and
commissions,  if any, applicable to the Securities being registered and the fees
and  expenses of their  counsel.  The  Investors  and one counsel for all of the
Investors shall have a reasonable  period, not to exceed three (3) Trading Days,
to review the proposed Registration Statement or any amendment thereto, prior to
filing with the  Commission,  and the Company  shall  provide each Investor with
copies of any comment letters  received from the Commission with respect thereto
within  two (2)  Trading  Days of receipt  thereof.  The  Company  shall use its
reasonable best efforts to qualify any of the securities for sale in such states
as any Investor reasonably  designates and shall furnish  indemnification in the
manner provided in Section 6 hereof.  However, the Company shall not be required
to  qualify  in any state  which  will  require  an escrow or other  restriction
relating to the Company and/or the sellers, or which will require the Company to
qualify to do business in such state or require the Company to file  therein any
general  consent to service of process.  The Company at its expense  will supply
the  Investors  with copies of the  applicable  Registration  Statement  and the
prospectus  included  therein and other related  documents in such quantities as
may be reasonably requested by the Investors.

                    (d) The Company  shall not be required by this  Section 3 to
include an Investor's  Securities in any  Registration  Statement which is to be
filed if, in the opinion of counsel for both the  Investor  and the Company (or,
should  they not  agree,  in the  opinion  of  another  counsel  experienced  in
securities  law matters  acceptable to counsel for the Investor and the Company)
the  proposed  offering  or other  transfer  as to which  such  registration  is
requested is exempt from applicable  federal and state securities laws and would
result in all  purchasers  or  transferees  obtaining  securities  which are not
"restricted securities", as defined in Rule 144 under the Securities Act.

                    (e) In the event that (i) the  Registration  Statement to be
filed by the Company pursuant to Section 3(a) above is not declared effective by
the  Commission  within the earlier of ninety (90) days from the Closing Date or
five (5) days of clearance by the Commission to request effectiveness, (ii) such
Registration  Statement  is not  maintained  as effective by the Company for the
period set forth in  Section  3(b)  above or (iii) the  additional  Registration
Statement  referred to in Section 3(a) is not filed  within  thirty (30) days or
declared  effective  within  ninety  (90)  days  as set  forth  therein  (each a
"Registration Default") then the Company will pay Investor (pro rated on a daily
30-day basis),  as liquidated  damages for such failure and not as a penalty two
percent (2%) of the purchase price of shares of Common Stock  purchased from the
Company  and  held by the  Investor  for  each  month  until  such  Registration

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Statement  has been  declared  effective (in case of clause (i) above) or lapsed
effectiveness  (in the case of clause (ii) above) or an additional  Registration
Statement is late filed or late  effective  (in the case of clause (iii) above),
two percent (2%) of the purchase price of shares of Common Stock  purchased from
the Company and held by the Investor  each month  (regardless  of whether one or
more such Registration  Defaults are then in existence,  but without duplication
of  liquidated  damages)  until such  Registration  Statement  has been declared
effective. Such payment of the liquidated damages shall be made to the Investors
in cash, within five (5) calendar days of demand,  provided,  however,  that the
payment of such  liquidated  damages  shall not  relieve  the  Company  from its
obligations to register the Securities pursuant to this Section.

                    If the Company  does not remit the payment to the  Investors
as set forth  above,  the Company  will pay the  Investors  reasonable  costs of
collection,  including  attorneys' fees, in addition to the liquidated  damages.
The  registration of the Securities  pursuant to this provision shall not affect
or limit the Investors' other rights or remedies as set forth in this Agreement.

                    (f) No provision contained herein shall preclude the Company
from selling  securities,  or including other selling  shareholders  who are not
Investors,  pursuant to any  Registration  Statement  in which it is required to
include Securities pursuant to this Section 3.

                    (g) If at any time or from time to time after the  effective
date of any  Registration  Statement,  the Company  notifies  the  Investors  in
writing of the  existence of a Potential  Material  Event (as defined in Section
3(h) below),  the Investors  shall not offer or sell any Securities or engage in
any other transaction involving or relating to Securities,  from the time of the
giving of notice with respect to a Potential  Material Event until the Investors
receive  written  notice from the Company  that such  Potential  Material  Event
either has been  disclosed  to the public or no longer  constitutes  a Potential
Material Event; provided, however, that the Company may not so suspend the right
to such holders of  Securities  for more than thirty (30) days in the  aggregate
during any twelve  month  period (and no longer than fifteen (15) days as to any
single delay), during the period the Registration Statement is required to be in
effect,  and if such  period is  exceeded,  such event  shall be a  Registration
Default.  If a  Potential  Material  Event  shall  occur  prior  to  the  date a
Registration Statement is required to be filed, then the Company's obligation to
file and  effect  such  Registration  Statement  shall be  delayed  respectively
without  penalty for not more than  twenty  (20) days,  and such delay or delays
shall not constitute a Registration  Default.  The Company must, if lawful, give
the Investors notice in writing at least two (2) Trading Days prior to the first
day of the blackout period.

                    (h) "Potential  Material  Event" means any of the following:
(a)  the  possession  by the  Company  of  material  information  not  ripe  for
disclosure in a registration statement, as determined in good faith by the Chief
Executive  Officer or the Board of Directors of the Company that  disclosure  of
such  information  in a  Registration  Statement  would  be  detrimental  to the
business and affairs of the Company; or (b) any material engagement, activity or
transaction by the Company which would, in the good faith  determination  of the
Chief Executive  Officer or the Board of Directors of the Company,  be adversely

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affected  by  disclosure  in  a  registration  statement  at  such  time,  which
determination  shall be accompanied by a good faith  determination  by the Chief
Executive  Officer or the Board of Directors of the Company that the  applicable
Registration  Statement would be materially  misleading  absent the inclusion of
such information.

                  Section  4.  COOPERATION  WITH  COMPANY.  The  Investors  will
cooperate  with the Company in all respects in connection  with this  Agreement,
including timely supplying all information  reasonably  requested by the Company
(which shall include all information regarding the Investors and proposed manner
of  sale  of  the  Registrable  Securities  required  to  be  disclosed  in  any
Registration  Statement)  and executing  and returning all documents  reasonably
requested  in  connection  with the  registration  and  sale of the  Registrable
Securities  and  entering  into  and  performing  their  obligations  under  any
underwriting  agreement,  if the offering is an underwritten  offering, in usual
and  customary  form,  with the managing  underwriter  or  underwriters  of such
underwritten offering.  Nothing in this Agreement shall obligate any Investor to
consent  to be  named  as an  underwriter  in any  Registration  Statement.  The
obligation  of the  Company to  register  the  Registrable  Securities  shall be
absolute and  unconditional  as to those  Securities  which the Commission  will
permit to be registered without naming the Investors as underwriters.  Any delay
or delays caused by the Investors by failure to cooperate as required  hereunder
shall not constitute or be counted toward a Registration Default.

                  Section  5.  REGISTRATION  PROCEDURES.  If  and  whenever  the
Company is required by any of the  provisions  of this  Agreement  to effect the
registration  of any of the  Registrable  Securities  under the Act, the Company
shall (except as otherwise  provided in this  Agreement),  as  expeditiously  as
possible,  subject to the Investors'  assistance  and  cooperation as reasonably
required with respect to each Registration Statement:

                    (a) (i) prepare and file with the Commission such amendments
and  supplements  to the  Registration  Statement  and  the  prospectus  used in
connection  therewith as may be necessary  to keep such  Registration  Statement
effective and to comply with the  provisions of the Act with respect to the sale
or other disposition of all securities  covered by such  registration  statement
whenever the  Investors  shall  desire to sell or otherwise  dispose of the same
(including  prospectus  supplements with respect to the sales of securities from
time to time in connection  with a registration  statement  pursuant to Rule 415
promulgated under the Act) and (ii) take all lawful action such that each of (A)
the Registration  Statement and any amendment  thereto does not, when it becomes
effective,  contain an untrue  statement  of a material  fact or omit to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading and (B) the prospectus  forming part of the  Registration  Statement,
and any  amendment  or  supplement  thereto,  does  not at any time  during  the
Registration  Period  include an untrue  statement of a material fact or omit to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading.  Without  limiting the  foregoing,  the Company  agrees that it
shall,  within  five  business  days of its legal  eligibility  to do so, file a
post-effective  amendment to the Registration  Statement to amend such statement
to be on Form  S-3 and to use  best  efforts  to  prosecute  such  amendment  to
effectiveness;

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                    (b) (i)  prior  to the  filing  with the  Commission  of an
Registration  Statement  (including any amendments thereto) and the distribution
or delivery of any prospectus (including any supplements thereto), provide draft
copies  of the  Selling  Stockholders  and  Plan of  Distribution  sections  (or
equivalents)  to the  Investors  as required by Section 3(c) and reflect in such
documents all such comments as the Investors (and their counsel)  reasonably may
propose with respect  thereto and (ii) furnish to each  Investor such numbers of
copies of a prospectus  including a  preliminary  prospectus or any amendment or
supplement to any prospectus, as applicable, in conformity with the requirements
of the Act, and such other documents, as such Investor may reasonably request in
order to facilitate the public sale or other disposition of the securities owned
by such Investor;

                    (c) register and qualify the Registrable  Securities covered
by the  Registration  Statement under such other  securities or blue sky laws of
such  jurisdictions  as the Investors shall  reasonably  request (subject to the
limitations set forth in Section 3(c) above),  and do any and all other acts and
things which may be necessary or advisable to enable each Investor to consummate
the public sale or other  disposition  in such  jurisdiction  of the  securities
owned by such Investor;

                    (d)  list  such  Registrable  Securities  on  the  Principal
Market,  if the listing of such  Registrable  Securities is then permitted under
the rules of such Principal Market;

                    (e)  notify  each  Investor  at any time  when a  prospectus
relating  thereto  covered  by the  Registration  Statement  is  required  to be
delivered under the Act, of the happening of any event of which it has knowledge
as a result of which the prospectus included in the Registration  Statement,  as
then in effect,  includes  an untrue  statement  of a material  fact or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein  not  misleading  in the  light  of the  circumstances  then
existing,  and the Company  shall  prepare and file a curative  amendment  under
Section 5(a) as quickly as commercially possible;

                    (f) as promptly as practicable  after becoming aware of such
event, notify each Investor who holds Registrable  Securities being sold (or, in
the  event  of an  underwritten  offering,  the  managing  underwriters)  of the
issuance  by the  Commission  of any  stop  order  or  other  suspension  of the
effectiveness  of the Registration  Statement at the earliest  possible time and
take all lawful action to effect the  withdrawal,  rescission or removal of such
stop order or other suspension;

                    (g) cooperate  with the  Investors to facilitate  the timely
preparation  and delivery of certificates  for the Registrable  Securities to be
offered pursuant to the Registration  Statement and enable such certificates for
the Registrable  Securities to be in such denominations or amounts,  as the case
may be, as the Investors  reasonably may request and registered in such names as
the Investors may request;  and,  within three (3) Trading Days after a any sale
pursuant to the Registration  Statement which includes Registrable Securities is
declared  effective by the Commission,  deliver and cause legal counsel selected
by the Company to deliver to the transfer agent for the  Registrable  Securities
(with copies to the  Investors) an  appropriate  instruction  and, to the extent
necessary, an opinion of such counsel;

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                    (h) take all such other lawful actions reasonably  necessary
to expedite and facilitate the disposition by the Investors of their Registrable
Securities  in accordance  with the intended  methods  therefor  provided in the
prospectus which are customary for issuers to perform under the circumstances;

                    (i) in  the  event  of an  underwritten  offering,  promptly
include or incorporate in a prospectus supplement or post-effective amendment to
the  Registration  Statement such  information as the managers  reasonably agree
should be included  therein and to which the Company does not reasonably  object
and make all required  filings of such prospectus  supplement or  post-effective
amendment  as soon as  practicable  after it is  notified  of the  matters to be
included  or  incorporated  in  such  Prospectus  supplement  or  post-effective
amendment; and

                    (j) maintain a transfer  agent and  registrar for its Common
 Stock.

                  Section 6.  INDEMNIFICATION.

                    (a) To the  maximum  extent  permitted  by law,  the Company
agrees to indemnify and hold harmless the Investors and each person, if any, who
controls  an  Investor  within  the  meaning  of  the  Securities  Act  (each  a
"Distributing  Investor")  against any losses,  claims,  damages or liabilities,
joint or several (which shall, for all purposes of this Agreement,  include, but
not be limited to, all  reasonable  costs of defense and  investigation  and all
reasonable attorneys' fees and expenses), to which the Distributing Investor may
become subject,  under the Securities Act or otherwise,  insofar as such losses,
claims,  damages or liabilities (or actions in respect  thereof) arise out of or
are based upon any untrue  statement or alleged untrue statement of any material
fact contained in any Registration Statement, or any related final prospectus or
amendment or supplement  thereto, or arise out of or are based upon the omission
or alleged  omission  to state  therein a material  fact  required  to be stated
therein or necessary to make the statements  therein not  misleading;  provided,
however, that the Company will not be liable in any such case to the extent, and
only to the extent, that any such loss, claim, damage or liability arises out of
or is based upon an untrue  statement or alleged untrue statement or omission or
alleged omission made in such Registration  Statement,  preliminary  prospectus,
final  prospectus or amendment or supplement  thereto in reliance  upon,  and in
conformity  with,   written   information   furnished  to  the  Company  by  the
Distributing Investor, its counsel, affiliates or any underwriter,  specifically
for use in the preparation thereof. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.

                    (b)  To  the  maximum   extent   permitted   by  law,   each
Distributing  Investor  agrees  that it will  indemnify  and hold  harmless  the
Company,  and each  officer and  director of the Company or person,  if any, who
controls  the Company  within the  meaning of the  Securities  Act,  against any
losses,  claims,  damages or liabilities  (which shall, for all purposes of this
Agreement,  include,  but not be limited to, all reasonable costs of defense and
investigation  and all  reasonable  attorneys'  fees and  expenses) to which the
Company or any such officer,  director or controlling  person may become subject
under the Securities Act or otherwise,  insofar as such losses,  claims, damages

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or  liabilities  (or actions in respect  thereof) arise out of or are based upon
any untrue  statement or alleged untrue statement of any material fact contained
in any Registration  Statement,  or any related final prospectus or amendment or
supplement  thereto,  or arise  out of or are  based  upon the  omission  or the
alleged  omission to state therein a material fact required to be stated therein
or necessary to make the  statements  therein not  misleading,  but in each case
only to the extent that such untrue  statement  or alleged  untrue  statement or
omission or alleged  omission  was made in such  Registration  Statement,  final
prospectus  or  amendment  or  supplement  thereto  in  reliance  upon,  and  in
conformity  with,  written   information   furnished  to  the  Company  by  such
Distributing Investor, its counsel, affiliates or any underwriter,  specifically
for use in the preparation thereof. This indemnity agreement will be in addition
to  any  liability   which  the   Distributing   Investor  may  otherwise  have.
Notwithstanding anything to the contrary herein, the Distributing Investor shall
not be liable  under this Section 6 for any amount in excess of the net proceeds
to such Distributing Investor as a result of the sale of Registrable  Securities
pursuant  to the  Registration  Statement  (including  any amount  that could be
received by such Investor for Registrable Securities not yet sold).

                    (c) Promptly  after  receipt by an  indemnified  party under
this  Section  6 of  notice  of the  commencement  of any  action  against  such
indemnified party, such indemnified party will, if a claim in respect thereof is
to be made  against  the  indemnifying  party  under this  Section 6, notify the
indemnifying party in writing of the commencement  thereof;  but the omission so
to notify the indemnifying  party will not relieve the  indemnifying  party from
any liability  which it may have to any  indemnified  party except to the extent
the  failure of the  indemnified  party to  provide  such  written  notification
actually prejudices the ability of the indemnifying party to defend such action.
In case any such  action  is  brought  against  any  indemnified  party,  and it
notifies the indemnifying  party of the commencement  thereof,  the indemnifying
party will be entitled to  participate  in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume the defense
thereof,  subject to the  provisions  herein  stated and after  notice  from the
indemnifying  party to such  indemnified  party of its election so to assume the
defense thereof,  the indemnifying  party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently incurred
by such  indemnified  party in  connection  with the defense  thereof other than
reasonable  costs of  investigation,  unless the  indemnifying  party  shall not
pursue the action to its final  conclusion.  The indemnified  parties as a group
shall have the right to employ one  separate  counsel in any such  action and to
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall not be at the expense of the indemnifying  party if the indemnifying party
has assumed the defense of the action with counsel  reasonably  satisfactory  to
the  indemnified  party  unless  (i) the  employment  of such  counsel  has been
specifically  authorized in writing by the indemnifying party, or (ii) the named
parties to any such action  (including any impleaded  parties)  include both the
indemnified  party and the  indemnifying  party and the indemnified  party shall
have been reasonably  advised by its counsel that there may be one or more legal
defenses  available to the indemnifying party different from or in conflict with
any legal defenses which may be available to the indemnified  party or any other
indemnified party (in which case the indemnifying party shall not have the right
to assume the defense of such  action on behalf of such  indemnified  party,  it
being understood, however, that the indemnifying party shall, in connection with

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any one such action or separate but substantially  similar or related actions in
the  same  jurisdiction   arising  out  of  the  same  general   allegations  or
circumstances,  be  liable  only for the  reasonable  fees and  expenses  of one
separate  firm of  attorneys  for the  indemnified  party,  which  firm shall be
designated  in writing by the  indemnified  party).  No settlement of any action
against an indemnified  party shall be made without the prior written consent of
the  indemnified  party,  which  consent shall not be  unreasonably  withheld or
delayed so long as such settlement includes a full release of claims against the
indemnified  party.  All expenses of the indemnified  party  (including costs of
defense  and  investigation  incurred  in a manner  not  inconsistent  with this
Section and, except as otherwise provided above,  reasonable attorneys' fees and
expenses)  shall  be paid by the  indemnifying  party to the  indemnified  party
within ten (10)  Trading  Days of  written  notice  thereof to the  indemnifying
party; provided,  that the indemnifying party may require such indemnified party
to  undertake  to  reimburse  the  indemnifying  party  for all of such fees and
expenses, with interest at market rates, if and to the extent that it is finally
judicially   determined  that  such   indemnified   party  is  not  entitled  to
indemnification hereunder.

                  Section  7.  CONTRIBUTION.  In order to  provide  for just and
equitable  contribution  under the  Securities  Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6 hereof
but is judicially  determined  (by the entry of a final  judgment or decree by a
court of  competent  jurisdiction  and the  expiration  of time to appeal or the
denial  of the last  right  of  appeal)  that  such  indemnification  may not be
enforced in such case  notwithstanding  the fact that the express  provisions of
Section 6 hereof provide for  indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any  indemnified  party,
then the Company and the applicable  Distributing  Investor shall  contribute to
the  aggregate  losses,  claims,  damages  or  liabilities  to which they may be
subject (which shall,  for all purposes of this Agreement,  include,  but not be
limited to, all reasonable costs of defense and investigation and all reasonable
attorneys'  fees and  expenses),  in either such case (after  contribution  from
others) on the basis of relative fault as well as any other  relevant  equitable
considerations.  The relative  fault shall be  determined by reference to, among
other things,  whether the untrue or alleged untrue statement of a material fact
or the  omission  or  alleged  omission  to state a  material  fact  relates  to
information  supplied  by  the  Company  on  the  one  hand  or  the  applicable
Distributing  Investor  on the other hand,  and the  parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
statement or omission.  The Company and the Distributing  Investor agree that it
would not  necessarily  be just and equitable if  contribution  pursuant to this
Section 7 were  determined  by pro rata  allocation  or by any  other  method of
allocation which does not take account of the equitable  considerations referred
to in this  Section 7. The amount paid or payable by an  indemnified  party as a
result of the  losses,  claims,  damages or  liabilities  (or actions in respect
thereof)  referred  to above in this  Section 7 shall be deemed to  include  any
legal  or  other  expenses  reasonably  incurred  by such  indemnified  party in
connection with  investigating  or defending any such action or claim. No person
guilty of fraudulent  misrepresentation  (within the meaning of Section 11(f) of
the Securities  Act) shall be entitled to  contribution  from any person who was
not guilty of such fraudulent misrepresentation.

                                       9
<PAGE>

                    Notwithstanding any other provision of this Section 7, in no
event shall any (i)  Investor be required to  undertake  liability to any person
under  this  Section 7 for any  amounts  in excess of the  dollar  amount of the
proceeds received by such Investor from the sale of such Investor's  Registrable
Securities  (after  deducting  any fees,  discounts and  commissions  applicable
thereto,  but  including  any amount that could be received by such Investor for
Registrable  Securities  not yet sold)  pursuant to any  Registration  Statement
under which such Registrable  Securities are registered under the Securities Act
and (ii) underwriter be required to undertake  liability to any person hereunder
for any  amounts  in  excess  of the  aggregate  discount,  commission  or other
compensation  payable  to  such  underwriter  with  respect  to the  Registrable
Securities  underwritten  by it and  distributed  pursuant to such  Registration
Statement.

                  Section 8. NOTICES. All notices, demands, requests,  consents,
approvals,  and other communications required or permitted hereunder shall be in
writing and, unless  otherwise  specified  herein,  shall be (i) hand delivered,
(ii) deposited in the mail,  registered or certified,  return receipt requested,
postage  prepaid,  (iii) delivered by reputable air courier service with charges
prepaid,  or (iv)  transmitted  by  facsimile,  addressed  as set  forth  in the
Purchase  Agreement or to such other address as such party shall have  specified
most recently by written notice. Any notice or other  communication  required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or  delivery  by  facsimile,   with  accurate  confirmation   generated  by  the
transmitting  facsimile  machine,  at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received),  or the first  business day following  such delivery (if delivered
other than on a business day during normal  business  hours where such notice is
to be received) or (b) on the first  business day  following the date of sending
by reputable courier service,  fully prepaid,  addressed to such address, or (c)
upon actual  receipt of such  mailing,  if mailed.  Either party hereto may from
time to time  change its  address or  facsimile  number for  notices  under this
Section 8 by giving at least ten (10) days' prior written notice of such changed
address or facsimile number to the other party hereto.

                  Section 9.  ASSIGNMENT.  This  Agreement  is binding  upon and
inures  to the  benefit  of the  parties  hereto  and  their  respective  heirs,
successors and permitted  assigns.  The rights granted the Investors  under this
Agreement  may be  assigned  to  any  permitted  transferee  of an  Investor  as
permitted by the Purchase  Agreement,  provided that such transferee shall agree
to be bound by the terms of this Agreement.

                  Section 10. ADDITIONAL  COVENANTS OF THE COMPANY.  The Company
agrees that at such time as it otherwise meets the  requirements  for the use of
Securities Act Registration Statement on Form S-3 for the purpose of registering
the Registrable  Securities,  it shall file all reports and information required
to be filed by it with the Commission in a timely manner and take all such other
action so as to maintain such eligibility for the use of such form.

                                       10
<PAGE>

                  Section  11.  COUNTERPARTS/FACSIMILE.  This  Agreement  may be
executed  in two or  more  counterparts,  each  of  which  shall  constitute  an
original,  but all of which, when together shall constitute but one and the same
instrument,  and shall become effective when one or more  counterparts have been
signed by each party hereto and delivered to the other  parties.  In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.

                  Section 12. REMEDIES.  The remedies provided in this Agreement
are cumulative  and not exclusive of any remedies  provided by law. If any term,
provision,  covenant  or  restriction  of this  Agreement  is held by a court of
competent  jurisdiction  to be  invalid,  illegal,  void or  unenforceable,  the
remainder of the terms, provisions,  covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected,  impaired
or invalidated,  and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction.

                  Section 13.  CONFLICTING  AGREEMENTS.  The  Company  shall not
enter into any agreement  with respect to its  securities  that is  inconsistent
with the  rights  granted  to the  holders  of  Registrable  Securities  in this
Agreement or  otherwise  prevents  the Company  from  complying  with all of its
obligations hereunder.

                  Section 14.  HEADINGS.  The  headings  in this  Agreement  are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation of this Agreement.

                  Section 15.  GOVERNING LAW,  ATTORNEY'S  FEES.  This Agreement
shall be governed by and construed in  accordance  with the laws of the State of
New York  applicable to contracts  made in New York by persons  domiciled in New
York City and  without  regard  to its  principles  of  conflicts  of laws.  The
non-prevailing  party to any action brought under this  Agreement  shall pay the
expenses of the  prevailing  party,  including  reasonable  attorneys'  fees, in
connection  with such action.  Any party shall be entitled to obtain  injunctive
relief  from a court  in any  case  where  such  relief  is  available,  and the
non-prevailing party in any such injunctive proceeding shall pay the expenses of
the prevailing party,  including reasonable  attorneys' fees, in connection with
such injunctive proceeding.

                            [Signature pages follow]

                                       11
<PAGE>

IN WITNESS  WHEREOF,  the parties  hereto have caused this  Registration  Rights
Agreement to be duly executed, on the day and year first above written.

                                         PURCHASEPRO.COM, INC.

                                         By:
                                               -----------------------------
                                         Name:
                                               -----------------------------
                                         Title:
                                               -----------------------------

                           [Signature pages continued]

                                       12
<PAGE>

                                    INVESTOR

                         By:_______________________________________

                                        Authorized Signatory

                                       13EXHIBIT 10.34

 

 

 

AGREEMENT

AND PLAN OF REORGANIZATION

 

IQUNIVERSE,

INC., AS PARENT

IQUNIVERSE

ACQUISITION CORP., AS NEWCO

WIRELESS

RONIN TECHNOLOGIES, INC., AS SELLER

AND

JOHN

BEHR, AS MAJORITY SHAREHOLDER

 

 

 

 

 

 

 

 

 

 

 

DATED:

February 6, 2002

 

 

 

LIST

OF SCHEDULES

 

 

2.1                   Permitted

Liens

2.1(a)              Tangible

Assets

2.1(b)              Assigned

Contracts

2.1(c)              Intangible

Assets

2.1(d)              Permits and

Licenses

2.1(e)              Open Projects

2.2                   Intentionally

Omitted

2.3(a)              Assumed

Convertible Debt

3.2                   Allocation

of Purchase Consideration

5(a)                 Seller

Exceptions

5.1(a)              Seller’s

Articles and Bylaws

5.1(b)              Seller’s

Foreign Qualifications

5.2                   Defaults;

Consents

5.4                   Financial

Statements

5.5(a)              Leases

5.5(a)(1)          Exceptions re:

Leases

5.5(b)              Fixed Assets

5.6                   Tax Matters

5.8                   Changes to

Business

5.9                   Intellectual

Property

5.10                 Licensed

Intellectual Property

5.11                 Assigned

Contracts

5.12                 Litigation

5.14                 Insurance

5.15                 Warranties

5.16                 Product

Liability

5.17                 Finder’s Fees

5.18                 Authorization

5.20                 Employee

Benefit Plans

5.21                 Environmental

Matters

5.22                 Customers,

Distributors, Independent Sales Representatives

5.23                 Employee

Matters

5.24                 Other

Agreements

7.1                   Parent/Newco

Articles and Bylaws

7.2                   Defaults;

Consents

7.3                   Parent

Capitalization

7.5                   Parent

Financial Statements

7.6                   Parent’s

Taxes

7.7                   Leasehold

Interests

7.9                   Parent/Newco

Litigation

7.15                 Parent

Employee Matters

7.16                 Parent

Contract Matters

 

2

 

LIST OF

EXHIBITS

 

 

 

Exhibit A                Certificate

of Designation

Exhibit B                Assignment

and Assumption Agreement

Exhibit C                Escrow

Agreement

Exhibit D                Form of

Employment, Noncompete, Nondisclosure, and Assignment of Invention Agreement

Exhibit E                 Bill of

Sale

Exhibit F                 Seller

Noncompetition Agreement

 

3

 

AGREEMENT

AND PLAN OF REORGANIZATION

 

THIS

AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) dated

February 6, 2002, is by and among IQUniverse, Inc., a Minnesota corporation

(“Parent”), IQUniverse Acquisition, Corp., a to be formed Minnesota corporation

(“Newco”), Wireless Ronin Technologies, Inc., a Minnesota corporation (the

“Seller”) and John Behr (the “Majority Shareholder”).

 

RECITALS:

 

WHEREAS, Seller is

developing and plans to market a wireless portable hand held computer and

communications device providing internet access and other wireless

communication services (the “Business”) and the Majority Shareholder owns a

majority of the outstanding and issued capital stock of Seller;

 

WHEREAS, Parent is a

publicly traded company with its Common Stock traded on the over-the-counter

bulletin board under the symbol “IQUN”;

 

WHEREAS, Newco is a to

be formed corporation under the laws of the state of Minnesota with all of its

outstanding capital stock to be held by Parent;

 

WHEREAS, Seller, Parent

and Newco intend for Newco to purchase the assets and assume certain

liabilities of Seller identified herein in consideration of Parent issuing

shares of its Series D Voting Convertible Preferred Stock to Seller with the

rights and preferences set forth in the Certificate of Designation in the form

of Exhibit A attached hereto pursuant to the terms and conditions

contained herein;

 

                WHEREAS,

the parties intend the transactions contemplated herein to constitute a

tax-free reorganization within the meaning of Sections 368(a)(1)(C) of the

Internal Revenue Code of 1986, as amended;

 

                WHEREAS, as an

inducement for and condition to Parent and Newco entering into this Agreement,

Seller and certain of its shareholders including Majority Shareholder have

agreed to be bound by a noncompetition agreement and certain of Seller’s

employees have agreed to become employed and enter into noncompetition

agreements with Parent and Newco all as provided herein; and

 

                NOW,

THEREFORE, in consideration of the covenants and mutual agreements

set forth herein and other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, and in reliance upon the

representations and warranties contained herein, the parties agree as follows:

 

SECTION 1.          DEFINITIONS

 

Unless otherwise defined elsewhere in this Agreement, as used in this

Agreement and any exhibits or schedules hereto, the following words and phrases

shall have the meanings set forth below:

 

“Act” shall mean the Securities Act of 1933, as amended.

 

“Assets” shall have the meaning ascribed to it in Section 2.1 below.

 

4

 

“Assumed Convertible Debt” means the convertible debt of Seller listed

on Schedule 2.3(a) being assumed by Newco.

 

“Balance Sheet” shall have the meaning ascribed to it in Section 5.4

below.

 

“Certificate of Designation” means the Certificate of Designation to be

filed with the Minnesota Secretary of State immediately prior to the Closing

which contains the rights and preferences of the Series D Stock.

 

“Closing” shall mean the consummation of the transactions contemplated

herein as described in Section 4.1 below.

 

“Closing Date” shall be the date of the Closing as described in Section

4.1 below.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Conversion Shares” means the shares of Parent Common Stock issuable

upon conversion of the Series D Stock.

 

“Employee Benefit Plan” shall have the meaning ascribed to it in

Section 5.20(a) below.

 

“Environmental Law” shall mean any environmental health and safety-related

law, regulation, rule, ordinance, or by-law at the federal, foreign, state, or

local level, whether existing as of the date hereof, previously enforced or

subsequently enacted.

 

“Escrow Agent” means a third party mutually agreed upon by both

parties.

 

“Escrow Shares” shall have the meaning ascribed to it in Section 3.4

below.

 

“Escrow Agreement” means the Escrow Agreement in the form of Exhibit

C attached hereto.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974,

as amended.

 

“Financial Statements” shall have the meaning ascribed to it in Section

5.4 below.

 

“Fraud” shall require a showing of an intent to deceive and, with

respect to a claim of misrepresentation, that the party to be charged had

knowledge of the falsity of the representation or acted recklessly in making

the representation; and with respect to an omission, that the party to be

charged knowingly failed to disclose or acted recklessly in failing to

disclose.

 

“Hazardous Materials” shall mean and include any hazardous waste,

hazardous material, hazardous substance, petroleum product, oil toxic substance

or pollutant as defined in or pursuant to the Resource Conservation and

Recovery Act, as amended, the Comprehensive Environmental Response,

Compensation and Liability Act, as amended, the Hazardous Materials

Transportation Act or any other foreign, federal, state or local law,

regulation, ordinance, rule or by-law, whether existing as of the date hereof,

previously enforced or subsequently enacted pertaining to environmental or

health and safety matters.

 

“Intellectual Property” shall have the meaning ascribed to it in

Section 5.9(a) below.

 

5

 

“Parent Common Stock” shall mean the Common Stock of Parent, par value $.01

per share.

 

“Person” shall mean an individual, a partnership, a corporation, an

association, a joint stock company, a trust, a joint venture, an unincorporated

organization or a governmental entity (or any department, agency or political

subdivision thereof).

 

“Purchase Consideration” shall have the meaning ascribed to it in

Section 3.1 below.

 

 “SEC” shall mean the Securities

and Exchange Commission.

 

“Series D Stock” means 1,300 shares of Seller’s Series D Voting

Convertible Preferred Stock, $.01 par value, with the rights and preferences

set forth in the Certificate of Designation.

 

“Share Increase Event” shall have the meaning ascribed to it in Section

3.1(a) below.

 

“Shareholders Meeting” means a special or annual meeting of Parent’s

shareholders at which Parent’s shareholders will vote upon, among other

matters, the increase in Parent’s capital stock to permit conversion of the

Series D Stock as contemplated by the Certificate of Designation, which meeting

shall occur as soon as practicable after the Closing.

 

“Taxes” shall mean any federal, state, local or foreign income, gross

receipts, license, payroll, employment, excise, severance, stamp, occupation,

premium, windfall profits, environmental, customs duties, capital stock,

franchise, profits, withholding, social security (or similar), unemployment,

disability, real property, personal property, sales, use, transfer,

registration, value-added, alternative or add-on minimum, estimated or other

tax of any kind whatsoever, including any interest, penalty or addition

thereto, whether disputed or not.

 

“Tax Return” shall mean any return, declaration, report, claim for

refund or information return or statement relating to Taxes, including any

schedule or attachment thereto, and including any amendment thereof.

 

“Transferred Employees” shall mean John Behr, Michael Hopkins,

Christopher Ebbert, George Nelms, and Edward Wicker.

 

 

SECTION 2.          SALE OF ASSETS

 

                2.1           Sale of Assets by Seller.  Subject to the terms and conditions set

forth in this Agreement, at the Closing, Seller will sell, convey, transfer,

assign and deliver to Newco, and Newco will purchase from Seller, the exclusive

right, title and interest, free and clear of all liens, security interests and

encumbrances other than the liens set forth on Schedule 2.1 (the

“Permitted Liens”), in and to all of Seller’s property, whether personal,

intangible or fixtures, utilized in or useful to the operation of Seller’s

Business (collectively, the “Assets”), except as specifically excluded in this

Section 2.1 or pursuant to Section 2.2 below, including, without limitation,

the following:

 

(a)                                  Tangible Assets.  All of Seller’s physical assets utilized by

or useful to the Business including, but not limited to, inventories, hardware,

software, furniture, fixtures, equipment, machinery, office equipment, tools,

supplies, 

 

6

 

and any other tangible personal property or assets used or usable by

Seller in the operation of the Business wherever located, together with any replacements

and additions made between the date of this Agreement and the Closing

(including specifically those items listed on Schedule 2.1(a) attached

hereto).

 

(b)                                 Contracts and

Agreements. The contracts and agreements relating to the

operation of the Business that are listed individually or by category on Schedule

2.1(b) attached hereto including customer agreements, vendor agreements and

any noncompetition agreement between Seller and each of the Transferred

Employees and any other employee of Seller hired by Newco on or after the

Closing Date and any renewals, extensions, amendments or modifications thereof

(the “Assigned Contracts”).

 

(c)                                  Intangible

Assets. All patents, copyrights, trademark and service marks,  tradenames, and domain names, including

“freedomPORT”, “Wireless Ronin Technologies” and “www.wirelessronin.com,”

licenses, computer software, code, trade secrets, business plans, rights, and

other intangible property rights and interests applied for, issued to or owned

by Seller, or under which Seller is licensed, and used or usable in the

operation of the Business all of which are listed on Schedule 2.1(c).

 

(d)                                 Permits and

Licenses.  All of

Seller’s transferable interest in governmental permits, licenses, approvals or

authorizations, and warranties relating to any of the Assets or the Business

described in Section 2.1(a) hereof, which permits, licenses and warranties are

listed on Schedule 2.1(d) attached hereto and made a part hereof.

 

(e)                                  Open Projects. All of

Seller’s right, title and interest to the open projects of the Business listed

on Schedule 2.1(e) (the “Open Projects”).

 

(f)                                    Goodwill. The Business

as a going concern, and any and all of its goodwill.

 

(g)                                 Customers.  Any and all of the Business’s past and

present customers and customer lists, potential customers, prospect and

prospect lists and relationships with customers, suppliers and franchisers, a

copy of which is attached hereto as Schedule 2.1(g).

 

 

(h)                                 Business

Records.  All files, logs, records,

books of account, financial records, supplier files and lists, including

telephone numbers, payroll and personnel records, marketing data and reports,

marketing information, brochures, art work, photographs, advertising materials,

consultants’ reports, design drawings, and other materials that concern the

operation of the Business, excluding Seller’s corporate records and minute

books; provided that Seller shall be permitted to retain a copy of information

of the Business necessary for tax purposes.

 

2.2           Intentionally

Omitted.

 

7

 

2.3           Assumption of

Liabilities.  Neither Newco nor

Parent shall assume nor be liable for any of the obligations or liabilities of

Seller, the Majority Shareholder or the Business or for obligations related to

the Assets of any kind or nature other than obligations or liabilities:

 

(a)                                  disclosed on

Seller’s Financial Statements specifically including the Assumed Convertible

Debt listed thereon and on Schedule 2.3(a) annexed hereto or as

otherwise expressly agreement to be assumed by Newco under this Agreement;

 

(b)                                 arising under

the Assigned Contracts and the Open Projects after the Closing Date;

 

(c)                                  arising under

or related to any of the Assets after the Closing Date which Newco agrees to

specifically assume pursuant to an Assignment and Assumption Agreement to be

executed and delivered at Closing substantially in the form of Exhibit B

attached hereto (the “Assignment and Assumption Agreement”); and

 

(d)                                 arising under

those real property leases used in the Business which Newco may desire to

assume and which are assigned and assumed pursuant to an Assignment and

Assumption of Lease Agreement satisfactory to the parties to be executed and

delivered at Closing.

 

Notwithstanding the above, Newco shall not assume any liability of

Seller’s dissenting shareholder’s under Section 3.4 below.

 

2.4           Employees.            Other than the Transferred Employees,

Newco does not agree to employ any employee of Seller or assume any employment

or collective bargaining agreement of Seller. 

Newco shall offer employment to the Transferred Employees pursuant to

employment agreements based upon the form attached hereto as Exhibit D.  It is expressly understood and agreed that:

 

(a)                                  Newco is not a

successor or joint employer by virtue of anything in this Agreement, or any

other accord or understanding with Seller or any thing done or not done by

Seller pursuant to this Agreement and Newco shall not, solely by virtue of this

Agreement, be obligated or responsible for performance of any terms of any

agreement applicable to any of Seller’s employees, salaried or hourly.

 

(b)                                 Newco is not

assuming, under this Agreement or otherwise, and Seller is and shall remain

fully responsible for any obligation, responsibility or liability, whether

contractual or statutory, arising out of Seller’s termination of employment of

an employee of the Business including without limitation any liability or

obligation with respect to wages, salaries, holiday, sick leave entitlements,

bonuses, vacations, health care plans or employee benefit plans or any other

compensation arrangement of any nature whatsoever which arise from or relate to

any person’s employment by Seller in the Business or from any Employee Benefit

Plan, sponsored or maintained by Seller.  Newco

shall not be obligated to continue any employee benefit plans or arrangements

of any nature whatsoever presently 

 

8

 

or previously sponsored or maintained by Seller other than the one

existing employee health plan of Seller provided the health insurance

company  consents to such assumption.

 

 

SECTION 3.          PURCHASE CONSIDERATION; ESCROW;

DISSENTER’S RIGHTS

 

                3.1           Purchase Consideration.  As full payment for the transfer of the

Assets under Section 2.1, at Closing, Parent shall issue to Seller 1,300 shares

of Series D Stock.  The Series D Stock

shall be voting stock with the rights and preferences set forth in the

Certificate of Designation (the “Purchase Consideration”) including automatically

converting into 13,000,000 shares of Parent Common Stock upon the authorization

by the Parent shareholders at or in connection with the Shareholder’s Meeting

of an increase in the authorized capital of Parent and the filing of an

Amendment to the Articles of Incorporation of Parent to increase such

authorized shares (the “Share Increase Event”).

 

3.2           Allocation of

Purchase Consideration.  The

Purchase Consideration shall be allocated among the Assets in accordance with

the Schedule 3.2 attached hereto.

 

3.3           Escrow of Shares.  Of the Purchase Consideration, Seller agrees

to escrow for two years following the Closing Date 200 shares of Series D Stock

pursuant to the terms and conditions of the Escrow Agreement to satisfy

indemnifiable claims of Parent and Newco pursuant to Section 10.2 of this Agreement

(the “Escrow Shares”). Of the 200 shares of Series D Stock, Behr agrees that

100 shares of Series D Stock shall be attributable or allocated to his

ownership interest in Seller. The other 100 shares of Series D Stock shall be

attributable or allocated to all the shareholders of Seller including Behr on a

pro-rata basis.

 

                3.4           Dissenter’s Rights for Seller’s

Shareholders. The parties agree that any shareholder of Seller who has not

voted in favor of the transactions contemplated by this Agreement or consented

thereto in writing and who shall have demanded properly in writing appraisal

for such shares in accordance with Section 302A.471 of the Minnesota Business

Corporation Act (collectively, the “Dissenting Shareholders”) shall be entitled

to receive from Seller payment of the appraised values of such shares held by

them in accordance with the provisions of Section 302A.471. Seller agrees to

satisfy any of these claims from the Purchase Consideration.

 

SECTION 4.         CLOSING; CLOSING DELIVERIES

 

4.1           Closing.  The closing (the “Closing”) of the

transactions contemplated by this Agreement shall take place at the offices of

Messerli & Kramer P.A. at 10:00 a.m., local time, on or before March 15,

2002, or at such other time and place and on such other date as Parent, Newco

and Seller shall agree, but not later than March 31, 2002  (the “Closing Date”).

 

4.2           Deliverables at

Closing.  The parties shall deliver

the following instruments, documents and property at the Closing to one

another:

 

(a)                                  By Parent

and/or Newco.  Parent

and/or Newco shall deliver the following instruments, documents and property to

Seller at the Closing:

 

                                                (i)            a Parent stock certificate

representing the unescrowed shares of Series D Stock issued in the name of

Seller and/or its shareholders;

 

9

 

(ii)                                  a Parent stock

certificate representing the Escrow Shares which shall be delivered to the

Escrow Agent pursuant to the Escrow Agent;

 

(iii)                               a certificate

of the President and Chief Executive Officer of Parent certifying on behalf of

Parent the truth and accuracy of Parent’s representations and warranties and

compliance with all of its covenants and agreements on and as of the Closing

Date;

 

(iv)                              a certificate

of the Secretary of Parent certifying correct copies of the resolutions of the

Board of Directors of Parent authorizing the transactions contemplated hereby,

the Articles of Incorporation and Bylaws;

 

(v)                                 a certificate

of the President and Chief Executive Officer of Newco certifying on behalf of

Newco the truth and accuracy of Newco’s representations and warranties and

compliance with all of its covenants and agreements on and as of the Closing

Date;

 

(vi)                              a certificate

of the Secretary of Newco certifying correct copies of the resolutions of the

Board of Directors of Newco authorizing the transactions contemplated hereby,

the Articles of Incorporation and Bylaws;

 

(vii)                           confirmation

that the Certificate of Designation had been filed with the Minnesota Secretary

of State and a form of Amendment to Articles of Incorporation of Parent;

 

(viii)                        Opinion of

Messerli & Kramer P.A. counsel to Parent and Newco regarding the due

authorization and valid issuance of the Series D Stock; and

 

(ix)                                A letter from

Paul Crawford confirming to Seller and Majority Shareholder his agreement to

use his reasonable best efforts to seek to raise financing for Newco following

the Closing; and

 

(x)                                   all other

consents, approvals, documents and certificates contemplated by this Agreement

or reasonably requested by Seller or its counsel and copies of all contracts,

commitments, leases and other documents required to be identified on the

Schedules hereto.

 

(b)                                 By Seller and

Majority Shareholder. 

Seller and Majority Shareholder shall deliver the following instruments,

documents and property to Parent and/or Newco at the Closing:

 

                                                (i)            a Bill of Sale substantially in the

form of Exhibit E attached hereto executed by Seller;

 

                                                (ii)           any and all assignments and other

appropriate documents and instruments necessary, and in a form reasonably

acceptable to 

 

10

 

Newco, to transfer and assign to Newco the Assets including an

Assignment of Patents for the Business technology, an Assignment of Trademarks

for freedomPORT and Wireless Ronin Technologies and an Assignment of Domain

Name of www.wirelessronin.com;

 

(iii)                                consents of

third parties, including consents to Assigned Contracts (if any), necessary to

transfer the Assets to Newco unless waived in writing by Newco and if

necessary, an Assignment of Lease Agreement;

 

(iv)                              all other

consents, approvals, documents and certificates contemplated by this Agreement

or reasonably requested by Newco or its counsel and copies of all contracts,

commitments, leases and other documents required to be identified on the

Schedules hereto;

 

(v)                                 UCC-3

Termination Statements terminating liens, if any, on the Assets, other than as

set forth on Schedule 2.1 Permitted Liens;

 

(vi)                              a certificate

of the President of Seller and by Majority Shareholder certifying the truth and

accuracy of Seller’s representations and warranties and compliance with all of

its covenants and agreements on and as of the Closing Date;

 

(vii)                           a certificate

of Majority Shareholder certifying the truth and accuracy of his

representations and warranties and compliance with all of its covenants and

agreements on and as of the Closing Date;

 

(viii)                      a certificate

of the Secretary of Seller certifying correct copies of the resolutions of the

Board of Directors and shareholders of Seller 

authorizing the transactions contemplated hereby, the Articles of

Incorporation and Bylaws;

 

(ix)                                either (a) the

original notes of Seller representing the Assumed Convertible Debt together

with consents from the holders thereof consenting to the assumption thereof by

Parent and/or Newco, or (b) evidence to the reasonable satisfaction of Parent

and/or Newco that such holders have elected to convert such debt to the capital

stock of Seller;

 

(x)                                   evidence that

Seller has changed its corporate name so as to not include either of the words

“Ronin” or “Wireless;”

 

(xi)                                copies of all

Assigned Contracts;

 

(xii)                             copies of all

Employee Benefit Plans; and

 

(xiii)                          reports

regarding Environmental Matters.

 

(c)                                  By Parent,

Newco, Seller and/or Majority Shareholder.  Parent, Newco, Seller and/or Majority Shareholder shall each

execute, as appropriate, the 

 

11

 

following instruments, documents and property to Parent and/or Newco at

the Closing:

 

(i)                                     the Assignment

and Assumption Agreement substantially in the form attached hereto as Exhibit

B hereto executed by Newco and Seller;

 

(ii)                                  the Escrow

Agreement substantially in the form attached hereto as Exhibit C

executed by Parent Newco and Seller;

 

(iii)                               an Employment,

Noncompete, Nondisclosure and Assignment of Inventions Agreement for each of

the Transferred Employees substantially in the form attached hereto as Exhibit

D each executed and delivered by Newco and each individual Transferred

Employee; and

 

(iv)                              a

Noncompetition Agreement in substantially the form of Exhibit F attached

hereto executed by Parent, Newco and Seller;

 

(d)                                  Additional

Documents and Actions.  Each party

agrees to execute and deliver such additional instruments, documents and

property, and to take such additional action, as may reasonably be requested by

another party hereto, or their counsel, in order to effectuate the transactions

contemplated by this Agreement.

 

 

SECTION 5.          REPRESENTATIONS AND WARRANTIES OF

SELLER

 

Seller and Majority Shareholder hereby each represent and warrant to

Parent and Newco as follows:

 

5.1           Organization and

Qualification.  Seller is a

corporation duly organized, validly existing and in good standing under the

laws of the State of Minnesota and has full power and authority to own or lease

its properties and to conduct its business in the manner and in the places

where such properties are owned or leased or as such business is currently

conducted.  The copies of Seller’s

Articles of Incorporation, as amended to date (hereinafter referred to as its

“Articles”), certified by the Secretary of State of the State of Minnesota and

of Seller’s Bylaws, as amended to date (hereinafter referred to as its

“Bylaws”), certified by Seller’s Secretary, both as attached under Schedule

5.1(a) hereto, are complete and correct and no amendments thereto have been

filed or are pending.  Seller is and has

been at all times in compliance with its Articles and Bylaws.  Seller is duly qualified or licensed to

conduct business as a foreign corporation in and is in good standing in each

jurisdiction in which the nature of the business conducted by Seller or the

character and nature of the property or assets owned or leased by Seller makes

such qualification necessary, all of which jurisdictions are listed on Schedule

5.1(b).

 

5.2           Authority.  Seller has full right, power and authority

to enter into this Agreement and each agreement, document and instrument to be

executed and delivered by Seller pursuant to this Agreement and to carry out

the transactions contemplated hereby and thereby.  The execution, delivery and performance of this Agreement and

each such other agreement, document and instrument by Seller has been duly and

validly authorized and approved by all necessary action on the part of Seller

and no other action on the part of Seller or Majority Shareholder is required

in 

 

12

 

connection therewith.  This

Agreement and each agreement, document and instrument to be executed and

delivered by Seller and Majority Shareholder pursuant to this Agreement

constitutes, or when executed and delivered will constitute, the legal, valid

and binding obligation of Seller and Majority Shareholder, each enforceable in

accordance with their respective terms, except to the extent that enforcement

is limited by bankruptcy, insolvency, moratorium, conservatorship, receivership

or similar laws of general application affecting creditors’ rights or by the

application by a court of equity principles. 

The execution, delivery and performance by Seller and Majority

Shareholder of this Agreement and each such agreement, document and instrument:

 

                                                (a)           to the best of Seller’s and Majority

Shareholder’s knowledge, does not and will not violate any foreign, federal,

state, local or other laws, regulations or ordinances applicable to Seller or

Majority Shareholder, respectively;

 

                                                (b)           does not or will not violate any term

or provision of the Articles or Bylaws of Seller; and

 

                                                (c)           except as set forth on Schedule

5.2, does not and will not result in a breach of, constitute or result in a

default under, accelerate any obligation under or give rise to a right of

termination of, any indenture or loan or credit agreement or any other material

agreement, contract, instrument, mortgage, lien, lease, permit, authorization,

order, writ, judgment, injunction, decree, determination or arbitration award

to which Seller or Majority Shareholder is a party or by which the Assets are

bound or affected, or result in the creation or imposition of any mortgage,

pledge, lien, security interest or other charge or encumbrance on any of the

Assets.

 

                                                (d)           Except as set forth on Schedule

5.2, no consent or waiver by, approval of, or designation, declaration or

filing with, any Person is required in connection with the execution, delivery

and performance by Seller and Majority Shareholder of this Agreement and each

agreement, document and instrument to be executed and delivered by Seller or

Shareholder pursuant to this Agreement.

 

5.3           Subsidiaries.  Seller has no subsidiaries.

 

5.4           Financial

Statements.  Schedule 5.4

contains Seller’s unaudited balance sheets, and statements of income,

shareholders’ equity and cash flows of the Business for the years ended 2001

and 2000 (collectively, the “Financial Statements”).  The unaudited balance sheet for the year ended 2001 shall be

referred to as the “Balance Sheet.”  No

material modifications are required to be made to any of the Financial

Statements (including the notes thereto) in order that they be in accordance

with generally accepted accounting principles applied consistently during the

periods covered thereby.  Without

limiting the foregoing, the Financial Statements are complete and correct,

fairly present in all material respects the financial position and the results

of operations of Seller at and for the period covered thereby (without given

effect to this Agreement) and are consistent with the books and records of

Seller.

 

5.5           Title to

Properties;  Liens;  Condition of Properties.

 

                                                (a)           Seller does not own any real property

used by the Business.  The Schedule of

Leases (Schedule 5.5(a)) contains a copy of and an accurate and complete 

 

13

 

list of all of Seller’s leasehold interests in real and personal

property used by the Business including a brief description of each leasehold

interest (including the duration and financial terms thereof) and, if

applicable, all liens, mortgages or other encumbrances upon each leasehold

interest.  Except as set forth on Schedule

5.5(a)(1), all such leases to which Seller is a party are currently in full

force and effect and each party thereto has performed substantially all of its

obligations under each of such leases and is not in default thereunder, and

neither Seller nor Majority Shareholder is aware of any event or condition

which could result in a default under any such lease after notice or lapse of

time or both, nor has Seller or Majority Shareholder received notice of any

alleged default under any such lease. 

Except as set forth on Schedule 5.5(a)(1), the consummation of

the transactions contemplated by this Agreement will not result in any

modification, termination, breach or default or require any consent under any

such lease.

 

 

                                                (b)           None of the Assets have an original

cost per unit in excess of $1,000 or with a fair market value in excess of

$5,000, except as set forth on the Schedule of Fixed Assets  (Schedule 5.5(b)) attached

hereto.  To the best of Seller’s and

Majority Shareholder’s knowledge, Seller has good and marketable title to the

Assets and none of the Assets is subject to any mortgage, pledge, lien,

conditional sales agreement, security interest, encumbrance or other charge

except as specifically reflected in the Financial Statements or on Schedule

5.5 (b).  Except as set forth

on Schedule 5.5(b), all of the Assets owned or leased by Seller are in

good repair and in working order.  The

Assets are the only assets used in or otherwise necessary to operate the

Business as currently conducted or proposed to be conducted.

 

5.6           Taxes.

 

(a)                                  Returns and

Payments.  As of the

date hereof, Seller has filed all Tax Returns that it was required to file as

of the date hereof.  To the best of

Seller’s and Majority Shareholder’s knowledge, all such Tax Returns were

correct and complete in all material respects. 

Except as set forth on the Schedule of Tax Matters (Schedule 5.6

hereto), all Taxes owed by Seller (whether or not shown on any Tax Return) as

of the date hereof have been paid or provided for in Seller’s Financial

Statements.  Seller currently is not the

beneficiary of any extension of time within which to file any Tax Return.  Except as set forth on Schedule 5.6

hereto, no claim has ever been made by an authority in a jurisdiction where

Seller does not file Tax Returns that it is or may be subject to taxation by

that jurisdiction.  There are no actual,

pending or, to the best of Seller’s or Majority Shareholder’s knowledge,

threatened liens, encumbrances or charges against any of the Assets arising in

connection with any failure (or alleged failure) to pay any Tax.  Except as set forth on Schedule 5.6

hereto, Seller has withheld and paid all Taxes required to have been withheld

and paid in connection with amounts paid or owing to any employee, independent

contractor, creditor, Shareholder or other third party.  Except as set forth on Schedule 5.6,

none 

 

14

 

of Seller, Majority Shareholder or any of Seller’s officers, directors,

or employees responsible for taxes has knowledge of any facts that would lead

them to expect any authority to assess any additional Taxes for any period for

which Tax Returns have been filed. 

Except as set forth on the Schedule 5.6, there is no dispute or claim

concerning any Tax liability of Seller either claimed or raised by any

authority in writing or as to which any of Seller, Majority Shareholder or any

of Seller’s, officers, directors, or employees responsible for Tax matters has

knowledge based upon personal contact with any agent of such authority.

 

(b)                                 Affiliated Group.  Seller has not been a member of an

affiliated group filing a consolidated federal income Tax Return or has any

liability for the Taxes of any other person or entity under Treasury

Regulations Section 1.1502-6 (or similar provision of state, local, or foreign

law), as a transferee or successor, by contract or otherwise.  Seller is not a party to any Tax allocation

or sharing agreement.

 

5.7           Absence of

Undisclosed Liabilities.  As of the

Balance Sheet date and the date hereof, Seller had and has no indebtedness,

liabilities or obligations of any nature or kind, whether accrued, absolute,

contingent or otherwise asserted or unasserted, and whether due or to become

due (including, without limitation, potential liabilities relating to products

or services provided by Seller or the conduct of Seller’s Business prior to the

Balance Sheet date regardless of whether claims in respect thereof had been

asserted as of such date), except liabilities which are reflected on the

Financial Statements, are otherwise expressly disclosed in the Schedules to

this Agreement or that have been incurred since the  Balance Sheet date in the ordinary course of business.

 

5.8           Absence of

Certain Changes.  Except as provided

in the Schedule of Changes (Schedule 5.8 hereto), since the date of the

Balance Sheet, there has not been:

 

(a)                                  any operation

of Seller out of the ordinary course of business or any change in the financial

condition, properties, assets, liabilities, business, prospects or operations

of Seller which change, by itself or in conjunction with all other such

changes, has been or is likely to have a materially adverse effect with respect

to the Business;

 

(b)                                 any purchase,

sale, license or other disposition, or any agreement or other arrangement for

the purchase, sale, license or other disposition, of any part of the Assets

(including any patents, trademarks and copyrights) other than purchases and

sales in the ordinary course of business other than pursuant to or in

connection with this Agreement;

 

(c)                                  any damage,

destruction or loss, whether or not covered by insurance, adversely affecting

Seller’s Assets or the Business in excess of $5,000 per single occurrence;

 

(d)                                 any change in

the accounting methods or practices followed by Seller or any change in

depreciation or amortization policies or rates theretofore adopted;

 

15

 

(e)                                  any material

change in the manner in which inventory of Seller is marketed or any increase

in inventory levels in excess of historical levels for comparable periods;

 

(f)                                    any

acceleration, termination, modification or cancellation of any agreement,

contract, lease or license (or series of related agreements, contracts, leases

or licenses) involving more than $10,000 to which Seller is a party or by which

it is bound and which is an Assigned Contract; or

 

(g)                                 any agreement

or understanding, whether in writing or otherwise, for Seller to take any of

the actions specified in paragraphs (a) through (f) above other than pursuant

to or in connection with this Agreement.

 

                5.9           Intellectual Property.

 

(a)                                  All domestic

and foreign patents, patent applications, copyrighted works including software,

copyright applications and registrations, trade names, trademarks and service

marks, registered trademarks and trademark applications, registered service

marks and service mark applications which are owned by or licensed to Seller

and used in or useful to the Business (collectively, the “Intellectual

Property”) are listed in the Schedule of Intellectual Property (Schedule 5.9)

attached hereto.  Except as set forth on

the Schedule of Intellectual Property, the Intellectual Property have been duly

registered in, filed in or issued by, as the case may be, the United States

Patent and Trademark Office, the United States Register of Copyrights or the

corresponding offices of other countries identified on Schedule 5.9,

and, to the best of Seller’s and Majority Shareholder’s knowledge, have been

properly maintained and renewed in accordance with all applicable provisions of

law and administrative regulations in the United States and each such country.

 

(b)                                 Except as set

forth on the Schedule 5.9, (i) use of the Intellectual Property does

not, to the best of Seller’s and Majority Shareholder’s knowledge, require the

consent of any other person and the same is freely transferable (except as

otherwise provided by law or pursuant to the applicable license or use

agreement);  (ii) the Intellectual

Property is owned exclusively by Seller, free and clear of any attachments,

liens, encumbrances or adverse claims; 

and (iii) neither Seller’s present or contemplated activities, products

or services infringe, misappropriate, dilute, impair or constitute unfair

competition with respect to any patent, tradename, trademark, copyright or

other proprietary rights of others.

 

(c)                                  Except as set

forth on the Schedule 5.9, no other person has an interest in or right

or license to use, or the right to license others under, the Intellectual

Property.  There are no claims or

demands of any other person pertaining thereto and no proceedings have been

instituted, are pending or are, to the best of Seller’s or Majority

Shareholder’s knowledge, threatened which challenge the rights of Seller in

respect thereof and Seller has no knowledge of any facts which could be the

basis of any such claims.  To the

knowledge of Seller, there is no infringement of any of the Intellectual

Property by 

 

16

 

others nor is any of the Intellectual Property subject to any outstanding

order, decree, judgment, stipulation, settlement, lien, charge, encumbrance or

attachment.  No claim or demand has been

made and no proceeding has been filed or, to the best of Seller’s or Majority

Shareholder’s knowledge, threatened to be filed charging Seller with

infringement of any patent, trade name, trademark, service mark or copyright

and Seller does not know of any facts which could be the basis of any such

claims.  To the knowledge of Seller,

there are no royalties, honoraria, fees or other payments payable by or on

behalf of Seller to any person with respect to any of the Intellectual

Property.

 

5.10         Trade Secrets;

Licensed Intellectual Property. 

Seller owns or has the right to use, free and clear of any claims or

rights of others, all trade secrets, inventions, developments, customer lists,

manufacturing and secret processes, hardware designs, programming processes,

software and other information and know-how (if any) required for or used in

the manufacture or marketing of all products formerly or presently sold,

manufactured, licensed, under development or produced by the Business,

including products licensed from others which are listed on the Schedule of

Licensed Intellectual Property (Schedule 5.10).  There are no payments in excess of $5,000

which are required to be made by or on behalf of Seller for the use of such

trade secrets, inventions, developments, customer lists, copyrighted materials,

manufacturing and secret processes and know-how.  To the best of Seller’s and Majority Shareholder’s knowledge,

Seller is not using or in any way making any unlawful or wrongful use of any

confidential information, copyrighted materials, know-how or trade secrets of

any third party.  Except as set forth on

Schedule 5.10, none of the Transferred Employees is a party to any

non-competition or confidentiality agreement with any party other than Seller

or Newco.

 

5.11         Contracts. The

Assigned Contracts are listed on Schedule of Assigned Contracts (Schedule

5.11) and, except as set forth on Schedule 5.11, subject to no

amendment, extension or other modification as of the date hereof.  Each Assigned Contract is binding and

enforceable in accordance with its terms and is in full force or effect without

any default thereunder by Seller or, by any other party thereto.

 

5.12         Litigation.  Except as set forth on the Schedule of

Litigation (Schedule 5.12 hereto), there are no suits, actions or

administrative, arbitration or other proceedings or governmental investigations

pending or threatened against or relating to Seller, the Assets or the

Business.  Except as set forth on the Schedule

5.12, Seller is not otherwise engaged as a party in any suit, action or

administrative, arbitration or other proceeding.  Seller has not entered into or been subject to any consent decree,

compliance order or administrative order with respect to any of the Assets or

the Business.  Except as set forth on Schedule

5.12, Seller has not received any request for information, notice, demand

letter, administrative inquiry or formal or informal complaint or claim with

respect to the Assets or the Business. 

Seller has not been named by the U.S. Environmental Protection Agency or

a state environmental agency as a potentially responsible party (or similar designation

under applicable state law) in connection with any site at which hazardous

substances, hazardous materials, toxic substances, oil or petroleum products

have been released or are, to the best of Seller’s or Majority Shareholder’s

knowledge, threatened to be released. 

Except as set forth on the Schedule 5.12, there are no existing

or, threatened product liability, warranty or other similar claims, or any

facts upon which a claim of such nature could be based, against Seller for

services or products which are defective or fail to meet any service or product

warranties.  Neither Seller nor Majority

Shareholder is aware of any facts providing a basis for any matter addressed in

this Section 5.12.

 

17

 

                5.13         Compliance with Laws.  To the best of Seller’s and Majority

Shareholder’s knowledge, Seller is not in material violation of any laws, rules

or regulations which apply to the conduct of Seller’s Business or properties

which violation has had or may be expected to have a material adverse effect on

the Assets or the Business’s financial condition or results of operations.  There has never been any citation, fine or

penalty imposed, asserted or threatened against Seller under any foreign,

federal, state, local or other law or regulation relating to employment,

immigration, occupational safety, zoning or environmental matters and Seller is

not aware of any circumstances, occurrences or conditions likely to result in

the imposition or assertion of such a citation, fine or penalty, nor has Seller

received any notice to the effect that Seller is in violation of any such laws

or regulations.

 

                5.14         Insurance.  The Assets of Seller are insured to the

extent disclosed in the Schedule of Insurance (Schedule 5.14)

attached hereto including present product liability insurance policies and

product liability insurance policies held by Seller over the past five years or

such shorter period of time by Seller has been in existence.  All such present policies of insurance are

in full force and effect, all premiums with respect thereto which have come due

as of the date hereof have been paid and Seller is in substantial compliance

with the terms thereof.  Such insurance

policies are sufficient for compliance by Seller with all requirements of law

and all material agreements and leases to which Seller is a party and provide

insurance coverage for the properties, assets, operations and employees of

Seller generally comparable in type and amount to that which is customarily

carried by other corporations engaged in similar businesses and of

approximately the same size and similarly situated as Seller.  To the best of Seller’s and Majority

Shareholder’s knowledge, the workers’ compensation insurance of Seller complies

with applicable statutory requirements as to the amount of such coverage.

 

                5.15         Product Warranty. To the best of

Seller’s and Majority Shareholder’s knowledge, each product of the Business

manufactured, sold, leased or delivered by the Seller has been in conformity

with all applicable contractual commitments and all express and implied

warranties.  To the best of Seller’s and

Majority Shareholder’s knowledge, Seller has no liability (and there is no

basis for any present or future action, suit, proceeding, hearing, investigation,

charge, complaint, claim or demand which may give rise to any liability) for

replacement or repair thereof or other damages in connection therewith, subject

only to the reserve for product warranty claims set forth in the Financial

Statements, and provided that liabilities arising from a recall required by a

vendor and not arising from any action or inaction on the part of Seller are

not included within this Section 5.15. 

To the best of Seller’s and Majority Shareholder’s knowledge, no product

manufactured, sold, leased or delivered by Seller is subject to any guaranty,

warranty or other indemnity beyond the applicable standard terms and conditions

of sale or lease, all of which are included in the Schedule of Warranties

(Schedule 5.15).

 

                5.16         Product Liability.  Seller has no liability (and there is no

basis for any present or future action, suit, proceeding, hearing,

investigation, charge, complaint, claim or demand against it giving rise to any

liability) arising out of any injury to individuals or property as a result of

the ownership, possession or use of any product manufactured, sold, leased or

delivered or services rendered by the Business.

 

                5.17         Finders’ Fees.  Neither Seller nor Majority Shareholder has

incurred or expects to incur or become liable for any broker’s commission or

finder’s fee relating to or in connection with the transactions contemplated by

this Agreement, except as described on the Schedule of Finders’ Fees (Schedule 5.17

hereto).

 

18

 

5.18         Authorizations.  Seller has obtained and is in material

compliance with all federal, foreign, state, provincial, municipal, local or

other governmental consents, certifications, licenses, permits, registrations,

grants and other authorizations (collectively the “Authorizations” and

individually an “Authorization”) which, to the best of Seller’s and Majority

Shareholder’s knowledge, are necessary to permit it to conduct the Business as

presently conducted and for which the failure to comply with has had or may be

expected to have a material adverse effect on the Business’s business,

financial condition or results of operations. 

No proceeding is pending or, to the best of Seller’s or Majority

Shareholder’s knowledge, is threatened in which any Person or governmental

authority is seeking to revoke or deny the renewal of any Authorization.  All Authorizations related to the Business

are listed in the Schedule of Authorizations (Schedule 5.18)

attached hereto.  Each Authorization is

in full force and effect without any default thereunder by Seller will remain

in full force and effect after giving effect to the transactions contemplated

by this Agreement and Seller has not received notice of any claim or charge

that Seller has breached any Authorization.

 

5.19         Transactions with

Interested Persons.  Neither

Majority Shareholder nor his spouse or children, owns, directly or indirectly,

on an individual or joint basis, any material interest in, or serves as an

officer or director or in another similar capacity of, any customer, competitor

or supplier of the Business, or any organization which has a material contract

or arrangement with the Business.

 

5.20         Employee Benefit

Plans.

 

(a)                                  All employee

benefit plans, as that term is defined in Section 3(2) and (3) of ERISA, fringe

benefit plans, as that term is defined in Section 6039D(d) of the Code, welfare

plans, as that term is defined in Section 3(1) of ERISA, whether or not funded,

which now are or ever have been maintained by Seller or to which Seller now has

or has ever had an obligation to contribute (the “Employee Benefit Plans”) are

described in the Schedule of Employee Benefit Plans (Schedule 5.20)

attached hereto.  No event has occurred

nor has there been any omission which would result in violation of any laws,

rulings or regulations applicable to any Employee Benefit Plan.  There are no claims pending or, to the best

of Seller’s or Majority Shareholder’s knowledge, threatened with respect to any

Employee Benefit Plan, other than claims for benefits by employees,

beneficiaries or dependents arising in the normal course of the operation of

any such plan.

 

(b)                                 Seller has no

and has never had any Employee Benefit Plan that is or was intended to be

qualified under Section 401(a) or 401(k) of the Code.

 

(c)                                  Seller is not a

member of a multi-employer plan within the meaning of Section 3(37) of ERISA.

 

(d)                                 With respect to

each “group health plan” (as defined in Section 607(1) of ERISA) that has been

maintained by Seller or any member of any Controlled Group, all notices

required pursuant to Section 606 of ERISA have been provided on a timely basis

and each such plan has otherwise complied in all material respects with the

requirements of Sections 606 through 608 of ERISA.  Except as required by Section 601 of ERISA, 

 

19

 

neither Seller nor any member of any Controlled Group has made any

commitment or is otherwise obligated to provide any non-pension benefits to any

employee, former employee or spouse or dependent of any such employee or former

employee.

 

(e)                                  With respect to

each Employee Benefit Plan (as that term is defined in Section 3(3) of ERISA)

maintained by Seller within the three years preceding the Closing, complete and

correct copies of those plans have been or will be delivered by Seller to

Parent at Closing pursuant to Section 4.2(b).

 

5.21         Hazardous

Materials;  Environmental

Compliance;  Disclosure of Environmental

Information.

 

(a)                                  In connection

with operating the Business, Seller has never generated, used, stored or

handled any Hazardous Materials nor has it treated, stored, disposed of,

spilled or released any Hazardous Materials at any site presently or formerly

owned, leased, operated or used by Seller or shipped any Hazardous Materials

for treatment, storage or disposal at any other site or facilities.  To the knowledge of Seller and the Majority

Shareholder, no other person has ever generated, used, handled, stored or

disposed of any Hazardous Materials at any site presently or formerly owned,

leased, operated or used by Seller, nor has there been or is there threatened

any release of any Hazardous Materials on or at any such site.  To the knowledge of Seller, Seller does not

presently own or lease, nor has it previously owned or leased, any site on

which underground storage tanks are or were located.  No lien has been imposed by any governmental agency on any

property, facility, machinery, or equipment owned, operated, leased or used by

Seller in connection with the presence of any Hazardous Materials.

 

(b)                                 To the

knowledge of Seller and the Majority Shareholder, Seller has no liability under

nor has it ever violated any Environmental Law with respect to any property

owned, operated, leased, or used by Seller and any facilities and operations

thereon.  In addition, any property

owned, operated, leased, or used by Seller, and any facilities and operations

thereon are presently in material compliance with all applicable Environmental

Laws.  Seller has not entered into or

been subject to any consent decree, compliance order or administrative order

with respect to any environmental or health and safety matter or received any

request for information, notice, demand letter, administrative inquiry, or

formal or, to the best of Seller’s or Majority Shareholder’s knowledge,

informal complaint or claim with respect to any environmental or health and

safety matter or any enforcement of any Environmental Law; and Seller and

Majority Shareholder have no knowledge that any of the above will be

forthcoming.

 

(c)                                  The Schedule

of Environmental Matters (Schedule 5.21 hereto) contains a list

of all documents, records, and information available to Seller and Majority

Shareholder concerning any environmental or health and safety matter relevant

to the Business, whether generated by Seller or others, 

 

20

 

including, without limitation, environmental audits, environmental risk

assessments, site assessments, documentation regarding off-site disposal of

Hazardous Materials, spill control plans, and reports, correspondence, permits,

licenses, approvals, consents or other authorizations issued by any

environmental agency.

 

5.22         Customers,

Distributors and Independent Sales Representatives.  The Schedule of Customers, Distributors

and Independent Sales Representatives (Schedule 5.22) sets

forth, to the best of Seller’s and Majority Shareholder’s knowledge, the names

of all customers to which, and independent sales representatives and

distributors through which, Seller through the Business has sold or distributed

in excess of $25,000 of its products or services during any of the last three

fiscal years of Seller as well as all customers, distributors and independent

sales representatives with which Seller has entered into a contract or

agreement.  Except as set forth on the Schedule

5.22, during the last three fiscal years and through the date hereof, no

such customer or distributor has canceled or otherwise terminated its

relationship with Seller or decreased materially its usage or purchase of the

products or services of Seller.  To the

knowledge of Seller, no such customer or distributor has any plan or intention

to terminate, cancel or otherwise modify its relationship with Seller in a

manner which would be materially adverse to Seller.

 

5.23         Employees.

Except as set forth on Schedule 5.23, Seller is not delinquent in

payments to any of its employees of the Business for any wages, salaries,

commissions, bonuses or other direct compensation for any services performed

for it to the date hereof or amounts required to be reimbursed to such

employees.  Upon termination of the

employment of any of Seller’s employees, Newco will not by reason of anything

done prior to the Closing be liable to any of such employees for “severance

pay” or any other payments.  To the best

of Seller’s and Majority Shareholder’s knowledge, Seller is in compliance with

all applicable laws and regulations respecting labor, employment, fair

employment practices, terms and conditions of employment and wages and

hours.  Except as set forth on the Schedule

of Employee Matters (Schedule 5.23), there are no charges of

employment or age discrimination, sexual harassment or unfair labor practices,

claims by employees against Seller the asserted value of which exceeds $5,000

individually or $15,000 in the aggregate or strikes, slowdowns, stoppages of

work or any other concerted interference with normal operations existing,

pending or threatened against or involving Seller.  No grievance which might have a material adverse effect on Seller

or the conduct of its business or any arbitration proceeding arising out of or

under collective bargaining agreements is pending and no claim therefor has

been asserted.  No collective bargaining

agreement is in effect or is currently being or is about to be negotiated by

Seller for the employees of the Business.

 

                5.24         Other Agreements.  Except as set forth in the Schedule of

Other Agreements (Schedule 5.24) attached hereto, there are no

material agreements or arrangements not contained herein, or disclosed in any

Schedule hereto, to which Majority Shareholder, or any individual serving as

director or officer of Seller, is a party relating to the business of the

Business.

 

                5.25         Completeness.  The representations, warranties and

statements contained in this Agreement and in the certificates, exhibits and

schedules delivered by Seller to Newco pursuant to this Agreement, when taken

together, do not and shall not at Closing contain any untrue statement of a

material fact, and do not and shall not omit to state a material fact required to

be stated therein or necessary in order to make such representations,

warranties or statements not misleading in light of the circumstances in which

they were made.

 

21

 

5.26         Disclosure of

Material Information and Potentially Adverse Developments.  Seller has reported to Newco any and all

material information of which Seller or Majority Shareholder has knowledge as

to potentially materially adverse factors in the business of the Business,

other than factors affecting the industry generally.

 

5.27.        Investment

Representations.  Seller understands

that the Series D Stock has not been registered under the Act.  Seller also understands that the Series D

Stock is being offered and sold pursuant to an exemption from registration

contained in the Act based in part upon Seller’s and Majority Shareholder’s

representations contained in the Agreement. 

Seller hereby represents and warrants as follows:

 

(a)                                  Seller Bears

Economic Risk.  Seller,

through its officers and directors, has such knowledge and experience in

financial business matters that its is capable of evaluating the merits and

risks of an investment in the Series D Stock, and if issued the Conversion

Shares to be received pursuant to this Agreement.  Seller acknowledges being furnished by Parent with a copy of

Parent’s most recent annual and quarterly reports on Forms 10-K and 10-Q,

respectively (the “SEC Reports”), and being offered the opportunity to ask

questions of, and receive answers from, Parent’s officers with respect to

Parent’s business and financial affairs. 

Seller understands that Parent is a shell company with essentially no

assets.  Seller must bear the economic

risk of this investment indefinitely unless the Series D Stock, and if issued

the Conversion Shares are registered pursuant to the Act, or an exemption from

registration is available.  Seller

understands that Parent has no present intention of registering the Series D

Stock, or the Conversion Shares.  Seller

also understands that there is no assurance that any exemption from

registration under the Act will be available and that, even if available, such

exemption may not allow Seller to transfer all or any portion of the Series D

Stock, the Conversion Shares under the circumstances, in the amounts or at the

times Seller might propose.

 

(b)                                 Acquisition for

Own Account.  Seller is

acquiring the Series D Stock, and if issued, the Conversion Shares for Seller’s

own account for investment only, and not with a view towards their public

distribution.

 

(c)                                  Seller Can

Protect Its Interest.  Seller

represents that by reason of its, or of its management’s, business or financial

experience, Seller has the capacity to protect its own interests in connection

with the transactions contemplated in this Agreements.  Further, Seller is aware of no publication

of any advertisement in connection with the transactions contemplated in the

Agreement.

 

 

(d)                                 Accredited

Investor.  Seller

represents that it is, and its shareholders are, each an accredited investor

within the meaning of Regulation D of the Securities Act.

 

(e)                                  Rule 144.  Seller acknowledges and agrees that the

Series D Stock, and, if issued, the Conversion Shares must be held indefinitely

unless they are subsequently registered under the Act or an exemption from such

 

22

 

registration is available. 

Seller has been advised or is aware of the provisions of Rule 144

promulgated under the Act, which permits limited resale of shares purchased in

a private placement subject to the satisfaction of certain conditions,

including, among other things: the availability of certain current public

information about Parent, the resale occurring not less than one year and in

some cases two years after a party has purchased and paid for the security to

be sold, the sale being through an unsolicited “broker’s transaction” or in

transactions directly with a market maker (as said term is defined under the

Securities Exchange Act of 1934, as amended) and the number of shares being

sold during any three-month period not exceeding specified limitations.

 

(f)                                    Residence.  The office or offices of the Seller in which

its investment decision was made is located at 8633 Jefferson Highway, Osseo,

Minnesota 55369.

 

(g)                                 Transfer

Restrictions.  Seller

acknowledges and agrees that the Series D Stock, and if issued, the Conversion

Shares are subject to restrictions on transfer and that the certificates

representing such securities will bear the following legend reflecting the

foregoing restrictions on transfer:

 

                                                “The shares of

stock represented by this certificate have not been registered under the

Securities Act of 1933, as amended (the “Act”) or under any applicable state

securities laws (the “Laws”).  The

shares may not be sold, transferred, assigned, pledged or otherwise disposed of

at any time unless they are registered under such Act and laws or unless in the

opinion of legal counsel for the Company such disposition will not result in a

violation of such Act or any such Laws.”

 

SECTION 6.         REPRESENTATIONS AND WARRANTIES OF

MAJORITY SHAREHOLDER

 

                Majority

Shareholder hereby makes to Parent and Newco each of the representations and

warranties set forth in this Section 6 as follows:

 

                6.1           Ownership of Seller.  Majority Shareholder owns 57.31% of the

outstanding and issued capital stock of Seller.

 

                6.2           Authority.  Majority Shareholder has full right,

authority, power and capacity (i) to enter into this Agreement and each

agreement, document and instrument to be executed and delivered by him pursuant

to this Agreement and  (ii) to carry out

the transactions contemplated hereby and thereby.  This Agreement and each agreement, document and instrument

executed and delivered by Majority Shareholder pursuant to this Agreement

constitutes, or when executed and delivered will constitute, the legal, valid

and binding obligation of Majority Shareholder, enforceable in accordance with

their respective terms, except to the extent that enforcement is limited by

bankruptcy, insolvency, moratorium, conservatorship, receivership or similar

laws of general application affecting creditors’ rights or by the application

by a court of equity principles.  Except

as expressly disclosed in the Schedules to this Agreement, the execution,

delivery and 

 

23

 

performance of this Agreement and each such agreement, document and

instrument by Majority Shareholder:  (i)

does not and will not violate any foreign, federal, state, local or other laws,

regulations or ordinances applicable to Majority Shareholder or require him to

obtain any approval, consent or waiver of, or make any filing with, any Person

or authority (governmental or otherwise) that has not been obtained or made and

(ii) does not and will not result in a breach of, constitute a default under,

accelerate any obligation under or give rise to a right of termination of, any

indenture or loan or credit agreement or any other agreement, contract,

instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment,

injunction, decree, determination or arbitration award to which Majority

Shareholder is a party or by which Majority Shareholder’s property is bound or

affected, or result in the creation or imposition of any mortgage, pledge,

lien, security interest or other charge or encumbrance on any of the Assets.

 

                6.3           NASD Representation.  Majority Shareholder (i) is not and does not

control a member of the National Association of Securities Dealers, Inc. (the

“NASD”), and (ii) is not a registered representative with a NASD member firm

and (iii) is not the parent, brother or sister, brother-in-law or

sister-in-law, son or daughter or son-in-law or daughter-in-law of an NASD

member or of a registered representative of a NASD member firm.

 

                6.4           Cooperation.  Majority Shareholder will use his best

efforts to cause the Company and its shareholders to consummate the

transactions contemplated by this Agreement. 

Without limitation, Majority Shareholder will vote in favor of the transactions

contemplated by this Agreement at any meeting of shareholders of the Company

held for such purpose (or execute a consent in writing in lieu of a meeting of

shareholders).

 

SECTION 7.         REPRESENTATIONS AND WARRANTIES OF

PARENT AND NEWCO.

 

Parent

and Newco hereby make to Seller each of the representations and warranties set

forth in this Section 7 as follows:

 

7.1           Organization and

Good Standing.  Parent and Newco are

corporations duly organized, validly existing and in good standing under the

laws of the State of Minnesota with full corporate power to conduct their

business as now being conducted. The copies of Parent’s and Newco’s Articles of

Incorporation, as amended to date (each hereinafter referred to as “Articles”),

certified by the Secretary of State of the State of Minnesota and Parent’s and

Newco’s Bylaws, as amended to date (each hereinafter referred to as “Bylaws”),

certified by Parent’s and Newco’s Secretary, as attached under Schedule 7.1

hereto, are complete and correct and no amendments thereto have been filed or

are pending.  Parent and Newco are, and

have been at all times, in compliance with their respective Articles and

Bylaws. The nature of Parent’s or Newco’s business and the character and nature

of the property or assets owned or leased by Parent or Newco (excluding the Assets

and Business being acquired hereunder) does not require Parent or Newco to

qualify as a foreign corporation in any jurisdiction.

 

7.2           Authority.  Parent and Newco have full right, power and

authority to enter into this Agreement and each agreement, document and

instrument to be executed and delivered by them pursuant to this Agreement and

to carry out the transactions contemplated hereby and thereby.  The execution, delivery and performance of

this Agreement and each such other agreement, document and instrument by them

has been duly and validly authorized and approved by all necessary action on

the part of each of them and no other action on the part of each of them is

required in 

 

24

 

connection therewith.  This

Agreement and each agreement, document and instrument to be executed and

delivered by each of them pursuant to this Agreement constitutes, or when

executed and delivered will constitute, the legal, valid and binding obligation

of each of them, each enforceable in accordance with their respective terms,

except to the extent that enforcement is limited by bankruptcy, insolvency,

moratorium, conservatorship, receivership or similar laws of general

application affecting creditors’ rights or by the application by a court of

equity principles.  The execution,

delivery and performance by Parent and Newco of this Agreement and each such

agreement, document and instrument:

 

(a)                                  does not and

will not violate any foreign, federal, state, local or other laws, regulations

or ordinances applicable to Parent or Newco;

 

(b)                                 does not or

will not violate any term or provision of the Articles of Incorporation or

Bylaws of Parent or Newco;  or

 

(c)                                  except as set

forth on Schedule 7.2, does not and will not result in a breach of,

constitute or result in a default under, accelerate any obligation under or

give rise to a right of termination of, any indenture or loan or credit

agreement or any other agreement, contract, instrument, mortgage, lien, lease,

permit, authorization, order, writ, judgment, injunction, decree, determination

or arbitration award to which Parent or Newco is a party or by which the

property of Parent or Newco is bound or affected, or result in the creation or

imposition of any mortgage, pledge, lien, security interest or other charge or

encumbrance on any of Parent’s or Newco’s assets.

 

No consent or waiver by, approval of, or designation, declaration or

filing with, any Person or authority (governmental or otherwise) is required in

connection with the execution, delivery and performance by Parent or Newco of

this Agreement and each agreement, document and instrument to be executed and

delivered by Parent or Newco pursuant to this Agreement.

 

                7.3           Capitalization. The authorized

and issued capital stock of Parent immediately prior to the Closing is as set

forth on Schedule 7.3 attached hereto. 

All issued and outstanding shares of Parent’s capital stock (i) have

been duly authorized and validly issued, (ii) are fully paid and nonassessable

and (iii) were issued in compliance with all applicable state and federal laws

concerning the issuance of securities. Other than as set forth on Schedule

7.3, there are no outstanding options, warrants, rights (including

conversion or preemptive rights and rights of first refusal), proxy or

stockholder agreements, or agreements of any kind for the purchase or

acquisition from Parent of any of its securities.  When issued in compliance with the provisions of this Agreement

and the Certificate of Designation, the Series D Stock, and upon conversion

thereof, the Conversion Shares, will be validly issued, fully paid and

nonassessable, and will be free of any liens or encumbrances; provided,

however, that the foregoing securities may be subject to restrictions on

transfer under state and/or federal securities laws as set forth herein or as

otherwise required by such laws at the time a transfer is proposed.  All authorized and issued capital stock of

Newco is owned by Parent.

 

7.4           Subsidiaries.  Parent has no subsidiaries other than

Newco.  Newco has no subsidiaries.

 

7.5           Financial

Statements.   Schedule 7.5

contains Parent’s audited balance sheets, and statements of income,

shareholders’ equity and cash flows of its business for the years ended 

 

25

 

March 31, 2001 and March 31, 2000 (the “Parent Financial Statements”)

and the unaudited balance sheet for the three months ended September 30, 2001

(the “Parent Balance Sheet”).  No

material modifications are required to be made to any of the Parent Financial

Statements or the Parent Balance Sheet (including the notes thereto) in order

that they be in accordance with generally accepted accounting principles

applied consistently during the periods covered thereby.  Without limiting the foregoing, the Parent

Financial Statements and the Parent Balance Sheet are complete and correct,

fairly present in all material respects the financial position and the results

of operations of Parent at and for the periods covered thereby (without given

effect to this Agreement) and are consistent with the books and records of

Parent.

 

7.6           Title to

Properties;  Liens;  Condition of Properties.

 

                                                (a)           Parent and Newco do not own any real

property used by their respective businesses. 

Schedule 7.6  contains an

accurate and complete list of all of Seller’s leasehold interests in real and

personal property including a brief description of each leasehold interest

(including the duration and financial terms thereof) and, if applicable, all

liens, mortgages or other encumbrances upon each leasehold interest.  Except as set forth on Schedule 7.6, all

such leases to which Parent is a party are currently in full force and effect

and each party thereto has performed substantially all of its obligations under

each of such leases and is not in default thereunder, and Parent is not aware

of any event or condition which could result in a default under any such lease

after notice or lapse of time or both, nor has Parent received notice of any

alleged default under any such lease. 

The consummation of the transactions contemplated by this Agreement will

not result in any modification, termination, breach or default or require any

consent under any such lease.

 

                                                (b)

          Parent has limited operations

and assets.  To the best of Parent’s

knowledge, Parent has good and marketable title to the assets used in its

business and none of such assets is subject to any mortgage, pledge, lien,

conditional sales agreement, security interest, encumbrance or other charge

except as specifically reflected in the Financial Statements or on Schedule

7.6.  Except as set forth on Schedule

7.6, all of the assets owned or leased by Parent are in good repair and in

working order.

 

7.7           Taxes.

 

(a)                                  Returns and

Payments.  As of the

date hereof, Parent has filed all Tax Returns that it was required to file as

of the date hereof.  To the best of

Parent’s  knowledge, all such Tax

Returns were correct and complete in all material respects.  Except as set forth on the Schedule 7.7

hereto, all Taxes owed by Parent (whether or not shown on any Tax Return) have

been paid.  Parent currently is not the

beneficiary of any extension of time within which to file any Tax Return.  Except as set forth on Schedule 7.7

hereto, no claim has ever been made by an authority in a jurisdiction where

Parent does not file Tax Returns that it is or may be subject to taxation by

that jurisdiction.  There are no actual,

pending or, to the best of Parent’s knowledge, threatened liens, encumbrances

or charges against any of the 

 

26

 

assets used in Parent’s business arising in connection with any failure

(or alleged failure) to pay any Tax. 

Except as set forth on Schedule 7.7 hereto, Parent has withheld

and paid all Taxes required to have been withheld and paid in connection with

amounts paid or owing to any employee, independent contractor, creditor,

shareholder or other third party. 

Except as set forth on Schedule 7.7, neither Parent nor any of

Parent’s officers, directors, or employees responsible for taxes has knowledge

of any facts that would lead them to expect any authority to assess any

additional Taxes for any period for which Tax Returns have been filed.  Except as set forth on the Schedule 7.7,

there is no dispute or claim concerning any Tax liability of Parent either

claimed or raised by any authority in writing or as to which any of Parent, or

any of Parent’s, officers, directors, or employees responsible for tax matters

has knowledge based upon personal contact with any agent of such authority.

 

(b)                                 Affiliated

Group.  Parent has not been a member

of an affiliated group filing a consolidated federal income Tax Return or has

any liability for the Taxes of any other person or entity under Treasury

Regulations Section 1.1502-6 (or similar provision of state, local, or foreign

law), as a transferee or successor, by contract or otherwise.  Parent is not a party to any Tax allocation

or sharing agreement.

 

7.8           Absence of

Undisclosed Liabilities.  As of the

Parent Balance Sheet date and the date hereof, Parent had and has no

indebtedness, liabilities or obligations of any nature or kind, whether

accrued, absolute, contingent or otherwise asserted or unasserted, and whether

due or to become due (including, without limitation, potential liabilities relating

to products or services provided by Parent or the conduct of Parent’s Business

prior to the Parent Balance Sheet date regardless of whether claims in respect

thereof had been asserted as of such date), except liabilities which are

reflected on the Financial Statements and the Parent Balance Sheet, are

otherwise expressly disclosed in the Schedules to this Agreement or that have

been incurred since the Parent  Balance

Sheet date in the ordinary course of business.

 

 

7.9           Litigation.  Except as set forth on the Schedule 7.9

hereto, there are no suits, actions or administrative, arbitration or other

proceedings or governmental investigations pending or threatened against or

relating to Parent or Newco, their assets or businesses.  Except as set forth on the Schedule 7.9,

neither Parent nor Newco have otherwise been engaged as a party in any suit,

action or administrative, arbitration or other proceeding.  Parent and Newco have not entered into or

been subject to any consent decree, compliance order or administrative order

with respect to any of their assets or businesses.  Except as set forth on Schedule 7.9, neither Parent nor

Newco has received any request for information, notice, demand letter,

administrative inquiry or formal or informal complaint or claim with respect to

any of its assets or business.  Neither

Parent nor Newco has not been named by the U.S. Environmental Protection Agency

or a state environmental agency as a potentially responsible party (or similar

designation under applicable state law) in connection with any site at which

hazardous substances, hazardous materials, toxic substances, oil or petroleum

products have been released or are threatened to be released. There are no

existing or threatened product liability, warranty or other similar claims, or

any facts upon which a claim of such nature could be based, against Parent for

services or products which are defective or fail to meet any service or product

warranties.  Neither Parent nor Newco is

aware of any facts providing a basis for any matter addressed in this Section

5.12.

 

27

 

                7.10         Compliance with Laws.  To the best of Parent’s and Newco’s

respective knowledge, neither Parent nor Newco is not in material violation of

any laws, rules or regulations which apply to the conduct of their respective

business or properties which violation has had or may be expected to have a

material adverse effect on their respective assets or business’ financial

condition or results of operations.  There

has never been any citation, fine or penalty imposed, asserted or threatened

against Parent or Newco under any foreign, federal, state, local or other law

or regulation relating to employment, immigration, occupational safety, zoning

or environmental matters and neither Parent nor Newco is aware of any

circumstances, occurrences or conditions likely to result in the imposition or

assertion of such a citation, fine or penalty, nor has Parent or Newco received

any notice to the effect that Parent or Newco is in violation of any such laws

or regulations.

 

                7.11         Finders’ Fees.  Neither Parent nor Newco has not incurred or

expects not to incur or become liable for any broker’s commission or finder’s

fee relating to or in connection with the transactions contemplated by this

Agreement.

 

                7.12         Authorizations.  Each of Parent and Newco has obtained and is

in material compliance with all federal, foreign, state, provincial, municipal,

local or other governmental consents, certifications, licenses, permits,

registrations, grants and other authorizations (collectively the

“Authorizations” and individually an “Authorization”) which, to the best of

their respective knowledge, are necessary to permit them to conduct their

respective businesses as presently conducted and for which the failure to

comply with has had or may be expected to have a material adverse effect on

their respective business, financial condition or results of operations.  No proceeding is pending or, is threatened

in which any Person or governmental authority is seeking to revoke or deny the

renewal of any Authorization.

 

                7.13         Employee Benefit Plans.  Neither Parent nor Newco has currently or

previously had any employee benefit plans, as that term is defined in Section

3(2) and (3) of ERISA, fringe benefit plans, as that term is defined in Section

6039D(d) of the Code,  welfare plan, as

that term is defined in Section 3(1) of ERISA, Employee Benefit Plan as that

term is defined under Section 401(a) or 401(k) of the Code, or group health

plans (as defined in Section 607(1) of ERISA.

 

                7.14         Environmental Compliance;  Disclosure of Environmental Information.

To the knowledge of Parent, Parent has no liability under nor has it ever

violated any Environmental Law with respect to any property owned, operated, leased,

or used by Parent and any facilities and operations thereon.  In addition, to the best of Parent’s

knowledge, any property owned, operated, leased, or used by Parent, and any

facilities and operations thereon are presently in material compliance with all

applicable Environmental Laws.  Parent

has not entered into or been subject to any consent decree, compliance order or

administrative order with respect to any environmental or health and safety

matter or received any request for information, notice, demand letter,

administrative inquiry, or formal or, to the best of Parent’s knowledge,

informal complaint or claim with respect to any environmental or health and

safety matter or any enforcement of any Environmental Law; and Parent has no

knowledge that any of the above will be forthcoming.

 

                7.15         Employees. Parent is not

delinquent in payments to any of its employees for any wages, salaries,

commissions, bonuses or other direct compensation for any services performed

for it to the date hereof or amounts required to be reimbursed to such

employees. To the best of Parent’s knowledge, Parent is in compliance with all

applicable laws and regulations respecting labor, employment, fair employment

practices, terms and conditions of employment and wages and 

 

28

 

hours.  Except as set forth on

the Schedule 7.15, there are no charges of employment or age

discrimination, sexual harassment or unfair labor practices, claims by

employees against Parent the asserted value of which exceeds $5,000

individually or $15,000 in the aggregate or strikes, slowdowns, stoppages of

work or any other concerted interference with normal operations existing,

pending or threatened against or involving Parent.  No grievance which might have a material adverse effect on Parent

or the conduct of its business or any arbitration proceeding arising out of or

under collective bargaining agreements is pending and no claim therefor has

been asserted.  No collective bargaining

agreement is in effect or is currently being or is about to be negotiated by

Parent for the employees of the Business.

 

                7.16         Contracts. All of Parent’s

material contracts are listed on Schedule 7.16 and, except as set forth

thereon, none are subject to amendment, extension or other modification as of

the date hereof and each is binding and enforceable in accordance with its

terms and is in full force or effect without any default thereunder by Parent

or, by any other party thereto.

 

                7.17         Transactions with Interested Persons.  Except as set forth in Parent’s reports

filed with the SEC, no officer, director or 5% shareholder of Parent, nor their

spouse or children, owns, directly or indirectly, on an individual or joint

basis, any material interest in, or serves as an officer or director or in

another similar capacity of, any customer, competitor or supplier of Parent’s

business, or any organization which has a material contract or arrangement with

Parent’s business. Except as set forth in Parent’s reports filed with the SEC, there

are no material agreements or arrangements not contained herein, or disclosed

in any Schedule hereto, to which any individual serving as director or officer

or 5% shareholder of Parent, is a party relating to Parent’s business.

 

                7.18         Completeness.  The representations, warranties and

statements contained in this Agreement and in the certificates, exhibits and

schedules delivered by Newco to Seller pursuant to this Agreement, when taken

together, do not and shall not contain any untrue statement of a material fact,

and do not and shall not omit to state a material fact required to be stated

therein or necessary in order to make such representations, warranties or

statements not misleading in light of the circumstances in which they were

made.

 

SECTION 8.         CONDITIONS TO CLOSING

 

8.1           Conditions to

Closing - Seller’s Obligation.  The

obligation of Seller to consummate the transactions contemplated by this

Agreement is subject to satisfaction of the following contingencies on or

before the Closing Date:

 

(a)                                  Representations

and Warranties True; Performance of Obligations.  The representations and warranties made by Parent and Newco in

Section 7 shall be true and correct in all material respects on and as of the

Closing Date with the same force and effect as if they had been made as of such

Closing Date, and Parent and Newco shall have performed all obligations and

conditions herein required to be performed or observed by them on or prior to

such Closing including delivering all of the documents specified in Section

4.2(a).

 

(b)                                 Legal Issuance.  On the Closing Date, the sale and issuance

of the Series D Stock, and the proposed issuance of the Conversion Shares,

shall be legally permitted by all laws and regulations to which Parent is

subject except that 

 

29

 

the Conversion Shares shall not have been duly authorized and reserved

for issuance upon such conversion until the Share Increase Event.

 

(c)                                  Consents,

Permits, and Waivers.  Parent and

Newco shall have obtained any and all consents, permits and waivers necessary

or appropriate for consummation of the transactions contemplated by the

Agreement including approvals and consents from government agencies necessary

to consummate the transactions hereunder

 

(d)                                 Filing of

Certificate and Amendments to Bylaws.  Parent shall have filed with the Secretary of State of the State

of Minnesota the Certificate of Designation and amended its Bylaws accordingly,

if necessary.

 

(e)                                  Parent/Newco

Schedule of Exceptions and Remaining Exhibits. Parent and Newco shall have

delivered to Seller and Majority Shareholder the Schedules required to be

delivered by them hereunder and Exhibits, each of which shall be in form and

substance reasonably satisfactory to Seller and Majority Shareholder.

 

(f)                                    Due Diligence Satisfaction. 

Seller and Majority Shareholder shall have completed to their

satisfaction their due diligence review of Parent and Newco and their

businesses.

 

(g)                                 Consent of Seller’s Shareholders. 

Seller shall have obtained the required 

consent by its shareholders authorizing the transactions contemplated by

this Agreement including providing its shareholders with notice of dissenter’s

rights under Section 302A.471 of the Minnesota Business Corporation Act.

 

8.2           Parent and

Newco’s Obligation.  The obligation

of Parent and Newco to consummate the transactions contemplated by this

Agreement is subject to satisfaction of the following contingencies on or

before the Closing Date:

 

(a)                                  Representations

and Warranties True; Performance of Obligations.  The representations and warranties made by Seller and Majority

Shareholder in Sections 5 and 6 shall be true and correct in all material

respects on and as of the Closing Date with the same force and effect as if

they had been made as of such Closing Date, and Seller and Majority Shareholder

shall have performed all obligations and conditions herein required to be

performed or observed by it on or prior to such Closing including delivering

all of the documents specified in Section 4.2(b).

 

(b)                                 Filing of

Certificate.  The

Certificate of Designation shall have been filed with the Secretary of State of

the State of Minnesota.

 

(c)                                  Actions or

Proceedings.  No action

or proceeding by any Person shall have been instituted or threatened which (a)

might have a material adverse effect on Seller,  the Business or the Assets, or (b) could enjoin, restrain or

prohibit, or could result in substantial damages in respect of, any provision

of this Agreement, or the consummation of the transactions contemplated hereby

or any integration of any part of the Business with those of Newco.

 

30

 

(d)                                 Consents,

Permits, and Waivers.  Parent and

Newco shall have obtained any and all consents, permits and waivers necessary

or appropriate for consummation of the transactions contemplated by the

Agreement including approvals and consents from government agencies necessary

to consummate the transactions hereunder.

 

(e)                                  Auditable

Financial Statements.  Parent’s

and Newco’s independent auditors shall have determined that the Financial

Statements can be audited to comply with Form 8-K and any other applicable SEC

reporting requirements.

 

(f)                                    Due Diligence.  Newco and Parent have completed to their

satisfaction their due diligence review of Seller and its business, finances

and prospects.

 

(g)                                 Proceedings and

Documents.  All

corporate and other proceedings in connection with the transactions

contemplated at the Closing hereby and all documents and instruments incident

to such transactions or required to be delivered hereunder shall be reasonably

satisfactory in substance and form to Parent and Newco and their counsel, and

Parent and Newco and their counsel shall have received all such counterpart

originals or certified or other copies of such documents as they may reasonably

request.

 

(h)                                 No Material

Adverse Change.  No

material adverse change shall have occurred and be continuing and no event

shall have occurred which in the reasonable judgment of Parent and Newco may

have a material adverse effect on the business operations, conditions

(financial or otherwise) or prospects of the Business since the date of the

Balance Sheet.

 

(i)                                     Schedules.  Seller and Majority Shareholder shall have

delivered to Parent and Newco the Schedules required to be delivered by them

hereunder and Exhibits, each of which shall be in form and substance reasonably

satisfactory to Parent and Newco.

 

8.3           Operations Pending Closing.  Until Closing or termination of this

Agreement as provided below, Seller shall continue to operate the Business in

the ordinary course of business and in a manner consistent with the Business’s

operations prior to execution of this Agreement.  In addition, until Closing or termination of this Agreement as

provided below, Seller and Majority Shareholder agree not to solicit, negotiate

with or provide any information to any person, firm or entity other than Parent

and Newco and their employees, accountants, attorneys and representatives

regarding any acquisition of the Assets of the Business or capital stock of

Seller or any merger or other business combination involving Seller or its

Assets or capital stock.

 

8.4           Termination of

Agreement.  This Agreement may be

terminated at any time prior to or on the Closing Date by either party upon

written notice to the other party as follows:

 

(a)                                  By Parent and Newco, if (i) any material term, condition or

covenant of this Agreement to be complied with by Seller and Majority

Shareholder shall not have been complied with or performed and such

noncompliance or nonperformance shall not have been waived by Parent and Newco;

(ii) a material adverse change occurs in Seller’s Business, Assets, financial

condition or 

 

31

 

actual or anticipated results of operations or any substantial part of

the Assets are destroyed by fire or other casualty; (iii) if there is a fact or

condition with respect to Seller’s Business, the Assets, properties, financial

condition or actual or anticipated results of operations of Seller which

materially or adversely affects the Business or Assets or the value or

continuance of the Business; or (iv) any of the contingencies set forth in

Section 8.2 shall not have been satisfied or fulfilled (unless waived in

writing) including Parent and Newco, in their sole discretion, not being

satisfied with their due diligence review pursuant to Section 8.2(f)

 

(b)                                 By Seller and Majority Shareholder, if (i) any material term, condition or

covenant of this Agreement to be complied with by Parent and Newco shall not

have been complied with or performed and such noncompliance or nonperformance

shall not have been waived by Seller, or (ii) any of the contingencies set

forth in Section 8.1 shall not have been satisfied or fulfilled (unless waived

in writing) including Seller and Majority Shareholder, in their sole

discretion, not being satisfied with their due diligence review pursuant to

Section 8.1(f)

 

SECTION 9          POST-CLOSING OBLIGATIONS

 

                9.1           Proxy Statement and Shareholder

Meeting.  Parent hereby covenants (a)

to file a  Proxy Statement with the SEC

as soon as practicable following the Closing for the purpose of holding a

meeting of Parent’s shareholders to authorize an amendment to the Articles of

Incorporation of Parent increasing the number of shares of capital stock

(namely, Parent Common Stock) Parent is authorized to issue in a minimum amount

equal to the Conversion Shares, (b) to hold such shareholders’ meeting as soon

as practicable following the filing of the Proxy Statement with, and the

approval thereof by, the SEC, and (c) file with the Minnesota Secretary of

State an Amendment to the Articles of Incorporation effectuating the approved

amendments.

 

                9.2           Current Reports under Securities

Exchange Act of 1934.  Seller hereby

acknowledges and agrees that Parent is required to file with the SEC, and

Parent hereby agrees to file with the SEC, (a) within 15 calendar days of the

Closing Date, a current report on Form 8-K disclosing the transaction

contemplated hereby filing the Agreement as required by Form 8-K, and (b)

within 75 calendar days of the Closing Date, an amendment to such Form 8-K to

file audited financial statements and pro forma financial statements of Seller

as required by Form 8-K.

 

SECTION 10.       INDEMNIFICATION

 

                10.1         Materiality;  Survival.  All representations, warranties, agreements, covenants and

obligations herein or in any schedule, certificate or financial statement

delivered by any party incident to the transactions contemplated hereby are

material, shall be deemed to have been relied upon by the parties and shall

survive the Closing hereof for a period of two (2) years.   If written notice of a specific claim has

been given pursuant to this Section 10 on or prior to the second anniversary of

the Closing, then the relevant representation, warranty or covenant shall

survive as to such claim until the claim has been finally resolved.

 

10.2                           Indemnification

by Seller.

 

(a)                                  Seller and Majority Shareholder, jointly

but not severally, agree to defend, indemnify and hold Parent and Newco and

their respective subsidiaries and affiliates and the persons serving as

officers, directors, partners, employees or agents thereof harmless from and

against any claims, damages, liabilities, losses, fines, penalties, costs, and

expenses (including, without limitation, reasonable counsel fees and expenses

as the same are incurred;  together 

 

32

 

referred to as “Losses”) of any kind or nature whatsoever which may be

sustained or suffered by any of them arising out of, based upon or in

connection with any of the following matters:

 

(i)                                     A breach of any

representation, warranty, agreement, covenant or obligation made by Seller or

Majority Shareholder in this Agreement or in any Schedule, Exhibit, certificate

or financial statement delivered hereunder or in connection herewith or by

reason of any claim, action or proceeding asserted or instituted growing out of

any matter or thing constituting a breach of such representations, warranties

or covenants; or

 

(ii)                                  Fraud in connection

with the making by Seller or Majority Shareholder of any representation,

warranty, covenant or obligation or an intentional misrepresentation by Seller

or Majority Shareholder of any representation, warranty, covenant or

obligation.

 

(b)                                 Parent and/or Newco shall give prompt

written notice to Seller and the Escrow Agent of any claim, liability or

expense to which the indemnification obligations hereunder would apply.  Such notice shall state the information then

available regarding the amount of such claim, liability or expense and shall

specify the provision or provisions of this Agreement under which the claim,

liability or expense is asserted.  The

failure to promptly notify Seller and the Escrow Agent as provided above shall

not relieve Seller of any liability hereunder except to the extent that the

rights of Seller have been materially and adversely prejudiced as a result of

the failure to give, or the delay in giving, such notice.

 

(c)                                  If such indemnification claim, liability

or expense is the subject of litigation, Seller shall have the right to

participate at its own expense in the defense of any such litigation, or if in

the opinion of Parent and/or Newco, the financial condition or business of the

Business would not be impaired thereby, Parent and/or Newco may authorize

Seller, if it so desires, to take over the defense of such litigation so long

as such defense is expeditious and is undertaken by counsel reasonably

acceptable to Parent and/or Newco. 

Otherwise, Parent and/or Newco will control the defense of such claim.

 

(d)                                 Upon resolution of the indemnification

claim, whether by final judicial decision after all periods for appeal have

lapsed, settlement, arbitration decision or otherwise, Parent and/or Newco

shall give Seller written notice of the Losses incurred by Parent and/or Newco

with respect to the claim (the “Final Notice”).  Thereafter, Seller shall have 30 days to give Parent and/or Newco

written notice that it intends to dispute the amount of the claimed

Losses.  Within 30 days after receipt of

said written notice, Parent and/or Newco shall attempt to settle the dispute

with Seller.  If the parties do not

reach settlement of Parent’s and/or Newco’s claim within such 30 days, the

dispute may at any time thereafter be submitted by either party to arbitration

in Minneapolis, Minnesota, before three arbitrators, one of which is selected

by Seller, one of which is selected by Parent and/or Newco and the third of

which is selected by the first two arbitrators.  The arbitration shall be conducted by the American Arbitration

Association in accordance with the rules and procedures of the American

Arbitration Association then in effect. 

The parties agree that the arbitrators’ award (which shall be agreed to

unanimously by the arbitrators) shall be final and binding upon them with

respect to the dispute and may be entered in any court having jurisdiction

thereof.  All costs of the arbitration

(including the reasonable legal expenses of all parties thereto) shall be borne

by the parties in the amounts determined by the arbitrators, which shall base

such determination upon the relative merits of the respective positions of the

parties in the dispute.  The judgment

upon the award may be entered in any court having jurisdiction thereof.  Following the resolution of such dispute by

the arbitrators, Parent and/or Newco shall submit a copy of the arbitrators’

award or decision to the Escrow Agent, which shall be entitled to rely upon

such copy.

 

33

 

(e)                                  Any claims as determined above in favor

of Parent and/or Newco shall be resolved by cancellation of Escrowed Shares. If

the Final Notice is given and is not disputed by Seller, or if an arbitrators’

award on Parent’s and/or Newco’s claim is granted, then the shares to be

canceled shall be valued (as if converted into Parent Common Stock) at the

average of the high closing bid prices per share for the Parent Common Stock as

reported by the OTC Bulletin Board (or such other exchange on which the Parent

Common Stock may be listed) for the ten (10) trading days ending on the trading

day immediately prior to the date of the Final Notice (if not disputed by

Seller) or arbitrators’ award (if disputed by Seller), as the case may be.

 

(f)                                    Despite the above provisions of this

subsection, Seller and Majority Shareholder may resolve any claim by paying

cash to Parent and/or Newco.  In such

case, the shares of stock that otherwise would have been released from escrow

to Parent and/or Newco for cancellation shall instead be released to Seller,

and Parent and/or Newco shall join with Seller in so instructing the Escrow

Agent.

 

(g)                                 Notwithstanding anything to contrary in

this Agreement, no Escrowed Shares shall be released by the Escrow Agent so

long as Escrow Agent has received notice of an indemnifiable claim which has

not been resolved pursuant to this Section 10.2.

 

(h)                                 The aggregate liability of Seller or

Majority Shareholder pursuant to Section 10.2 shall be limited to the value of

Escrowed Shares pursuant to the terms and conditions of the Escrow Agreement.

 

                10.3         Indemnification by Parent and/or

Newco.  Parent and Newco agree,

jointly and severally, to defend, indemnify and hold Seller and its respective

subsidiaries and affiliates and the persons serving as officers, directors,

partners, employees or agents thereof harmless from and against any Losses of

any kind or nature whatsoever which may be sustained or suffered by any of them

arising out of, based upon or in connection with any of the following matters:

 

(i)                                     A breach of any representation, warranty,

agreement, covenant or obligation made by Parent and/or Newco in this Agreement

or in any Schedule, Exhibit, certificate or financial statement delivered

hereunder or in connection herewith or by reason of any claim, action or

proceeding asserted or instituted growing out of any matter or thing

constituting a breach of such representations, warranties or covenants;

 

(ii)                                  Fraud in connection with the making by

Parent and/or Newco of any representation, warranty, covenant or obligation or

an intentional misrepresentation by Parent and/or Newco of any representation,

warranty, covenant or obligation; or

 

        The

parties shall follow the same procedures set forth in Section 10.2 for any

claim of indemnification asserted by Seller except that references to Escrow

Agent, Escrow Shares and Escrow Agreement shall not apply.  Parent agrees to issue up to 1,000,000 of

Parent Common Stock for any indemnifiable claims of Seller or Majority Shareholder

arising under Section 10.3. The aggregate liability of Parent pursuant to

Section 10.3 shall be limited to such 1,000,000 shares which shall be valued in

the same manner as the Escrowed Shares will be valued pursuant to the terms and

conditions of the Escrow Agreement.

 

34

 

SECTION 11.       MISCELLANEOUS

 

                11.1         Fees and Expenses.  Except as otherwise provided herein, each of

the parties to this Agreement will bear its own expenses in connection with the

negotiation and consummation of the transactions contemplated by this

Agreement.  All sales and transfer

taxes, fees and duties under applicable law (including all stock transfer

taxes, fees and duties, if any) incurred in connection with this Agreement or the

transactions contemplated thereby will be borne and paid by Seller.

 

                11.2         Confidentiality.  Seller and Shareholder acknowledge that

Parent is a publicly traded company and agree that they will treat the

existence and terms of this Agreement and the transactions contemplated hereby

as strictly confidential and will not disclose them to any Person without the

prior written consent of Parent or unless Parent publicly discloses such

information.

 

                11.3         Law Governing.  This Agreement shall be governed by and

construed in accordance with the laws of the State of Minnesota without

reference to the choice of law provisions thereof.  The parties hereby irrevocably and unconditionally consent to the

exclusive jurisdiction of the courts of the State of Minnesota and of the

United States of America located in the State of Minnesota in connection with

any suit, action or proceeding relating to this Agreement and the transactions

contemplated hereby (without, however, derogating from the exclusivity of the

arbitration procedures set forth in Section 10.2(f) hereof) and agree not to

commence any action, suit or proceeding relating thereto except in such courts.

 

                11.4         Notices.  All notices, requests, demands and other

communications hereunder shall be deemed to have been duly given on the date

delivered if delivered by hand, three days after being sent by certified or

registered mail (postage prepaid and with return receipt requested), on the

date delivered if by overnight courier service, on the date delivered if by

telecopy or other written form of electronic confirmation:

 

	

  To:

  	

   

  	

  Parent:

  	

   

  	

  Paul Crawford, Chief

  Executive Officer

  
	

   

  	

   

  	

   

  	

   

  	

  7 Main Street S.E.

  
	

   

  	

   

  	

   

  	

   

  	

  Minneapolis,

  Minnesota  55414

  
	

   

  	

   

  	

   

  	

   

  	

  (612) 362-8464 (fax)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  With a copy to:

  	

   

  	

  Jeffrey C. Robbins, Esq.

  
	

   

  	

   

  	

   

  	

   

  	

  Messerli & Kramer P.A.

  
	

   

  	

   

  	

   

  	

   

  	

  150 South Fifth Street,

  Suite 1100

  
	

   

  	

   

  	

   

  	

   

  	

  Minneapolis,

  Minnesota  55402

  
	

   

  	

   

  	

   

  	

   

  	

  (612) 672-3777 (fax)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  To:

  	

   

  	

  Newco:

  	

   

  	

  Paul Crawford, Chief

  Executive Officer

  
	

   

  	

   

  	

   

  	

   

  	

  7 Main Street S.E.

  
	

   

  	

   

  	

   

  	

   

  	

  Minneapolis,

  Minnesota  55414

  
	

   

  	

   

  	

   

  	

   

  	

  (612) 362-8464 (fax)

  

 

35

 

	

  With a copy to:

  	

   

  	

  Jeffrey C. Robbins, Esq.

  
	

   

  	

   

  	

   

  	

   

  	

  Messerli & Kramer P.A.

  
	

   

  	

   

  	

   

  	

   

  	

  150 South Fifth Street,

  Suite 1100

  
	

   

  	

   

  	

   

  	

   

  	

  Minneapolis,

  Minnesota  55402

  
	

   

  	

   

  	

   

  	

   

  	

  (612) 672-3777 (fax)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  To:

  	

   

  	

  Seller:

  	

   

  	

  Michael Hopkins, Chief

  Executive Officer

  
	

   

  	

   

  	

   

  	

   

  	

  11633 Jefferson Highway

  
	

   

  	

   

  	

   

  	

   

  	

  Osseo, Minnesota 55369

  
	

   

  	

   

  	

   

  	

   

  	

  (763) 315-3588 (fax)

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  With a copy to:

  	

   

  	

  Susan M. Hermann, Esq.

  
	

   

  	

   

  	

   

  	

   

  	

  Pedersen & Houpt

  
	

   

  	

   

  	

   

  	

   

  	

  161 North Clark Street

  
	

   

  	

   

  	

   

  	

   

  	

  Suite 3100

  
	

   

  	

   

  	

   

  	

   

  	

  Chicago, Illinois  60601

  
	

   

  	

   

  	

   

  	

   

  	

  (312) 261-1209 (fax)

  

 

or to such other address of which any party may notify the other

parties as provided above.  Notices are

effective upon receipt or, if mailed, five (5) business days after the placing

thereof in the United States mail in the manner provided above.

 

                11.5         Entire Agreement.  This Agreement, including the Schedules and

Exhibits referred to herein, constitutes the entire agreement between the

parties with respect to its subject matters and supersedes all previous written

or oral negotiations, commitments and writings;  no promises, representations, understandings, warranties and

agreements have been made by any of the parties hereto except as referred to

herein or in such Schedules and Exhibits or in such other writings; and all

inducements to the making of this Agreement relied upon by all the parties

hereto have been expressed herein or in said Schedules or Exhibits  or in such other writings.

 

                11.6         Assignability. This Agreement

shall be binding upon, and shall be enforceable by and inure to the benefit of,

the parties named herein and their respective successors and permitted assigns;

provided, however, that (a) an assignment of this Agreement may be made by

Parent or Newco to an affiliate of Parent or Newco upon written notice to

Seller and Majority Shareholder, although no such assignment shall relieve

Parent or Newco of any liabilities or obligations under this Agreement and (b)

this Agreement may not be assigned by Seller or Majority Shareholder without

the prior written consent of Parent and Newco.

 

                11.7         Waivers;  Severability.  The

failure of any of the parties to this Agreement to require the performance of a

term or obligation under this Agreement or the waiver by any of the parties to

this Agreement of any breach hereunder shall not prevent subsequent enforcement

of such term or obligation or be deemed a waiver of any subsequent breach

hereunder.  If any one or more of the

provisions of this Agreement are held to be invalid, illegal or unenforceable,

the validity, legality or enforceability of the remaining provisions of this

Agreement will not be affected thereby, and the parties will use all reasonable

efforts to substitute for such invalid, illegal or unenforceable provisions one

or more valid, legal and enforceable provisions which, insofar as practicable, implement

the purposes and intents hereof.  To the

extent permitted by applicable law, each party waives any provision of law

which renders any provision of this Agreement invalid, illegal or unenforceable

in any respect.

 

36

 

                11.8         Counterparts.  This Agreement may be executed in any number

of counterparts, each of which shall be deemed an original and all of which

shall constitute one and the same agreement.

 

                11.9         Amendments.  This Agreement may not be amended or

modified, nor may compliance with any condition or covenant set forth herein be

waived, except by a writing duly and validly executed by each party hereto, or

in the case of a waiver, the party waiving compliance.

 

 

[SIGNATURE

PAGES TO FOLLOW INTENTIONALLY]

 

37

 

IN WITNESS WHEREOF, the undersigned have hereto affixed their

signatures.

 

 

	

   

  	

  IQUNIVERSE, INC.,

  
	

   

  	

  a Minnesota corporation

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Paul Crawford

  
	

   

  	

   

  	

  Paul Crawford, Chief

  Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  IQUNIVERSE ACQUISITION,

  CORP.,

  
	

   

  	

  a Minnesota corporation

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Paul Crawford

  
	

   

  	

   

  	

  Paul Crawford, Chief

  Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  WIRELESS RONIN

  TECHNOLOGIES, INC.,

  
	

   

  	

  a Minnesota corporation

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Michael Hopkins

  
	

   

  	

   

  	

  Michael Hopkins, Chief

  Executive Officer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  MAJORITY SHAREHOLDER:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  /s/ John Behr

  
	

   

  	

   

  	

  John Behr

  

 

38

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