Document:

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EXHIBIT 10.2

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                          PURCHASE AND OPTION AGREEMENT
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                            FIELDWORKS, INCORPORATED
                             FWRKS ACQUISITION CORP.

                                  June 29, 2000
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                                TABLE OF CONTENTS

                                                                            Page

1.  Acquisition of Securities................................................-1-
    1.1    Sale and Issuance of Notes and Warrant............................-1-
    1.2    Acquisition of First Option.......................................-1-
    1.3    Acquisition of Second Option......................................-2-

2.  Representations and Warranties of the Company............................-2-
    2.1    Organization, Qualification, Authorization and Enforcement........-2-
    2.2    Capitalization and Voting Rights..................................-3-
    2.3    Valid Issuance, Grant and Reservation.............................-4-
    2.4    SEC Documents.....................................................-4-
    2.5    Absence of Undisclosed Liabilities................................-4-
    2.6    Absence of Certain Developments...................................-5-
    2.7    Governmental Consents.............................................-6-
    2.8    Litigation........................................................-6-
    2.9    Patents and Trademarks............................................-6-
    2.10   Compliance with Other Instruments.................................-7-
    2.11   Agreements........................................................-8-
    2.12   Title to Property and Assets......................................-8-
    2.13   Labor Agreements and Actions; Employee Benefits...................-8-
    2.14   Insurance.........................................................-9-
    2.15   Tax Matters.......................................................-9-
    2.16   Regulations G, T and X............................................-9-
    2.17   No Default; Compliance with Applicable Laws......................-10-
    2.18   Seniority........................................................-11-
    2.19    Takeover Statutes...............................................-11-
    2.20   Private Offering.................................................-11-
    2.21   Warranties.......................................................-11-
    2.22   No Misrepresentations............................................-12-

3.  Representations and Warranties of the Purchaser.........................-12-
    3.1    Authorization....................................................-12-
    3.2    Purchase for Investment..........................................-12-
    3.3    Purchaser's Investment Decision..................................-12-

4.  Deliveries by the Company...............................................-12-
    4.1    Secretary's Certificate..........................................-12-
    4.2    Opinion of Company Counsel.......................................-13-
    4.3    Consents and Waivers.............................................-13-
    4.4    Note Certificate.................................................-13-
    4.5    Warrant Certificate..............................................-13-
    4.6    Registration Rights Agreement....................................-13-

5.  Deliveries by the Purchaser.............................................-13-
    5.1    Note and Warrant Purchase Price..................................-13-
    5.2    Registration Rights Agreement....................................-13-

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6.  Affirmative Covenants of the Company....................................-13-
    6.1    Reservation of Securities........................................-13-
    6.2    Rank of Notes. ..................................................-14-
    6.3    Transfer Pursuant to Rule 144A...................................-14-
    6.4    Inspection.......................................................-14-
    6.5    Further Assurances...............................................-14-
    6.6    Board Observer...................................................-14-
    6.7    Conduct of Business..............................................-15-
    6.8    Right of First Refusal...........................................-15-

7.  Negative Covenants of the Company.......................................-15-

8.  Additional Covenants of the Company.....................................-17-
    8.1    Pre-Emptive Rights...............................................-17-
    8.2    Special Meeting of Shareholders..................................-17-
    8.3    Repayment of Notes and Loans; Reimbursement of Expenses..........-17-
    8.4    Directors........................................................-18-

9.  Covenant of IWHC........................................................-18-

10. Covenants of the Purchaser..............................................-18-
    10.1   Exercise of Warrant..............................................-18-
    10.2   Working Capital Loans of Purchaser...............................-19-

11. Exercise Date Deliveries by the Company to the Purchaser................-19-
    11.1   Secretary's Certificate..........................................-19-
    11.2   President's Certificate..........................................-19-
    11.3   Good Standing Certificate........................................-19-
    11.4   Opinion of Company Counsel.......................................-19-

12. Conditions Precedent to Effectiveness of Exercise.......................-19-

13. Closing.................................................................-20-

14. Closing Deliveries by the Company to the Purchaser......................-20-
    14.1   Secretary's Certificate..........................................-20-
    14.2   President's Certificate..........................................-21-
    14.3   Good Standing Certificate........................................-21-
    14.4   Certificates.....................................................-21-
    14.5   Consents and Waivers.............................................-21-
    14.6   Charter Amendment................................................-22-
    14.7   Resignations.....................................................-22-
    14.8   Other Instruments................................................-22-

15. Closing Deliveries by the Company to IWHC...............................-22-

16. Closing Deliveries by IWHC..............................................-22-

17. Closing Deliveries by the Purchaser.....................................-22-

18. Conditions Precedent to Closing Date Obligations........................-23-

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    18.1   Conditions to Obligations of the Purchaser.......................-23-
    18.2   Conditions to Obligations of the Company.........................-23-

19. Indemnity...............................................................-24-

20. Termination.............................................................-25-

21. Definitions.............................................................-26-

22. Miscellaneous...........................................................-32-
    22.1   Additional Agreements; Cooperation...............................-32-
    22.2   Survival of Representations, Warranties and Covenants............-32-
    22.3   Successors and Assigns...........................................-32-
    22.4   Governing Law; Jurisdiction......................................-33-
    22.5   Counterparts.....................................................-33-
    22.6   Titles and Subtitles.............................................-33-
    22.7   Notices..........................................................-33-
    22.8   Finder's Fee.....................................................-34-
    22.9   Entire Agreement; Amendments and Waivers.........................-34-
    22.10  Severability.....................................................-34-
    22.11  Specific Performance.............................................-34-
    22.12  Expenses and Taxes...............................................-34-
    22.13  Waiver of Trial By Jury..........................................-35-
    22.14  Independence of Covenants........................................-35-
    22.15  IWHC Waiver of Preemptive Rights.................................-35-

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                          PURCHASE AND OPTION AGREEMENT
                          -----------------------------

         THIS PURCHASE AND OPTION AGREEMENT (the "Agreement") is made this 29th
day of June, 2000, by and between FieldWorks, Incorporated, a Minnesota
corporation (the "Company"), and FWRKS Acquisition Corp., a Delaware corporation
(the "Purchaser"), which is a wholly-owned subsidiary of Kontron Embedded
Computers AG, a German corporation. Certain capitalized terms used herein are
defined in Section 21 hereof.

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, the Purchaser desires to purchase and to acquire the right to
purchase certain securities of the Company and the Company is willing to sell
and to grant or issue the right to acquire such securities, upon the terms and
subject to the conditions set forth in this Agreement;

         NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:

         1.       Acquisition of Securities.

                  1.1 Sale and Issuance of Notes and Warrant. The Company hereby
         issues and sells, and the Purchaser hereby purchases and acquires, the
         Notes and Warrant. Concurrently herewith, the Company is delivering to
         the Purchaser the Notes and the Warrant against wire transfer of the
         Note and Warrant Purchase Price to an account heretofore designated by
         the Company.

                  1.2 Acquisition of First Option. The Company hereby grants to
         the Purchaser, and the Purchaser hereby acquires from the Company, the
         First Option, which shall expire at 5:00 P.M., Central Time, on August
         15, 2000. The aggregate number and kind of shares subject to the First
         Option and the exercise price of the First Option shall be subject to
         adjustment as provided in Exhibit A hereto. The First Option may be
         exercised by the Purchaser at any time prior to its expiration by
         delivery to the Company of notice to such effect, which notice (i)
         shall set forth the Exercise Date, and (ii) shall be irrevocable and
         shall constitute the Purchaser's agreement, subject only to the
         conditions herein provided, to

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         purchase the First Option Shares on the Closing Date. If the Purchaser
         does not exercise the First Option prior to its expiration, then the
         First Option shall be null and void and of no further force and effect.

                  1.3 Acquisition of Second Option. Concurrently herewith, the
         Purchaser and IWHC are executing and delivering the Second Option
         Agreement pursuant to which IWHC is acquiring the Second Option.

         2. Representations and Warranties of the Company. For the purposes of
this Section 2, references to the "Company" shall be deemed references to the
Company and the Subsidiaries, unless such a reference would be inappropriate in
the context in which it is made. The Company hereby represents and warrants to
the Purchaser that, except for the exceptions set forth in Exhibit B (the
"Schedule of Exceptions") attached hereto and furnished to the Purchaser (which
exceptions shall be deemed to be representations and warranties as if made
hereunder):

                  2.1 Organization, Qualification, Authorization and
         Enforcement.

                           (a) The Company is a corporation duly organized,
                  validly existing and in good standing under the laws of the
                  State of Minnesota and has all requisite corporate power and
                  authority to own and use its properties and to carry on its
                  business as currently conducted and as proposed to be
                  conducted. The Company has no Subsidiaries other than those
                  that are identified in Section 2.1 of the Schedule of
                  Exceptions. Each of the Subsidiaries is a corporation, duly
                  incorporated, validly existing and in good standing under the
                  laws of the jurisdiction of its incorporation, with all
                  requisite corporate power and authority to own and use its
                  properties and assets and to carry on its business as
                  currently conducted and as proposed to be conducted. Each of
                  the Company and the Subsidiaries is duly qualified to transact
                  business as a foreign corporation in each jurisdiction in
                  which it is required to so qualify, except for such
                  jurisdictions where the failure to so qualify would not have a
                  Material Adverse Effect. True and correct copies of the
                  Company's Charter and Bylaws, each as amended through the date
                  hereof, have been provided by the Company to the Purchaser.

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                           (b) The Company has all requisite legal and corporate
                  power and authority to enter into and to consummate the
                  transactions contemplated hereby (including without
                  limitation, the issuance and sale of the Notes and Warrant,
                  the grant of the First Option and the issuance of the Reserved
                  Shares) and by the Registration Rights Agreement and otherwise
                  to carry out its obligations hereunder and thereunder. The
                  execution and delivery of the Transaction Documents by the
                  Company and the consummation by it of the transactions
                  contemplated thereby have been duly authorized by all
                  necessary action on the part of the Company. Each of the
                  Transaction Documents has been duly executed and delivered by
                  the Company and constitutes the legal, valid and binding
                  obligation of the Company, enforceable against the Company in
                  accordance with its respective terms, except as such
                  enforceability may be limited by applicable bankruptcy,
                  insolvency, reorganization, moratorium, liquidation or similar
                  laws relating to, or affecting generally the enforcement of,
                  creditors' rights and remedies or by other equitable
                  principles of general application.

                  2.2 Capitalization and Voting Rights. The authorized capital
         of the Company consists of:

                           (a) 5,000,000 shares of Preferred Stock, 4,250,000 of
                  which have been designated as Series B Preferred Stock and
                  500,000 of which have been designated as Series C Preferred
                  Stock and all of which Series B Preferred Stock and Series C
                  Preferred Stock are issued and outstanding on the date hereof.
                  No shares of any other series of Preferred Stock are
                  outstanding. The designation, powers, preferences and rights
                  and the qualifications, limitations and restrictions of the
                  Series B Preferred Stock and the Series C Preferred Stock are
                  as stated in the Charter.

                           (b) 30,000,000 shares of Common Stock, of which
                  8,894,426 shares are issued and outstanding on the date
                  hereof.

         Except as set forth in Section 2.2 of the Schedule of Exceptions and
         for the right to acquire securities pursuant to the Warrant and the
         First Option, there are no outstanding options, warrants, rights
         (including conversion, exchange or preemptive rights) or agreements for
         the purchase or acquisition from or sale or disposition by the Company
         of any shares of its capital stock. The Company is not a party or
         subject to any agreement, arrangement or

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         understanding, and, to the Company's Knowledge, except as set forth in
         Section 2.2 of the Schedule of Exceptions, there is no agreement,
         arrangement or understanding between Persons other than the Company,
         that affects or relates to the voting or giving of written consents
         with respect to any security or by any director of the Company. Except
         as set forth in Section 2.2 of the Schedule of Exceptions: (i) the
         Company has no obligation to purchase, redeem or otherwise acquire any
         of its securities or to make any distribution, in cash, securities or
         otherwise, in respect thereof; and (ii) there are no voting trusts or
         agreements, shareholders agreements, rights of first refusal,
         preemptive rights or proxies relating to securities of the Company.

                  2.3 Valid Issuance, Grant and Reservation. The issuance, sale
         and delivery of the Notes and the Warrant, the grant of the First
         Option and the reservation for issuance of the Reserved Shares have
         been duly authorized by all required corporate action on the part of
         the Company and, when issued, sold, and delivered in accordance with
         the terms hereof for the consideration expressed herein, the Notes and
         the Warrant will be duly and validly issued. The Reserved Shares have
         been duly and validly reserved for issuance and, upon issuance in
         accordance with the terms of the Warrant, the First Option and the
         Second Option, shall be duly and validly issued, fully paid and
         non-assessable. The Notes, Warrant and First Option issued or granted
         hereunder are, and the Reserved Shares when issued will be, free and
         clear of any Encumbrances other than those created by, or imposed upon,
         the holders thereof through no action of the Company. The issuance of
         the Notes, the Warrant and the First Option is, and the Reserved Shares
         will be, free of preemptive or any other similar rights.

                  2.4 SEC Documents. The Company has furnished the Purchaser
         with true and complete copies of all SEC Documents. The Company has
         filed all SEC Documents on a timely basis, or has received a valid
         extension of the time for such filing. As of their respective dates,
         the SEC Documents complied in all material respects with the
         requirements of the Securities Act and the Exchange Act and the rules
         and regulations of the Commission promulgated thereunder, and none of
         the SEC Documents, when filed, contained any untrue statement of a
         material fact or omitted to state a material fact required to be stated
         therein or necessary in order to make the statements therein, in light
         of the circumstances under which they were made, not misleading. The
         financial

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         statements of the Company included in the SEC Documents comply as to
         form in all material respects with applicable accounting requirements
         and the published rules and regulations of the Commission with respect
         thereto. Such financial statements have been prepared in accordance
         with GAAP applied on a consistent basis during the periods involved,
         except as may be otherwise indicated in such financial statements or
         the notes thereto, and fairly present in all material respects the
         financial position of the Company and its consolidated subsidiaries as
         of and for the dates thereof and the results of operations and cash
         flows for the periods then ended, subject, in the case of unaudited
         statements, to normal, recurring year-end audit adjustments.

                  2.5 Absence of Undisclosed Liabilities. The Company has no
         debt, obligation or liability (whether accrued, absolute, contingent,
         liquidated or otherwise, whether due or to become due, whether or not
         known to the Company) arising out of any transaction entered into at or
         prior to the date hereof, or any act or omission at or prior to the
         date hereof, or any state of facts existing at or prior to the date
         hereof, including taxes with respect to or based upon the transactions
         or events occurring at or prior to the date hereof, and including,
         without limitation, unfunded past service liabilities under any
         pension, profit sharing or similar plan, except liabilities disclosed
         in the Company's Quarterly Report on Form 10-Q for the quarter ended
         April 2, 2000, current liabilities incurred since April 2, 2000, and
         obligations under agreements entered into in the usual and ordinary
         course of business, none of which (individually or in the aggregate)
         could have a Material Adverse Effect.

                  2.6 Absence of Certain Developments. Since January 2, 2000,
         except as disclosed in the SEC Reports or in Section 2.6 of the
         Schedule of Exceptions, there has been no: (a) event, occurrence or
         development with respect to the Company that has had a Material Adverse
         Effect; (b) declaration or payment of any dividend or other
         distribution of the assets of the Company or any direct or indirect
         redemption, purchase or acquisition of any securities of the Company;
         (c) increase in compensation of any of the Company's officers, or the
         rate of pay of the Company's employees as a group, except as part of
         regular compensation increases in the ordinary course of business; (d)
         resignation or termination of employment of any officer or key employee
         of the Company; (e) change in the accounting methods or practices
         followed

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         by the Company; (f) issuance of any stock, bonds, or other securities
         of the Company or options, warrants, or rights or agreements or
         commitments to purchase or issue such securities or grant such options,
         warrants or rights, except for those issuances pursuant to the exercise
         of options, warrants, or convertible securities outstanding at such
         date or as contemplated by the Transaction Documents; (g) damage,
         destruction or loss, whether or not covered by insurance, materially
         and adversely affecting the properties, operation or business of the
         Company; (h) acceleration or prepayment of any Debt of the Company or
         the refunding of any such Debt, (i) waiver by the Company of a valuable
         right or of a material Debt owed to it; (j) loans made by the Company
         to its employees, officers, or directors, other than advances of
         expenses made in the ordinary course of business; (k) labor
         organization activity or organized labor trouble; (l) sale, transfer,
         or lease of any of the Company's assets, except in the ordinary course
         of business or any mortgage or pledge of or lien imposed upon any of
         the Company's assets; (m) notification by a material customer or
         supplier of the Company of its intention to terminate its relationship
         with the Company; or (n) any other material transaction by the Company
         otherwise than for fair value in the ordinary course of business. No
         event that would constitute an Event of Default (as defined in the
         Notes) has occurred, whether or not continuing on the date hereof.

                  2.7 Governmental Consents. Except for (a) the filing of any
         notice subsequent to the date hereof that may be required under Federal
         and/or applicable state securities laws (which, if required, shall be
         filed on a timely basis as may be so required), (b) if required, the
         filings required by the Company and the Purchaser under the HSR Act or
         (c) as listed in Section 2.7 of the Schedule of Exceptions hereto, no
         consent, approval, order or authorization of, or declaration to, or
         filing, registration, qualification or declaration with, any Person
         (governmental or private) is required for the valid authorization,
         execution, delivery and performance by the Company of the Transaction
         Documents or for the valid authorization, issuance, sale, delivery and
         grant of the Notes, the Warrant or the First Option or for the valid
         authorization, reservation, issuance, sale and delivery of the Reserved
         Shares.

                  2.8 Litigation. Except as described in Section 2.8 of the
         Schedule of Exceptions: (a) there is no action, suit, notice of

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         violation, proceeding, or investigation pending or, to the Company's
         Knowledge, currently threatened against the Company that questions the
         validity or enforceability of the Transaction Documents or the right of
         the Company to enter into such agreements or instruments, or to
         consummate the transactions contemplated thereby, or that might result,
         either individually or in the aggregate, in any Material Adverse
         Effect, or any change in the current ownership of securities of the
         Company, including, without limitation, actions pending or threatened
         involving the prior employment of any of the Company's employees, their
         use in connection with the Company's business of any information or
         techniques allegedly proprietary to any of their former employers, or
         their obligations under any agreements with prior employers; (b) the
         Company is not a party or subject to the provisions of any order, writ,
         injunction, judgment, or decree of any court or government agency or
         instrumentality; and (c) there is no action, suit, proceeding or
         investigation by the Company currently pending or that the Company
         presently intends to initiate.

                  2.9 Patents and Trademarks. The Company has sufficient title
         and ownership of all Intellectual Property Rights necessary for its
         business as now conducted without any conflict with or infringement of
         the rights of others. Section 2.9 of the Schedule of Exceptions
         contains a complete list of all Intellectual Property Rights held or
         made by the Company. Except as disclosed in Section 2.9 of the Schedule
         of Exceptions: (a) there are no outstanding options, licenses, or
         agreements of any kind relating to the foregoing, nor is the Company
         bound by or a party to any options, licenses, or material agreements
         with respect to the Intellectual Property Rights of any other Person;
         (b) the Company has not received any communications or claims alleging
         that the Company has violated or, by conducting its business as
         proposed, would violate, any of the Intellectual Property Rights of any
         other Person; (c) the Company is not aware that any of its employees is
         obligated under any contract (including licenses, covenants, or
         commitments of any nature) or other agreement, or subject to any
         judgment, decree or order of any court or administrative agency, that
         would materially interfere with the use of such employee's best efforts
         to promote the interests of the Company or that would materially
         conflict with the Company's business as proposed to be conducted; (d)
         neither the execution and delivery of the Transaction Documents, nor
         the carrying on of the Company's business as currently proposed, will
         conflict with or result in a

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         breach of the terms, conditions or provisions of, or constitute a
         default under, any contract, covenant or instrument under which any of
         such employees is now obligated; and (e) the Company does not believe
         that it presently is or that it will be necessary to utilize any
         inventions of any of its employees (or people it currently intends to
         hire) made prior to their employment by the Company.

                  2.10 Compliance with Other Instruments. Except as set forth in
         Section 2.10 of the Schedule of Exceptions, the Company is not in
         violation or default of any provisions of its Charter or Bylaws or of
         any instrument, judgment, order, writ, decree, or agreement to which it
         is a party or by which it or any of its assets may be bound or, of any
         provision of federal or state statute, rule or regulation, license, or
         permit applicable to the Company, the violation or default of which
         could have a Material Adverse Effect. The execution, delivery, and
         performance of the Transaction Documents and the consummation of the
         transactions contemplated thereby will not result in any such violation
         or be in conflict with or constitute, with or without the passage of
         time and giving of notice, either a default under any such provision,
         instrument, judgment, order, writ, decree, or agreement or an event
         that results in the creation of any Encumbrance upon any assets of the
         Company or trigger any anti-dilution provisions, provisions for the
         right to purchase stock, or preemptive rights in any agreements to
         which the Company is a party. The Company does not have any Knowledge
         of any termination or material breach by the other parties to any
         material agreement, arrangement or understanding to which it is a party
         or to which any of its assets is subject. To the Company's Knowledge,
         there are no warranty claims or other uninsured claims against the
         Company under completed agreements that might involve a material
         liability that are not reserved against in the financial statements
         contained in the SEC Documents.

                  2.11 Agreements. Section 2.11 of the Schedule of Exceptions
         lists each of the following agreements, arrangements or understandings
         to which the Company is a party: (a) those required to be filed as
         exhibits to the SEC Documents in accordance with the rules and
         regulations under the Securities Act and Exchange Act; (b) those (other
         than purchase and sales orders entered into in the ordinary course of
         business) providing for payments to or by the Company in excess of
         $100,000 annually; and (c) those between the Company and any Affiliate
         thereof. Each of the foregoing listed in

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         such Section 2.11 is valid, binding, in full force and effect and
         enforceable against the Company, and to the Knowledge of the Company,
         the other party or parties thereto, in accordance with its respective
         terms.

                  2.12 Title to Property and Assets. The Company has good and
         marketable title to all of its material property and assets, free and
         clear of all Encumbrances, except as disclosed in Section 2.12 of the
         Schedule of Exceptions or such Encumbrances that arise in the ordinary
         course of business and do not materially impair the Company's ownership
         or use of such property or assets. With respect to the property and
         assets it leases, the Company is in material compliance with such
         leases and holds a valid leasehold interest, free of any Encumbrances.
         All of the Company's material properties and assets are in good
         operating and usable condition, subject to normal wear and tear.

                  2.13 Labor Agreements and Actions; Employee Benefits. The
         Company is not bound by or subject to (and none of its assets or
         properties is bound by or subject to) any written or oral, express or
         implied, contract, commitment, or arrangement with any labor union, and
         no labor union has requested or, to the Knowledge of the Company, has
         sought to represent any of the employees, representatives, or agents of
         the Company. There is no strike or other labor dispute involving the
         Company pending, or, to the Knowledge of the Company, threatened, that
         could have a Material Adverse Effect, nor is the Company aware of any
         labor organization activity involving its employees. Except as
         disclosed in Section 2.13 of the Schedule of Exceptions, the Company
         has no employee benefit plans (as defined in Section 3(3) of the
         Employee Retirement Income Security Act of 1974) covering employees of
         the Company, whether or not currently employed, or under which the
         Company has any obligation or liability. Section 2.13 of the Schedule
         of Exceptions lists all Benefit Arrangements. True and complete copies
         of all Benefit Arrangements have been provided or made available to the
         Purchaser prior to the date hereof. The Benefit Arrangements are and
         have been administered in compliance with their terms and with the
         requirements of applicable law. All payments to current or former
         employees of the Company pursuant to the Benefit Arrangements are and
         have been fully deductible under the Code.

                                      -9-
<PAGE>

                  2.14 Insurance. The Company has in full force and effect fire,
         casualty and liability insurance policies, with extended coverage, in
         such amounts and with such coverage as is reasonable and prudent in
         view of the business and operations of the Company.

                  2.15 Tax Matters. The Company (a) has timely filed all tax
         returns that are required to have been filed by it with all appropriate
         governmental agencies (and all such returns are true and correct and
         fairly reflect its operations for tax purposes); and (b) has timely
         paid all taxes owed or assessments by it (other than taxes the validity
         of which are being contested in good faith by appropriate proceedings
         and in respect of which appropriate reserves are reflected in the
         financial statements contained in the SEC Documents). The assessment of
         any additional taxes for periods for which returns have been filed is
         not expected to exceed the recorded liability therefor and there are no
         material unresolved questions or claims concerning the Company's tax
         liability. To the best of the Company's Knowledge and belief, the
         Company's tax returns have not been reviewed or audited by any taxing
         authority. There is no pending dispute with any taxing authority
         relating to any of such returns which, if determined adversely to the
         Company, would result in the assertion by any taxing authority of any
         valid deficiency in a material amount for taxes. The reserve for taxes
         and tax liabilities on the most recent balance sheet included in the
         SEC Documents is fully adequate to cover all liabilities of the Company
         for taxes with respect to periods ending on or before the date hereof.

                  2.16 Regulations G, T and X. The Company does not own or have
         any present intention of acquiring any "margin security" within the
         meaning of Regulation G (12 C.F.R. Part 207) of the Board of Governors
         of the Federal Reserve System (herein called "margin security"). None
         of the proceeds of the Notes will be used, directly or indirectly, by
         the Company for the purpose of purchasing or carrying, or for the
         purpose of reducing or retiring any indebtedness that was originally
         incurred to purchase or carry, any margin security or for any purpose
         that might cause the Transaction Documents or the transactions
         contemplated thereby to violate any of Regulation G, T, U or X, or any
         other regulation, of the Board of Governors of the Federal Reserve
         System.

                  2.17 No Default; Compliance with Applicable Laws.

                                      -10-
<PAGE>

                           (a) The Company is not in default under any term of
                  any mortgage, indenture, deed of trust, or other material
                  agreement, commitment, understanding, arrangement to which it
                  or its properties is a party or by which it or any of the
                  assets or properties owned by it may be bound.

                           (b) The Company is in compliance with, and is not in
                  violation or default under, any federal, state or local laws,
                  ordinances, government rules and regulations applicable to
                  their business operations, properties, or assets, including
                  without limitation laws or regulations relating to: the
                  environment; occupational health and safety; employee
                  benefits; ERISA plans; wages; work place safety; equal
                  employment opportunity and race; and religious, sex and age
                  discrimination, except in respect of all of the foregoing for
                  such non-compliance, violation or default as would not have a
                  Material Adverse Effect. The Company does not have any
                  Knowledge of any actual or claimed violation or default with
                  respect to any of the foregoing. No material expenditures are
                  or will be required in order to cause the current operations
                  or assets and properties of the Company to comply with any
                  applicable laws, ordinances, governmental rules or
                  regulations. The Company heretofore has delivered to the
                  Purchaser a copy of any audit, survey, assessment or report
                  prepared by or for the Company during the five-year period
                  prior to the date hereof relating to compliance or
                  non-compliance with any of the foregoing laws, ordinances and
                  governmental rules and regulations.

                           (c) The Company has all Approvals necessary to the
                  ownership of its assets and properties and to the conduct of
                  its business, which if violated or not obtained would have a
                  Material Adverse Effect. The Company has not been finally
                  denied any application for any Approvals. There is no action
                  pending, or to the best Knowledge of the Company, threatened
                  or recommended by federal, state or local governmental
                  authorities having jurisdiction thereof, either to revoke,
                  withdraw, or suspend any Approvals, that would have a Material
                  Adverse Effect on any Approvals, nor has any such governmental
                  authority determined not to renew any Approvals.

                           (d) The Company is and has operated in material
                  compliance with all Government Contracts. Except as set forth
                  in the SEC Documents, neither the Company nor any of the
                  Subsidiaries

                                      -11-
<PAGE>

                  is subject to any claim, penalty, fine, return of premium,
                  repayment of costs charged, or renegotiation of charges or
                  fees as a result of any audit, adjustment, charge, retroactive
                  restatements of costs or charges, or other liability with
                  respect to any Government Contract, except for any such claim,
                  penalty, fine, return of premium, repayment or renegotiation
                  as would not have a Material Adverse Effect.

                  2.18 Seniority. Except as disclosed in Section 2.18 of the
         Schedule of Exceptions, the Company does not have any equity or debt
         securities that are senior to the Notes in right of payment, whether
         upon liquidation, dissolution or otherwise.

                  2.19 Takeover Statutes. A committee of all "disinterested
         members" of the Company's Board (as such term is defined for purposes
         of Section 302A.673 of the MBCA) has approved this Agreement and the
         transactions contemplated hereby and the Company has completed all
         other actions and satisfied all other conditions necessary and
         sufficient to negate any application of Section 302A.673 to the
         Purchaser. Accordingly, with respect to Section 302A.673 of the MBCA
         the Purchaser may purchase more than 10% of the Company's voting stock
         pursuant to this Agreement and will not further be restricted from
         purchasing additional capital stock of the Company thereafter by virtue
         of such provision. Upon obtaining the Special Meeting Approvals, the
         Second Option Shares to be received by the Purchaser upon IWHC's
         exercise of the Second Option will have the same voting rights as the
         other shares of Common Stock in accordance with Section 302A.671 of the
         MBCA. Except as set forth above, no other state or federal "fair
         price," "moratorium," "control share acquisition" or other similar
         antitakeover statute or regulation is applicable to the transactions
         contemplated hereby.

                  2.20 Private Offering. Neither the Company nor anyone acting
         on its behalf shall offer the Notes, the Warrant or the First Option,
         for issue or sale to, or solicit any offer to acquire any of the same
         from, any Person so as to bring the issuance and sale of the Notes, the
         Warrant or the First Option, or any part thereof, within the provisions
         of Section 5 of the Securities Act. Based upon the representations of
         the Purchaser set forth in Sections 3.2 and 3.3, the offer, issuance
         and sale of the Notes, the Warrant, the First Option and the Reserved
         Shares are and will be exempt from the registration and prospectus
         delivery

                                      -12-
<PAGE>

         requirements of the Securities Act, and have been registered or
         qualified (or are exempt from registration and qualification) under the
         registration, permit or qualification requirements of all applicable
         state securities laws.

                  2.21 Warranties. Section 2.21 of the Schedule of Exceptions
         describes the terms of all warranties and guarantees, written or oral,
         made or given within the five-year period preceding the date hereof in
         connection with the products and services of the Company. The reserve
         for warranty claims in the most recent balance sheet included in the
         SEC Documents has been fixed in accordance with GAAP consistently
         applied and is adequate to cover all liabilities for warranties with
         respect to periods ending on or before the date hereof.

                  2.22 No Misrepresentations. The representations and warranties
         made by the Company in or pursuant to the Transaction Documents
         (including the Exhibits and Schedules thereto) are true, complete and
         correct in all material respects and do not contain any untrue
         statement of a material fact or omit to state any material fact
         necessary to make any such representation, warranty or statement, under
         the circumstances in which it is made, not misleading.

         3. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company that:

                  3.1 Authorization. This Agreement constitutes its legally
         binding obligation, enforceable against the Purchaser in accordance
         with its terms and the Purchaser has full power and authority to enter
         into this Agreement.

                  3.2 Purchase for Investment. The Purchaser is purchasing the
         Notes for its own account, for investment purposes and not with a view
         to, or for resale in connection with, any distribution or public
         offering thereof within the meaning of the Securities Act.

                  3.3 Purchaser's Investment Decision. The Purchaser is an
         "accredited investor" as that term is defined in Rule 501 of Regulation
         D under the Securities Act or has such Knowledge and experience in
         financial and business matters that it is capable of

                                      -13-
<PAGE>

         evaluating the merits and risks of the investment contemplated hereby.

         4. Deliveries by the Company. Contemporaneously with the execution of
this Agreement and the performance by the Purchaser of its obligations
hereunder, the Company is delivering to the Purchaser the following:

                  4.1 Secretary's Certificate. A certificate of the Secretary of
         the Company certifying: (a) that attached thereto is a true and
         complete copy of the Company's Charter as in effect on the date hereof;
         (b) that attached thereto is a true and complete copy of the Bylaws of
         the Company as in effect on the date hereof; (c) that attached thereto
         is a true and complete copy of all resolutions adopted by the Board (or
         any committee thereof) authorizing or relating to the transactions
         contemplated by the Transaction Documents and that such resolutions are
         in full force and effect and have not been amended or revoked as of the
         date hereof; and (d) to the incumbency and specimen signatures of each
         officer of the Company executing the Transaction Documents and the
         other agreements and certificates contemplated hereby.

                  4.2 Opinion of Company Counsel. An opinion of Dorsey & Whitney
         LLP, counsel for the Company, in the form attached hereto as Exhibit C.

                  4.3 Consents and Waivers. Executed copies of any and all
         consents and waivers necessary or appropriate for consummation of the
         purchase and sale of the Note and Warrant.

                  4.4 Note Certificate. The Notes, dated the date hereof, in the
         principal amount of $2,500,000.

                  4.5 Warrant Certificate. The Warrant, dated the date hereof.

                  4.6 Registration Rights Agreement. A counterpart of the
         Registration Rights Agreement.

         5. Deliveries by the Purchaser. Contemporaneously with the execution of
this Agreement and performance by the Purchaser of its obligations hereunder,
the Purchaser is delivering to the Company the following:

                                      -14-
<PAGE>

                  5.1 Note and Warrant Purchase Price. The Note and Warrant
         Purchase Price, by wire transfer of immediately available funds.

                  5.2 Registration Rights Agreement. A counterpart of the
         Registration Rights Agreement.

         6. Affirmative Covenants of the Company. The Company covenants and
agrees that so long as the First Option shall remain outstanding, provided that
if the First Option is exercised, such period shall be extended, without further
action of the parties hereto, to and including the Closing Date (except that the
Company's covenants and agreements contained in Sections 6.2 and 6.3 hereof
shall be effective so long as any of the Notes are outstanding):

                  6.1 Reservation of Securities. The Company shall at all times
         duly reserve for issuance the Reserved Shares and any other securities
         of the Company issuable pursuant to the terms of the Warrant, the First
         Option Shares and the Second Option Shares.

                  6.2 Rank of Notes. The Notes shall at all times rank on a
         parity with all other Debt of the Company other than the Bank Debt.

                  6.3 Transfer Pursuant to Rule 144A. From and after August 15,
         2000, the Company shall provide to the Purchaser and, upon the
         Purchaser's request, to any prospective purchaser designated by the
         Purchaser the financial and other information specified in Rule
         144A(d)(4) under the Securities Act and to take any other action
         reasonably requested by the Purchaser or to execute any certificates
         necessary to permit a transfer of the Notes by Purchaser to qualify for
         the exemption set forth in Rule 144A.

                  6.4 Inspection. The Company shall permit the Purchaser, its
         nominee, assignee, and its representative to visit and inspect any of
         the properties of the Company and its Subsidiaries, to examine all its
         books of account, records, reports and other papers not contractually
         required of the Company to be confidential or secret, to make copies
         and extracts therefrom, and to discuss its affairs, finances and
         accounts with its officers, directors, key employees and independent
         public accountants or any of them (and by

                                      -15-
<PAGE>

         this provision the Company authorizes said accountants to discuss with
         the Purchaser, its nominees, assignees and representatives the finances
         and affairs of the Company and any Subsidiaries), all at such
         reasonable times and as often as may be reasonably requested.

                  6.5 Further Assurances. At any time or from time to time upon
         the request of any holder of the Notes, the Warrant, the First Option
         Shares and the Second Option Shares, the Company shall execute and
         deliver such further documents and do such other acts and things as
         such holder may reasonably request in order to effect fully the
         purposes of the Transaction Documents.

                  6.6 Board Observer. The Purchaser shall have the right to send
         an observer (who need not be the same individual from meeting to
         meeting) to observe each meeting of the Board. The Company shall give
         the Purchaser advance written notice of each meeting of the Board and
         provide the Purchaser with an agenda and minutes of each meeting no
         later than the time it gives such notice and provides such agenda to
         the other members of the Board. Such observer shall be entitled to
         receive reimbursement for his reasonable costs incurred in attending
         such meetings, including, without limitation, meals, lodging and
         transportation.

                  6.7 Conduct of Business. The Company shall continue to engage
         in business of the same general type as now conducted by it, and
         preserve, renew and keep in full force and effect its corporate
         existence and take all reasonable action to maintain all rights,
         privileges and franchises necessary or desirable in the normal conduct
         of its business.

                  6.8 Right of First Refusal. The Company shall not directly or
         indirectly, without the prior consent of the Purchaser, effect a
         Subsequent Financing, except (a) the granting of options under, and the
         issuance of shares upon exercise of options granted under, any stock
         option plan heretofore adopted by the Company; and (b) shares issued
         upon exercise of any currently outstanding warrants and upon conversion
         of any currently outstanding convertible preferred stock, unless (i)
         the Company provides the Purchaser a Subsequent Financing Notice of its
         intention to effect such Subsequent Financing, which Subsequent
         Financing Notice shall describe in reasonable detail the proposed terms
         of such Subsequent Financing and the amount of proceeds intended to be
         raised thereby and (ii) the Purchaser shall not have notified the
         Company by 5:00

                                      -16-
<PAGE>

         P.M., Central Time, on the fifth Business Day after its receipt of the
         Subsequent Financing Notice of its good faith agreement to provide (or
         to cause its designee to provide) financing to the Company on
         substantially the terms set forth in the Subsequent Financing Notice.
         If the Purchaser shall fail to notify the Company of its intention to
         provide such financing within such time period, or shall fail to
         provide such financing within 30 days thereafter, the Company may
         effect the Subsequent Financing substantially upon the terms and to the
         Persons set forth in the Subsequent Financing Notice; provided, that
         the Company shall provide the Purchaser with a second Subsequent
         Financing Notice, and the Purchaser shall again have the right of first
         refusal set forth above in this Subsection 6.8, if the Subsequent
         Financing subject to the initial Subsequent Financing Notice shall not
         have been consummated for any reason on the terms set forth in such
         Subsequent Financing Notice within 30 days after the date that the
         initial Subsequent Financing Notice is given to the Purchaser.

         7. Negative Covenants of the Company. The Company covenants and agrees
that:

                  (a) Until August 16, 2000 and, if the First Option is
         exercised, the Closing Date, without the consent of the Purchaser, the
         Company shall not take any of the following actions: (i) the entry into
         any agreement, arrangement or transaction with an Affiliate of the
         Company other than those currently in effect and disclosed in the SEC
         Documents; (ii) the amendment, modification or repeal of any provision
         of the Charter or Bylaws; (iii) the creation, authorization or issuance
         of any securities of the Company, provided that the Company may issue
         Common Stock (x) upon exercise of options granted under any stock
         option plan, agreement or arrangement heretofore adopted by the
         Company, (y) upon exercise of warrants outstanding on the date hereof,
         and (z) upon conversion of any security outstanding on the date hereof;
         (iv) the recapitalization of the Company or the reclassification of any
         authorized or issued capital stock of the Company; (v) the
         establishment of any new Subsidiary; (vi) the sale, lease, transfer or
         other disposition (in a transaction or related series of transactions)
         of any material assets of the Company or its Subsidiaries;(vii) the
         purchase, lease or acquisition by the Company of a material amount of
         assets; (viii) the making of any material change in the business
         conducted by the Company or its Subsidiaries or the failure to conduct
         such business in the

                                      -17-
<PAGE>

         ordinary course; (ix) the increase of the annual compensation of any
         Person employed by the Company or any Subsidiary by greater than 10% in
         any fiscal year of the Company or the hiring of any such employee whose
         annual compensation would exceed $125,000 in any such fiscal year; (x)
         the commencement by the Company or any Subsidiary of a voluntary case
         under any federal or state bankruptcy or reorganization, moratorium,
         relief of debtors, insolvency law, or the commencement of an
         involuntary case against the Company or any Subsidiary under any such
         law, which case is not opposed by the Company or such Subsidiary within
         15 days thereafter or is not dismissed within 60 days thereafter or
         (xi) the entry into any agreement, arrangement or understanding to do
         any of the foregoing.

                  (b) In addition to those covenants set forth in (a) above, so
         long as any of the Notes, the Warrants, or the First Option shall
         remain outstanding, without the consent of the Purchaser, the Company
         shall not take any of the following actions: (i) the creation,
         incurrence, guarantee, issuance, or assumption of any Debt other than
         the Debt evidenced by the Notes, unless (x) such Debt is Bank Debt and
         (y) immediately thereafter, and after giving effect thereto, the total
         Debt of the Company (other than the Debt evidenced by the Notes) does
         not exceed $4,000,000; (ii) the repurchase, redemption or other
         acquisition of equity securities of the Company; (iii) the declaration
         of any dividends or the making of any distribution by the Company
         (other than dividend distributions of its Common Stock); (iv) the
         merger or consolidation of the Company or any Subsidiary with any other
         Person; (v) the liquidation or dissolution of the Company; or (vi) the
         entry into any agreement, arrangement or understanding to do any of the
         foregoing.

                                      -18-
<PAGE>

         8. Additional Covenants of the Company.

                  8.1 Pre-Emptive Rights. If the Company issues any shares of
         Common Stock upon the exercise of options or warrants at any time on or
         before the Closing Date, the Purchaser shall have the right for a
         period of 30 days following the Closing Date upon notice by the Company
         to it of any such issuance to purchase from the Company that number of
         shares of Common Stock as equals the number of shares of Common Stock
         issued upon such exercise at a price per share equal to the Market
         Value of the Common Stock. If the Company shall fail to notify the
         Purchaser of any such issuance, the 30-day period during which the
         Purchaser may exercise the right provided in the next preceding
         sentence shall commence upon discovery by the Purchaser of such
         issuance.

                  8.2 Special Meeting of Shareholders. The Company shall
         prepare, and as promptly as practicable after exercise by the Purchaser
         of the First Option, shall file with the Commission the Proxy
         Statement, respond to comments of the staff of the Commission, clear
         the Proxy Statement with the staff of the Commission and promptly
         thereafter mail the Proxy Statement to the appropriate holders of
         record of the Common Stock. The Company shall comply in all respects
         with the requirements of the Exchange Act and the rules and regulations
         thereunder applicable to the Proxy Statement and the solicitation of
         proxies for the Special Meeting (including any amendment or supplement
         to the Proxy Statement) and each party hereto shall furnish such
         information relating to it and to the transactions contemplated by the
         Transaction Documents as shall be required by such rules and
         regulations. The Proxy Statement shall include such information about
         the Purchaser, its Affiliates and nominees, as is required by Section
         14(f) of the Exchange Act and Rule 14f-1 thereunder and the
         recommendation of the Board in favor of the transactions contemplated
         by the Transaction Documents.

                  8.3 Repayment of Notes and Loans; Reimbursement of Expenses.
         If (a) the Purchaser exercises the First Option but at the Special
         Meeting the Special Meeting Approvals are not obtained, or (b) if the
         Special Meeting Approvals are obtained, but the Closing Date does not
         occur on or before November 15, 2000 otherwise than by reason of the
         breach by the Purchaser of its obligations under this Agreement or the
         failure by the Purchaser to

                                      -19-
<PAGE>

         provide the information required by applicable rules and regulations to
         be included in the Proxy Statement, the Company shall repay the Notes
         and any Working Capital Loans made to it pursuant to Sections 9 and
         10.2 hereof, together with accrued interest thereon, within 30 days
         after the earlier to occur of the failure to obtain the Special Meeting
         Approvals at the Special Meeting or November 15, 2000.

                  8.4 Directors. Concurrently with the transactions effected on
         the Closing Date, the Purchaser shall be entitled to designate such
         number of directors, rounded up to the next whole number, on the Board
         as is equal to the product of the total number of directors on the
         Board (giving effect to the directors designated by Parent pursuant to
         this provision) multiplied by the percentage that the aggregate number
         of shares of Common Stock beneficially owned (as determined in
         accordance with Rule 13d-3 under the Exchange Act) by the Purchaser and
         its Affiliates bears to the total number of shares of Common Stock then
         outstanding (such number being the "Board Percentage") provided,
         however, that if the number of shares of Common Stock beneficially
         owned by the Purchaser and its Affiliates equals or exceeds 50.01% of
         the outstanding shares of Common Stock, the Board Percentage will in
         all events be at least a majority of the members of the Board. The
         Company and IWHC shall each, upon request of the Purchaser, use its
         respective best efforts to cause the Purchaser's designees to satisfy
         the Board Percentage, including without limitation increasing the size
         of the Board and securing resignations of such number of its incumbent
         directors as is necessary to enable the Purchaser's designees to be so
         elected to the Board, and shall promptly cause the Purchaser's
         designees to be so elected.

         9. Covenant of IWHC. If during the period from the date hereof to and
including August 15, 2000, after the application of available proceeds of Bank
Debt, the Notes and other sources of liquidity then available to the Company,
the Purchaser in its reasonable discretion determines that the Company has
insufficient cash to pay in the ordinary course its obligations that are due on
or before August 15, 2000, upon notice from the Purchaser, IWHC shall make one
or more Working Capital Loans to the Company in the maximum aggregate principal
amount of $2,500,000.

                                      -20-
<PAGE>

         10. Covenants of the Purchaser.

                  10.1 Exercise of Warrant. On the Closing Date, the Purchaser
         shall exercise the Warrant in accordance with its terms. It shall be a
         condition to such exercise, which may be waived by the Company in its
         sole discretion, that the Purchaser purchase the First Option Shares
         and Second Option Shares concurrently. The Purchaser shall not transfer
         the Warrant to any other Person without the prior written consent of
         the Company and IWHC, and any Person to whom the Warrant is transferred
         shall agree in writing to be bound by the provisions of this Section
         10.1. Between the date hereof and the Closing Date, the Purchaser shall
         not exercise any other warrant to purchase shares of Common Stock.

                  10.2 Working Capital Loans of Purchaser. If the Purchaser
         exercises the First Option and during the period from August 16, 2000
         to and including the earlier of the date of the Special Meeting (if the
         Special Meeting Approvals are not obtained) or the Closing Date, it
         determines in its reasonable discretion, after the application of
         available proceeds of Bank Debt, the Notes, the IWHC Working Capital
         Loans and other sources of liquidity then available to the Company,
         that the Company has insufficient cash to pay its obligations in the
         ordinary course, the Purchaser shall make one or more Working Capital
         Loans to the Company in the maximum aggregate principal amount of
         $5,000,000.

         11. Exercise Date Deliveries by the Company to the Purchaser. On or
prior to the Exercise Date, the Company shall deliver to the Purchaser, duly and
properly executed:

                  11.1 Secretary's Certificate. A certificate of the Secretary
         of the Company certifying: (a) that attached thereto is a true and
         complete copy of the Company's Charter as in effect on the date
         thereof; (b) that attached thereto is a true and complete copy of the
         Bylaws of the Company as in effect on the date thereof; (c) that
         attached thereto is a true and complete copy of all resolutions adopted
         by the Board (or any committee thereof) authorizing or relating to the
         transactions contemplated by the Transaction Documents, and that such
         resolutions are in full force

                                      -21-
<PAGE>

         and effect and have not been amended or revoked as of the date hereof;
         and (d) to the incumbency and specimen signatures of each officer of
         the Company executing the Transaction Documents and the other
         agreements and certificates contemplated thereby.

                  11.2 President's Certificate. A certificate of the President
         of the Company in accordance with Section 12(a) hereof.

                  11.3 Good Standing Certificate. A long-form certificate of the
         Secretary of State of the State of Minnesota dated as of a recent date
         as to the existence and good standing of the Company in such state.

                  11.4 Opinion of Company Counsel. An opinion of Dorsey &
         Whitney LLP, counsel for the Company, in the form attached hereto as
         Exhibit C.

         12. Conditions Precedent to Effectiveness of Exercise. The
effectiveness of exercise by the Purchaser of the First Option shall be subject
to the satisfaction as of or before the Exercise Date of the following
conditions (unless waived in writing by the Purchaser):

                  (a) Except as may be set forth in Exhibit A to the certificate
         referenced in this Section 12(a), the Company's representations and
         warranties set forth in Article 2 of the Agreement shall have been true
         and correct in all material respects when made and shall be true and
         correct in all material respects at and as of the Exercise Date as if
         such representations and warranties were made as of the Exercise Date,
         and the Purchaser shall have received a certificate to that effect and
         as to the matters set forth in Section 12(b) hereof, dated the Exercise
         Date, from the Company.

                  (b) All covenants, conditions and other obligations under this
         Agreement that are to be performed or complied with by the Company and
         IWHC prior to the Exercise Date shall have been performed and complied
         with in all material respects at or prior to the Exercise Date.

                  (c) If the certificate delivered pursuant to Section 12(a)
         shall include Exhibit A, then the matters set forth

                                      -22-
<PAGE>

         in such Exhibit A shall be satisfactory to the Purchaser in its sole
         and absolute discretion.

                  (d) There shall be no pending or threatened claim, action,
         litigation or proceeding, judicial or administrative, or governmental
         investigation against the Purchaser or the Company for the purpose of
         enjoining or preventing the consummation of the Transaction Documents,
         or otherwise claiming that the Transaction Documents or the
         consummation thereof is illegal.

                  (e) No Material Adverse Effect shall have occurred.

         13. Closing. The consummation of the purchase of the First Option
Shares and Second Option Shares and the exercise of the Warrant (the "Closing")
shall take place at 10:00 A.M., Eastern Time, on the Closing Date at the offices
of Olshan Grundman Frome Rosenzweig & Wolosky LLP, 505 Park Avenue, New York,
New York 10022, or at such other place as may be agreed upon by the parties
hereto.

         14. Closing Deliveries by the Company to the Purchaser. At or prior to
the Closing, the Company shall deliver to the Purchaser, duly and properly
executed:

                  14.1 Secretary's Certificate. A certificate of the Secretary
         of the Company certifying: (a) that attached thereto is a true and
         complete copy of the Company's Charter as in effect on the date
         thereof; (b) that attached thereto is a true and complete copy of the
         Bylaws of the Company as in effect on the date thereof; (c) that
         attached thereto is a true and complete copy of all resolutions adopted
         by the Board (or any committee thereof) and shareholders of the Company
         (A) authorizing or relating to the transactions contemplated by the
         Transaction Documents and (B) electing members of the Board in
         accordance with the provisions of Section 8.4 hereof, and that such
         resolutions are in full force and effect and have not been amended or
         revoked as of the date thereof; and (d) to the incumbency and specimen
         signatures of each officer of the Company executing the Transaction
         Documents and the other agreements and certificates contemplated
         thereby.

                  14.2 President's Certificate. A certificate of the President
         of the Company in accordance with Section 18.1(a) hereof.

                                      -23-
<PAGE>

                  14.3 Good Standing Certificate. A long-form certificate of the
         Secretary of State of the State of Minnesota dated as of a recent date
         as to the existence and good standing of the Company in such state.

                  14.4 Certificates. Certificates representing the Warrant
         Shares and the First Option Shares, registered in such names and in
         such denominations as the Purchaser shall have directed by notice to
         the Company given not later than two Business Days prior to the Closing
         Date.

                  14.5 Consents and Waivers. Executed copies of (a) any and all
         consents and waivers necessary or appropriate for consummation of the
         transactions contemplated by the Transaction Documents; (b) a consent
         executed by the holders of the outstanding shares of Series B Preferred
         Stock (i) to the transactions contemplated by the Transaction
         Documents; (ii) amending Section 6 of the Certificate of Designation of
         Series of Preferred Stock relating to the Series B Preferred Stock to
         provide that the prior affirmative written consent of the holders of at
         least a majority of the Series B Preferred Stock shall be required to
         take any of the actions specified in paragraphs (d) (insofar as it
         relates to the merger of the Company with the Purchaser or any
         Affiliate thereof), (i) and (l) thereof; (iii) amending Section 5 of
         the Certificate of Designation of Series of Preferred Stock relating to
         the Series C Preferred Stock to provide that the prior affirmative
         written consent of the holders of at least a majority of the Series C
         Preferred Stock shall be required to take any of the actions specified
         in paragraphs (d) (insofar as it relates to the merger of the Company
         with the Purchaser or any Affiliate thereof), (i) and (l) thereof, and
         (iv) amending each of the sections referenced in clauses (ii) and (iii)
         of this Section 14.5 to provide that the protective provisions
         contained in such sections shall terminate as to any shares of such
         Preferred Stock transferred and that the approval of holders of
         Preferred Stock required by such sections be calculated without
         reference to the Preferred Stock transferred.

                  14.6 Charter Amendment. An executed copy of an amendment to
         the Charter in appropriate form under applicable laws giving effect to
         the amendments to the Charter as to which consent shall have been
         obtained from the holders of the outstanding shares of Series B
         Preferred Stock and Series C Preferred Stock as contemplated by Section
         14.5 hereof.

                                      -24-
<PAGE>

                  14.7 Resignations. Resignations, effective as of the Closing
         Date, of those directors necessary to give effect to the provisions of
         Section 8.4 hereof.

                  14.8 Other Instruments. Such other separate instruments or
         documents that the Purchaser deems necessary or appropriate in order to
         consummate the transactions contemplated by the Transaction Documents.

         15. Closing Deliveries by the Company to IWHC. At or prior to the
Closing, the Company shall deliver to IWHC an amount equal to the sum of all
amounts due and payable by the Company to IWHC under the Working Capital Loans,
by wire transfer to an account designated by IWHC not later than two Business
Days prior to the Closing Date.

         16. Closing Deliveries by IWHC. If the Second Option is exercised, at
or prior to the Closing, IWHC shall deliver to the Purchaser certificates
representing the Second Option Shares, accompanied by separate stock powers duly
executed in blank, with signatures guaranteed by a commercial bank, trust
company or New York Stock Exchange member firm.

         17. Closing Deliveries by the Purchaser. At or prior to the Closing,
(a) the Purchaser shall deliver to the Company (i) an amount equal to the excess
of the purchase price for the Warrant Shares and First Option Shares over the
sum of all amounts due and payable by the Company to the Purchaser under the
Notes and the Working Capital Loans, by wire transfer to an account designated
by the Company not less than two Business Days prior to the Closing Date, and
(ii) the Notes and the notes evidencing the Working Capital Loans; and (b) if
the Second Option is exercised, the Purchaser shall deliver to IWHC the
consideration for the Second Option Shares as more fully set forth in the Second
Option Agreement.

         18. Conditions Precedent to Closing Date Obligations.

                  18.1 Conditions to Obligations of the Purchaser. Each and
         every obligation of the Purchaser to be performed at the Closing shall
         be subject to the satisfaction as of or before the

                                      -25-
<PAGE>

         Closing Date of the following conditions (unless waived in writing by
         the Purchaser):

                           (a) Except as set forth in Exhibit A to the
                  certificate referenced in Section 12(a) hereof, the Company's
                  representations and warranties set forth in Article 2 of this
                  Agreement shall have been true and correct in all material
                  respects when made and as of the Exercise Date as if such
                  representations and warranties were made as of the Exercise
                  Date, and the Purchaser shall have received a certificate to
                  that effect and as to the matters set forth in Section 18.1(b)
                  hereof, dated the Closing Date, from the Company.

                           (b) All covenants, conditions and other obligations
                  under this Agreement that are to be performed or complied with
                  by the Company and IWHC shall have been performed and complied
                  with in all material respects at or prior to the Closing.

                           (c) No preliminary or permanent injunction or other
                  order (including a temporary restraining order) of any
                  federal, state or local court or other governmental agency or
                  of any foreign jurisdiction that prohibits the consummation of
                  the Transaction Documents shall have been issued or entered
                  and remain in effect.

                           (d) After giving effect to the exercise of the
                  Warrant and the purchase of the First Option Shares and Second
                  Option Shares, the Purchaser shall own of record and
                  beneficially securities of the Company having a combined
                  voting power comprising a majority of the combined voting
                  power of all then outstanding securities of the Company.

                           (e) The Special Meeting Approvals shall have been
                  obtained.

                           (f) If the HSR Act is applicable to the consummation
                  of the transactions contemplated under the Transaction
                  Documents, all waiting periods thereunder shall have expired
                  or been terminated.

                  18.2 Conditions to Obligations of the Company. Each and every
         obligation of the Company to be performed at the Closing shall be
         subject to the satisfaction as of or before the Closing of the
         following conditions (unless waived in writing by the Company):

                                      -26-
<PAGE>

                           (a) The Purchaser's representations and warranties
                  set forth in Article 3 of this Agreement shall have been true
                  and correct in all material respects when made and as of the
                  Exercise Date as if such representations and warranties were
                  made as of the Exercise Date.

                           (b) All covenants, conditions and other obligations
                  under this Agreement that are to be performed or complied with
                  by the Purchaser shall have been performed and complied with
                  in all material respects at or prior to the Closing.

                           (c) No preliminary or permanent injunction or other
                  order (including a temporary restraining order) of any
                  federal, state or local court or other governmental agency or
                  of any foreign jurisdiction that prohibits the consummation of
                  the Transaction Documents shall have been issued or entered
                  and remain in effect.

                           (d) If the HSR Act is applicable to the consummation
                  of the transactions contemplated under the Transaction
                  Documents, all waiting periods thereunder shall have expired
                  or been terminated.

         19. Indemnity. (a) Subject to the provisions of Section 19(b) hereof,
the Company shall, with respect to the representations, warranties, covenants
and agreements made by the Company in the Transaction Documents indemnify,
defend and hold the Purchaser and the holders of the Notes (and their respective
shareholders, directors, officers, employees, agents, Affiliates and controlling
parties) (each, an "Indemnified Party") harmless from and against all liability,
loss or damage, together with all reasonable costs and expenses related thereto
(including reasonable legal and accounting fees and expenses), arising from or
in connection with the untruth, inaccuracy or breach (or any facts or
circumstances constituting the untruth, inaccuracy or breach) of any such
representations, warranties, covenants or agreements of the Company contained in
this Agreement or the assertion of any claims relating to the foregoing. In
addition, the Company shall indemnify and hold harmless each Indemnified Party
against any losses, claims, damages or liabilities, joint or several, to which
any of the foregoing persons may become subject, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any alleged violations by the

                                      -27-
<PAGE>

Company, the Board or any Indemnified Party or (ii) any actual violations by the
Company or the Board of the provisions of (x) Securities Act or state securities
or "blue sky" laws applicable to the Company relating to action or inaction
required of the Company in connection with the Securities Act or registration or
qualification under such state securities or blue sky laws, and (y) the MBCA,
the Securities Act or the Exchange Act, applicable to the transactions
contemplated by the Transaction Documents, including without limitation, those
implicated in any claim, action, suit or proceeding that may hereafter be
commenced by a shareholder of the Company; provided, however, that the Company
shall not be liable hereunder to the extent that any such loss, claim, damage or
liability (or actions in respect thereof) arises out of or is based on an untrue
statement or omission in reliance on and in conformity with written information
furnished by the Purchaser to the Company; and shall reimburse each such
Indemnified Party for any reasonable legal or other expenses incurred by any of
them in connection with investigating or defending any such loss, claim, damage,
liability or action. In case any such action is brought against an Indemnified
Party, the Company shall be entitled to participate in and assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Party, and
after notice from the Company to such Indemnified Party of its election to
assume the defense thereof, the Company shall be responsible for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof, provided that if any Indemnified Party shall have reasonably
concluded that there may be one or more legal defenses available to such
Indemnified Party that conflict in any material respect with those available to
the Company, or that such claim or litigation involves or could have an effect
upon matters beyond the scope of the indemnity agreement provided in this
Section 19, the Company shall not have the right to assume the defense of such
action on behalf of such Indemnified Party and the Company shall reimburse such
Indemnified Party and any person controlling such Indemnified Party for that
portion of the fees and expenses of any counsel retained by the Indemnified
Party that are reasonably related to the matters covered by the indemnity
agreement provided in this Section 19. The Company shall not make any settlement
of any claims indemnified against hereunder without the written consent of the
Indemnified Party or Parties, unless such settlement shall include an
unconditional release of the Indemnified Party or Parties.

                                      -28-
<PAGE>

         (b) Notwithstanding the provisions of Section 19(a) hereof, no
Indemnified Party shall be entitled to assert a claim thereunder unless and
until the aggregate amount of all claims thereunder by all Indemnified Parties
equals or exceeds $25,000.

         20. Termination. This Agreement may be terminated as follows
(notwithstanding receipt of the Special Meeting Approvals): (a) by mutual
written consent of the Purchaser and the Company at any time; (b) by the
Purchaser or the Company if the Closing shall not have occurred on or before
November 15, 2000, provided that the party seeking to exercise such right is not
then in breach of any of its material obligations under this Agreement; (c) by
either the Company or the Purchaser if there shall be any law or regulation that
makes consummation of the transactions contemplated by the Transaction Documents
illegal or otherwise prohibited or if any judgment, injunction, order or decree
enjoining the Purchaser or the Company from consummating such transactions is
entered and such judgment, injunction, order or decree shall become final and
non-appealable; or (d) by either the Company or the Purchaser if, at the Special
Meeting or any adjournment thereof at which the Transaction Documents are
submitted for approval, the Special Meeting Approvals shall not have been
obtained. The party desiring to terminate this Agreement pursuant to this
Section 20 shall give written notice of such termination to the other party in
accordance with Section 22.7. If this Agreement is terminated pursuant to
Section 20, this Agreement shall become void and of no effect with no liability
on the part of any party hereto or such party's officers, directors, employees
or representatives, except (i) that the agreements contained in Sections 6.1,
6.2, 6.3, 7(b), 8.3, 19, 22.4, 22.8 and 22.12 hereof shall survive the
termination hereof and (ii) nothing herein shall relieve any party from
liability for any breach of this Agreement.

         21. Definitions. All capitalized terms used in this Agreement shall
have the meanings assigned to them elsewhere in this Agreement or as specified
below:

                  "Accommodation Obligation" shall mean, as applied to any
         Person and without duplication of amounts, any obligation of such
         Person guaranteeing or intended to guarantee (whether guaranteed,
         endorsed, co-made, discounted, or sold with recourse to such Person)
         any indebtedness, lease, dividend, letter of credit, or other
         obligations ("primary obligation") of any Person in any

                                      -29-
<PAGE>

         manner whether directly or indirectly, including any obligation of such
         Person or on behalf of any other Person (irrespective of whether
         contingent), or to otherwise assure or hold harmless the owner of such
         primary obligation against loss in respect thereof. The amount of any
         Accommodation Obligation shall be deemed to be an amount equal to the
         maximum amount of a Person's liability with respect to the stated or
         determinable amount of the primary obligation for which such
         Accommodation Obligation is incurred.

                  "Affiliate" means, with respect to any Person, any other
         Person, directly or indirectly, controlling, controlled by, or under
         common control with, such Person. For the purposes of this definition,
         "control" when used with respect to any Person, means the possession,
         directly or indirectly, of the power to direct or cause the direction
         of the management and policies of such Person, whether through the
         ownership of voting securities, by contract or otherwise; and the terms
         "controlling" and "controlled" have meanings correlative to the
         foregoing.

                  "Approvals" shall mean licenses, permits, franchises and other
         governmental approvals and authorizations.

                  "Bank Debt" shall mean senior commercial bank debt without
         equity features.

                  "Benefit Arrangement" shall mean all plans, contracts,
         bonuses, commissions, profit sharing, pension, savings, stock option,
         severance, medical, insurance, deferred compensation or similar fringe
         or employee benefits covering employees of the Company, whether or not
         currently employed, or under which the Company has any obligation or
         liability.

                  "Board" shall mean the Board of Directors of the Company.

                  "Business Day" shall mean any day other than a Saturday,
         Sunday or other day on which commercial banks in Minneapolis, Minnesota
         are authorized or required to close under Federal law or the laws of
         the State of Minnesota.

                  "Capitalized Lease" shall mean any lease of an asset by the
         Company or any subsidiary as lessee which would, in conformity with
         GAAP, be required to be accounted for as a capital lease on the balance
         sheet of the Company or such subsidiary.

                                      -30-
<PAGE>

                  "Capitalized Lease Obligations" shall mean the aggregate
         amount which in accordance with GAAP is required to be reported as a
         liability on the balance sheet of the Company or any subsidiary at such
         time in respect of its respective interest as lessee under a
         Capitalized Lease.

                  "Charter" shall mean the certificate of incorporation of the
         Company.

                  "Closing Date" shall mean the date on which the following
         concurrent transactions shall occur: (a) the acquisition by the
         Purchaser from the Company of the Warrant Shares; (b) the acquisition
         by the Purchaser from the Company of the First Option Shares; and (c)
         the acquisition by the Purchaser from IWHC of the Second Option Shares.
         The Closing Date shall be October 1, 2000, provided that if all of the
         conditions to the obligation of the Purchaser to effect the
         transactions set forth in the next preceding sentence shall not have
         been satisfied or waived, then the Closing Date shall be the date
         selected by the Purchaser that is not later than three Business Days
         after the satisfaction or waiver of all of such conditions, but in no
         event later than November 15, 2000.

                  "Commission" shall mean the Securities and Exchange
         Commission.

                  "Common Stock" shall mean the Company's Common Stock, par
         value $.001 per share.

                  "Debt" shall mean, with respect to any Person, without
         duplication: (a) all obligations of such Person for borrowed money; (b)
         all obligations of such Person evidenced by bonds, debentures, notes,
         or other similar instruments; (c) all obligations of such Person in
         respect of letters of credit, bankers acceptances, interest rate swaps
         or other financial products or similar instruments (including
         reimbursement with respect thereto), except such as have been issued to
         secure payment of trade payables; (d) all obligations of such Person to
         pay the deferred purchase price of property or services, except trade
         payables; (e) all Capitalized Lease Obligations of such Person; (f) all
         obligations or liabilities of others secured by a lien on any asset
         owned by such

                                      -31-
<PAGE>

         Person, whether or not such obligation or liability is assumed by such
         Person; and (g) all Accommodation Obligations of such Person.

                  "Encumbrances" shall mean liens, claims, charges, mortgages,
         pledges, security interests or encumbrances of any kind or character
         whatsoever.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
         as amended.

                  "Exercise Date" shall mean the date designated by the
         Purchaser on which the exercise of the First Option shall be effective
         and which shall in no event be later than August 15, 2000.

                  "First Option" shall mean the right and option to purchase the
         First Option Shares for an exercise price of $1.00 per share.

                  "First Option Shares" shall mean 7,750,000 shares of Common
         Stock.

                  "GAAP" shall mean generally accepted accounting principles in
         the United States of America.

                  "Government Contracts" shall mean contractual, statutory,
         regulatory, and other requirements applicable to entities furnishing
         coverage to employees of federal, state and local governments and
         subdivisions and to beneficiaries under programs sponsored or
         administered by any such governments or subdivisions thereof.

                  "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
         Improvements Act of 1976, as amended, and the rules and regulations
         thereunder.

                  "IWHC" shall mean Industrial-Works Holding Co., LLC, a
         Delaware limited liability company.

                  "Intellectual Property Rights" shall mean all worldwide
         intellectual property rights, including without limitation, each
         patent, patent right and application, license, trademark, trade name,
         and trademark right and application, copyright, copyright

                                      -32-
<PAGE>

         registration and application, service mark, brand mark and name, and
         trade secrets relating to or arising from any proprietary process or
         formula.

                  "Knowledge" shall mean with respect to the Company all
         information that is actually known, or in the exercise of reasonable
         diligence in the normal course of their employment should have been
         known, by David G. Mell and Karen L. Engebretson.

                  "Market Value" shall mean with respect to a share of Common
         Stock that may be purchased by the Purchaser in accordance with Section
         8.1 hereof, the average closing price (or if there shall be no
         published closing price, the average of the closing bid and asked
         prices) of a share of Common Stock in the principal securities market
         in which the Common Stock is traded during the 20 most recent trading
         days ended three trading days prior to the exercise of the option or
         warrant that resulted in such purchase of Common Stock by the
         Purchaser.

                  "Material Adverse Effect" shall mean a material adverse effect
         on the assets, condition (financial or otherwise), affairs, business,
         results of operations or prospects of the Company, but shall not
         include general economic conditions, conditions affecting the Company
         and its competitors generally or those matters disclosed in Section 2.6
         of the Schedule of Exceptions.

                  "MBCA" shall mean the Minnesota Business Corporation Act.

                  "1999 Notes" shall mean the Company's subordinated notes dated
         in September 1999 in the aggregate principal amount of $3,000,000.

                  "Note and Warrant Purchase Price" shall mean the sum of
         $2,500,000.

                  "Notes" shall mean the Company's Subordinated Promissory Notes
         in the original aggregate principal amount of $2,500,000, in the form
         set forth as Exhibit D hereto.

                  "Person" shall mean an individual, partnership, corporation,
         business trust, joint stock company, trust, unincorporated association,
         joint venture, governmental authority

                                      -33-
<PAGE>

         or other entity of whatever nature, including, as appropriate, the
         Company or any subsidiary thereof.

                  "Proxy Statement" shall mean the proxy statement relating to
         the Special Meeting.

                  "Registration Rights Agreement" shall mean the agreement dated
         the date hereof between the Company and the Purchaser in the form
         attached hereto as Exhibit E.

                  "Reserved Shares" shall mean the aggregate of the shares of
         Common Stock issuable (a) upon exercise of the Warrant and the First
         Option, and (b) upon conversion of the Second Option Shares.

                  "SEC Documents" shall mean (a) all reports filed by the
         Company under the Exchange Act, including those filed pursuant to
         Section 13(a) or 15(d) thereof, and (b) all registration statements
         filed by the Company under the Securities Act, whether or not declared
         effective by the Commission, in each case for the three years preceding
         the date hereof.

                  "Second Option" shall mean the right and option of IWHC to
         sell the Second Option Shares to the Purchaser pursuant to the Second
         Option Agreement.

                  "Second Option Agreement" shall mean that certain agreement of
         even date herewith between IWHC and the Purchaser.

                  "Second Option Shares" shall mean 2,428,600 shares of Series B
         Preferred Stock and 285,700 shares of Series C Preferred Stock.

                  "Securities Act" shall mean the Securities Act of 1933, as
         amended.

                  "Series B Preferred Stock" shall mean the Company's Series B
         Convertible Participating Preferred Stock, $.001 par value.

                  "Series C Preferred Stock" shall mean the Company's Series C
         Convertible Participating Preferred Stock, $.001 par value.

                                      -34-
<PAGE>

                  "Special Meeting" shall mean a special meeting of shareholders
         of the Company, the agenda for which shall include all approvals
         required for the transactions contemplated by the Transaction
         Documents, including without limitation, those required under Sections
         302A.671 and 302A.673 of the MBCA and the rules of the Nasdaq Stock
         Market (the "Special Meeting Approvals").

                  "Subsequent Financing" shall mean the offer, sale, grant of an
         option to purchase, or other disposition (or the announcement of an
         offer, sale, grant of an option to purchase or other disposition) of
         any equity or equivalent security of the Company or any Subsidiary.

                  "Subsequent Financing Notice" shall mean a written notice of a
         Subsequent Financing.

                  "Subsidiaries" shall mean those corporations of which more
         than 50% of the outstanding shares of stock of each class having
         ordinary voting power is owned or controlled, directly or indirectly,
         by the Company.

                  "Transaction Documents" shall mean this Agreement, the Notes,
         the Warrant and the Registration Rights Agreement.

                  "Warrant" shall mean the warrant to purchase 1,250,000 shares
         of Common Stock, in the form set forth as Exhibit F hereto.

                  "Warrant Shares" shall mean the Common Stock issuable upon
         exercise of the Warrant.

                  "Working Capital Lender" shall mean IWHC or the Purchaser, as
         the case may be.

                  "Working Capital Loan" shall mean a loan made by either of
         IWHC or the Purchaser to the Company, which shall represent the
         purchase of a subordinated note substantially in the form of the Notes
         in the principal amount of such Working Capital Loan. Each such Note
         shall be delivered to the Working Capital Lender against wire transfer
         of such Working Capital Loan to an account designated by the Company.

         22. Miscellaneous.

                                      -35-
<PAGE>

                  22.1 Additional Agreements; Cooperation. Subject to the terms
         and conditions herein provided, each of the parties hereto shall use
         its reasonable commercial efforts to take, or cause to be taken, all
         action and to do, or cause to be done, all things necessary, proper or
         advisable to consummate and make effective as promptly as practicable
         the transactions contemplated by this Agreement, and to cooperate with
         each other in connection with the foregoing, including using its
         reasonable efforts (i) to obtain all necessary waivers, consents and
         approvals from other parties, (ii) to obtain all necessary consents,
         approvals and authorizations as are required to be obtained under any
         federal, state or foreign law or regulations, (iii) to defend all
         lawsuits or other legal proceedings commenced or instituted by persons
         or entities other than the parties hereto challenging this Agreement or
         the consummation of the transactions contemplated hereby, (iv) to lift
         or rescind any injunction or restraining order or other order adversely
         affecting the ability of the parties to consummate the transactions
         contemplated hereby, and (v) to fulfill all conditions to this
         Agreement.

                  22.2 Survival of Representations, Warranties and Covenants.
         The representations, warranties and covenants of the Company and the
         Purchaser contained in or made pursuant to this Agreement shall survive
         the execution and delivery of this Agreement and the Closing and shall
         in no way be affected by any investigation of the subject matter
         thereof made by or on behalf of the Purchaser or the Company; provided,
         however, that the representations and warranties of the parties shall
         not survive beyond the third anniversary of the Closing.

                  22.3 Successors and Assigns. Except as otherwise provided
         herein, the terms and conditions of this Agreement shall inure to the
         benefit of and be binding upon the respective successors and assigns of
         the parties (including transferees of the Notes sold hereunder or the
         Reserved Shares). Nothing in this Agreement, express or implied, is
         intended to confer upon any party other than the parties hereto or
         their respective successors and permitted assigns any rights, remedies,
         obligations or liabilities under or by reason of this Agreement, except
         as expressly provided in this Agreement. The Company may not assign or
         transfer any of its rights under this Agreement without the prior
         written consent of the Purchaser. The Purchaser may assign and transfer
         its rights

                                      -36-
<PAGE>

         under this Agreement, in whole or in part, to any of its Affiliates at
         such times and upon such conditions as the Purchaser shall determine in
         its sole discretion subject to the obligations imposed on the Purchaser
         by this Agreement.

                  22.4 Governing Law; Jurisdiction. This Agreement and the other
         Transaction Documents shall be governed by, construed, applied and
         enforced in accordance with the laws of the State of Delaware,
         including the Uniform Commercial Code, except that no doctrine of
         choice of law shall be used to apply any law other than that of
         Delaware, and no defense, counterclaim or right of set-off given or
         allowed by the laws of any other state or jurisdiction, or arising out
         of the enactment, modification or repeal of any law, regulation,
         ordinance or decree of any foreign jurisdiction, shall be interposed in
         any action hereon. Any action or proceeding to enforce any right
         arising out of the Transaction Documents may be commenced in the courts
         of the State of Delaware or in the United States District Court in the
         State of Delaware, and the Company consents to such jurisdiction,
         agrees that venue will be proper in such courts in any such matter,
         agrees that New Castle County is the most convenient forum for
         litigation in any such suit, action or legal proceeding, and agrees
         that a summons and complaint commencing an action or proceeding in any
         such court shall be properly served and shall confer personal
         jurisdiction if served by registered or certified mail to the Company,
         or as otherwise provided by the laws of the State of Delaware or the
         United States of America. The Company agrees that a final judgment in
         any such action or proceeding shall be conclusive and may be enforced
         in other jurisdictions by suit on the judgment or in any other manner
         provided by law.

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

                  22.6 Titles and Subtitles. The titles and subtitles used in
         this Agreement are used for convenience only and are not to be
         considered in construing or interpreting this Agreement.

                  22.7 Notices. Unless otherwise provided, any notice required
         or permitted under this Agreement shall be given in writing and shall
         be deemed effectively given upon personal

                                      -37-
<PAGE>

         delivery (which shall include delivery by responsible overnight
         carrier)to the party to be notified or five days after deposit with the
         United States Post Office, by registered or certified mail, postage
         prepaid and addressed to the party to be notified at the address
         indicated for such party on the signature page hereof, or at such other
         address as such party may designate by written notice hereunder to the
         other parties, with a copy (which shall not constitute notice) to (a)
         in case of notices to the Company, to Dorsey & Whitney LLP, Pillsbury
         Center South, 220 South Sixth Street, Minneapolis, Minnesota 55402,
         Attention: Kenneth Cutler, Esq., (b) in case of notices to the
         Purchaser, to Olshan Grundman Frome Rosenzweig & Wolosky LLP, 505 Park
         Avenue, New York, New York 10022, Attention: David J. Adler, Esq., and
         (c) in the case of notices to IWHC to Paul, Hastings, Janofsky & Walker
         LLP, 695 Town Center Drive, Costa Mesa, California 92626, Attention:
         Peter J. Tennyson, Esq.

                  22.8 Finder's Fee. Each party represents that except as set
         forth in Section 22.8 of the Schedule of Exceptions, it neither is nor
         will be obligated for any finder's fee or commission in connection with
         the transactions contemplated by the Transaction Documents. The Company
         agrees to indemnify and hold harmless the Purchaser from any liability
         for any commission or compensation in the nature of a finder's fee (and
         the costs and expenses of defending against such liability or asserted
         liability) for which the Company or any of its officers, employees, or
         representatives is responsible.

                  22.9 Entire Agreement; Amendments and Waivers. This Agreement
         constitutes the full and entire understanding and agreement between the
         parties with regard to the subject hereof. Any term of this Agreement
         may be amended and the observance of any term of this Agreement may be
         waived (either generally or in a particular instance and either
         retroactively or prospectively), only with the written consent of the
         parties hereto.

                  22.10 Severability. If one or more provisions of this
         Agreement are held to be unenforceable under applicable law, such
         provision shall be excluded from this Agreement and the balance of the
         Agreement shall be interpreted as if such provision were so excluded
         and shall be enforceable in accordance with its terms.

                                      -38-
<PAGE>

                  22.11 Specific Performance. The parties hereto agree that
         irreparable damage would occur in the event any provision of this
         Agreement were not performed in accordance with the terms hereof and
         that the parties shall be entitled to specific performance of the terms
         hereof, in addition to any other remedy at law or equity, without the
         necessity of demonstrating the inadequacy of money damages.

                  22.12 Expenses and Taxes. Each party shall pay the fees and
         expenses of its advisers, counsel, accountants and other experts, if
         any, and all other expenses incurred by such party incident to the
         negotiation, preparation, execution, delivery and performance of this
         Agreement, except (a) as set forth in the Registration Rights Agreement
         and (b) that such expenses of the Company shall be limited to $650,000
         payable to Goldsmith, Agio, Helms & Lynner at the Closing plus other
         expenses not to exceed $250,000 in the aggregate. The Company shall pay
         any and all stamp and other taxes and fees payable or determined to be
         payable in connection with the execution, delivery, filing and
         recording of this Agreement and agrees to save the Purchaser harmless
         from and against any and all liabilities with respect to or resulting
         from any delay in paying or omission to pay such taxes and fees.

                  22.13 Waiver of Trial By Jury. TO THE EXTENT THEY MAY LEGALLY
         DO SO, THE PARTIES HERETO HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY
         JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING
         ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTION
         DOCUMENTS OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL
         TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT,
         THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED HERETO AND
         THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
         IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. TO THE
         EXTENT THEY MAY LEGALLY DO SO, THE PARTIES HERETO HEREBY AGREE THAT ANY
         SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE
         DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY
         FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 22.13 WITH ANY
         COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES
         HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.

                  22.14 Independence of Covenants. All covenants under this
         Agreement shall be given independent effect so that if a particular
         action or condition is not permitted by any one

                                      -39-
<PAGE>

         covenant, the fact that it would be permitted by another covenant, by
         an exception thereto, or would otherwise be within the limitations
         thereof, shall not avoid the occurrence of breach of this Agreement if
         such action is taken or condition exists.

                  22.15 IWHC Waiver of Preemptive Rights. By its signature to
         this Agreement, IWHC (as the holder of all issued and outstanding
         shares of the Company's Series B Preferred Stock and Series C Preferred
         Stock), hereby irrevocably waives, solely with respect to the
         transactions contemplated by this Agreement (including without
         limitation, the issuance of the First Option, the Warrant and the
         Reserved Shares), the preemptive rights provisions set forth in Section
         8 of the Certificate of Designation of Series of Preferred Stock
         relating to the Series B Preferred Stock and Section 7 of the
         Certificate of Designation of Series of Preferred Stock relating to the
         Series C Preferred Stock.

         IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.

                                        FIELDWORKS, INCORPORATED

                                        By:  /s/ David G. Mell
                                             --------------------------------
                                             David G. Mell, President

                                             Address: 7631 Anagram Drive
                                                      Eden Prairie, MN 55344

                                        FWRKS ACQUISITION CORP.

                                        By:  /s/ Pierre McMaster
                                             --------------------------------
                                             Pierre McMaster, President

                                             Address: Teknor Applicom Inc.
                                                      616 Cure-Boivin

                                      -40-
<PAGE>

                                                      Boisbriand, QC Canada
                                                      J7G 2A7

ACKNOWLEDGED AND AGREED SOLELY
WITH RESPECT TO THE PROVISIONS
OF SECTIONS 8.4, 9, 16 AND 22.15
HEREOF:

INDUSTRIAL-WORKS HOLDING CO., LLC

By: /s/ Robert D.D. Forbes
    --------------------------------
    Name:  Robert D.D. Forbes
    Title: Managing Director

Address: 19200 Van Karman Avenue
         Suite 400
         Irvine, California 92612

                                      -41-<PAGE>

EXHIBIT 10.3

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. ACCORDINGLY, THIS WARRANT
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT (1) AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO FIELDWORKS, INCORPORATED THAT SUCH SALE,
TRANSFER OR OTHER DISPOSITION MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS OR (2) SUCH
REGISTRATION.

THIS WARRANT AND THE SECURITIES THAT MAY BE ACQUIRED UPON THE EXERCISE OF THIS
WARRANT ARE SUBJECT TO A PURCHASE AND OPTION AGREEMENT DATED JUNE 29, 2000, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. SUCH PURCHASE
AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR CERTAIN RESTRICTIONS UPON THE
EXERCISE, SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
SECURITIES EVIDENCED BY THIS CERTIFICATE.

                            FIELDWORKS, INCORPORATED

                                     WARRANT
                                   TO PURCHASE
                             SHARES OF COMMON STOCK

         For value received, FWRKS Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Kontron Embedded Computers AG, a German corporation
(together with its successors or assigns, the "Holder"), is entitled to purchase
from FieldWorks, Incorporated, a Minnesota corporation (the "Company"), up to
1,250,000 fully paid and nonassessable shares of the Company's common stock,
$.001 par value per share (the "Common Stock"), or such greater or lesser number
of such shares as may be determined by application of the anti-dilution
provisions of this Warrant, at the price of $1.00 per share, subject to
adjustments as noted below (the "Exercise Price").

         This Warrant is being issued by the Company pursuant to a Purchase and
Option Agreement (the "Purchase Agreement"), dated June 29, 2000, between the
Company and FWRKS Acquisition Corp. Subject to Section 10.1 of the Purchase
Agreement, this Warrant may be exercised by Holder at any time or from time to
time prior to the close of business on November 15, 2000. Notwithstanding
anything to the contrary herein, if the Closing Date (as such term is defined in
the Purchase Agreement) does not occur on or prior to November 15, 2000, this
Warrant shall not vest and shall immediately terminate.

         This Warrant is subject to the following terms and conditions:
<PAGE>

         1. Exercise. The rights represented by this Warrant may be exercised by
the Holder, in whole or in part, by written election, in the form set forth
below, by the surrender of this Warrant (properly endorsed if required) at the
principal office of the Company, and by payment to it by cash, certified check
or bank draft of the Exercise Price for the shares to be purchased. The shares
so purchased shall be deemed to be issued as of the close of business on the
date on which this Warrant has been exercised by payment to the Company of the
Exercise Price. Certificates for the shares of stock so purchased, bearing the
restrictive legend set forth at the end of this Warrant, shall be delivered to
the Holder within 15 days after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
has not been exercised shall also be delivered to the Holder hereof within such
time.

         2. Payment of Exercise Price. The Exercise Price may either be paid as
described in Section 1 above or, at Holder's option, all or any portion of the
Exercise Price may be paid (i) by delivery by the Holder to the Company of such
principal amount of Notes (as defined in the Purchase Agreement) which, together
with accrued interest thereon, equals or exceeds the aggregate Exercise Price,
in which case the Company shall issue a replacement Note to the Holder for any
amount in excess of such Exercise Price, or (ii) by surrendering a portion of
the shares issuable upon exercise of this Warrant. In the latter case, the value
of the shares so surrendered shall be the closing price of the Common Stock on
the date of Holder's notice of exercise, or, if the Common Stock is not then
listed or admitted for trading on any national securities exchange or automated
quotation system or quoted in the over-the-counter market, the fair value
thereof (as of a date that is within 20 days of the date as of which the
determination is to be made) determined in good faith by the Board of Directors
of the Company.

         3. Shares. All shares of Common Stock that may be issued upon the
exercise of the rights represented by this Warrant shall, upon issuance, be duly
authorized and issued, fully paid and nonassessable shares. During the period
within which the rights represented by this Warrant may be exercised, the
Company shall at all times have authorized and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.

         4. Adjustment. The Exercise Price shall be subject to adjustment from
time to time as hereinafter provided in this Section 4:

                  (a) If the Company at any time divides the outstanding shares
         of its Common Stock into a greater number of shares (whether pursuant
         to a stock split, stock dividend or otherwise), and conversely, if the
         outstanding shares of its Common Stock are combined into a smaller
         number of shares, the Exercise Price in effect immediately prior to
         such division or combination shall be proportionately adjusted to
         reflect the reduction or increase in the value of each such share of
         Common Stock.

                  (b) If any capital reorganization or reclassification of the
         capital stock of the Company, or consolidation or merger of the Company
         with another corporation, or sale of

                                      -2-
<PAGE>

         all or substantially all of its assets to another corporation shall be
         effected in such a way that holders of the Company's Common Stock shall
         be entitled to receive stock, securities or assets with respect to or
         in exchange for such Common Stock, then, as a condition of such
         reorganization, reclassification, consolidation, merger or sale, the
         Holder shall have the right to purchase and receive upon the basis and
         upon the terms and conditions specified in this Warrant and in lieu of
         the shares of the Common Stock immediately theretofore purchasable and
         receivable upon the exercise of the rights represented hereby, such
         shares of stock, other securities or assets as would have been issued
         or delivered to the Holder if Holder had exercised this Warrant and had
         received such shares of Common Stock immediately prior to such
         reorganization, reclassification, consolidation, merger or sale. The
         Company shall not effect any such consolidation, merger or sale unless
         prior to the consummation thereof the successor corporation (if other
         than the Company) resulting from such consolidation or merger or the
         corporation purchasing such assets shall assume by written instrument
         executed and delivered to the Holder at the last address of the Holder
         appearing on the books of the Company the obligation to deliver to the
         Holder such shares of stock, securities or assets as, in accordance
         with the foregoing provisions, the Holder may be entitled to purchase.

                  (c) If and whenever the Company shall (1) issue or sell any
         shares of its Common Stock for a consideration per share less than the
         Exercise Price in effect immediately prior to the time of such issuance
         or sale, (2) issue or sell any warrants, options or other rights to
         acquire shares of its Common Stock (each, an "Option") at a purchase
         price less than the Exercise Price in effect immediately prior to the
         time of such issuance or sale or (3) issue or sell any other securities
         that are convertible into shares of its Common Stock (each, a
         "Convertible Security") for a purchase or exchange price less than the
         Exercise Price in effect immediately prior to the time of such issuance
         or sale (except for the issuance or sale of shares of the Company's
         Common Stock pursuant to stock option plans, purchase plans or other
         employee stock incentive programs adopted by the Board prior to the
         date hereof), then, upon such issuance or sale, the Exercise Price
         shall be reduced to the price (calculated to the nearest cent)
         determined by dividing (A) an amount equal to the sum of (1) the number
         of shares of the Common Stock outstanding immediately prior to such
         issue or sale multiplied by the then existing Exercise Price and (2)
         the consideration, if any, received by the Company upon such issue or
         sale plus the consideration to be received by the Company upon the
         exercise of such Options by (B) an amount equal to the sum of (1) the
         number of shares of its Common Stock outstanding immediately prior to
         such issue or sale and (2) the number of its shares of Common Stock
         thus issued or sold or issuable or saleable upon the exercise of such
         Options or the conversion of such Convertible Securities; provided,
         however, that in the event that any such Option expires or is
         terminated prior to the exercise of this Warrant, the Exercise Price
         shall be recalculated by deleting such Option and provided further that
         if an adjustment is made to the Exercise Price as a result of the
         issuance or sale of any such Options or Convertible Securities, no
         further adjustment shall be made to the Exercise Price at the time such
         Options are exercised or Convertible Securities are converted.

                                      -3-
<PAGE>

                  (d) Upon each adjustment of the Exercise Price, the Holder
         shall thereafter be entitled to purchase, at the Exercise Price
         resulting from such adjustment, the number of shares obtained by
         multiplying the Exercise Price in effect immediately prior to such
         adjustment by the number of shares purchasable pursuant hereto
         immediately prior to such adjustment and dividing the product thereof
         by the Exercise Price resulting from such adjustment.

                  (e) If any Common Stock, Option or Convertible Security is
         issued or sold or deemed to have been issued or sold for cash, the
         consideration received therefor shall be deemed to be the amount
         received by the Company therefor (net of discounts, commissions and
         related expenses). If any Common Stock, Option or Convertible Security
         is issued or sold for a consideration other than cash, the amount of
         the consideration other than cash received by the Company shall be the
         fair value of such consideration as of the date of receipt. If any
         Common Stock, Option or Convertible Security is issued to the owners of
         the non-surviving entity in connection with any merger in which the
         Company is the surviving company, the amount of consideration therefor
         shall be deemed to be the fair value of such portion of the net assets
         and business of the non-surviving entity as is attributable to such
         Common Stock, Option or Convertible Security, as the case may be. The
         fair value of any consideration other than cash and securities shall be
         determined jointly by the Company and Holders representing a majority
         of the holders of the Warrants issued pursuant to the Purchase
         Agreement. If such parties are unable to reach agreement within a
         reasonable period of time, the Holders representing a majority of the
         holders of the Warrants issued pursuant to the Purchase Agreement may,
         upon a reasonable good faith determination by such Holder that an
         appraisal is necessary, request in a timely manner that the fair value
         of such consideration be determined by an independent appraiser
         experienced in valuing such type of consideration jointly selected by
         the Company and the registered Holder of this Warrant. The
         determination of such appraiser shall be final and binding upon the
         parties, and the fees and expenses of such appraiser shall be borne by
         the Company.

                  (f) In case any Option is issued in connection with the issue
         or sale of other securities of the Company, together comprising one
         integrated transaction in which no specific consideration is allocated
         to such Option by the parties thereto, the Option shall be deemed to
         have been issued for a consideration of $.001.

                  (g) In the event that the Company shall at any time prior to
         the exercise of all Warrants declare a dividend (other than a dividend
         consisting solely of shares of Common Stock) or otherwise distribute to
         its stockholders any assets, property, rights, evidences or
         indebtedness, securities (other than shares of Common Stock), whether
         issued by the Company or by another, or any other thing of value, the
         Holder of the unexercised Warrants shall thereafter be entitled, in
         addition to the shares of Common Stock or other securities and property
         receivable upon the exercise thereof, to receive, upon the exercise of
         such Warrants, the same property, assets, rights, evidences of
         indebtedness, securities or any other thing of value that they would
         have been entitled to receive at the time of such dividend or
         distribution as if the Warrants had been exercised immediately prior to
         the record date for

                                      -4-
<PAGE>

         such dividend or distribution. At the time of any such dividend or
         distribution, the Company shall make appropriate reserves to ensure the
         timely performance of the provisions of this Section 4(g).

                  (h) Upon any adjustment of the Exercise Price, the Company
         shall give prompt written notice thereof to the Holder stating the
         Exercise Price resulting from such adjustment and the increase or
         decrease, if any, in the number of shares purchasable at such price
         upon the exercise of this warrant, setting forth in reasonable detail
         the method of calculation and the facts upon which such calculation is
         based.

         5. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of this Warrant, and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.

         6. Exchange and Replacement of Warrant. Each certificate representing a
Warrant is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant certificate of like tenor and date representing in the aggregate the
right to purchase the same number of securities in such denominations as shall
be designated by the Holder thereof at the time of such surrender.

         Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant certificate, and,
in the case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant certificate of like
tenor, in lieu thereof.

         7. No Avoidance or Impairment. The Company will not, by amendment of
its Articles of Incorporation, including, without limitation, amendment of the
par value of its Common Stock, or through reorganization, consolidation, merger,
dissolution, issuance of capital stock or sale of treasury stock (otherwise than
upon exercise of this Warrant) or sale of assets, by effecting any subdivision
of or stock split or stock dividend with respect to its Common Stock, or by any
other voluntary act or deed, avoid or seek to avoid the performance or
observance of any of the covenants, stipulations or conditions in this Warrant
to be observed or performed by the Company. The Company will at all times in
good faith assist, insofar as it is able, in the carrying out of all of the
provisions of this Warrant (including, but not limited to, the provisions of
Section 4) in a reasonable manner and in the taking of all other action that may
be necessary in order to protect the rights of the Holder, including, but not
limited to protection against dilution in the manner required by the provisions
of this Warrant. In the event that the Company shall after the date hereof issue
securities with greater or superior voting rights than the shares of Common
Stock outstanding as of the date hereof, the Holder, at its option, may receive
upon exercise of any Warrant either shares of Common Stock or a like number of
such securities with greater or superior voting rights.

                                      -5-
<PAGE>

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

         9. Registration Rights. The Holder shall be entitled to the benefit of
the provisions of that certain Registration Rights Agreement between the Company
and FWRKS Acquisition Corp. dated June 29, 2000.

         10. Transfer. Subject to certain restrictions set forth in the Purchase
Agreement, this Warrant and all rights hereunder are transferable, in whole or
in part, at the principal office of the Company by the holder hereof in person
or by duly authorized attorney, upon surrender of this Warrant properly endorsed
to any person or entity who represents in writing that such person or entity is
acquiring the Warrant for investment and without any view to the sale or other
distribution thereof. Each holder of this Warrant, by taking or holding the
same, consents and agrees that the bearer of this Warrant, when endorsed, may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights represented by this Warrant, or to the transfer hereof on the books of
the Company, any notice to the contrary notwithstanding; but until such transfer
on such books, the Company may treat the registered owner hereof as the owner
for all purposes. Any transferee of this Warrant and any rights hereunder, by
acceptance thereof, agrees to assume all of the obligations of the Holder and to
be bound by all of the terms and provisions of this Warrant.

         11. Notices. All demands and notices to be given hereunder shall be
delivered or sent by first class mail, postage prepaid; in the case of the
Company, addressed to its corporate headquarters, Attention: Chief Financial
Officer, 7631 Anagram Drive, Eden Prairie, MN 55344, until a new address shall
have been substituted by like notice; and in the case of Holder, addressed to
Holder at the address written below, until a new address shall have been
substituted by like notice.

[The remainder of this page intentionally is left blank; signature page follows]

                                      -6-
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this warrant to be executed
and delivered by a duly authorized officer.

Dated: June 29, 2000

                                        FIELDWORKS, INCORPORATED

                                        By         /s/  David G. Mell
                                            ------------------------------------
                                            Name:  David G. Mell
                                            Title: President and Chief
                                                   Executive Officer

                                      -7-
<PAGE>

                             RESTRICTION ON TRANSFER

         The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state and may not be sold, transferred or otherwise disposed of except pursuant
to an effective registration statement or exemption from registration under the
foregoing laws. Accordingly, the shares represented by this certificate may not
be sold, transferred or otherwise disposed of without (i) an opinion of counsel
reasonably satisfactory to FieldWorks, Incorporated that such sale, transfer or
other disposition may lawfully be made without registration under the Securities
Act of 1933 and applicable state securities laws or (ii) such registration.

                                      -8-
<PAGE>

                                WARRANT EXERCISE

                (To be signed only upon exercise of this warrant)

         The undersigned, the Holder of the foregoing warrant, hereby
irrevocably elects to exercise the purchase right represented by such warrant
for, and to purchase thereunder, __________ shares of common stock of
FieldWorks, Incorporated, to which such warrant relates and herewith makes
payment herewith in full therefore at a price per share provided by such
Warrant. The undersigned hereby requests that the certificates for such shares
be issued in the name of, and be delivered to ____________________, whose
address is set forth below the signature of the undersigned.

Dated: ____________________

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

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

-------------------------------------  -------------------------------------

-------------------------------------

-------------------------------------

-------------------------------------
Please print present name and address

                                      -9-
<PAGE>

                               WARRANT ASSIGNMENT

                (To be signed only upon transfer of this warrant)

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

Dated:__________________________

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

-------------------------------------  Social Security or other Tax
                                       Identification No.

-------------------------------------  -------------------------------------

-------------------------------------

-------------------------------------
Please print present name and complete address

                                      -10-

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