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      EXHIBIT
        10.1

       

      STANDBY
        JOINT VENTURE FINANCING AGREEMENT

       

      THIS
        STANDBY JOINT VENTURE FINANCING AGREEMENT
        (the
“Agreement”)
        is
        entered into as of the 18th day of August, 2006, by and among Wits Basin
        Precious Minerals Inc., a Minnesota corporation (the “Company”),
        and
        Andrew Green, a resident of Ohio (“Green”).

       

      INTRODUCTION

      A. The
        Company and Green wish to set forth the terms of an agreement whereby Green
        will
        review and contemplate 60% participation in joint venture or financing
        arrangements for purposes and on terms set forth by the Company (each, a
        “Proposal”).
        Contemporaneously herewith, the Company is entering into a similar agreement
        with Pacific Dawn Capital, LLC, a California limited liability company
        (“Pacific
        Dawn”),
        whereby Pacific Dawn will have a similar right to participate in 40% of each
        Proposal. 

       

      B. The
        Company and Green wish to enter into this Agreement to set certain terms
        relating to Green’s consideration of Proposals.

       

      AGREEMENT

       

      NOW,
        THEREFORE, in consideration of the foregoing facts and premises hereby made
        a
        part of this Agreement, the mutual promises hereinafter set forth and for
        other
        good and valuable consideration the receipt and sufficiency of which are
        hereby
        acknowledged, the parties hereto, intending to be legally bound, hereby agree
        as
        follows:

       

      1.  JV
        Participation.
        On the
        terms and conditions hereof, and from the date hereof to August 18, 2008,
        Green
        hereby agrees to review and contemplate participation in any Proposals presented
        to Green by the Company. Each Proposal shall be in writing and set forth
        the
        amount and terms of such Proposal, and shall include information relating
        to the
        intended purpose of the Proposal (the “Project”).
        Green
        shall have a period of ten (10) business days from the date of his receipt
        of
        the written Proposal to provide the Company written notice of his election
        to
        participate in such Proposal, including the amount of such participation.
        The
        amount of a participation by Green in any Proposal shall hereinafter be referred
        to as a “Financing.”
The
        Company may, in its sole discretion, require Green and any other Participants
        (as defined in Section 2) to a Proposal, to enter into a written agreement
        setting forth the specific terms of the Proposal.

       

      This
        Agreement shall not be construed in any way to require the Company to present
        one or more Proposals to Green, and the Company may choose to present Proposals
        to any other party or parties in its sole discretion. 

       

      2.  Other
        Rights of Participation.
        Green
        acknowledges and agrees that his right to participate in any Proposal as
        set
        forth in Section 1 shall be subject to the right, on similar terms, of Pacific
        Dawn to participate in up to 40% of the amount of the Proposal. In the event
        Pacific Dawn elects not to participate in any of or all of the 40% of the
        Proposal to which it is entitled, Green shall be entitled to participate
        in any
        portion of the Proposal for which Pacific Dawn does not participate. Green
        further acknowledges and agrees that in the event, and to the extent, he
        does
        not elect to participate in any Proposal offered to him by the Company
        (including Green’s rejection of any portion of the 40% of a Proposal that
        Pacific Dawn does not elect to participate), the Company shall be entitled,
        in
        its sole discretion, to offer, at the same terms, any portion of a Proposal
        of
        which Green and Pacific Dawn do not participate to any one or more third
        parties. All of the participants to any Proposal shall be referred to herein
        as
“Participants.”
        

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.  Consideration.
        In
        consideration of Green’s agreement to review and consider Proposals as set forth
        herein, Green’s right to purchase up to 3,000,000 shares of the Company’s common
        stock at a purchase price per share of $0.20, as provided pursuant to that
        certain Amendment to Secured Convertible Promissory Note dated April 1, 2006
        by
        and between Green and the Company, shall be extended from August 31, 2006
        to
        March 31, 2007.

       

      4.  Proceeds.
        Subject
        to Green’s right to demand earlier repayment of any Financing pursuant to the
        terms hereof, any net proceeds to the Company from a Project shall be paid
        out
        in accordance with the following:

       

      (i)  Until
        such time that Green is paid an aggregate amount equal to three hundred fifty
        percent (350%) of his Financing relating to such Proposal and Project,
        Participants in the Proposal shall receive seventy percent (70%) of the net
        proceeds from such Project, to be split between the Participants in proportion
        to their percentage participation in such Proposal, with the remaining thirty
        percent (30%) to be retained by the Company to be used in its sole discretion;
        

       

      (ii)  After
        such time that Green has been paid an aggregate amount equal to three hundred
        fifty percent (350%) of his Financing relating to such Proposal and Project,
        the
        Participants in the Proposal shall receive ten percent (10%) of the net proceeds
        from such Project, to be split between the Participants in proportion to
        their
        percentage participation in such Proposal, with the remaining ninety percent
        (90%) to be retained by the Company to be used in its sole discretion.

       

      5.  Demand
        of Repayment of Financing.
        At any
        time after the date that is three years from the date of any Financing, provided
        that Green has not received proceeds from the Project to which the Financing
        relates in an aggregate amount equal to or more than such Financing, Green
        shall
        be entitled to demand that the Company repay Green an amount equal to the
        amount
        of the Financing less any and all proceeds from the Project paid to Green
        prior
        to such date (the “Remaining
        Financing Balance”).
        Notwithstanding the foregoing, in the event the Company’s Board of Directors
        determines in its reasonable good faith discretion that a Project is not
        economically viable as set forth in Section 7 hereof, Green shall be entitled
        to
        demand repayment with respect to such Financing in accordance with the terms
        of
        this Section prior to the expiration of three years from the date of the
        Financing.

       

      Any
        demand made pursuant to this Section shall be in writing and delivered to
        the
        Company at its principal place of business, specifying the amount of the
        Remaining Financing Balance and the Proposal to which it relates (“Demand
        Notice”).
        The
        Company shall be required to repay to Green the Remaining Financing Balance
        specified in the Demand Notice within 180 days of the Company’s receipt of the
        Demand Notice. 

      

      Upon
        receipt of a Demand Notice for the Remaining Financing Balance, the Company’s
        obligations under Section 4 to pay Green a portion of the net proceeds of
        the
        Project to which the Demand Notice relates shall terminate in full, and any
        future net proceeds relating to the Project that would have been paid to
        Green
        will be retained by the Company. 

       

      6.  No
        Debt Covenant of the Company.
        At any
        time Green is a Participant in one or more Projects and has not received
        proceeds from each respective Project in an aggregate amount equal to or
        more
        than his Financing relating to such respective Project, the Company shall
        not,
        without the written consent of Green, (i) incur any indebtedness for money
        borrowed in excess of $100,000, except for trade payables, or taxes, fees,
        levies or charges incurred in the ordinary course of business, leases or
        subleases or licenses granted or entered into in the ordinary course of
        business, or equipment leases or purchase financing incurred in the ordinary
        course of business or (ii) grant, or permit to be created any mortgage, pledge,
        lien, security interest or other charge or encumbrance of any kind.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.  Additional
        Rights of Green.
        In the
        event any Project in which Green participates does not have any economic
        value
        to the Company and will not provide proceeds to the Company and the
        Participants, as determined in the reasonable good faith discretion of the
        Company’s Board of Directors, the Participants to such Project, in proportion to
        their percentage participation in the Proposal relating to such Project,
        shall
        be entitled to obtain the Company’s interest in the Project and any assets
        acquired by the Company specifically for such Project. With respect to any
        Project, the Company and Green shall contemplate entry into a security agreement
        relating to the assets underlying the Project. 

       

      8.  Miscellaneous.

       

      (i)  Amendment
        and Waiver.
        This
        Agreement may be amended or modified, and any provision hereunder may be
        waived,
        only upon the written consent of the Company and the Green.

       

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

       

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

       

      (iv)  Notices.
        All
        notices, requests, consents, and other communications hereunder shall be
        in
        writing and shall be deemed effectively given and received when delivered
        in
        person or by national overnight courier service or by certified or registered
        mail, return-receipt requested, or by facsimile, addressed as
        follows:

       

      if
        to the
        Company:

       

      Wits
        Basin Precious Minerals Inc.

      80
        South
        Eighth Street, Suite 900

      Minneapolis,
        Minnesota 55402

      Attention:
        Mark D. Dacko, Chief Financial Officer

      Facsimile:
        (612) 395-5276

       

      if
        to
        Green:

       

      Andrew
        Green

      5101
        Creek Road

      Cincinnati,
        OH 45242

      Facsimile:
        (513) 794-1303

       

      (v)  Governing
        Law; Venue.
        This
        Agreement shall be governed by the laws of the State of Minnesota without
        regard
        to its conflicts-of-law principles. The parties expressly acknowledge and
        agree
        that any judicial action to enforce any right of any party under this Agreement
        may be brought and maintained in Minnesota state or federal courts. Accordingly,
        the parties hereby submit to the process, jurisdiction and venue of any such
        court. Each party hereby waives, and agrees not to assert, any claim that
        it is
        not personally subject to the jurisdiction of the foregoing courts in the
        State
        of Minnesota or that any action or other proceeding brought in compliance
        with
        this Section is brought in an inconvenient forum.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (vi)  Counterparts.
        This
        Agreement may be executed in any number of counterparts, all of which taken
        together shall constitute one agreement binding on the parties. Facsimile
        and
        electronically transmitted signatures shall be valid and binding to the same
        extent as original signatures. Each party shall become bound by this Agreement
        immediately upon signing and delivering any counterpart, independently of
        the
        signature of any other party. Nevertheless, in making proof of this Agreement,
        it will be necessary to produce only one copy signed by the party to be
        charged.

       

      (vii)  Further
        Assurances.
        Each
        party hereby agrees to execute and deliver such additional documents and
        instruments and to perform such additional acts as may be necessary or
        appropriate to effectuate, carry out and perform all of the terms, provisions
        and conditions of this Agreement and the transactions contemplated
        hereby.

      

      

      IN
        WITNESS WHEREOF, the parties hereto have set their hands to this Agreement
        to be
        effective as of the date first set forth above.

       

      

      
        	COMPANY:	 	GREEN:
	 	 	 	 
	WITS
                BASIN
                PRECIOUS MINERALS INC.	 	 	 
	 	 	 	 	 
	
                By:

              	
                /s/
                  Mark D. Dacko

              	 	
                By:

              	
                /s/
                  Andrew Green

              
	
                Its:

              	
                CFOEXHIBIT 10.1

                                 PAKETERIA GMBH

                         COMMON STOCK PURCHASE AGREEMENT
                         -------------------------------

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                                                                           Page
                                                                           ----

0.Shareholder Structure.......................................................1

1.Purchase and Sale of Common Stock...........................................2

  1.1      Issuance of Common Stock...........................................2
  1.2      Closing; Delivery..................................................3
  1.3      Use of Proceeds....................................................3
  1.4      Defined Terms Used in this Agreement...............................3

2.Representations and Warranties of the Company...............................5

  2.1      Organization, Good Standing, Corporate Power and Qualification.....5
  2.2      Capitalization, Articles and Commercial Register...................5
  2.3      Subsidiaries.......................................................6
  2.4      Authorization......................................................6
  2.5      Valid Issuance of Shares...........................................6
  2.6      Governmental Consents and Filings..................................7
  2.7      Litigation.........................................................7
  2.8      Intellectual Property..............................................7
  2.9      Compliance with Other Instruments..................................8
  2.10     Agreements; Actions................................................8
  2.11     Certain Transactions...............................................9
  2.12     Rights of Registration and Voting Rights...........................9
  2.13     Absence of Liens...................................................9
  2.14     Financial Statements..............................................10
  2.15     Changes...........................................................10
  2.16     Employee Matters..................................................11
  2.17     Tax Returns and Payments..........................................12
  2.18     Insurance.........................................................12
  2.19     Confidential Information and Invention Assignment Agreements......12
  2.20     Permits...........................................................12
  2.21     Corporate Documents...............................................12
  2.22     Environmental and Safety Laws.....................................13
  2.23     Disclosure........................................................13

3.Representations and Warranties of the Purchasers...........................13

  3.1      Authorization.....................................................13

4.Conditions to the Purchasers' Obligations at Closing.......................13

  4.1      Representations and Warranties....................................13
  4.2      Performance.......................................................14
  4.3      Qualifications....................................................14
  4.4      Investors' Rights Agreement.......................................14
  4.5      Long Term Note....................................................14
  4.6      Long Term Note Option Agreement...................................14

                                       -i-
<PAGE>

                                TABLE OF CONTENTS
                                -----------------
                                   (continued)

  4.7      M&R Option Agreement..............................................14
  4.8      Roesch Employment Agreement.......................................14
  4.9      Roesch Release....................................................14
  4.10     Capital Increase and Restated Articles............................14
  4.11     Proceedings and Documents.........................................14

5.Conditions of the Company's Obligations at Closing.........................14

  5.1      Representations and Warranties....................................14
  5.2      Performance.......................................................14

6.Miscellaneous..............................................................15

  6.1      Survival of Warranties............................................15
  6.2      Successors and Assigns............................................15
  6.3      Governing Law.....................................................15
  6.4      Titles and Subtitles; Interpretation..............................15
  6.5      Notices...........................................................15
  6.6      No Finder's Fees..................................................15
  6.7      Attorney's Fees...................................................15
  6.8      Amendments and Waivers............................................16
  6.9      Severability......................................................16
  6.10     Delays or Omissions...............................................16
  6.11     Entire Agreement..................................................16
  6.12     Dispute Resolution................................................16
  6.13     Waiver of Jury Trial..............................................17

  Exhibit A -       Capital Increase
  Exhibit B -       Form of Amended and Restated Articles
  Exhibit C -       Form of Investors' Rights Agreement
  Exhibit D -       Form of Long Term Note
  Exhibit E -       Form of Long Term Note Option Agreement
  Exhibit F -       Form of Roesch Employment Agreement
  Exhibit G -       Roesch Releases
  Exhibit H -       Disclosure Schedule
  Exhibit I -       Current Articles of Association of the Company
  Exhibit J -       Excerpt from the Commercial Register

                                      -ii-
<PAGE>

                         COMMON STOCK PURCHASE AGREEMENT
                         -------------------------------

         THIS COMMON STOCK PURCHASE  AGREEMENT (this  "Agreement") is made as of
the 7th day of August, 2006 among

1.       Paketeria GmbH, a limited  liability company  incorporated  under the
         laws of Germany,

2.       Andy Roesch (the "Principal")

3.       Ralf Budde

4.       Joseph Benson

5.       John Moore

6.       Richard Rimer

     - the parties 2. through 6 jointly hereinafter: "Current Shareholders" -

         and

7.       Data Systems & Software Inc., a Delaware corporation (the "Purchaser").

         The parties hereby agree as follows:

         0.       Shareholder Structure

         The share  capital of the Company in the total amount of (euro)  37,450
         currently is held as follows:

         Shareholder                     Shares           Total Amount of Shares
         -------------            -------------           ----------------------
         Andy Rosch               (euro) 18,750
                                   (euro) 4,950                    (euro) 23,700
         -------------            -------------           ----------------------
         Ralf Budde                (euro) 1,600
                                   (euro) 1,400                     (euro) 3,000
         -------------            -------------           ----------------------
         Joseph Benson               (euro) 950                       (euro) 950
         -------------            -------------           ----------------------
         John Moore                (euro) 3,300
                                     (euro) 950
                                     (euro) 650                     (euro) 4,900
         -------------            -------------           ----------------------
         Richard Rimer             (euro) 3,350
                                     (euro) 900
                                     (euro) 650                     (euro) 4,900
         -------------            -------------           ----------------------
         Total                           37,450                           37,450

<PAGE>

      1.    Purchase and Sale of Common Stock.

            1.1.  Issuance of Common Stock.

                  (a) The Current  Shareholders  shall adopt by way of notarized
shareholders'  resolution,  and the  Company  shall  file  with  the  Commercial
Register  of the Lower  Court  ("Amtsgericht")  of Berlin  Charlottenburg  on or
before the Closing (as defined below):

                    (i) an increase  of the share  capital of the Company by way
of the  issuance  of a new  share  with a par  value of  (euro)  13,800  against
contribution  of the par value of (euro) 13,800 in cash plus an additional  agio
("Aufgeld") of (euro) 536,426 also in cash,  resulting in a total aggregate cash
contribution of (euro) 550,226 (the "Contribution"), along with the admission of
the  Purchaser as sole  subscriber  of such share,  all in the form of Exhibit A
(the "Capital Increase"); and

                    (ii)  the  Amended  and  Restated  Articles  in the  form of
Exhibit B attached to this Agreement (the "Restated Articles").

                  The   Current   Shareholders   shall   waive  their  right  to
participate in this capital increase.

                  (b) Subject to the terms and conditions of this Agreement, the
Purchaser  agrees to subscribe at the Closing and the Company agrees to issue to
the Purchaser a partial share with a par value of (euro) 11,800 of the new share
with a par value of (euro)  13,800 of the Common Stock  ("Stammkapital")  of the
Company pursuant to subsection (a)  subparagraph  (i) above,  against payment of
the cash  contribution as stipulated in subsection (a)  subparagraph  (i) above.
The share of Common Stock issued at the Closing is sometimes referred to in this
Agreement as the "Share".

                  (c) In  accordance  with the terms of the M&R  Stock  Purchase
Agreement,  the  Purchaser  shall  acquire a partial  share  with a par value of
(euro)  2,000 of the new share  with a par value of (euro)  13,800 of the Common
Stock as a result of the Purchaser's  acquisition of certain subscription rights
of John Moore and Richard Rimer to acquire a (euro) 2,000 share against  payment
of its par value (the "Subscription  Rights") which John Moore and Richard Rimer
assigned to the Purchaser  under the M&R Stock Purchase  Agreement.  The Company
and the Current  Shareholders  each hereby  confirms the valid  existence of the
Subscription  Rights as well as the valid assignment  hereunder to the Purchaser
of such  Subscription  Rights subject to the execution of the M&R Stock Purchase
Agreement and the exercise of the option contained therein.

                  (d) The parties  acknowledge  that the agio  stipulated  above
includes a  deduction  in the amount of (euro)  50,000 in  consideration  of the
advance payment made by the Purchaser to the Company  pursuant to the Memorandum
of Terms dated [ ]. Before such deduction, the total contribution (share capital
contribution  plus agio) would have amounted to (euro)  598,226,  resulting in a
purchase price of (euro) 50.70  (rounded) for each Euro of Common Stock (without
taking into account the (euro) 2,000 partial share  acquired at par value on the
basis of the Subscription Right).

                                       -2-
<PAGE>

            1.2. Closing; Delivery.

                  (a) The resolution and filing of the Capital Increase pursuant
to Sec. 1.1 (a) (i) and of the Restated  Articles  pursuant to Sec. 1.1 (a) (ii)
as well as the issuance and  subscription  of the Share pursuant to Sec. 1.1 (b)
shall take place before a German notary public,  at 10:00 a.m.  (EDT), on August
7,  2006,  or at such  other  time and place as the  Company  and the  Purchaser
mutually  agree upon,  orally or in writing (which time and place are designated
as the "Closing").

                  (b) At the Closing, the Purchaser shall arrange for payment of
the Contribution by check payable to the Company,  or by wire transfer to a bank
account designated by the Company.

            1.3.  Use of Proceeds.  The Company  will use the proceeds  from the
sale of the Shares for  Payment of  Permitted  Debt  Repayments  (as  defined in
Section 1.4) and ordinary working capital purposes.

            1.4. Defined Terms Used in this Agreement.  In addition to the terms
defined above,  the following terms used in this Agreement shall be construed to
have the meanings set forth or referenced below.

                  "Affiliate"  means, with respect to any specified Person,  any
other Person who or which,  directly or indirectly,  controls, is controlled by,
or is under  common  control  with such  specified  Person,  including,  without
limitation,  any partner,  officer,  director, member or employee of such Person
and any venture capital fund now or hereafter  existing that is controlled by or
under common control with one or more general  partners or managing  members of,
or shares the same management company with, such Person.

                  "Company  Intellectual  Property"  means all  patents,  patent
applications,  trademarks,  trademark applications,  service marks,  tradenames,
copyrights,  trade secrets,  licenses, domain names, mask works, information and
proprietary  rights  and  processes  as  are  necessary  to the  conduct  of the
Company's business as now conducted and as presently proposed to be conducted.

                  "Immediate   Family   Member"   means  a   child,   stepchild,
grandchild,  parent, stepparent,  grandparent,  spouse, sibling,  mother-in-law,
father-in-law,  son-in-law,  daughter-in-law,  brother-in-law, or sister-in-law,
including adoptive relationships, of a natural person referred to herein.

                  "Investors'  Rights  Agreement"  means the agreement among the
Company, the Purchaser and each other party listed therein, dated as of the date
of the Closing, in the form of Exhibit C attached to this Agreement.

                  "Key Employee" means any  executive-level  employee (including
division director and vice president-level positions) as well as any employee or
consultant  who  either  alone or in  concert  with  others  develops,  invents,
programs or designs any Company Intellectual Property.

                                      -3-
<PAGE>

                  "Knowledge",   including   the   phrase   "to  the   Company's
knowledge,"  shall mean the actual knowledge after  reasonable  investigation of
the following officers: the Principal and Viola Roesch.

                  "Long Term Note"  means the  promissory  note  executed by the
Company and delivered to the Principal,  dated as of the date of the Closing, in
the form of Exhibit D attached to this Agreement.

                  "Long Term Note Option  Agreement"  means the agreement  among
the Principal  and the  Purchaser,  dated as of the date of the Closing,  in the
form of Exhibit E attached to this Agreement.

                  "Material  Adverse Effect" means a material  adverse effect on
the business,  assets  (including  intangible  assets),  liabilities,  financial
condition, property, prospects or results of operations of the Company.

                  "M&R  Option  Agreement"  means the  agreement  among  John A.
Moore, Richard Rimer and the Purchaser,  dated as of the date of the Closing, in
a form satisfactory to the Purchaser.

                  "Person"  means  any  individual,  corporation,   partnership,
trust, limited liability company, association or other entity.

                  "Permitted Debt  Repayments"  means payments by the Company to
the  following  Persons in the amounts set forth  opposite  such  Person's  name
below:

               Person                            Amount
               Andy Roesch                       (euro) 54,442
               Viola Roesch                      (euro) 25,000
               Berliner Volksbank eG             (euro) 88,605.06
                        Guarantee                (euro) 14,781
                                                 (euro) 94.34 (credit)
               Deutsche Bank AG                  (euro) 30,767

               Total                             (euro) 213,500.72

                  "Roesch  Employment  Agreement"  means the agreement among the
Company and the  Principal  dated as of the date of the Closing,  in the form of
Exhibit F attached to this Agreement.

                  "Roesch  Release"  means the release  delivered by each of the
Principal and Viola Roesch,  in the form of Exhibit G-1 and Exhibit G-2 attached
to this Agreement.

                  "Transaction  Agreements" means this Agreement, the Investors'
Rights Agreement,  the Long Term Note, the Long Term Note Option Agreement,  the
M&R Stock Purchase  Agreement,  the Roesch Employment  Agreement and each Roesch
Release.

                                      -4-
<PAGE>

      2.  Representations  and  Warranties  of the Company.  The Company and the
Principal, hereby represent and warrant, jointly and severally, to the Purchaser
that,  except as set forth on the Disclosure  Schedule  attached as Exhibit H to
this   Agreement   which   exceptions   shall  be  deemed  to  be  part  of  the
representations and warranties made hereunder, the following representations are
true and complete as of the date of the Closing,  except as otherwise indicated.
The  Disclosure  Schedule  shall be arranged in  sections  corresponding  to the
numbered and lettered sections and subsections  contained in this Section 2, and
the  disclosures in any section or subsection of the  Disclosure  Schedule shall
qualify other  sections and  subsections in this Section 2 only to the extent it
is readily  apparent from a reading of the  disclosure  that such  disclosure is
applicable to such other sections and subsections.  The disclosures contained in
the due  diligence  report  entitled  "Summary of the Financial  Statements  and
Contractual  Obligations  of  Paketeria  GmbH"  that is  part of the  Disclosure
Schedule  qualify  against all  Sections  of this  Section 2 to the extent it is
readily  apparent from a reading of the due diligence report that its content is
applicable to the representations and warranties contained in this Section 2.

            2.1. Organization, Good Standing, Corporate Power and Qualification.
The Company is a limited liability company duly organized,  validly existing and
in good standing under the laws of the Republic of Germany and has all requisite
corporate  power and  authority to carry on its business as presently  conducted
and as  proposed to be  conducted.  The  Company is duly  qualified  to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would have a Material Adverse Effect.

            2.2. Capitalization, Articles, Commercial Register.

                  (a) The  authorized  capital of the Company has a par value of
(euro)  37,450,  split as set  forth in the  table in Sec.  0 above in shares of
common stock (the "Common  Stock") with an aggregate par value of (euro) 37,450,
all of which are issued and outstanding. All of the outstanding shares of Common
Stock  have been duly  authorized,  are fully  paid and  nonassessable  and were
issued in compliance with all applicable  securities laws. Except for the Common
Stock described in the immediately  preceding sentence,  there is no other class
of capital stock or equity security of the Company authorized or issued. None of
the shares of Common  Stock in the Company are subject to any lien or  otherwise
encumbered  with any other third party rights or subject to any  restriction  of
assignment or transfer other than those restrictions expressly stipulated in the
current articles of association.

                  (b)  The  Company  has no  employee  stock  option  or  equity
incentive plan. There are no outstanding  options,  warrants,  rights (including
conversion or preemptive  rights and rights of first refusal or similar  rights)
or agreements, orally or in writing, to purchase or acquire from the Company any
shares of Common Stock, or any securities  convertible  into or exchangeable for
shares of Common Stock.

                  (c) Section 2.2(c) of the  Disclosure  Schedule sets forth the
capitalization  table of the  Company  effective  as of the entry of the capital
increase pursuant to Sec. 1.1 (a) (i) above in the commercial register.

                                      -5-
<PAGE>

                  (d) A true  and  complete  copy  of the  current  articles  of
association of the Company is attached to this Agreement as Exhibit I. There are
no additional  documents such as by laws, rules of procedure or the like dealing
with topics that are addressed,  or would usually be addressed,  in the articles
of association.

                  (e) The excerpt from the commercial  register  attached hereto
as Exhibit J is up to date.  There are no events  that can be  entered  into the
commercial register but have not been entered,  and there are no pending filings
to the commercial register.

                  (f) the Company is not party to any control agreement,  profit
and loss transfer agreement, profit pooling or other kind of corporate agreement
("Unternehmensvertrag").

            2.3.  Subsidiaries.  The Company does not  currently own or control,
directly or  indirectly,  any  interest in any other  corporation,  partnership,
trust, joint venture, limited liability company,  association, or other business
entity.  The Company is not a participant in any joint  venture,  partnership or
similar arrangement.

            2.4. Authorization. All corporate action required to be taken by the
Company's  managing directors  ("Geschaftsfuhrer")  and stockholders in order to
authorize the Company to enter into the Transaction Agreements, and to issue the
Shares at the Closing, has been taken or will be taken prior to the Closing. All
action on the part of the officers of the Company and stockholders necessary for
the execution and delivery of the Transaction Agreements, the performance of all
obligations of the Company under the  Transaction  Agreements to be performed as
of the  Closing,  and the  issuance and delivery of the Shares has been taken or
will be taken prior to the Closing.  Each Transaction  Agreement,  when executed
and delivered by their  respective  parties,  shall constitute valid and legally
binding  obligations  of the Company and (to the extent  they are  parties)  the
Current  Shareholders and Viola Roesch,  enforceable  against them in accordance
with their respective terms.

            2.5.  Valid  Issuance of Shares.  The Share,  when issued,  sold and
delivered in accordance  with the terms and for the  consideration  set forth in
this Agreement, will be validly issued, fully paid and nonassessable and free of
any liens or encumbrances or restrictions on transfer,  other than  restrictions
on transfer under the Transaction  Agreements and liens or encumbrances  created
by or imposed by the  Purchaser.  The shares of Common Stock  issuable  upon the
conversion of the Long Term Note will upon the execution of the conversion right
in  accordance  with the terms of the Long Term Note, be validly  issued,  fully
paid and  nonassessable and free of any liens or encumbrances or restrictions on
transfer other than  restrictions on transfer under the Transaction  Agreements,
applicable  laws  and  liens  or  encumbrances  created  by or  imposed  by  the
Purchaser.  The shares of Common  Stock  that are the  subject of the M&R Option
Agreement are currently and validly  issued,  fully paid and  nonassessable  and
free of any  liens or  encumbrances  or  restrictions  on  transfer  other  than
restrictions  on  transfer  under  the  Transaction  Agreements,  and  liens  or
encumbrances  created  by or  imposed  by  the  Purchaser  and  were  issued  in
compliance   with  all   applicable   laws.   Assuming   the   accuracy  of  the
representations  of the Purchaser in Section 3 of this  Agreement and subject to
the filings  described  in Section  2.6(ii)  below,  the Share and the shares of
Common Stock  issuable upon the  conversion of the Long Term Note will be issued
in compliance with all applicable laws.

                                      -6-
<PAGE>

            2.6. Governmental Consents and Filings. Assuming the accuracy of the
representations  made  by the  Purchaser  in  Section  3 of this  Agreement,  no
consent,  approval,  order or authorization of, or registration,  qualification,
designation,  declaration or filing with, any governmental authority is required
on  the  part  of  the  Company  in  connection  with  the  consummation  of the
transactions  contemplated  by the  Transaction  Agreements,  except for (i) the
filing of the  Restated  Articles and the Capital  Increase  pursuant to Section
1.1(a)(i), which will have been filed as of the Closing, and (ii) the filings of
the capital  increase(s) upon execution of the conversion  right(s)  pursuant to
the terms of the Long Term Note.

            2.7.  Litigation.  There  is no  claim,  action,  suit,  proceeding,
arbitration,  complaint,  charge or  investigation  pending or to the  Company's
knowledge, currently threatened (i) against the Company or any officer, director
or Key  Employee of the  Company;  or (ii) that  questions  the  validity of the
Transaction  Agreements  or the right of the  Company to enter into them,  or to
consummate the transactions contemplated by the Transaction Agreements; or (iii)
that  would  reasonably  be  expected  to have,  either  individually  or in the
aggregate,  a Material Adverse Effect. Neither the Company nor, to the Company's
knowledge,  any of its  officers,  directors  or Key  Employees is a party or is
named as subject to the provisions of any order, writ,  injunction,  judgment or
decree of any court or  government  agency  or  instrumentality  (in the case of
officers,  directors or Key Employees,  such as would affect the Company). There
is no action, suit,  proceeding or investigation by the Company pending or which
the Company intends to initiate.  The foregoing  includes,  without  limitation,
actions,  suits,  proceedings or investigations pending or threatened in writing
(or any basis therefor known to the Company)  involving the prior  employment of
any of the Company's  employees,  their services provided in connection with the
Company's business,  or any information or techniques  allegedly  proprietary to
any of their former  employers,  or their  obligations under any agreements with
prior employers.

            2.8.  Intellectual  Property.  The Company  owns or possesses or can
acquire on commercially  reasonable terms sufficient legal rights to all Company
Intellectual  Property  without any known conflict with, or infringement of, the
rights of others.  No product or service  marketed  or sold (or  proposed  to be
marketed  or sold) by the  Company  violates  or will  violate  any  license  or
infringes or will infringe any intellectual  property rights of any other party.
Other than with  respect  to  commercially  available  software  products  under
standard  end-user  object code  license  agreements,  there are no  outstanding
options,  licenses,   agreements,   claims,  encumbrances  or  shared  ownership
interests of any kind relating to the Company Intellectual  Property, nor is the
Company  bound by or a party to any options,  licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets,  licenses,  information,  proprietary rights and processes of any
other Person. The Company has not received any communications  alleging that the
Company has violated or, by conducting  its  business,  would violate any of the
patents, trademarks, service marks, tradenames,  copyrights, trade secrets, mask
works or other proprietary  rights or processes of any other Person. The Company
has obtained and possesses  valid  licenses to use all of the software  programs
present on the computers and other  software-enabled  electronic devices that it
owns or leases or that it has otherwise  provided to its employees for their use
in connection with the Company's  business.  It will not be necessary to use any
inventions  of any of its  employees  or  consultants  (or Persons it  currently
intends to hire) made prior to their  employment by the Company.  Each employee,
officer and  consultant  (including  the  Principal  and Viola  Roesch) and each
former  employee,  officer  and  consultant  has  assigned  to the  Company  all
intellectual  property  rights he or she owns that are related to the  Company's
business as now conducted and as presently proposed to be conducted. Section 2.8
of the Disclosure Schedule lists all Company Intellectual Property.

                                      -7-
<PAGE>

            2.9.  Compliance  with  Other  Instruments.  The  Company  is not in
violation  or  default  (i)  of  any  provisions  of  its  current  articles  of
association,  (ii) of any instrument,  judgment,  order,  writ or decree,  (iii)
under any note,  indenture  or  mortgage,  or (iv) under any  lease,  agreement,
contract or  purchase  order to which it is a party or by which it is bound that
is required to be listed on the Disclosure  Schedule,  or, to its knowledge,  of
any provision of any statute,  rule or regulation applicable to the Company, the
violation of which would have a Material Adverse Effect. The execution, delivery
and  performance  of the  Transaction  Agreements  and the  consummation  of the
transactions  contemplated by the Transaction  Agreements 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  (i) a default  under any such  provision,
instrument,  judgment,  order,  writ,  decree,  contract or agreement or (ii) an
event which results in the creation of any lien,  charge or encumbrance upon any
assets of the Company or the suspension,  revocation,  forfeiture, or nonrenewal
of any material permit or license applicable to the Company.

            2.10. Agreements; Actions.

                  (a)  Except  for  the  Transaction  Agreements,  there  are no
agreements,  understandings,  instruments, contracts or proposed transactions to
which  the  Company  is a  party  or by  which  it is  bound  that  involve  (i)
obligations  (contingent or otherwise) of, or payments to, the Company in excess
of (euro) 50,000, (ii) the license of any patent,  copyright,  trademark,  trade
secret or other  proprietary  right to or from the  Company,  (iii) the grant of
rights to manufacture,  produce, assemble, license, market, or sell its products
to any  other  Person  that  limit the  Company's  exclusive  right to  develop,
manufacture,  assemble,  distribute,  market  or  sell  its  products,  or  (iv)
indemnification  by the Company with  respect to  infringements  of  proprietary
rights.

                  (b) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to the Common Stock, or
any class or series of capital stock,  (ii) incurred any  indebtedness for money
borrowed  or incurred  any other  liabilities  individually  in excess of (euro)
50,000 or in excess of (euro) 200,000 in the aggregate,  (iii) made any loans or
advances to any Person,  other than ordinary  advances for travel  expenses,  or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights, other
than the sale of its  inventory  in the  ordinary  course of  business.  For the
purposes  of  this  subsection  (b) of  this  Section  2.10,  all  indebtedness,
liabilities,  agreements,  understandings,  instruments,  contracts and proposed
transactions involving the same Person (including Persons the Company has reason
to believe are  affiliated  with each other) shall be aggregated for the purpose
of meeting the individual  minimum dollar  amounts of such  subsection.  Section
2.10(b) of the Disclosure  Schedule  describes all  indebtedness  of the Company
individually in excess of (euro) 50,000.

                  (c)  The  Company  is not a  guarantor  or  indemnitor  of any
indebtedness of any other Person.

                                      -8-
<PAGE>

            2.11. Certain Transactions.

                  (a) Other than (i) standard employee  benefits  generally made
available to all employees,  (ii) standard director and officer  indemnification
agreements approved by the Board of Directors, (iii) the Long Term Note, in each
instance,   approved  in  the  written  minutes  of  the  Shareholders'  Meeting
(previously provided to the Purchaser or its counsel),  there are no agreements,
understandings  or  proposed  transactions  between  the  Company and any of its
officers,  directors,  consultants  or Key  Employees,  or any  member  of their
respective Immediate Families, or any Affiliate thereof.

                  (b)  Except  for the Long Term Note and the debts to be repaid
with the Permitted  Debt  Repayments,  the Company is not indebted,  directly or
indirectly,  to any of its  directors,  officers or  employees  or to members of
their respective Immediate Families or to any Affiliate of any of the foregoing.
None of the Company's directors,  officers or employees, or any members of their
Immediate  Families,  or any  Affiliate of the  foregoing  (i) are,  directly or
indirectly,  indebted to the Company or, (ii) to the Company's  knowledge,  have
any direct or indirect  ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business relationship,
or any firm or  corporation  which  competes with the Company.  To the Company's
knowledge,  none of the  Company's  Key Employees or directors or any members of
their immediate  families or any Affiliate of any of the foregoing are, directly
or indirectly, interested in any material contract with the Company. None of the
directors  or  officers,  or any members of their  immediate  families,  has any
material  commercial,   industrial,   banking,  consulting,  legal,  accounting,
charitable  or  familial  relationship  with  any  of the  Company's  customers,
suppliers, service providers, joint venture partners, licensees and competitors.

            2.12.  Rights of Registration and Voting Rights.  Except as provided
in the Investors' Rights  Agreement,  the Company is not under any obligation to
register  for public sale any of its  currently  outstanding  securities  or any
securities  issuable upon  exercise or  conversion of its currently  outstanding
securities. To the Company's knowledge, except as contemplated in the Investors'
Rights Agreement,  no stockholder of the Company has entered into any agreements
with respect to the voting of capital shares of the Company.

            2.13.  Absence of Liens.  The  property  and assets that the Company
owns are free and  clear of all  mortgages,  deeds of  trust,  liens,  loans and
encumbrances,  except for  customary  retention of title arising in the ordinary
course of business that does 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  compliance  with such leases and, to its  knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances other
than those of the lessors of such property or assets.

                                      -9-
<PAGE>

            2.14. Financial  Statements.  The Company has delivered to Purchaser
its unaudited pro forma financial statements as of December 31, 2005 and for the
fiscal year then ended  (collectively,  the "Pro Forma  Financial  Statements").
Save to the extent  disclosed  in the Pro Forma  Financial  Statements,  the Pro
Forma  Financial  Statements  have  been  prepared  in  accordance  with  German
generally  accepted   accounting   principles  applied  on  a  consistent  basis
throughout the periods indicated.  Save to the extent disclosed in the Pro Forma
Financial  Statements,  the Pro Forma Financial Statements fairly present in all
material  respects the financial  condition and operating results of the Company
as of the dates, and for the periods,  indicated therein, subject in the case of
the  unaudited  Pro  Forma   Financial   Statements  to  normal  year-end  audit
adjustments.  Except  as set  forth  or  disclosed  in the Pro  Forma  Financial
Statements,  the Company has no material liabilities or obligations,  contingent
or  otherwise,  other than (i)  liabilities  incurred in the ordinary  course of
business subsequent to December 31, 2005 and (ii) liabilities and obligations of
a type or  nature  not  required  under  German  generally  accepted  accounting
principles to be reflected in the Pro Forma Financial Statements,  which, in all
such cases,  individually and in the aggregate would not have a Material Adverse
Effect. The Company maintains and will continue to maintain a standard system of
accounting  established and  administered  in accordance  with German  generally
accepted  accounting  principles.  As  per  December  31,  2005,  the  Company's
shareholder  equity  (subscribed  capital plus  capital  reserve less loss carry
forward less loss of the current  fiscal year,  all as defined in Sec. 266 para.
(3) lit.  A of the German  Commercial  Code)  shall be not less  (i.e.  not more
negative) than - (euro) 284,940.33.

            2.15. Changes. Since December 31, 2005 there has not been:

                  (a) any change in the assets, liabilities, financial condition
or  operating  results  of the  Company  from that  reflected  in the  Financial
Statements,  except  changes in the  ordinary  course of business  that have not
caused, in the aggregate, a Material Adverse Effect;

                  (b) any damage, destruction or loss, whether or not covered by
insurance, that would have a Material Adverse Effect;

                  (c) any  waiver or  compromise  by the  Company  of a valuable
right or of a material debt owed to it;

                  (d) any  satisfaction  or  discharge  of any lien,  claim,  or
encumbrance or payment of any obligation by the Company,  except in the ordinary
course of business and the  satisfaction  or discharge of which would not have a
Material Adverse Effect;

                  (e) any material change to a material contract or agreement by
which the Company or any of its assets is bound or subject;

                  (f) any material  change in any  compensation  arrangement  or
agreement with any employee, officer, director or stockholder;

                  (g)  any  resignation  or  termination  of  employment  of any
officer or Key Employee of the Company;

                  (h) any mortgage,  pledge, transfer of a security interest in,
or lien, created by the Company,  with respect to any of its material properties
or assets, except liens for taxes not yet due or payable and liens that arise in
the  ordinary  course of business  and do not  materially  impair the  Company's
ownership or use of such property or assets;

                  (i) any payments,  loans or guarantees  made by the Company to
or for the benefit of its  employees,  officers or directors,  or any members of
their immediate families,  other than travel advances and other advances made in
the ordinary course of its business;

                                      -10-
<PAGE>

                  (j)  any  declaration,  setting  aside  or  payment  or  other
distribution in respect of any of the Company's  capital stock, or any direct or
indirect redemption,  purchase, or other acquisition of any of such stock by the
Company;

                  (k)  any  sale,   assignment   or   transfer  of  any  Company
Intellectual  Property that could reasonably be expected to result in a Material
Adverse Effect;

                  (l)  receipt  of  notice  that  there  has been a loss of,  or
material order cancellation by, any major customer of the Company;

                  (m) to the Company's  knowledge,  any other event or condition
of any  character,  other than events  affecting  the  economy or the  Company's
industry  generally,  that could  reasonably be expected to result in a Material
Adverse Effect; or

                  (n) any  arrangement or commitment by the Company to do any of
the things described in this Section 2.15.

            2.16. Employee Matters.

                  (a) As of the date  hereof,  the Company  employs 22 full-time
employees and 2 part-time  employees and engages 4  consultants  or  independent
contractors.  Section  2.16 of the  Disclosure  Schedule  sets  forth a detailed
description of all compensation,  including salary, bonus, severance obligations
and deferred compensation paid or payable for each officer, employee, consultant
and independent contractor of the Company who received compensation in excess of
(euro) 50,000 for the fiscal year ended  December 31, 2005 or is  anticipated to
receive  compensation  in excess of (euro)  50,000  for the fiscal  year  ending
December 31, 2006.

                  (b) To the  Company's  knowledge,  none  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 such
employee's ability to promote the interest of the Company or that would conflict
with  the  Company's  business.   Neither  the  execution  or  delivery  of  the
Transaction  Agreements,  nor the carrying on of the  Company's  business by the
employees  of the  Company,  nor the  conduct of the  Company's  business as now
conducted  and as presently  proposed to be  conducted,  will,  to the Company's
knowledge,  conflict  with or result in a breach of the  terms,  conditions,  or
provisions  of, or  constitute  a  default  under,  any  contract,  covenant  or
instrument under which any such employee is now obligated.

                  (c) The  Company is not  delinquent  in payments to any of its
employees,  consultants,  or independent  contractors  for any wages,  salaries,
commissions, bonuses, or other direct compensation for any service performed for
it to the date hereof or amounts  required to be reimbursed  to such  employees,
consultants,  or  independent  contractors.  The  Company  has  complied  in all
material respects with all applicable equal employment opportunity laws and with
other laws  related to  employment,  including  those  related to wages,  hours,
worker classification,  and collective bargaining.  The Company has withheld and
paid to the  appropriate  governmental  entity or is holding for payment not yet
due to such  governmental  entity  all  amounts  required  to be  withheld  from
employees  of the  Company  and is not liable for any  arrears of wages,  taxes,
penalties, or other sums for failure to comply with any of the foregoing.

                                      -11-
<PAGE>

                  (d) The Company does not have a present intention to terminate
the employment of any Key Employee, nor to the Company's knowledge, does any Key
Employee intend to terminate  employment with the Company or is otherwise likely
to become  unavailable to continue as a Key Employee.  Other than in the case of
the  Principal,  the employment of each employee of the Company is terminable at
the will of the Company.  Upon the  termination  of the  employment  of any such
employees,  no severance or other  payments  will become due. The Company has no
policy,  practice,  plan,  or  program  of paying  severance  pay or any form of
severance   compensation  in  connection  with  the  termination  of  employment
services.

            2.17. Tax Returns and Payments.  There are no taxes, social security
contributions  and other public  charges  dues and payable by the Company  which
have not been timely  paid.  There are no accrued and unpaid  country,  local or
foreign taxes of the Company which are due, whether or not assessed or disputed.
There have been no examinations or audits of any tax returns or matters relating
to social  security  contributions  or other  public  charges  or reports by any
applicable federal, state, local or foreign governmental agency. The Company has
duly and timely filed all tax returns,  social security  contributions and other
public  charges  required  to have  been  filed by it and there are in effect no
waivers of applicable  statutes of limitations  with respect to taxes and social
security contributions for any year.

            2.18.  Insurance.  The Company has in full force and effect fire and
casualty  insurance  policies  with  extended  coverage,  sufficient  in  amount
(subject to reasonable  deductions) to allow it to replace any of its properties
that might be damaged or destroyed.

            2.19. Confidential  Information and Invention Assignment Agreements.
Each  current  and former  employee,  consultant  and officer of the Company has
executed an agreement with the Company regarding confidentiality and proprietary
information  substantially in the form or forms delivered to the counsel for the
Purchaser (the "Confidential Information Agreements").  No current or former Key
Employee  has  excluded  works  or  inventions  from  his or her  assignment  of
inventions pursuant to such Key Employee's  Confidential  Information Agreement.
The Company is not aware that any of its Key Employees is in violation thereof.

            2.20. Permits. The Company has all franchises, permits, licenses and
any similar  authority  necessary for the conduct of its  business,  the lack of
which  could  reasonably  be  expected to have a Material  Adverse  Effect.  The
Company is not in default in any material  respect under any of such franchises,
permits, licenses or other similar authority.

            2.21.  Corporate  Documents.  The  copy of the  minute  books of the
Company provided to the Purchaser  contains minutes of all meetings of directors
and  stockholders  and all actions by written  consent  without a meeting by the
directors  and  stockholders  since  the date of  incorporation  and  accurately
reflects  in all  material  respects  all  actions  by the  directors  (and  any
committee  of  directors)  and  stockholders  with  respect to all  transactions
referred to in such minutes.

                                      -12-
<PAGE>

            2.22.  Environmental and Safety Laws. Except as could not reasonably
be expected to have a Material  Adverse Effect,  (a) the Company is and has been
in  compliance  with all  Environmental  Laws;  (b) there has been no release or
threatened release of any pollutant, contaminant or toxic or hazardous material,
substance or waste,  or petroleum  or any fraction  thereof,  (each a "Hazardous
Substance")  on,  upon,  into or from any site  currently or  heretofore  owned,
leased or otherwise used by the Company.

            For purposes of this Section  2.22,  "Environmental  Laws" means any
law,  regulation,  or other applicable  requirement  relating to (a) releases or
threatened  release of  Hazardous  Substance;  (b)  pollution or  protection  of
employee  health  or  safety,  public  health  or the  environment;  or (c)  the
manufacture,  handling,  transport,  use,  treatment,  storage,  or  disposal of
Hazardous Substances.

            2.23.  Disclosure.  The Company has made  available to the Purchaser
all the information  reasonably  available to the Company that the Purchaser has
requested  for  deciding  whether to acquire the Shares.  No  representation  or
warranty  of the  Company  contained  in this  Agreement,  as  qualified  by the
Disclosure  Schedule,  and  no  certificate  furnished  or  to be  furnished  to
Purchaser  at the Closing  contains any untrue  statement of a material  fact or
omits to  state a  material  fact  necessary  in  order  to make the  statements
contained herein or therein not misleading in light of the  circumstances  under
which  they  were  made.  The due  diligence  report  entitled  "Summary  of the
Financial Statements and Contractual Obligations of Paketeria GmbH" that is part
of the Disclosure Schedule does not contain any material misstatements.

      3.  Representations and Warranties of the Purchaser.  The Purchaser hereby
represents and warrants to the Company, severally and not jointly, that:

            3.1.  Authorization.  The  Purchaser has full power and authority to
enter into the Transaction Agreements.  The Transaction Agreements to which such
Purchaser  is a party,  when  executed  and  delivered  by the  Purchaser,  will
constitute valid and legally binding  obligations of the Purchaser,  enforceable
in accordance with their terms, except (a) as limited by applicable  bankruptcy,
insolvency,  reorganization,  moratorium,  fraudulent conveyance,  and any other
laws  of  general  application   affecting   enforcement  of  creditors'  rights
generally,  and as limited by laws  relating  to the  availability  of  specific
performance,  injunctive  relief,  or other  equitable  remedies,  or (b) to the
extent  the  indemnification  provisions  contained  in  the  Investors'  Rights
Agreement may be limited by applicable federal or state securities laws.

      4. Conditions to the Purchaser's  Obligations at Closing.  The obligations
of the  Purchaser to  subscribe  the Share and to make the  Contribution  at the
Closing are subject to the  fulfillment,  on or before such Closing,  of each of
the following conditions, unless otherwise waived:

            4.1.   Representations  and  Warranties.   The  representations  and
warranties  of the Company  contained  in Section 2 shall be true and correct in
all  respects  as of such  Closing,  except  that any such  representations  and
warranties  shall be true and correct in all respects where such  representation
and warranty is qualified with respect to materiality.

                                      -13-
<PAGE>

            4.2. Performance. The Company shall have performed and complied with
all  covenants,  agreements,   obligations  and  conditions  contained  in  this
Agreement  that are required to be performed or complied  with by the Company on
or before such Closing.

            4.3.  Qualifications.  All authorizations,  approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection  with the lawful  issuance and sale of
the Shares pursuant to this Agreement shall be obtained and effective as of such
Closing.

            4.4. Investors' Rights Agreement. The Company, the Purchaser and the
other  stockholders  of the Company named as parties thereto shall have executed
and delivered the Investors' Rights Agreement.

            4.5.  Long Term Note.  The Company shall have executed and delivered
the Long Term Note to the Principal.

            4.6. Long Term Note Option Agreement.  The Company and the Principal
shall have executed and delivered the Long Term Note Option Agreement.

            4.7. M&R Option  Agreement.  The Company,  John A. Moore and Richard
Rimer shall have executed and delivered the M&R Option Agreement.

            4.8.  Roesch  Employment  Agreement.  The Company and the  Principal
shall have executed and delivered the Roesch Employment Agreement.

            4.9.  Roesch  Release.  Each of the Principal and Viola Roesch shall
have executed and delivered a Roesch Release to the Company.

            4.10.  Capital Increase and Restated Articles.  At the Closing,  the
Current Shareholders shall adopt and the Company shall file the Capital Increase
and the Restated  Articles  with the  Commercial  Register of the Lower Court of
Berlin Charlottenburg as part of the Closing.

            4.11. Proceedings and Documents. All corporate and other proceedings
in  connection  with  the  transactions  contemplated  at the  Closing  and  all
documents  incident  thereto  shall  be  reasonably  satisfactory  in  form  and
substance  to the  Purchaser,  and the  Purchaser  (or its  counsel)  shall have
received all such  counterpart  original  and  certified or other copies of such
documents as  reasonably  requested.  Such  documents  may include good standing
certificates.

      5. Conditions of the Company's  Obligations at Closing. The obligations of
the  Company to sell Shares to the  Purchaser  at the Closing are subject to the
fulfillment,  on or before the  Closing,  of each of the  following  conditions,
unless otherwise waived:

            5.1.   Representations  and  Warranties.   The  representations  and
warranties of the Purchaser  contained in Section 3 shall be true and correct in
all respects as of such Closing.

            5.2.   Performance.  The Purchaser shall have performed and complied
with all covenants,  agreements,  obligations  and conditions  contained in this
Agreement  that are required to be performed or complied  with on or before such
Closing.

                                      -14-
<PAGE>

      6. Miscellaneous.

            6.1.   Survival of  Warranties.  Unless  otherwise set forth in this
Agreement,  the  representations and warranties 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  or  knowledge  of the subject  matter  thereof made by or on
behalf of the Purchaser or the Company.

            6.2.   Successors  and  Assigns.  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.  Nothing in this  Agreement,  express or
implied,  is intended to confer upon any party other than the parties  hereto or
their respective successors and assigns any rights,  remedies,  obligations,  or
liabilities under or by reason of this Agreement,  except as expressly  provided
in this Agreement.

            6.3.   Governing  Law.  This  Agreement  shall  be  governed  by and
construed in accordance with the law of the State of New York, without regard to
its conflicts of laws.

            6.4.  Titles and Subtitles; Interpretation. 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.

            6.5.  Notices.  All notices and other  communications  given or made
pursuant to this Agreement  shall be in writing and shall be deemed  effectively
given: (a) upon personal delivery to the party to be notified,  (b) when sent by
confirmed  electronic  mail or facsimile if sent during normal business hours of
the recipient, and if not so confirmed,  then on the next business day, (c) five
(5) days after having been sent by registered or certified mail,  return receipt
requested,  postage  prepaid,  or (d) one business (1) day after  deposit with a
nationally recognized overnight courier,  specifying next business day delivery,
with written  verification of receipt.  All communications  shall be sent to the
respective  parties at their address as set forth on the  signature  page, or to
such e-mail address,  facsimile  number or address as  subsequently  modified by
written notice given in accordance  with this Section 6.5. If notice is given to
the Purchaser, a copy shall also be given to Reitler Brown & Rosenblatt LLC, 800
Third Avenue,  21st Floor, New York, New York 10022, (212) 371-5500,  Attention:
Scott H. Rosenblatt, Esq.

            6.6.  No Finder's Fees. Each party represents that it neither is nor
will be obligated for any finder's fee or  commission  in  connection  with this
transaction.  The Purchaser agrees to indemnify and to hold harmless the Company
from any  liability  for any  commission  or  compensation  in the  nature  of a
finder's or broker's  fee  arising  out of this  transaction  (and the costs and
expenses of defending  against such  liability or asserted  liability) for which
the  Purchaser  or  any  of  its  officers,  employees,  or  representatives  is
responsible.  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 or broker's  fee  arising  out of this  transaction  (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.

            6.7.  Attorney's Fees. If any action at law or in equity  (including
arbitration)  is  necessary  to  enforce  or  interpret  the terms of any of the
Transaction  Agreements,  the  prevailing  party shall be entitled to reasonable
attorney's  fees,  costs and  necessary  disbursements  in addition to any other
relief to which such party may be entitled.

                                      -15-
<PAGE>

            6.8.  Amendments and Waivers.  Except as set forth in Section 1.3 of
this Agreement, any term of this Agreement may be amended,  terminated or waived
only with the written consent of the Company and the Purchaser. Any amendment or
waiver  effected in  accordance  with this Section 6.8 shall be binding upon the
Purchaser and each  transferee of the Shares (or the Common Stock  issuable upon
conversion thereof), each future holder of all such securities, and the Company.

            6.9.   Severability.  The  invalidity  or  unenforceability  of  any
provision  hereof shall in no way affect the validity or  enforceability  of any
other provision.

            6.10.   Delays or  Omissions.  No delay or omission to exercise  any
right,  power or remedy  accruing  to any party under this  Agreement,  upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such  non-breaching or non-defaulting  party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein,  or of or in any similar breach or default  thereafter  occurring;  nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default  theretofore  or  thereafter  occurring.  Any waiver,  permit,
consent or  approval  of any kind or  character  on the part of any party of any
breach or default under this  Agreement,  or any waiver on the part of any party
of any provisions or conditions of this Agreement,  must be in writing and shall
be effective  only to the extent  specifically  set forth in such  writing.  All
remedies,  either under this  Agreement  or by law or otherwise  afforded to any
party, shall be cumulative and not alternative.

            6.11.  Entire  Agreement.  This  Agreement  (including  the Exhibits
hereto), the Restated Articles and the other Transaction  Agreements  constitute
the full and entire understanding and agreement between the parties with respect
to the subject matter hereof,  and any other written or oral agreement  relating
to the  subject  matter  hereof  existing  between  the  parties  are  expressly
canceled.

            6.12.  Dispute  Resolution.  The parties (a) hereby  irrevocably and
unconditionally  submit to the  jurisdiction of the state courts of New York and
to the  jurisdiction  of the  United  States  District  Court  for the  Southern
District  of New York for the  purpose of any suit,  action or other  proceeding
arising out of or based upon this Agreement, (b) agree not to commence any suit,
action or other proceeding arising out of or based upon this Agreement except in
the  state  courts  of New York or the  United  States  District  Court  for the
Southern District of New York, and (c) hereby waive, and agree not to assert, by
way of  motion,  as a  defense,  or  otherwise,  in any  such  suit,  action  or
proceeding,  any claim that it is not subject  personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution,  that the suit,  action or proceeding  is brought in an  inconvenient
forum, that the venue of the suit, action or proceeding is improper or that this
Agreement or the subject matter hereof may not be enforced in or by such court.

                                      -16-
<PAGE>

            6.13.   Waiver of Jury Trial.  Each party hereto waives any right it
may have to a trial by jury in any action or  proceeding  directly or indirectly
arising out of or relating to this  Agreement or the  transactions  contemplated
hereby (whether based on contract, tort, equity or any other theory). Each party
certifies  that no  representative,  agent or  attorney  of the other  party has
represented,  expressly  or  otherwise,  that the other party to this  Agreement
would not, in the event of litigation,  seek to enforce the foregoing waiver and
acknowledges  that all  parties  hereto  have been  induced  to enter  into this
Agreement by, among other things,  the waivers and  certifications  contained in
this Section 6.13.

                          [Signature Page(s) Follow(s)]

                                      -17-
<PAGE>

         IN WITNESS  WHEREOF,  the  parties  have  executed  this  Common  Stock
Purchase Agreement as of the date first written above.

                               COMPANY:

                               PAKETERIA GmbH

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

                               By:
                                    ---------------------------------------

                               Name:
                                    ---------------------------------------
                                                      (print)
                               Title:
                                     --------------------------------------

                               Address:

                               PRINCIPAL:

                               --------------------------------------------
                               Andy Roesch

                               Address:

                               PURCHASER:

                               DATA SYSTEMS & SOFTWARE INC.

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

                               By:
                                  -----------------------------------------

                               Name:
                                    ---------------------------------------
                                                      (print)
                               Title:
                                     --------------------------------------

                               Address:

<PAGE>

                               CURRENT SHAREHOLDERS:

                               --------------------------------------------
                               Name:
                                    ---------------------------------------
                                                      (print)

                               Address:

                               --------------------------------------------
                               Name:
                                    ---------------------------------------
                                                      (print)

                               Address:

                               --------------------------------------------
                               Name:
                                    ---------------------------------------
                                                      (print)

                               Address:

                               --------------------------------------------
                               Name:
                                    ---------------------------------------
                                                      (print)

                               Address:

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