-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MLE45I/tVXlRwLgKlc/y8+ACtnAfFCjQWRvL0kgfyhrzwfPonUU4bZLvcW4dX97w jJ1MPu7DNvRxmf325xWdig== 0000897101-00-000348.txt : 20000403 0000897101-00-000348.hdr.sgml : 20000403 ACCESSION NUMBER: 0000897101-00-000348 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000331 GROUP MEMBERS: JACK A NORQUAL GROUP MEMBERS: JOHN L MORGAN GROUP MEMBERS: KIRK A MACKENZIE GROUP MEMBERS: MORGAN JOHN L GROUP MEMBERS: RUSH RIVER GROUP LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GROW BIZ INTERNATIONAL INC CENTRAL INDEX KEY: 0000908315 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS RETAIL [5900] IRS NUMBER: 411622691 STATE OF INCORPORATION: MN FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-46803 FILM NUMBER: 591606 BUSINESS ADDRESS: STREET 1: 4200 DAHLBERG DR CITY: GOLDEN VALLEY STATE: MN ZIP: 55422-4837 BUSINESS PHONE: 6125208500 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN JOHN L CENTRAL INDEX KEY: 0000900704 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O GROW BIZ INTERNATIONAL, INC. STREET 2: 4200 DAHLBERG DRIVE CITY: MINNEAPOLIS STATE: MN ZIP: 55422-4817 BUSINESS PHONE: 6128299331 MAIL ADDRESS: STREET 1: C/O GROW BIZ INTERNATIONAL, INC STREET 2: 4200 DAHLBERG DRIVE CITY: MINNEAPOLIS STATE: MN ZIP: 55422-4837 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Schedule 13D Under the Securities Exchange Act of 1934 (Amendment No. ___)* Grow Biz International, Inc. ----------------------------------- (Name of Issuer) Common Stock, no par value ----------------------------------- (Title of Class of Securities) 908315 -------------------- (CUSIP Number) Patrick Delaney, Esq. Lindquist & Vennum, PLLP 4200 IDS Center Minneapolis, MN 55402 Telephone: (612) 371-3281 Fax no.: (612) 371-3207 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 22, 2000 -------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Continued on following page(s)) Page 1 of 23 Pages - -------------------------------------------------------------------------------- CUSIP No. 908315 13D Page 2 of 23 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON John L. Morgan - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Mr. Morgan is a citizen of the United States. - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 422,300 SHARES ---------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 144,300 ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 422,300 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 144,300 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 566,600 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.5% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- Page 2 of 23 Pages - -------------------------------------------------------------------------------- CUSIP No. 908315 13D Page 3 of 23 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Rush River Group LLC, a Minnesota limited liability company; FEIN: 41-1920090 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Rush River Group LLC is a Minnesota limited liability company - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 140,000 SHARES ---------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY -0- ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 140,000 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 140,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.6% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- Page 3 of 23 Pages - -------------------------------------------------------------------------------- CUSIP No. 908315 13D Page 4 of 23 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Kirk A. MacKenzie - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Mr. MacKenzie is a citizen of the United States. - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 70,000 SHARES ---------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 140,000 ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 70,000 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 140,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 210,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- Page 4 of 23 Pages - -------------------------------------------------------------------------------- CUSIP No. 908315 13D Page 5 of 23 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON Jack A. Norqual - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Mr. Norqual is a citizen of the United States. - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 70,000 SHARES ---------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 140,000 ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 70,000 PERSON ---------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER 140,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 210,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [X] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.9% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- Page 5 of 23 Pages ITEM 1. SECURITY AND ISSUER. This Schedule 13D (the "Statement") relates to the Common Stock, no par value per share (the "Common Stock"), of Grow Biz International, Inc., a Minnesota corporation (the "Company"). The principal executive office of the Company is located at 4200 Dahlberg Drive, Minneapolis, MN 55422-4837. ITEM 2. IDENTITY AND BACKGROUND. (a) This Schedule 13D is being filed on behalf of John L. Morgan, an individual, Rush River Group LLC, a Minnesota limited liability company, Kirk A. MacKenzie, an individual, and Jack A. Norqual, an individual. Messrs. Morgan, MacKenzie and Norqual are members of Rush River Group LLC. Rush River Group LLC and Messrs. Morgan, MacKenzie and Norqual are sometimes referred to herein as the "Reporting Persons." Mr. Morgan and Rush River Group LLC are making this filing because, collectively, they are beneficial owners, pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, of more than five percent of the outstanding shares of Common Stock of the Issuer. Messrs. MacKenzie and Norqual are included in this filing as Reporting Persons due to their beneficial ownership of shares of Common Stock of the Issuer, individually and as members of Rush River Group LLC. This Schedule 13D also pertains to 4,300 shares of Common Stock of the Issuer owned by Sheila Morgan, the spouse of John L. Morgan, which are deemed beneficially owned by Mr. Morgan. Such shares are included within the references herein. (b) The business address of Mr. Morgan is 4200 Dahlberg Drive, Minneapolis, Minnesota 55422-4837. (c) Mr. Morgan's present principal employment is as Chairman and Chief Executive Officer of the Company, which is located at the address set forth in Item 1 above. Mr. Morgan is also a member of Rush River Group LLC, which is located at 4200 Dahlberg Drive, Minneapolis, Minnesota 55422-4837. (d)-(e) During the last five years, Mr. Morgan (1) has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor (2) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Morgan is a citizen of the United States. Page 6 of 23 Pages IDENTITY AND BACKGROUND - REPORTING PERSONS HOLDING LESS THAN 5% OF THE ISSUER'S OUTSTANDING SECURITIES RUSH RIVER GROUP LLC (a) This Schedule 13D is also being filed by Rush River Group LLC. (b) The business address of Rush River Group LLC is 10400 Viking Drive, Suite 160, Eden Prairie, Minnesota 55344. (c) Rush River Group LLC is a Minnesota limited liability company organized in December 1998. Its principal business activities involve investing in equity securities of privately owned and publicly traded companies, as well as other types of securities. (d)-(e) During the last five years, Rush River Group LLC (1) has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor (2) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which the it was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Rush River Group LLC is a limited liability company organized under the laws of the State of Minnesota. KIRK A. MACKENZIE (a) This Schedule 13D is also being filed by Kirk A. MacKenzie. (b) The business address of Mr. MacKenzie is 10400 Viking Drive, Suite 160, Eden Prairie, Minnesota 55344. (c) Mr. MacKenzie's present principal employment is as a member of Rush River Group LLC, which is located at the address set forth in Item 2(b) above. (d)-(e) During the last five years, Mr. MacKenzie (1) has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor (2) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. MacKenzie is a citizen of the United States. JACK A. NORQUAL (a) This Schedule 13D is also being filed by Jack A. Norqual. (b) The business address of Mr. Norqual is 10400 Viking Drive, Suite 160, Eden Prairie, Minnesota 55344. Page 7 of 23 Pages (c) Mr. Norqual's present principal employment is as a member of Rush River Group LLC, which is located at the address set forth in Item 2(b) above. (d)-(e) During the last five years, Mr. Norqual (1) has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor (2) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Norqual is a citizen of the United States. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On or about March 22, 2000, Mr. Morgan purchased a total of 420,000 shares of Common Stock of the Issuer, at $7.00 per share, for cash in the amount of $2,940,000 and Rush River Group LLC purchased a total of 140,000 shares of Common Stock the Issuer, at $7.00 per share, for cash in the amount of $980,000. Also on or about March 22, 2000, Mr. MacKenzie purchased a total of 70,000 shares of Common Stock of the Issuer, at $7.00 per share, for cash in the amount of $490,000 and Mr. Norqual purchased a total of 70,000 shares of Common Stock of the Issuer, at $7.00 per share, for cash in the amount of $490,000. The shares purchased by Messrs. Morgan, MacKenzie and Norqual were purchased using personal funds. The shares purchased by Rush River Group LLC were purchased with working capital. All of the shares were purchased for investment purposes in privately negotiated transactions. In addition, on March 23, 2000, Mr. Morgan purchased an additional 2,300 shares of Common Stock of the Issuer, at $6.75 per share, for cash in the amount of $15,525 and his wife, Sheila Morgan, purchased 4,300 shares, at $6.875 per share, for cash in the amount of $29,562.50. These purchases were also made in open market transactions for investment purposes and were purchased using personal funds. ITEM 4. PURPOSE OF TRANSACTION. Mr. Morgan acquired the shares of Common Stock that are the subject of this Schedule 13D for himself for personal investment purposes, in connection with his appointment as Chairman and Chief Executive Officer of the Company, and Sheila Morgan, his wife, acquired 4,300 shares for personal investment purposes. Rush River Group LLC, of which Mr. Morgan is a member, acquired the shares of Common Stock that are the subject of this Schedule 13D with respect to it for investment purposes. Messrs. MacKenzie and Norqual each purchased 70,000 shares of Common Stock of the Issuer in connection with the foregoing purchases. The Reporting Persons may, individually or collectively, increase their investments in the Company through the acquisition of additional shares of Common Stock in the open market or otherwise, subject to availability at prices deemed favorable by them. Alternatively, they may decide to sell any or all of the shares of Common Stock beneficially owned by them in the open market or otherwise. The foregoing represents the range of activities presently contemplated by Mr. Page 8 of 23 Pages Morgan and the other Reporting Persons. Their plans, proposals and activities are subject to change at any time depending on, among other things, the actions of the Company's Board of Directors, the Company's performance and conditions in the public securities markets. Except as set forth above, none of Mr. Morgan, Rush River Group LLC, Mr. MacKenzie or Mr. Norqual has any present plans or intentions that would result in or relate to any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) Set forth below are the shares of Common Stock of the Company beneficially owned by each of the Reporting Persons and the percentage of the total outstanding shares as of the date of this filing. The foregoing percentage is based upon 5,381,119 shares of Common Stock outstanding on March 13, 2000, as set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 25, 1999, as filed by the Company with the Securities and Exchange Commission on March 22, 2000. Percentage of Total Reporting Person No. Shares Purchased Shares Outstanding ---------------- -------------------- ------------------ John L. Morgan 566,600*,** 10.5% Rush River Group LLC 140,000 2.6% Kirk A MacKenzie 210,000* 3.9% Jack A. Norqual 210,000* 3.9% - ------------------ * Includes beneficial ownership of shares held by Rush River Group LLC ** Includes 4,300 shares purchased by Sheila Morgan, his wife, for which he disclaims beneficial ownership. (b) With the exception of 4,300 shares purchased by Sheila Morgan, his wife, Mr. Morgan has the sole power to vote and dispose of the shares of Common Stock which he beneficially owns. Mr. Morgan also has shared voting and dispositive power, together with Messrs. MacKenzie and Norqual, over the shares of the Company beneficially owned by Rush River Group LLC, due to their respective positions as members of the LLC. Rush River Group LLC holds 140,000 shares of record of the Company and shares voting and dispositive power to vote or dispose of such shares with each of the other Reporting Persons. Each of Messrs. Morgan, MacKenzie and Norqual disclaim any beneficial ownership of the shares held by the other persons, either individually or in their respective capacities as members of Rush River Group, LLC. Mr. Morgan disclaims beneficial ownership with respect to the 4,300 shares purchased by Sheila Morgan, his wife. (c) Transactions in the Common Stock effected by Mr. Morgan, Rush River Group LLC and Messrs. MacKenzie and Norqual in the last 60 days are as set forth in Item 3 above. Other than as described above, the Reporting Persons have not effected any transactions in the securities of the Company during the past sixty days. Page 9 of 23 Pages (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Neither Mr. Morgan nor Rush River Group LLC, Kirk A. MacKenzie or Jack A. Norqual has any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of the Company other than the following: On March 22, 2000, Mr. Morgan purchased 420,000 shares of Common Stock of the Company at a purchase price of $7.00 per share, for a total purchase price of $2,940,000. Effective March 22, 2000, he entered into an Employment Agreement with the Company to serve as its Chairman and Chief Executive Officer. As a condition of his employment, Mr. Morgan also entered into a side agreement whereby he agreed to comply with the Minnesota Business Combination Act and not to effect or attempt to effect a business combination of the Company, without prior approval of a committee of the board of directors of the Company, as long as his beneficial ownership of shares in the Company equaled or exceeded 10%. Copies of the Employment Agreement and side agreement are attached hereto as Exhibits 2 and 3, respectively. Effective March 22, 2000, Mr. Morgan also was granted options to purchase an additional 600,000 shares of Common Stock of the Company at an exercise price of $5.00 per share. The shares vest as to 120,000 shares annually, beginning on the first anniversary of the date of grant. A copy of the Stock Option Agreement is attached hereto as Exhibit 4. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit No. Description - ----------- ----------- 1. Joint Filing Agreement. 2. Employment Agreement dated March 22, 2000 between Grow Biz International, Inc. and John L. Morgan. 3. Letter Agreement dated March 22, 2000 between Grow Biz International, Inc. and John L. Morgan. 4. Nonqualified Stock Option Agreement dated March 22, 2000 between Grow Biz International, Inc. and John L. Morgan. Page 10 of 23 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. Dated: March 29, 2000 /s/ John L. Morgan ------------------------------------- John L. Morgan, individually RUSH RIVER GROUP LLC By: /s/ John L. Morgan ------------------------------------- John L. Morgan Its: Member /s/ Kirk A. MacKenzie ------------------------------------- Kirk A. MacKenzie, individually /s/ Jack A. Norqual ------------------------------------- Jack A. Norqual, individually Page 11 of 23 Pages EX-1 2 JOINT FILING AGREEMENT EXHIBIT 1 JOINT FILING AGREEMENT The undersigned hereby agree that this Schedule 13D relating to securities of Grow Biz International, Inc. shall be filed on behalf of each of them. March 29, 2000 /s/ John L. Morgan --------------------------------------- John L. Morgan, individually RUSH RIVER GROUP LLC By: /s/ John L. Morgan --------------------------------------- John L. Morgan Its: Member /s/ Kirk A. MacKenzie --------------------------------------- Kirk A. MacKenzie, individually /s/ Jack A. Norqual --------------------------------------- Jack A. Norqual, individually Page 12 of 23 Pages EX-2 3 EMPLOYMENT AGREEMENT EXHIBIT 2 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT ("AGREEMENT") is made as of March 22, 2000, between Grow Biz International, Inc. ("EMPLOYER") and John L. Morgan ("EMPLOYEE"). INTRODUCTION Employer desires to employ Employee under the terms of this Agreement, including the non-solicitation, registration rights and other covenants stated below, and Employee is willing to enter into such covenants in return for the benefits hereunder. AGREEMENT In consideration of the foregoing, the parties agree as follows: 1. NATURE AND CAPACITY OF EMPLOYMENT. Employer agrees to employ Employee as Chief Executive Officer of Employer under the terms of this Agreement. Employee agrees to perform, or be available to perform, on a full-time basis, the functions of this position, under the terms of this Agreement. 2. TERM OF EMPLOYMENT. The term of this Agreement will commence as of March 23, 2000 and continue until such time as terminated under Section 9 below. 3. ANNUAL BASE SALARY. The annual base salary, exclusive of any benefits or bonuses, which Employer agrees to pay to Employee for the first year of this Agreement will be Fifty Thousand Dollars ($50,000). All amounts paid under this Agreement will be paid consistent with Employer's normal payroll practice and will be subject to all normal and required withholdings. 4. BONUS. The Compensation Committee of Employer's Board of Directors may, in its sole discretion, establish certain criteria under which Employee may become eligible to receive an annual bonus payment, and will also maintain the right to adjust such criteria in its sole discretion, however the Committee is not obligated to grant any bonus to Employee. 5. EMPLOYEE EXPENSES. Employer agrees to reimburse Employee for the reasonable business expenses Employee incurs on behalf of Employer upon proof of expenditure. 6. EMPLOYEE BENEFITS. Employee will be eligible for those benefits provided to executive management employees. 7. EMPLOYEE FRINGE BENEFITS. Employee will receive the following fringe benefits ("EMPLOYEE FRINGE BENEFITS"): Page 13 of 23 Pages 7.1 STOCK OPTIONS. Employee will be issued a six year option (the "OPTION"), under the terms of the stock option agreement attached hereto as EXHIBIT A, to purchase 600,000 shares of Employer's common stock (the "OPTION SHARES"), at an exercise price of $5 per share, vesting at the rate of 120,000 shares per year on the anniversaries of this Agreement. 7.2 REGISTRATION RIGHTS. Employer has agreed to register under the Securities Act of 1993, as amended ("SECURITIES ACT"), the Option, the Option Shares and the 700,000 shares of Employer's common stock which Employee and others are purchasing from K. Jeffrey Dahlberg, for resale by Employee. 8. UNDERTAKINGS OF EMPLOYEE. Employee agrees to spend Employee's full working time and effort in performing Employee's duties with Employer so long as employed by Employer, and will not, during the course of employment by Employer, without prior written approval of Employer, become an employee, director, officer, agent, partner of or consultant to, or a stockholder of (except a stockholder of a public company in which Employee owns less than five percent (5%) of the issued and outstanding capital stock of such company) any company or other business entity which is a significant competitor, supplier, or customer of Employer. 9. TERMINATION OF EMPLOYMENT AGREEMENT. Employee's employment under this Agreement may be terminated, by either party for any reason or no reason upon 30 days written notice to Employee. 10. CONFIDENTIAL INFORMATION. For purposes hereof, "CONFIDENTIAL INFORMATION" means any information that Employee learns or develops during the course of employment that derives independent economic value from being not generally known by the public and includes trade secrets, methods of research and testing, customer lists, vendor lists and financial information, and information relating to such matters as management systems and sales or marketing techniques. Employee will not directly or indirectly use or disclose any Confidential Information for anyone other than Employer either during the course of employment or after the termination of employment. Employee recognizes that the Confidential Information constitutes a valuable asset of Employer and agrees to act in such a manner as to prevent its disclosure and use by any person unless such use is for Employer. Employee's obligations under this paragraph are unconditional and will not be excused by any Employer conduct, except prior voluntary disclosure by Employer of this information. 11. INVENTIONS. Employee agrees to promptly disclose to Employer in writing any invention, improvement, work of authorship, discovery or idea (including those which may be subject to copyright protection) generated, conceived, or reduced to practice by Employee alone or in conjunction with others, during or after working hours, while an employee of Employer ("INVENTIONS"); and all such Inventions will be Employer's exclusive property Page 14 of 23 Pages and are hereby assigned to Employer. Further, Employee will, at Employer's expense, give Employer all assistance it reasonably requires to perfect, protect, and use its rights to Inventions. In particular, Employee will sign all documents, do all things, and supply all information that Employer may deem necessary to: (i) transfer or record the transfer of Employee's entire right, title and interest in Inventions; and (ii) enable Employer to obtain copyright or trademark protection for Inventions. Employee's obligations under this Section will continue beyond the termination of employment with respect to Inventions and will be binding on assigns, executors, and other legal representatives. NOTICE: PURSUANT TO MINNESOTA STATUTES SS. 181.78, EMPLOYEE IS NOTIFIED THAT THE AGREEMENT DOES NOT APPLY TO ANY INVENTION FOR WHICH NO EQUIPMENT, SUPPLIES, FACILITY, OR TRADE SECRET INFORMATION OF EMPLOYER WAS USED AND WHICH WAS DEVELOPED ENTIRELY ON EMPLOYEE'S OWN TIME, AND WHICH DOES NOT RELATE DIRECTLY TO EMPLOYER'S BUSINESS OR TO ITS ACTUAL OR DEMONSTRABLY ANTICIPATED RESEARCH OR DEVELOPMENT, OR WHICH DOES NOT RESULT FROM ANY WORK EMPLOYEE PERFORMED FOR EMPLOYER. 12. NON-SOLICITATION. Employee covenants that during the term of his employment by Employer, and for one year after the termination of his employment, regardless of the cause of termination, Employee will not, without Employer's prior written consent, directly or indirectly, employ or seek to employ, in any capacity, any person who, within the preceding six months, has been an employee of Employer, or any franchisee of Employer. 13. INDEMNIFICATION BY EMPLOYER. In addition to any indemnification to which Employee may be entitled in his capacity as an officer and director of Employer, Employer shall indemnify, defend and hold harmless Employee from and against any and all costs, expenses, losses, damages, claims, liabilities, obligations, actions or causes of action (including, without limitation, reasonable attorneys' fees and expenses) incurred, sustained or suffered by him as a result of any claim, suit, cause of action, investigation or proceeding, whenever instituted or commenced, against Employee by a third party that is not directly or indirectly affiliated or related to Employee, arising out of the actions or inactions of Employer with respect to Employer's business prior to March 22, 2000. Should any claim covered by the indemnity provided in Section 13 be asserted, Employee shall promptly notify Employer and give Employer an opportunity to defend the same either in Employer's name or, as required by applicable laws and regulations, in Employee's name; provided, that the failure to give prompt notice shall not affect the rights of Employee to indemnification hereunder except to the extent that such failure either shall have materially prejudiced Employer in the defense of such claim or shall have increased the amount of the obligation of Employer. Employee shall extend reasonable cooperation in connection with such defense and shall have the right, at his own expense, to participate in, but not to control, any such defense by Employer. If Employer shall fail, after notice from Employee, to defend against such claim within a reasonable time, then Employee shall be entitled to assume the defense thereof, and Page 15 of 23 Pages Employer shall be liable to repay Employee for all of his expenses reasonably incurred in connection with such defense, including reasonable attorney's fees and settlement payments. No settlement shall be made by Employee of any claim which Employer has assumed pursuant to this Section 13, or of any other claim or actions with respect to which indemnification is claimed hereunder, without the prior written consent of Employer, so long as such consent is not unreasonably withheld or delayed. 14. NO RESTRICTIONS. Employee represents and warrants to Employer that he is not subject to any covenant, agreement, understanding or restriction of any kind or nature which would prohibit, restrict or interfere in any way with his ability to perform the functions of his positions with Employer. 15. MISCELLANEOUS. 15.1 INTEGRATION. This Agreement and the Stock Option Agreement of even date herewith contains the entire agreement and understanding among the parties relative to the subject matter hereof and supersedes all prior agreements and understandings relating thereto. 15.2 APPLICABLE LAW. This Agreement and the rights of the parties will be governed by and construed and enforced under the laws of the state of Minnesota. The venue for any action hereunder will be in the state of Minnesota, and the parties consent to the jurisdiction of the courts of the state of Minnesota, County of Hennepin, and the U.S. District Court, District of Minnesota. 15.3 BINDING EFFECT. Except as herein provided, this Agreement will be binding upon and will benefit the parties and their respective heirs, successors, assigns and personal representatives; provided, however, that Employee may not assign his rights or obligations hereunder without Employer's prior written consent. Employer may assign its rights and obligations under this Agreement, provided the assignee agrees to fulfill Employer's obligations hereunder. 15.4 NOTICES. All notices, requests and other communications hereunder will be given in writing and deemed to have been given if personally delivered, or sent by first class, certified mail, return receipt requested, postage prepaid, to the party at the address as provided below, or to such other address as such party may hereafter designate by written notice to the other party: (a) If to Employer, to the address of its then principal office. (b) If to Employee, to the address last shown in Employer's records. Page 16 of 23 Pages 15.5 MODIFICATION. This Agreement will not be modified or amended except by a written instrument signed by the parties. 15.6 SEVERABILITY. The invalidity or partial invalidity of any portion of this Agreement will not invalidate the remainder thereof. If any provision of this Agreement is, for any reason, held to be excessively broad as to scope, activity, subject or otherwise, so as to be unenforceable at law, such provision will be construed by the appropriate judicial body by limiting or reducing it, so as to be enforceable to the maximum extent compatible with then applicable law. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date herein first above written. EMPLOYER Grow Biz International, Inc. Dated: March 22, 2000 By: /s/ Ronald G. Olson -------------------------------------- Ronald G. Olson, Vice Chairman EMPLOYEE: Dated: March 22, 2000 By: /s/ John L. Morgan -------------------------------------- John L. Morgan Page 17 of 23 Pages EX-3 4 LETTER AGREEMENT EXHIBIT 3 March 22, 2000 John L. Morgan c/o Lindquist & Vennum P.LL.P. 4200 IDS Center 80 South 8th Street Minneapolis, Minnesota 55402-2205 Dear Mr. Morgan: This letter is an agreement between you and Grow Biz International, Inc. (the "Company") regarding your proposal for you, Kirk MacKenzie, Jack Norqual and Rush River Group LLC to acquire from K. Jeffrey Dahlberg approximately 700,000 shares of outstanding capital stock of the Company (the "Proposed Purchase"). Unless otherwise defined herein, each term in this letter agreement for which a definition is provided in the Minnesota Business Corporation Act (Minnesota Statutes, Chapter 302A) shall have such definition. You have requested, pursuant to Section 302A.673 of the Minnesota Business Corporation Act, that a committee of disinterested directors approve the Proposed Purchase. In response to your request and in reliance on your obligations under this letter agreement, the committee of disinterested directors has indicated its intention to approve the Proposed Purchase. In consideration of such approval, you have agreed to the following: 1. While your beneficial ownership equals or exceeds 10% of all outstanding shares of common stock of the Company, neither you nor any of your associates or affiliates will effect (or attempt to effect) any business combination without the prior approval of a committee of the board of directors consisting of all disinterested directors. 2. Because the Company may suffer irreparable harm as a result of any breach of this letter agreement by you, the Company shall be entitled to obtain all available remedies (including without limitation injunctive relief and specific performance) to prevent any actual or threatened breach by you of this letter agreement, without proving any damages or posting any bond or other security. Such remedies are in addition to all other remedies available for breach of an agreement, whether at law or in equity. 3. This letter agreement may be executed in one or more counterparts, and all such counterparts taken together will constitute one and the same instrument. Sincerely, GROW BIZ INTERNATIONAL, INC. By: /s/ Ronald G. Olson ------------------------------------- Its: Vice Chairman ------------------------------------- The undersigned hereby agrees as set forth above. /s/ John L. Morgan - -------------------------------- John L. Morgan Page 18 of 23 Pages EX-4 5 NONQUALIFIED STOCK OPTION AGREEMENT EXHIBIT 4 GROW BIZ INTERNATIONAL, INC. NONQUALIFIED STOCK OPTION AGREEMENT March 22, 2000 TO: John L. Morgan (the "OPTIONEE") As the new Chief Executive Officer of Grow Biz International, Inc., a Minnesota corporation (the "COMPANY"), you are hereby granted an option (the "OPTION"), pursuant to a resolution of the Board of Directors of the Company adopted on March 22, 2000. The Option entitles you to purchase up to 600,000 shares of Common Stock(the "STOCK") of the Company at a price of $5.00 per share, which was in excess of the sales price of the Stock as reported on the NASDAQ SmallCap Market as of the time of the approval of the grant of this Option and as of the close of business on the date immediately prior to the date of the grant of this Option. Your Option is in all respects limited and conditioned by the following terms and conditions: 1. DEFINITIONS. In addition to definitions that may be contained elsewhere herein, for purposed of this Agreement and the Option, the following terms, when capitalized, shall have the following meanings: (a) "AGREEMENT" means this written agreement evidencing the Option granted hereunder which is signed by both the Company and Optionee. (b) "BOARD" means the Board of Directors of the Company. (c) "CODE" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. (d) "DISABILITY" means disability as defined in Section 22(e)(3) of the Code. (e) "FAIR MARKET VALUE" means, as of any given date, unless otherwise determined by the Board in good faith, the closing sales price of the Stock for that date as reported on the NASDAQ SmallCap Market. 2. OPTION TERMS. You will be entitled to purchase up to 120,000 shares of Stock on March 22, 2001, and an additional 120,000 shares on each of March 22, 2002, March 22, 2003, March 22, 2004 and March 22, 2005, so long as you are still serving as Chief Executive Officer of the Company on such date. If you cease serving as Chief Executive Officer of the Company, any nonvested portion of the Option is terminated immediately, and any Page 19 of 23 Pages vested portion is exercisable for thirty (30) days following the last day on which you served as Chief Executive Officer of the Company or until the expiration of the Option, whichever period is shorter. 3. TERM. This Option expires in its entirety on March 22, 2006. Subject to the vesting schedule set forth in Section 2 hereof, the Option may be exercised in whole or in part at any time during the term of the Option. 4. EXERCISE. The Option may be exercised by delivery of the attached Notice of Exercise to the Company. The exercise price may be paid in cash, by certified check, or by transfer to the Company of shares of Stock having a Fair Market Value, as of the date of exercise, not less than the purchase price of the Stock being acquired pursuant to your Option, or any combination thereof. The Company's obligation to deliver shares upon the exercise of the Option will be subject to applicable federal, state, and local tax withholding requirements. Unless otherwise determined by the Board, withholding obligations may be settled with Stock, including Stock received as part of the exercise giving rise to the withholding requirement. 5. DEATH. If Optionee's service to the Company as Chief Executive Officer of the Company terminates by reason of death, the Option held by Optionee may thereafter by exercised by the legal representative of Optionee's estate or by any person who acquires the Option by will or the laws of descent and distribution for a period of one year from the date of such death or until the expiration of the stated term of the Option, whichever period is shorter. The Option shall be exercisable only to the extent that the Option was exercisable as of the date of death. 6. DISABILITY. If Optionee's service to the Company as Chief Executive Officer of the Company terminates by reason of Disability, Optionee may exercise such portion of the Option as was exercisable at the date of termination for a period of one year from the date of termination or until the expiration of the stated term of the Option, whichever period is shorter. The Option shall be exercisable only to the extent that the Option was exercisable as of the date of termination. 7. NONTRANSFERABILITY. The Option is transferable only by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act ("ERISA"), or the rules thereunder. Except as permitted by the preceding sentence, neither the Option nor any of the rights and privileges thereby conferred may be transferred, assigned, pledged, or hypothecated in any way (whether by operation of law or otherwise), and no such option, right, or privilege will be subject to execution, attachment, or similar process. The Option may be exercised during Optionee's lifetime only by Optionee or his or her guardian or legal representative. 8. INVESTMENT INTENT. Unless a registration statement under the Securities Act of 1933 (and applicable state securities laws) is in effect with respect to Stock to be purchased pursuant Page 20 of 23 Pages to this Option, you agree with, and represent to, the Company that you are acquiring the Option and Stock for the purpose of investment and with no present intention to transfer, sell, or otherwise dispose of the Stock. In the absence of such registration, no shares of Stock acquired pursuant to the exercise, in whole or in part, of the Option may be transferred unless, in the opinion of counsel to the Company, such transfer is in compliance with applicable securities laws, and each certificate representing any shares of Stock issued to Optionee hereunder will have endorsed thereon an appropriate legend referring to the restrictions against transfer. Prior to the transfer of any Stock to you, the Company may require an opinion of counsel satisfactory to it that at all times the Company will be in compliance with applicable federal and state securities laws. 9. ADJUSTMENT IN CAPITALIZATION. In the event of any merger, reorganization, consolidation, recapitalization, Stock dividend, Stock split, or other change in corporate structure affecting the Stock, such substitution or adjustment will be made in the number and option price of shares purchasable hereunder, in the aggregate number of shares reserved for issuance with respect to the Option, and in the number and option price of shares subject to any outstanding portion of the Option as may be determined to be appropriate by the Board to prevent dilution or enlargement of Option rights granted hereunder, provided that the number of shares subject to the Option will always be a whole number. 10. NONQUALIFIED OPTION. This Option is not intended to be an "incentive stock option" as defined in the Code and is granted outside any stock option plan adopted by the Company. 11. NONEXCLUSIVITY. The granting of the Option will not be construed as limiting the power of the Board to adopt such other incentive arrangements as it may deem desirable, including the granting of other stock options. Such arrangements may be either generally applicable or applicable only in specific cases. 12. GOVERNING LAW. The Option and this Agreement will be governed by and construed in accordance with the laws of the State of Minnesota without regard to conflicts of laws principles, and all terms will be interpreted and construed so that there will not be committed any violation of applicable state or federal securities laws. 13. NO RIGHT TO SERVE. The granting of the Option does not grant Optionee any right of service as a director, and the Company retains the right to terminate service of Optionee as its Chief Executive Officer, or otherwise, pursuant to the Company's Articles of Incorporation, Bylaws and applicable law. Page 21 of 23 Pages IN WITNESS WHEREOF, Company and Optionee have each executed this Agreement effective as of the date first above written. COMPANY OPTIONEE: GROW BIZ INTERNATIONAL, INC. /s/ Ronald G. Olson /s/ John L. Morgan - ---------------------------------- ---------------------------------- By: Ronald G. Olson John L. Morgan Its: Vice Chairman Page 22 of 23 Pages EXHIBIT A NOTICE OF EXERCISE OF STOCK OPTION AND RECORD OF STOCK TRANSFER TO: Grow Biz International, Inc. 4200 Dahlberg Drive Golden Valley, MN 55422-4837 I hereby exercise my stock option granted by Grow Biz International, Inc. ("COMPANY"), effective March 22, 2000, subject to all terms and provisions thereof and notify you of my desire to purchase _________ shares of Common Stock of the Company ("SHARES"), offered to me pursuant to said Option. Enclosed is a certified check in the sum of $___________ or payment in such other form as the Company has specified. [THIS SECTION IS APPLICABLE IF THE SHARES ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933.] I hereby represent that the Shares are being acquired by me as an investment and not with a view to, or for resale in connection with, the distribution of any shares of the Company. I understand that the Shares are not registered under the Securities Act of 1933, as amended ("ACT"), or applicable state securities laws, that the Shares may not be sold or otherwise transferred except pursuant to an effective registration statement under the Act and said laws, unless the Company has received an option of counsel satisfactory to it that such transfer or disposition does not require registration under the Act or said laws and, for any sales under Rule 144 of the Act, such evidence as it shall request for compliance with that rule or applicable state securities laws. I further understand that the certificate representing the Shares will contain a legend referring to such restrictions. I acknowledge that I am responsible for payment of any taxes for which I may become liable as a result of the exercise of this Option. , - ---------------------------------- ---------------------------------- John L. Morgan RECEIPT is hereby acknowledged of the delivery to me by Grow Biz International, Inc. on ________________________, ____ of stock certificate no. ___________ for ___________ shares of Common Stock purchased by me pursuant to the terms and conditions of the option agreement referred to above. ---------------------------------- John L. Morgan Page 23 of 23 Pages -----END PRIVACY-ENHANCED MESSAGE-----