Exhibit 10.4
 
 
SHARE EXCHANGE AGREEMENT
 
This Share Exchange Agreement, dated as of August 12, 2010, is made by and among
NeuLion, Inc., a company incorporated under the laws of Canada (the “Acquiror
Company”), TransVideo International Ltd., a BVI business company incorporated
under the laws of the British Virgin Islands (the “Company”) and AvantaLion LLC,
a Delaware limited liability company and Wang Yunchuan, Hao Jingfang, Wang Qi,
Tan Zhongjun, Wang Xiaohong, Shu Wei, Zhao Yun (each a “Shareholder” and
collectively, the “Shareholders”).
 
RECITALS
 
WHEREAS, the Shareholders own 3,200,000 shares of US$0.01 each, being 100% of
the issued and outstanding shares (the “Shares”) in the Company;
 
WHEREAS, the Shareholders desire to transfer to the Acquiror Company, and the
Acquiror Company desires to acquire from the Shareholders, all of the Shares, in
exchange for 22,000,802 common shares of the Acquiror Company (the “Acquiror
Company Common Shares”) to be issued on the Closing Date, on the terms and
conditions as set forth herein.
 
NOW, THEREFORE, in consideration of the respective representations, warranties,
covenants, agreements, and conditions hereinafter set forth, and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
 
ARTICLE I
DEFINITIONS
 
1.1           Except as otherwise expressly provided herein or, unless the
context otherwise requires, the terms defined in this Section 1.1 will have the
meanings herein specified for all purposes of this Agreement.
 
“Acquiror Company” has the meaning set forth in the preamble.
 
“Acquiror Company Common Shares” has the meaning set forth in the recitals.
 
“Affiliate” means any Person that directly or indirectly controls, is controlled
by or is under common control with the indicated Person.
 
“Agreement” means this Share Exchange Agreement, including all Schedules and
Exhibits hereto, as it may be from time to time amended, modified or
supplemented.
 
“Circular” means the information circular of the Acquiror Company to be prepared
with respect to the Meeting and the Exchange and in accordance with the
requirements of National Instrument 61-101 – Take-Over Bids and Special
Transactions.
 
“Closing” has the meaning set forth in Section 3.1.
 
 
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“Closing Date” has the meaning set forth in Section 3.1.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Commission” means the Securities and Exchange Commission or any other federal
agency then administering the Securities Act.
 
“Company” has the meaning set forth in the preamble.
 
“Company Balance Sheet” means the Company’s audited balance sheet at December
31, 2009.
 
“Company Intellectual Property” has the meaning set forth in Section 4.2.22.
 
“Damages” means any and all liabilities, obligations, damages, deficiencies,
Taxes, fines, penalties, expenses, Proceedings, demands, assessments, judgments,
costs and expenses, including reasonable attorneys’ fees and costs of
collection, defense and settlement.
 
“Environmental Laws” means any Law or other requirement relating to the
environment, natural resources, or public or employee health and safety.
 
“Environmental Permit” means all licenses, permits, authorizations, approvals,
franchises and rights required under any applicable Environmental Law or Order.
 
“Equity Security” means any stock or similar security, including, without
limitation, securities containing equity features and securities containing
profit participation features, or any security convertible into or exchangeable
for, with or without consideration, any stock or similar security, or any
security carrying any warrant, right or option to subscribe to or purchase any
shares of capital stock, or any such warrant, right or option.
 
“Exchange” has the meaning set forth in Section 2.1.
 
“Fair Market Value” means as of the Closing Date $0.435, and as of any other
date, (x) if such shares are listed on one or more securities exchanges the
closing price on shares on the principal exchange on which such shares are then
trading on the most recent trading day preceding such date of determination or
(y) if such shares are not publicly traded, the value as determined in good
faith by the board of directors of the Acquiror Company.
 
“Financial Statements” has the meaning set forth in Section 4.2.23.
 
“GAAP” means, with respect to any Person, United States generally accepted
accounting principles applied on a basis consistent with such Person’s past
practices.
 
“Governmental Authority” means any federal or national, state or provincial,
municipal or local government, governmental authority, regulatory or
administrative agency, governmental commission, department, board, bureau,
agency or instrumentality, political subdivision, commission, court, tribunal,
official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.
 
 
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“Indebtedness” means any obligation, contingent or otherwise.  Any obligation
secured by a Lien on, or payable out of the proceeds of, or production from,
property of the relevant party will be deemed to be Indebtedness.
 
“Insolvency Proceeding” means any one or more of the following in relation to
any Person:

(a)                 it is unable to pay its debts as they fall due; or

(b)                 the value of its liabilities (including its contingent and
prospective liabilities) exceeds the value of its assets; or

(c)                 it fails to comply with the requirements of a statutory
demand that has not been set aside under Section 157 of the Insolvency Act, 2003
of the British Virgin Islands; or

(d)                 execution or other process issued on a judgment, decree or
order of a court in favour of a creditor of it is returned wholly or partly
unsatisfied; or

(e)                 it has taken any action or steps have been taken or legal
proceedings have been started or threatened against it for (i) its winding up,
liquidation, administration, dissolution, amalgamation, reconstruction,
reorganisation, arrangement, adjustment, consolidation or protection or relief
of creditors (whether by way of voluntary arrangement, scheme of arrangement or
otherwise), or (ii) the enforcement of any security interest over any or all of
its assets; or (iii) the appointment of a liquidator, receiver, controller,
inspector, manager, supervisor, administrative receiver, administrator, trustee
or similar officer or official of it or of any or all of its assets; or

(f)                   a compromise or arrangement has been proposed, agreed to
or sanctioned under any of Sections 177, 178 and 179A of the BVI Business
Companies Act, 2004 of the British Virgin Islands (the “BVI Companies Act”) in
respect of it, or an application has been made to, or filed with, a court for
permission to convene a meeting to vote on a proposal for any such compromise or
arrangement; or

(g)                 a merger or consolidation is proposed, approved, agreed to
or sanctioned under any of Sections 170 to 174 (inclusive) of the BVI Companies
Act in respect of it; or

(h)                 action is being taken by the Registrar of Corporate Affairs
pursuant to Section 213 of the BVI Companies Act to dissolve or strike it off
the British Virgin Islands register of companies; or

(i)                   action is proposed, approved, agreed to or being taken
pursuant to Section 184 of the BVI Companies Act to continue it as a company
incorporated under the laws of a jurisdiction outside the British Virgin
Islands; or
 
 
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(j)           it is, in any jurisdiction, subject to or threatened by any
actions, steps, procedures or other proceedings under any applicable bankruptcy,
insolvency, rehabilitation or other reorganisation laws; or

(k)           any actions, steps, procedures or other proceedings equivalent or
analogous to any of those set out in any of (a) – (j) above (inclusive) of this
definition have been taken, started or threatened against it in any
jurisdiction, including the seeking by it (or any other person in relation to
it) of winding up, liquidation, administration, dissolution,
 
“Intellectual Property” means all industrial and intellectual property,
including, without limitation, all U.S. and non-U.S. patents, patent
applications, patent rights, trademarks, trademark applications, common law
trademarks, Internet domain names, trade names, service marks, service mark
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.
 
“Laws” means, with respect to any Person, any U.S. or non-U.S. federal,
national, state, provincial, local, municipal, international, multinational or
other law (including common law), constitution, statute, code, ordinance, rule,
regulation or treaty applicable to such Person.
 
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including, without limitation, any conditional sale or other
title retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
similar statute) of any jurisdiction and including any lien or charge arising by
Law.
 
“Material Adverse Effect” means, when used with respect to the Acquiror Company
or the Company, as the case may be, any change, effect or circumstance which,
individually or in the aggregate, would reasonably be expected to (a) have a
material adverse effect on the business, assets, financial condition or results
of operations of the Acquiror Company or the Company, as the case may be, in
each case taken as a whole or (b) materially impair the ability of the Acquiror
Company, the Company or the Shareholders, as the case may be, to perform their
obligations under this Agreement, excluding any change, effect or circumstance
resulting from (i) the announcement, pendency or consummation of the
transactions contemplated by this Agreement, (ii) changes in the United States
or Canadian securities markets generally, or (iii) changes in general economic,
currency exchange rate, political or regulatory conditions in industries in
which the Acquiror Company or the Company, as the case may be, operate.
 
 
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“Meeting” means the special meeting of shareholders of the Acquiror Company to
be called and held with respect to the Exchange and in accordance with the
requirements of National Instrument 61-101 – Take-Over Bids and Special
Transactions.
 
“Order” means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any Governmental
Authority.
 
“Organizational Documents” means (a) the articles or certificate of
incorporation, memorandum of association and the by-laws or code of regulations
of a corporation or company; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited partnership; (d) the
articles or certificate of formation and operating agreement of a limited
liability company; (e) any other document performing a similar function to the
documents specified in clauses (a), (b), (c) and (d) adopted or filed in
connection with the creation, formation or organization of a Person; and (f) any
and all amendments to any of the foregoing.
 
“Permitted Liens” means (a) Liens for Taxes not yet payable or in respect of
which the validity thereof is being contested in good faith by appropriate
proceedings and for the payment of which the relevant party has made adequate
reserves; (b) Liens in respect of pledges or deposits under workmen’s
compensation Laws or similar legislation, carriers, warehousemen, mechanics,
laborers and materialmen and similar Liens, if the obligations secured by such
Liens are not then delinquent or are being contested in good faith by
appropriate proceedings conducted and for the payment of which the relevant
party has made adequate reserves; (c) statutory Liens incidental to the conduct
of the business of the relevant party which were not incurred in connection with
the borrowing of money or the obtaining of advances or credits and that do not
in the aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business; and (d) Liens that
would not have a Material Adverse Effect.
 
“Person” means all natural persons, corporations, business trusts, associations,
companies, partnerships, limited liability companies, joint ventures and other
entities, governments, agencies and political subdivisions.
 
“Proceeding” means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative or investigative)
commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Authority.
 
“Securities Act” means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same will be in effect at the time.
 
“Shareholders” has the meaning set forth in the preamble.
 
“Shares” has the meaning set forth in the recitals.
 
“Subsidiary” means, with respect to the Company, any corporation, limited
liability company, joint venture or partnership of which the Company (a)
beneficially owns, either directly or indirectly, more than 50% of (i) the total
combined voting power of all classes of voting securities of such entity, (ii)
the total combined equity interests, or (iii) the capital or profit interests,
in the case of a partnership; or (b) otherwise has the power to vote or to
direct the voting of sufficient securities to elect a majority of the board of
directors or similar governing body.
 
 
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“Taxes” means all foreign, federal, state or local taxes, charges, fees, levies,
imposts, duties and other assessments, as applicable, including, but not limited
to, any income, alternative minimum or add-on, estimated, gross income, gross
receipts, sales, use, transfer, transactions, intangibles, ad valorem,
value-added, franchise, registration, title, license, capital, paid-up capital,
profits, withholding, payroll, employment, unemployment, excise, severance,
stamp, occupation, premium, real property, recording, personal property, federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Section 59A of the Code) or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to tax with
respect to any of the foregoing; and “Tax” means any of the foregoing Taxes.
 
“Tax Return” means any return, declaration, report, claim for refund or credit,
information return, statement or other similar document filed with any
Governmental Authority with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
 
1.2           References.  For all purposes of this Agreement:  (i) the words
“hereof”, “herein”, “hereunder”, and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement; (ii) section references contained in this Agreement
are references to Sections in this Agreement unless otherwise specified; (iii)
the term “including” shall mean “including without limitation”; (iv) the
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms; (v) any agreement, instrument or
statute defined or referred to herein or in any instrument or certificate
delivered in connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein; (vi) any references to a Person are also to its permitted
successors and assigns; (vii) all Article and Section titles or captions
contained in this Agreement or in any Exhibit or Schedule referred to herein and
the table of contents of this Agreement are for convenience only and shall not
be deemed a part of this Agreement or affect the meaning or interpretation of
this Agreement; (viii) unless otherwise specified, all references herein to
numbered Articles and Sections are to Articles and Sections of this Agreement,
as applicable, and all references herein to Schedules or Exhibits are to
Schedules and Exhibits to this Agreement; and (vii) unless otherwise specified,
all references contained in this Agreement, in any Exhibit or Schedule referred
to herein or in any instrument or document delivered pursuant hereto to dollars
or “$” shall mean United States dollars.
 
 
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ARTICLE II
EXCHANGE OF SHARES AND SHARE CONSIDERATION
 
2.1           Share Exchange.  At the Closing, the Shareholders shall sell and
transfer the Shares to the Acquiror Company and the Acquiror Company agrees to
purchase and accept transfer of the Shares and, in consideration therefor,
subject to Section 2.2, the Acquiror Company shall issue to the Shareholders the
Acquiror Company Common Shares (the “Exchange”).  Each Shareholder shall receive
such number of Acquiror Company Common Shares as set forth opposite such
Shareholder’s name on Schedule A, attached hereto.
 
2.2           Withholding.  The Acquiror Company shall be entitled to deduct and
withhold from the Acquiror Company Common Shares otherwise payable pursuant to
this Agreement to each Shareholder such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code or any
provision of state, local, provincial or foreign tax Law.  To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to such Shareholder in respect of which
such deduction and withholding was made.  Notwithstanding the foregoing, the
Acquiror Company at its option, may require any such amounts required to be
deducted and withheld to be reimbursed in cash to the Acquiror Company by such
Shareholder prior to the time any Acquiror Company Common Shares are issued to
such Shareholder.
 
2.3           Section 368 Reorganization.  For U.S. federal income tax purposes,
the Exchange is intended to constitute a “reorganization” within the meaning of
Section 368(a)(1)(B) of the Code.  The parties to this Agreement hereby adopt
this Agreement as a “plan of reorganization” within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations.  Notwithstanding the foregoing or anything else to the contrary
contained in this Agreement, the parties acknowledge and agree that no party is
making any representation or warranty as to the qualification of the Exchange as
a reorganization under Section 368 of the Code or as to the effect, if any, that
any transaction consummated prior to, on or after the Closing Date has or may
have on any such reorganization status.  The parties acknowledge and agree that
each (i) has had the opportunity to obtain independent legal and tax advice with
respect to the transaction contemplated by this Agreement, and (ii) is
responsible for paying its own Taxes, including without limitation, any adverse
Tax consequences that may result if the transaction contemplated by this
Agreement is not determined to qualify as a reorganization under Section 368 of
the Code.
 
ARTICLE III
CLOSING DATE
 
3.1           Closing Date.  The closing of the Exchange (the “Closing”) will
take place (i) at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, New
York 10154 at 10:00 a.m. (Eastern Time) on the date (the “Closing Date”) upon
which all of the conditions set forth in Articles VII and VIII have either been
satisfied or, in the case of conditions not satisfied, waived in writing by the
party entitled to the benefit of such conditions or (ii) at such other place and
time as the parties may agree in writing.
 
 
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
 
4.1           Each Shareholder, severally as to itself, hereby represents and
warrants to the Acquiror Company:
 
4.1.1           Authority.  Such Shareholder has the right, power, authority and
capacity to execute and deliver this Agreement, to consummate the transactions
contemplated by this Agreement and to perform such Shareholder’s obligations
under this Agreement.  This Agreement has been duly and validly authorized and
approved, executed and delivered by such Shareholder.  Assuming this Agreement
has been duly and validly authorized, executed and delivered by the parties
hereto other than such Shareholder, this Agreement is duly authorized, executed
and delivered by such Shareholder and constitutes the legal, valid and binding
obligation of such Shareholder, enforceable against such Shareholder in
accordance with its terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other similar Laws
affecting the enforcement of creditors rights generally.
 
4.1.2           No Conflict.  Neither the execution or delivery by such
Shareholder of this Agreement nor the consummation or performance by such
Shareholder of the transactions contemplated hereby will, directly or
indirectly, (a) contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of such Shareholder (if such
Shareholder is not a natural person); (b) contravene, conflict with, constitute
a default (or an event or condition which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or acceleration
of, any agreement or instrument to which such Shareholder is a party or by which
the properties or assets of such Shareholder is bound; or (c) contravene,
conflict with, or result in a violation of, any Law or Order to which such
Shareholder, or any of the properties or assets of such Shareholder, may be
subject.
 
4.1.3           Ownership of Shares.  Such Shareholder is the legal and
registered holder, owns, of record and beneficially, and has good, valid and
indefeasible title to and the right to transfer to the Acquiror Company pursuant
to this Agreement, such Shareholder’s Shares free and clear of any and all
Liens.  There are no options, rights, voting trusts, shareholder agreements or
any other contracts or understandings to which such Shareholder is a party or by
which such Shareholder or such Shareholder’s Shares are bound with respect to
the issuance, sale, transfer, voting or registration of such Shareholder’s
Shares.  At the Closing Date, the Acquiror Company will acquire good, valid and
marketable title to such Shareholder’s Shares free and clear of any and all
Liens.  The number of Shares so legally and beneficially owned by such
Shareholder, along with the jurisdiction in which such Shareholder is resident,
is set forth opposite such Shareholder’s name on Schedule A hereto.
 
4.1.4           Litigation.  There is no pending Proceeding against such
Shareholder that involves the Shares or that challenges, or may have the effect
of preventing, delaying or making illegal, or otherwise interfering with, any of
the transactions contemplated by this Agreement and, to the knowledge of such
Shareholder, no such Proceeding has been threatened, and no event or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding.
 
 
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4.1.5           No Brokers or Finders.  No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against
such Shareholder for any commission, fee or other compensation as a finder or
broker, or in any similar capacity, and such Shareholder will indemnify and hold
the Acquiror Company harmless against any liability or expense arising out of,
or in connection with, any such claim in accordance with Article IX.
 
4.1.6           Investment Representations.
 
(a)           Schedule 4.1.6(a) sets forth the name of such Shareholder if such
Shareholder is an accredited investor (each, an “Accredited Investor”) within
the meaning of Rule 501(a) under the Securities Act.
 
(b)           Schedule 4.1.6(b) sets forth name of such Shareholder if such
Shareholder is not a U.S. Person within the meaning of Rule 902(k) under the
Securities Act.
 
(c)           Section 4.1.6(c) sets forth the name of such Shareholder if such
Shareholder is not an Accredited Investor (a “Non-Accredited Investor”).  Such
Non-Accredited Investor, either individually or through a representative, has
such knowledge and experience in financial and business matters as to be capable
of evaluating his, her or its investment in the Acquiror Company Common Shares.
 
(d)           Such Shareholder understands and agrees that the Acquiror Company
Common Shares to be issued pursuant to this Agreement and the Exchange have not
been registered under the Securities Act or any state, local or foreign
securities laws. and that the issuance of the Acquiror Company Common Shares is
being effected in reliance upon an exemption from registration afforded either
under Section 4(2) of the Securities Act for transactions by an issuer not
involving a public offer or Regulation S for offers and sale of securities
outside the U.S.
 
(e)           Such Shareholder represents, warrants and covenants that it is
acquiring the Acquiror Company Common Shares with investment intent and not with
a view to resale. Such Shareholder also acknowledges that it has been advised to
consult its own legal advisors with respect to applicable resale restrictions
and that it is responsible for complying with such restrictions.
 
4.2           The Shareholders, jointly and not severally, represent and warrant
to the Acquiror Company:
 
4.2.1           Organization and Qualification.  The Company is duly
incorporated, validly existing and in good standing under the laws of British
Virgin Islands, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and as contemplated to be conducted, to own,
hold and operate its properties and assets as now owned, held and operated by
it, to enter into this Agreement, to carry out the provisions hereof except
where the failure to be so organized, existing and in good standing or to have
such authority or power will not, in the aggregate, have a Material Adverse
Effect.  The Company is duly qualified, licensed or domesticated as a foreign
corporation in good standing in each jurisdiction wherein the nature of its
activities or its properties owned or leased makes such qualification, licensing
or domestication necessary, except where the failure to be so qualified,
licensed or domesticated will not have a Material Adverse Effect.  Set forth on
Schedule 4.2.1 is a list of those jurisdictions in which the Company presently
conducts its business, owns, holds and operates its properties and assets.
 
 
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4.2.2           Subsidiaries. Schedule 4.2.2 shall set forth the name and
jurisdiction of formation or incorporation of the Subsidiaries of the Company
and the jurisdictions wherein such Subsidiary presently conducts its business,
owns, holds and operates its properties and assets. Each entity set forth on
Schedule 4.2.2 is duly incorporated, validly existing and in good standing under
the Laws of its jurisdiction or formation or incorporation, has all requisite
authority and power (corporate and other), governmental licenses,
authorizations, consents and approvals to carry on its business as presently
conducted and as contemplated to be conducted, to own, hold and operate its
properties and assets as now owned, held and operated by it.
 
4.2.3           Organizational Documents.  Copies of the Organizational
Documents of the Company and its Subsidiaries have been made available to the
Acquiror Company prior to the execution of this Agreement, are true and complete
and have not been amended or repealed.  Neither the Company nor any of its
Subsidiaries is in violation or breach of any of the provisions of its
Organizational Documents.
 
4.2.4           Authorization and Validity of this Agreement.  The Company has
all requisite authority and power (corporate and other), governmental licenses,
authorizations, consents and approvals to enter into this Agreement, to
consummate the transactions contemplated by this Agreement, to perform its
obligations under this Agreement, and to record the transfer of the Shares and
the delivery of the new certificates representing the Shares registered in the
name of the Acquiror Company.  The execution, delivery and performance by the
Company of this Agreement have been duly authorized by all necessary corporate
action and do not require from the Company’s board of directors or the
Shareholders any consent or approval that has not been validly and lawfully
obtained.  The execution, delivery and performance by the Company of this
Agreement require no authorization, consent, approval, license, exemption of or
filing or registration with any Governmental Authority or other Person.
 
4.2.5           No Violation.  Neither the execution nor the delivery by the
Company of this Agreement nor the consummation or performance by the Company of
the transactions contemplated hereby will, directly or indirectly, (a)
contravene, conflict with, or result in a violation of any provision of the
Organizational Documents of the Company; (b) contravene, conflict with,
constitute a default (or an event or condition which, with notice or lapse of
time or both, would constitute a default) under, or result in the termination or
acceleration of, or result in the imposition or creation of any Lien under, any
agreement or instrument to which the Company is a party or by which the
properties or assets of the Company are bound; (c) contravene, conflict with, or
result in a violation of, any Law or Order to which the Company, or any of the
properties or assets owned or used by the Company, may be subject; or (d)
contravene, conflict with, or result in a violation of, the terms or
requirements of, or give any Governmental Authority the right to revoke,
withdraw, suspend, cancel, terminate or modify, any licenses, permits,
authorizations, approvals, franchises or other rights held by the Company or
that otherwise relate to the business of, or any of the properties or assets
owned or used by, the Company, except, in the case of clause (b), (c), or (d),
for any such contraventions, conflicts, violations, or other occurrences as
would not have a Material Adverse Effect.
 
 
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4.2.6           Binding Obligations.  Assuming this Agreement has been duly and
validly authorized, executed and delivered by the parties hereto other than the
Company,  this Agreement is duly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforcement is limited by general equitable principles, or by bankruptcy,
insolvency and other similar Laws affecting the enforcement of creditors  rights
generally.
 
4.2.7           Capitalization and Related Matters.
 
(a)           Capitalization.  The authorized capital of the Company consists of
5,000,000 shares, of which 3,200,000 shares are issued and outstanding.  Except
as set forth in Schedule 4.2.7(a), there are no outstanding or authorized
options, warrants, calls, purchase agreements, participation agreements,
subscription rights, conversion rights, exchange rights or other securities or
contracts that could require the Company to issue, sell or otherwise cause to
become outstanding any of its authorized but unissued shares or any securities
convertible into, exchangeable for or carrying a right or option to purchase
shares or to create, authorize, issue, sell or otherwise cause to become
outstanding any new class of shares.  There are no outstanding shareholders’
agreements, voting trusts or arrangements, registration rights agreements,
rights of first refusal or other contracts pertaining to the capital stock of
the Company.  The issuance of all of the shares of the Company described in this
Section 4.2.7 has been made in compliance with the laws of the British Virgin
Islands.  All issued and outstanding shares of the Company are duly authorized,
validly issued, fully paid and nonassessable and have not been issued in
violation of any preemptive or similar rights.
 
(b)           No Redemption Requirements.  Except as set forth in Schedule
4.2.7(b), there are no outstanding contractual obligations (contingent or
otherwise) of the Company  or any of its Subsidiaries to retire, repurchase,
redeem or otherwise acquire any outstanding capital shares of, or other
ownership interests in, the Company or any of its Subsidiaries or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any other Person.
 
(c)           Shareholders.  The Shareholders are the sole beneficial holders of
all of the outstanding capital shares of the Company.  Except as expressly
provided in this Agreement, no holder of Shares or any other security of the
Company or any other Person is entitled to any preemptive right, right of first
refusal or similar right as a result of the issuance of the shares or
otherwise.  There is no voting trust, agreement or arrangement among any
Shareholders of any capital stock of the Company affecting the exercise of the
voting rights of any such capital stock.
 
(d)           No Rights to Purchase. Except for the Acquiror Company’s right to
acquire from the Shareholders the Shares which are being transferred hereunder,
there do not now exist any stock or other options, warrants or rights of any
nature or kind whatsoever, actual, contingent or executory, for the purchase,
sale or transfer of any of the securities in the capital of the Company which
are owned by the Shareholders.
 
 
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4.2.8           Compliance with Laws and Other Instruments.  The business and
operations of the Company and its Subsidiaries have been and are being conducted
in accordance with all applicable Laws and Orders.  Neither the Company nor any
of its Subsidiaries has received notice of any violation (or any Proceeding
involving an allegation of any violation) of any applicable Law or Order by or
affecting the Company or its Subsidiaries and, to the knowledge of the Company,
no Proceeding involving an allegation of violation of any applicable Law or
Order is threatened or contemplated.
 
4.2.9           Litigation and Insolvency Proceedings.  There is no Proceeding
(whether federal, state, local or foreign) pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Subsidiary or any of
their properties, assets, business or employees.  To the knowledge of the
Company, there is no fact that might result in or form the basis of any such
Proceeding.  Neither the Company nor any of its Subsidiaries are subject to any
Orders.  No Insolvency proceeding has occurred in relation to the Company or any
of its Subsidiaries.
 
4.2.10           No Brokers or Finders.  No person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Company for any commission, fee or other compensation as a finder or broker, or
in any similar capacity, and the Shareholders will indemnify and hold the
Acquiror Company harmless against any liability or expense arising out of, or in
connection with, any such claim in accordance with Article IX.
 
4.2.11           Title to and Condition of Properties.  The Company owns (with
good and marketable title in the case of real property) or holds under valid
leases or other rights to use all real property, plants, machinery and equipment
necessary for the conduct of the business of the Company as presently conducted,
free and clear of all Liens, except Permitted Liens.  The material buildings,
plants, machinery and equipment necessary for the conduct of the business of the
Company as presently conducted are structurally sound, are in good operating
condition and repair and are adequate for the uses to which they are being put,
in each case, taken as a whole, and none of such buildings, plants, machinery or
equipment is in need of maintenance or repairs, except for ordinary, routine
maintenance and repairs that are not material in nature or cost.
 
4.2.12           Absence of Undisclosed Liabilities.  Except as set forth on
Schedule 4.2.12, the Company has no debt, obligation or liability (whether
accrued, absolute, contingent, liquidated or otherwise, whether due or to become
due, whether or not known to the Company) arising out of any transaction entered
into at or prior to the Closing Date, including no obligation to fund any joint
venture or other entity, or any act or omission at or prior to the Closing Date,
except to the extent set forth on or reserved against on the Company Balance
Sheet.  All debts, obligations or liabilities with respect to directors and
officers of the Company will be cancelled prior to the Closing.  The Company has
not incurred any liabilities or obligations under agreements entered into in the
usual and ordinary course of business since January 1, 2010.
 
 
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4.2.13           Changes.  The Company has, since January 1, 2010:
 
(a)           not conducted its business or entered into any transaction other
than in the usual and ordinary course of business, except for this Agreement;
 
(b)           not suffered or experienced any change in, or affecting, its
condition (financial or otherwise), properties, assets, liabilities, business,
operations, results of operations or prospects other than changes, events or
conditions in the usual and ordinary course of its business, none of which would
have a Material Adverse Effect;
 
(c)           not made any loans or advances to any Person other than travel
advances and reimbursement of expenses made to employees, officers and directors
in the ordinary course of business;
 
(d)           not created or permitted to exist any Lien on any material
property or asset of the Company, other than Permitted Liens;
 
(e)           not issued, sold, disposed of or encumbered, or authorized the
issuance, sale, disposition or encumbrance of, or granted or issued any option
to acquire any shares of its capital stock or any other of its securities or any
Equity Security, or altered the term of any of its outstanding securities or
made any change in its outstanding shares of capital stock or its
capitalization, whether by reason of reclassification, recapitalization, stock
split, combination, exchange or readjustment of shares, stock dividend or
otherwise;
 
(f)            not declared, set aside, made or paid any dividend or other
distribution to any of its shareholders;
 
(g)           not terminated or modified any Material Company Contract except
for termination upon expiration in accordance with the terms thereof;
 
(h)           not released, waived or cancelled any claims or rights relating to
or affecting the Company in excess of US $5,000 in the aggregate or instituted
or settled any Proceeding involving in excess of US $5,000 in the aggregate;
 
(i)            not paid, discharged or satisfied any claim, obligation or
liability in excess of US $5,000 in the aggregate, except for liabilities
incurred prior to the date of this Agreement in the ordinary course of business;
 
(j)            not created, incurred, assumed or otherwise become liable for any
Indebtedness in excess of US $5,000 in the aggregate, other than professional
fees;
 
(k)           not guaranteed or endorsed in a material amount any obligation or
net worth of any Person;
 
(l)            not acquired the capital stock or other securities or any
ownership interest in, or substantially all of the assets of, any other Person;
 
 
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(m)           not changed its method of accounting or the accounting principles
or practices utilized in the preparation of its Financial Statements, other than
as required by GAAP;
 
(n)           not entered into any agreement, or otherwise obligated itself, to
do any of the foregoing.
 
4.2.14           Material Company Contracts.  Schedule 4.2.14 sets forth all of
the contracts to which the Company or any Subsidiary is a party (the “Material
Company Contracts”).  The Company has provided to the Acquiror Company, prior to
the date of this Agreement, true, correct and complete copies of each written
Material Company Contract, including each amendment, supplement and modification
thereto.
 
4.2.15           No Defaults.  Each Material Company Contract is a valid and
binding agreement of the Company that is party thereto, and is in full force and
effect.  The Company is not in breach or default of any Material Company
Contract to which it is a party and, to the knowledge of the Company, no other
party to any Material Company Contract is in breach or default thereof.  Except
as would not have a Material Adverse Effect, no event has occurred or
circumstance exists that (with or without notice or lapse of time) would (a)
contravene, conflict with or result in a violation or breach of, or become a
default or event of default under, any provision of any Material Company
Contract or (b) permit the Company or any other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify any Material Company
Contract.  The Company has not received notice of the pending or threatened
cancellation, revocation or termination of any Material Company Contract to
which it is a party.  There are no renegotiations of, or attempts to
renegotiate, or outstanding rights to renegotiate any material terms of any
Material Company Contract.
 
4.2.16           Employees.
 
(a)           The Company is in full compliance with all Laws regarding
employment, wages, hours, benefits, equal opportunity, collective bargaining,
the payment of taxes, occupational safety and health and plant closing.  The
Company is not liable for the payment of any compensation, damages, taxes,
fines, penalties or other amounts, however designated, for failure to comply
with any of the foregoing Laws.
 
(b)           The Company does not maintain or contribute to any employee
benefit, bonus, commission, incentive, deferred compensation, stock purchase,
stock option, severance, change in control or fringe benefit plans.
 
(c)           No director, officer or employee of the Company is a party to, or
is otherwise bound by, any contract (including any confidentiality,
non-competition or proprietary rights agreement) with any other Person that in
any way adversely affects or will materially affect (a) the performance of his
or her duties as a director, officer or employee of the Company or (b) the
ability of the Company to conduct its business.  Each employee of the Company is
employed on an at-will basis and the Company does not have any contract with any
of its employees which would interfere with its ability to discharge its
employees.
 
 
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4.2.17           Tax Returns and Audits.
 
(a)           Tax Returns.  The Company and its Subsidiaries have filed all Tax
Returns required to be filed by or on behalf of the Company and its Subsidiaries
and all such Tax Returns are correct and complete.  The Company and its
Subsidiaries have paid all Taxes required to have been paid (whether or not
reflected on any Tax Return).  No Governmental Authority in any jurisdiction
where the Company or any of its Subsidiaries do not file a Tax Return has made a
claim, assertion or threat to the Company or its Subsidiaries that such entity
is or may be subject to taxation by such jurisdiction; there are no Liens with
respect to Taxes on the Company or any of its Subsidiaries’ property or assets
other than Permitted Liens; and there are no Tax rulings, requests for rulings,
or closing agreements relating to the Company or any of its Subsidiaries for any
period (or portion of a period) that would affect any period after the date
hereof. The Company and its Subsidiaries have withheld, and will continue until
the Closing Date to withhold, any Taxes which are required by applicable Law to
be withheld and has timely paid or remitted, and will continue until the Closing
Date to pay and remit, on a timely basis, the full amount of any Taxes which
have been or will be withheld, to the applicable Governmental
Authority.  Transactions in respect of goods or services between the Company and
its Subsidiaries and any affiliated or related Person have occurred for arm’s
length consideration, and the Company and its Subsidiaries have complied with
all contemporaneous documentation requirements and all other transfer pricing
requirements in respect of affiliated or related party transactions.  Neither
the Company nor any of its Subsidiaries is a party to any agreement, waiver,
extension or arrangement with any Governmental Authority which relates to any
extension of time with respect to the filing of any Tax Return, any payment of
Taxes or any assessment.
 
(b)           No Adjustments, Changes.  Neither the Company or any of its
Subsidiaries nor any other Person on behalf of the Company or its Subsidiaries
(a) has executed or entered into a closing agreement pursuant to Section 7121 of
the Code or any predecessor provision thereof or any similar provision of state,
local or foreign Law; or (b) has agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign Law.
 
(c)           No Disputes.  There is no pending audit, examination,
investigation, dispute, proceeding or claim with respect to any Taxes of the
Company or any of its Subsidiaries, nor is any such claim or dispute pending or
contemplated.  The Company has delivered or made available to the Acquiror
Company true, correct and complete copies of all of its and its Subsidiaries Tax
Returns, if any, examination reports and statements of deficiencies assessed or
asserted against or agreed to by the Company or any Subsidiary since its
inception and any and all correspondence with respect to the foregoing.
 
(d)           Not a U.S. Real Property Holding Corporation.  Neither the Company
nor any of its Subsidiaries is and has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code at any
time during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
 
 
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(e)           No Tax Allocation/ Sharing. Neither the Company or any of its
Subsidiaries is a party to any Tax allocation or sharing agreement and does not
have any liability for the Taxes of any other Person under any Tax Law or as a
transferee or successor, or by contract or otherwise.
 
(f)           No Other Arrangements.  Neither the Company nor any Subsidiary (i)
is a party to any agreement, contract or arrangement for services that would
result, individually or in the aggregate, in the payment of any amount that
would not be deductible by reason of Section 162(m), 280G or 404 of the Code (or
any similar provision of state, local or foreign Law, (ii) has any outstanding
closing agreement, ruling request, request for consent to change a method of
accounting, subpoena or request for information to or from a Governmental
Authority in connection with any Tax matter or (iii) is a party to any
reportable transaction within the meaning of Treasury Regulation Section
1.6011-4 (or any similar provision of state, local or foreign Law).
 
(g)           Canadian Tax. None of the Shares will constitute “taxable Canadian
property” for purposes of the Income Tax Act (Canada).
 
4.2.18           Insurance.  All existing insurance plans of the Company are in
full force and effect, all insurance premiums thereon have been paid in full
when due and no notice of cancellation, nonrenewal or termination has been
issued or received by the Company.  Schedule 4.2.18 lists all insurance policies
of any kind or nature maintained as of the date hereof by or on behalf of the
Company.
 
4.2.19           Licenses.  The Company and its Subsidiaries possess from the
appropriate Governmental Authority all licenses, permits, authorizations,
approvals, franchises and rights that are necessary for the Company and its
Subsidiaries to engage in its business as currently conducted and to permit the
Company and its Subsidiaries to own and use its properties and assets in the
manner in which it currently owns and uses such properties and assets
(collectively, “Company Permits”).  Neither the Company nor any Subsidiary has
received notice from any Governmental Authority or other Person that there is
lacking any license, permit, authorization, approval, franchise or right
necessary for the Company or any of its Subsidiaries to engage in its business
as currently conducted and to permit the Company and its Subsidiaries to own and
use its properties and assets in the manner in which it currently owns and uses
such properties and assets.  The Company Permits are valid and in full force and
effect.  No event has occurred or circumstance exists that may (with or without
notice or lapse of time):  (a) constitute or result, directly or indirectly, in
a violation of or a failure to comply with any Company Permit; or (b) result,
directly or indirectly, in the revocation, withdrawal, suspension, cancellation
or termination of, or any modification to, any Company Permit.  Neither the
Company nor any Subsidiary has received notice from any Governmental Authority
or any other Person regarding:  (a) any actual, alleged, possible or potential
contravention of any Company Permit; or (b) any actual, proposed, possible or
potential revocation, withdrawal, suspension, cancellation, termination of, or
modification to, any Company Permit.  All applications required to have been
filed for the renewal of such Company Permits have been duly filed on a timely
basis with the appropriate Persons, and all other filings required to have been
made with respect to such Company Permits have been duly made on a timely basis
with the appropriate Persons.  All Company Permits are renewable by their terms
or in the ordinary course of business without the need to comply with any
special qualification procedures or to pay any amounts other than routine fees
or similar charges, all of which have, to the extent due, been duly paid.
 
 
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4.2.20           Governmental Inquiries.  The Company has provided to the
Company a copy of each material written inspection report, questionnaire,
inquiry, demand or request for information received by the Company from any
Governmental Authority, and the Company’s response thereto, and each material
written statement, report or other document filed by the Company with any
Governmental Authority.
 
4.2.21           Bank Accounts and Safe Deposit Boxes.  Schedule 4.2.21
discloses the title and number of each bank or other deposit or financial
account, and each lock box and safety deposit box used by the Company and its
Subsidiaries, the financial institution at which that account or box is
maintained and the names of the persons authorized to draw against the account
or otherwise have access to the account or box, as the case may be.
 
4.2.22           Intellectual Property.
 
(a)           Schedule 4.2.22(a) sets forth a true, correct and complete list of
all Intellectual Property owned or licensed by the Company or any Subsidiary
(the “Company Intellectual Property”), specifying as to each, as applicable: (i)
the description of such Company Intellectual Property; (ii) the owner of such
Company Intellectual Property; and (iii) the jurisdictions by or in which such
Company Intellectual Property has been issued or registered or in which an
application for such issuance or registration has been filed.
 
(b)           Except as set forth on Schedule 4.2.22(b):
 
(i)           within the past three (3) years (or prior thereto if the same is
still pending or subject to appeal or reinstatement), the Company has not been
sued or charged in writing with or been a defendant in any Proceeding that
involves a claim of infringement of any Intellectual Property; and
 
(ii)           to the knowledge of the Shareholders, there is no claim of
infringement of the Company Intellectual Property brought by the Company against
any Person in the past three (3) years and so far as they are aware, there has
been no material infringement by any Person of any Company Intellectual Property
in the year prior to the date of this Agreement.
 
(c)           Neither the current use by the Company of the Company Intellectual
Property infringes nor the continued use of the Company Intellectual Property
after the Closing will infringe the rights of any other Person.
 
(d)           All employees, agents, consultants or contractors who have
contributed to or participated in the creation or development of any
copyrightable, patentable or trade secret material on behalf of the Company
which is material to the operation of the business (excluding Intellectual
Property owned by or held by the Company for the use of clients of the Company)
have executed an assignment or an agreement to assign in favor of the Company
(or such predecessor in interest, as applicable) all right, title and interest
in such material.
 
 
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4.2.23           Financial Statements.  Schedule 4.2.23 sets forth the Company’s
Balance Sheet and the related audited statements of income and cash flows, and
the Company’s unaudited interim balance sheet as of March 31, 2010 and the
related unaudited interim statements of income and cash flows for the three
months then ended (collectively, the “Financial Statements”).  The Financial
Statements comply in all material respects with and were prepared in accordance
with GAAP applied on a consistent basis during the periods involved and fairly
present in all material respects (subject, in the case of unaudited statements,
to normal, recurring audit adjustments) the financial position of the Company as
at the dates thereof and the results of its operations and cash flows for the
periods then ended.
 
4.2.24           Environmental and Safety Matters.  Except as set forth on
Schedule 4.2.24, (a) the Company has at all time been and is in compliance with
all Environmental Laws applicable to the Company, (b) there are no Proceedings
pending or threatened against the Company alleging the violation of any
Environmental Law or Environmental Permit applicable to the Company or alleging
that the Company is a potentially responsible party for any environmental site
contamination and (c) neither this Agreement nor the consummation of the
transactions contemplated by this Agreement shall impose any obligations to
notify or obtain the consent of any Governmental Authority or third Persons
under any Environmental Laws applicable to the Company.
 
4.2.25           No Improper Payments. Neither the Company nor any of its
Subsidiaries has offered, paid or agreed to pay, directly or indirectly, any
money or thing of value (tangible or intangible) to any Person (or to any
Affiliate of such Person) who is or was either an official of any regulatory
authority or a director, manager, officer or employee or other representative of
any past or present customer of the Company or any of its Subsidiaries for the
purpose, or with the intent, of having such Person use his/her influence to
obtain or maintain business for the Company or any of its Subsidiaries or
otherwise affect the business, affairs, operations or assets of the Company in
any financial or other manner.
 
4.2.26           Compliance with Applicable Securities Law. The Exchange is
exempt from the take-over bid requirements under Part XX – Take-Over Bids and
Issuer Bids of the Securities Act (Ontario) by virtue of the exemption available
in Section 100.2 of the Securities Act (Ontario) and Part 6 of OSC Rule 62-504 –
Take-Over Bids and Issuer Bids (and all analogous provisions in provinces other
than Ontario) and is otherwise in compliance with all applicable Canadian
securities Law.
 
4.2.27           Manufacturing. Each Subsidiary maintains good out-sourcing
manufacturing practices and abides by the requirements of applicable Law
including any guidelines, policies, or other standards from time to time
promulgated or issued by any Governmental Authority with respect to the
manufacture of its respective products.
 
 
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4.2.28           Inventories. The inventories of the Subsidiaries do not include
any material items that are slow moving, below standard quality or of a quality
or quantity not useable or saleable in the normal course of business, the value
of which has not been written down on the books of the applicable Subsidiary of
account to net realizable market value. The inventory levels of the Subsidiaries
have been maintained at such amounts as are required for the operations of their
respective business as previously conducted and as proposed to be conducted, and
such inventory levels are adequate therefor.
 
4.2.29           Company Information. The financial statements provided by the
Company to UHY Advisors, Inc. in connection with its preparation of a business
valuation of the Company, were accurate and based on reasonable assumptions and
projections.
 
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANY
 
The Acquiror Company represents and warrants to the Shareholders as follows:
 
5.1           Organization and Qualification.  The Acquiror Company is duly
organized, validly existing and in good standing under the laws of Canada, has
all requisite authority and power (corporate and other), governmental licenses,
authorizations, consents and approvals to carry on its business as presently
conducted and to own, hold and operate its properties and assets as now owned,
held and operated by it, except where the failure to be so organized, existing
and in good standing, or to have such authority and power, governmental
licenses, authorizations, consents or approvals would not have a Material
Adverse Effect.  The Acquiror Company is duly qualified, licensed or
domesticated as a foreign corporation in good standing in each jurisdiction
wherein the nature of its activities or its properties owned, held or operated
makes such qualification, licensing or domestication necessary, except where the
failure to be so duly qualified, licensed or domesticated and in good standing
would not have a Material Adverse Effect.
 
5.2           Organizational Documents.  True, correct and complete copies of
the Organizational Documents of the Acquiror Company have been made available to
the Shareholders prior to the execution of this Agreement, and no action has
been taken to amend or repeal such Organizational Documents.  The Acquiror
Company is not in violation or breach of any of the provisions of its
Organizational Documents, except for such violations or breaches as would not
have a Material Adverse Effect.
 
5.3           Authorization.  Subject to its receipt of shareholder approval in
the manner required by Law and to the approval of the Toronto Stock Exchange,
the Acquiror Company has all requisite authority and power (corporate and
other), governmental licenses, authorizations, consents and approvals to enter
into this Agreement, to consummate the transactions contemplated by this
Agreement and to perform its obligations hereunder.  The execution, delivery and
performance by the Acquiror Company of this Agreement have been duly authorized
by all necessary corporate action and do not require from the Acquiror Company
any consent or approval that has not been validly and lawfully obtained except
for approval by the Acquiror Company shareholders and the Toronto Stock
Exchange.
 
 
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5.4           No Violation.  Neither the execution nor the delivery by the
Acquiror Company of this Agreement nor the consummation or performance by the
Acquiror Company of the transactions contemplated hereby will, directly or
indirectly, (a)  contravene, conflict with, or result in a violation of any
provision of the Organizational Documents of the Acquiror Company; (b)
contravene, conflict with, constitute a default (or an event or condition which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination or acceleration of, or result in the imposition or
creation of any Lien under, any agreement or instrument to which the Acquiror
Company is a party or by which the properties or assets of the Acquiror Company
is bound; (c) contravene, conflict with, or result in a violation of, any Law or
Order to which the Acquiror Company, or any of the properties or assets owned or
used by the Acquiror Company, may be subject; or (d) contravene, conflict with,
or result in a violation of, the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any licenses, permits, authorizations, approvals, franchises or other
rights held by the Acquiror Company or that otherwise relate to the business of,
or any of the properties or assets owned or used by, the Acquiror Company,
except, in the case of clause (b), (c), or (d), for any such contraventions,
conflicts, violations, or other occurrences as would not have a Material Adverse
Effect.
 
5.5           Binding Obligations.  Assuming this Agreement has been duly and
validly authorized, executed and delivered by the parties thereto other than the
Acquiror Company, this Agreement is duly authorized, executed and delivered by
the Acquiror Company and constitutes the legal, valid and binding obligations of
the Acquiror Company, enforceable against the Acquiror Company in accordance
with their respective terms, except as such enforcement is limited by general
equitable principles, or by bankruptcy, insolvency and other similar Laws
affecting the enforcement of creditors  rights generally.
 
5.6           Securities Laws.  Assuming the accuracy of the representations and
warranties of the Shareholders in Section 4.1.6, the issuance of the Acquiror
Company Common Shares pursuant to this Agreement will be, when issued and paid
for in accordance with the terms of this Agreement, issued in accordance with
exemptions from the registration and prospectus delivery requirements of the
Securities Act and the registration permit or qualification requirements of all
applicable state securities laws.
 
5.7           Duly Authorized.  The issuance of the Acquiror Company Common
Shares has been duly authorized and, upon delivery to the Shareholders of
certificates therefor in accordance with the terms of this Agreement, the
Acquiror Company Common Shares will have been validly issued and fully paid, and
will be nonassessable, have the rights, preferences and privileges specified,
will be free of preemptive rights and will be free and clear of all Liens and
restrictions, other than Liens created by the Shareholders and restrictions on
transfer imposed by this Agreement and the Securities Act.
 
5.8           No Brokers or Finders.  No Person has, or as a result of the
transactions contemplated herein will have, any right or valid claim against the
Acquiror Company for any commission, fee or other compensation as a finder or
broker, or in any similar capacity.
 
 
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ARTICLE VI
COVENANTS
 
6.1           Interim Operations of the Company. Except as otherwise
contemplated by this Agreement or consented to in writing by Acquiror Company,
which consent shall not be unreasonably withheld, between the date of this
Agreement and the Closing Date, the Shareholders shall cause the Company to,
conduct its business in the ordinary course and use commercially reasonable
efforts to preserve substantially intact its business, keep available the
services of their present officers and employees, preserve in all respects their
present business relationships and goodwill, retain all Company Intellectual
Property and to make all capital expenditures as currently planned or as
necessary, in each case in the ordinary course of business.
 
Except as set forth on Schedule 6.1, between the date of this Agreement and the
Closing Date, the Shareholders shall not permit the Company to, and shall
procure that the Company does not:
 
(a)           amend its Organizational Documents;
 
(b)           organize any Subsidiary or acquire any capital stock of any Person
or any equity or ownership interest in any business, dispose of any Subsidiary,
start up any new business or merge, consolidate or enter into any share exchange
with or into any other Person (except the transactions contemplated by this
Agreement);
 
(c)           issue, sell or otherwise dispose of any of its equity interests,
or create or suffer to be created any encumbrance thereon, or reclassify, split
up or otherwise change any of its equity interests, or grant or enter into any
options, covenants or calls or other rights to purchase or convert any
obligation into any of its equity interests;
 
(d)           incur or guarantee any Indebtedness for borrowed money or incur
any obligation or liability (contingent or otherwise) to a third party, except
to the extent required in the ordinary course of business and for contracts and
agreements entered into in the ordinary course of business;
 
(e)           pay, discharge or satisfy any claim, liability or obligation
(whether fixed or contingent), other than in the ordinary course of business;
 
(f)            make any loans or advances in excess of $10,000 in the aggregate
to any Person, other than extensions of credit to customers and expense
allowances and advances to employees of the Company, in each case in the
ordinary course of business;
 
(g)           make, grant or enter into any (i) increase in the compensation of,
or benefits or severance payable to, any employee of the Company, other than
customary adjustments in compensation consistent with past practice or (ii)
agreement to hire any employee other than in the ordinary course of business
consistent with past practices;
 
 
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(h)           sell, assign, transfer, convey, lease, pledge, encumber or
otherwise dispose of or agree to sell, assign, transfer, convey, lease, pledge,
encumber or otherwise dispose of any assets or properties of the Company with an
aggregate book value in excess of $10,000, other than (i) sales of inventory in
the ordinary course of business and (ii) the disposition of used or worn out
equipment or other tangible personal property no longer used in the business of
the Company;
 
(i)            cancel any debts to the Company in excess of $10,000 in the
aggregate, except for cancellations of bad debts made in the ordinary course of
business, or waive any other rights or claims of the Company in excess of
$10,000, except for waivers, compromises or other adjustments of rights or
claims against customers or suppliers made in the ordinary course of business;
 
(j)            settle any Proceeding against the Company;
 
(k)           change its accounting methods or classifications, except as
required by GAAP;
 
(l)            enter into any agreement, contract, commitment or arrangement
which involves any joint venture, partnership or other arrangement involving
sharing of profits with any Person or that would restrict the Company from
carrying on business anywhere in the world;
 
(m)           enter into any agreement, contract, commitment or arrangement that
would be required to be listed on Schedule 4.2.14 or amend, modify or terminate
any Material Company Contract other than in the ordinary course of business;
 
(n)           make a material election or change to a material election in
respect of Taxes, amend any Tax Return, enter into any tax allocation agreement,
tax sharing agreement, tax indemnity agreement or closing agreement to which the
Company is a party, settle or compromise any material claim or assessment in
respect of Taxes; or take any action with respect to the computation of Taxes or
the preparation of Tax Returns that is inconsistent with past practice;
 
(o)           in any other manner, modify, change or otherwise alter the
fundamental nature of the business of the Company as presently conducted; or
 
(p)           enter a binding commitment to perform any of the foregoing.
 
6.2           Public Announcements.  Prior to the Closing Date, the Company, the
Shareholders and the Acquiror Company shall consult with each other in issuing
any press releases or otherwise making public statements or filings and other
communications with the Commission or any regulatory agency or stock market or
trading facility with respect to the transactions contemplated hereby and
neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications without the prior written
consent of the other, which consent shall not be unreasonably withheld or
delayed, except that no prior consent shall be required if such disclosure is
required by law, in which case the disclosing party shall provide the other
party with prior notice of such public statement, filing or other communication
and shall incorporate into such public statement, filing or other communication
the reasonable comments of the other party.
 
 
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6.3           Confidentiality.
 
6.3.1           The Acquiror Company, the Shareholders, and the Company will
maintain in confidence, and will cause their respective directors, officers,
employees, agents, and advisors to maintain in confidence any written, oral, or
other information obtained in confidence from another party in connection with
this Agreement or the transactions contemplated by this Agreement, unless (a)
such information is already known to such party or to others not bound by a duty
of confidentiality or such information becomes publicly available through no
fault of such party, (b) the use of such information is necessary in making any
required filing with the Commission or any other securities regulatory
authority, or obtaining any consent or approval required for the consummation of
the transactions contemplated by this Agreement, or (c) the furnishing or use of
such information is required by or necessary in connection with legal
proceedings.
 
6.3.2           In the event that any party is required to disclose any
information of another party pursuant to clause (b) or (c) of Section 6.3.1, the
party requested or required to make the disclosure (the “disclosing party”)
shall provide the party that provided such information (the “providing party”)
with prompt notice of any such requirement so that the providing party may seek
a protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 6.3.  If, in the absence of a protective order or
other remedy or the receipt of a waiver by the providing party, the disclosing
party is nonetheless, in the opinion of counsel, legally compelled to disclose
the information of the providing party, the disclosing party may, without
liability hereunder, disclose only that portion of the providing party’s
information which such counsel advises is legally required to be disclosed,
provided that the disclosing party exercises its reasonable efforts to preserve
the confidentiality of the providing party’s information, including, without
limitation, by cooperating with the providing party to obtain an appropriate
protective order or other relief assurance that confidential treatment will be
accorded the providing party’s information.
 
6.3.3           If the transactions contemplated by this Agreement are not
consummated, each party will return or destroy as much of such written
information as the other party may reasonably request.
 
6.4           Preparation of Circular and Other Disclosure
Materials. The Acquiror Company shall schedule the Meeting and solicit proxies
approving this Agreement and the transactions contemplated hereby.  In
connection with such Meeting, the Acquiror Company will prepare the Circular to
be distributed to its shareholders prior to such Meeting.  The Company will use
all reasonable efforts to take all actions necessary to cooperate in the
preparation and delivery of the Circular and any amendments thereto and such
other information and documents relating to Acquiror Company shareholder
approval and disclosure regarding the Company as the parties believe is
necessary or advisable.
 
6.5           Information to be Provided. Upon written request by the Acquiror
Company, the Company shall promptly provide such information that is required by
the Acquiror Company in order to prepare the Circular with adequate disclosure
and information in sufficient detail to permit the shareholders of the Acquiror
Company to form a reasoned judgment concerning the respective matters to be
placed before them at the Meeting, including the Exchange.
 
 
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6.6           Meeting. The Acquiror Company has done, or will do, all such acts
and things as may be necessary to comply, in all respects, with applicable laws
and regulatory requirements in relation to the Meeting, including the
preparation and sending of the Circular to all persons required by applicable
Law.
 
6.7           Compliance.  Any Shareholder that constitutes a “control person”
(as such term is defined in applicable Canadian securities Law) of the Acquiror
Company as a result of the Exchange or otherwise will comply with all applicable
resale restrictions, in respect of the Acquiror Company Common Shares.
 
6.8           Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each party hereto will use its reasonable best efforts to cause the
conditions set forth in Articles VII and VIII to be satisfied and the Closing to
occur at the earliest practicable date.
 
6.9           Resale Restrictions on Acquiror Company Common
Shares. The Shareholders understand and acknowledge that the  Acquiror Company
Common Shares to be issued in connection with the Exchange will be subject
to  resale restrictions under applicable securities laws and the Shareholders
agree to comply with such restrictions.  For purposes of complying with such
securities laws, the Shareholders understand and acknowledge that upon the
issuance of the Acquiror Company Common Shares, all the certificates
representing the Acquiror Company Common Shares, as well as all certificates
issued in exchange for or in substitution of the foregoing securities, shall
bear the following legend:
 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE OR
FOREIGN SECURITIES LAWS, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS. UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [INSERT DATE THAT IS
4 MONTHS AND ONE DAY FROM CLOSING DATE].”
 
ARTICLE VII
CONDITIONS PRECEDENT OF THE ACQUIROR COMPANY
 
The Acquiror Company’s obligation to acquire the Shares and to take the other
actions required to be taken by the Acquiror Company at the Closing Date is
subject to the satisfaction, at or prior to the Closing Date, of each of the
following conditions (any of which may be waived by the Acquiror Company, in
whole or in part):
 
 
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7.1           Accuracy of Representations.  The representations and warranties
of the Shareholders set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto that are not qualified as to materiality
shall be true and correct in all material respects as of the date of this
Agreement and the Closing Date, except to the extent a representation or
warranty is expressly limited by its terms to another date.  The representations
and warranties of the Company and the Shareholders set forth in this Agreement
or in any Schedule or certificate delivered pursuant hereto that are qualified
as to materiality shall be true and correct in all respects as of the date of
this Agreement and the Closing Date, except to the extent a representation or
warranty is expressly limited by its terms to another date.
 
7.2           Performance by the Company and Shareholders.
 
7.2.1           All of the covenants and obligations that the Company and the
Shareholders are required to perform or to comply with pursuant to this
Agreement (considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with.
 
7.2.2           The Shareholders shall have properly completed and duly executed
an Internal Revenue Service Form W-8 or W-9, as applicable.
 
7.2.3           Each document required to be delivered by the Company and the
Shareholders pursuant to this Agreement shall have been delivered.
 
7.3           No Force Majeure Event.  There shall not have been any delay,
error, failure or interruption in the conduct of the business of the Company, or
any loss, injury, delay, damage, distress, or other casualty, due to force
majeure including but not limited to (a) acts of God; (b) fire or explosion; (c)
war, acts of terrorism or other civil unrest; or (d) national emergency.
 
7.4           Certificate of Officer.  The Company will have delivered to the
Acquiror Company a certificate executed by an officer of the Company, certifying
the satisfaction of the conditions specified in Sections 7.1, 7.2, and 7.3 and
such other matters as the Acquiror Company may reasonably request.
 
7.5           Certificate of Shareholders.  Each Shareholder will have delivered
to the Acquiror Company a certificate executed by such Shareholder, if a natural
person, or an authorized officer of the Shareholder, if an entity, certifying
the satisfaction of the conditions specified in Sections 7.1 and 7.2 and such
other matters as the Acquiror Company may reasonably request.
 
7.6           Consents.
 
7.6.1           All material consents, waivers, approvals, authorizations or
orders required to be obtained, and all filings required to be made, by the
Company and/or the Shareholders for the authorization, execution and delivery of
this Agreement and the consummation by them of the transactions contemplated by
this Agreement, shall have been obtained and made by the Company or the
Shareholders, as the case may be.
 
7.6.2           Acquiror Company shall have received approval from its
shareholders on such basis as prescribed by Laws and requirements of the Toronto
Stock Exchange, including approval by a majority of its shareholders, excluding
the shares of any of the Shareholders, their Affiliates and persons with whom
they may act jointly or in concert.
 
 
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7.7           Documents.  The Company and the Shareholders must deliver to the
Acquiror Company at the Closing:
 
7.7.1           duly executed share transfer forms (in the form as set out in
Exhibit A) transferring the Shares from the Shareholders to the Acquiror
Company;
 
7.7.2           certified copy of the register of members of the Company
evidencing that the transfer of the Shares from the Shareholders to the Acquiror
Company has been registered;
 
7.7.3           a duly executed and issued share certificate in the name of the
Acquiror Company in respect of the Shares;
 
7.7.4           a directors’ resolution of the Company in the agreed form, duly
passed, approved and completed in all respects (the “Directors’ Resolution”).
The Shareholders shall also procure that each action and other matter specified
in such Directors’ Resolution has been completed at Closing and has been
notified to the Registrar of Corporate Affairs (the “Registrar”) (if applicable)
and the Shareholders have produced evidence thereof to the Acquiror Company;
 
7.7.5           if required, a member’s resolution of the Company in the agreed
form, duly passed, approved and completed in all respects (the “Member’s
Resolution”). The Shareholders shall also procure that each action and other
matter specified in any such Member’s Resolution has been completed at Closing
and has been notified to the Registrar (if applicable) and the Shareholders have
produced evidence thereof to the Acquiror Company; and
 
7.7.6           such other documents and evidence as the Acquiror Company may
reasonably request for the purpose of (a) evidencing the accuracy of any of the
representations and warranties of the Company and the Shareholders pursuant to
Section 7.1, (b) evidencing the performance of, or compliance by the Company and
the Shareholders with, any covenant or obligation required to be performed or
complied with by the Company or the Shareholders, as the case may be,
(c) evidencing the satisfaction of any condition referred to in this Article
VII, or (d) otherwise facilitating the consummation or performance of any of the
transactions contemplated by this Agreement.
 
7.8           No Proceedings.  There must not have been commenced or threatened
against the Acquiror Company, the Company or the Shareholders, or against any
Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of the
Closing Date) (a) involving any challenge to, or seeking damages or other relief
in connection with, any of the transactions contemplated by this Agreement, or
(b) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the transactions contemplated by this
Agreement. There must not have occurred any Insolvency Proceeding in relation to
the Company.
 
7.9           No Claim Regarding Stock Ownership or Consideration.  There must
not have been made or threatened by any Person any claim asserting that such
Person (a) is the holder of, or has the right to acquire or to obtain beneficial
ownership of the Shares or any other stock, voting, equity, or ownership
interest in, the Company, or (b) is entitled to all or any portion of the
Acquiror Company Common Shares.
 
 
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7.10           KylinTV Inc.     The Company shall have assigned or transferred,
via declaration of dividend or otherwise, its entire ownership interest in
KyLinTV, Inc. to the Shareholders.
 
ARTICLE VIII
CONDITIONS PRECEDENT OF THE COMPANY
AND THE SHAREHOLDERS
 
The Shareholders’ obligation to transfer the Shares and the obligations of the
Company to take the other actions required to be taken by the Company in advance
of or at the Closing Date are subject to the satisfaction, at or prior to the
Closing Date, of each of the following conditions (any of which may be waived by
the Company and the Shareholders jointly, in whole or in part):
 
8.1           Accuracy of Representations.  The representations and warranties
of the Acquiror Company set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto that are not qualified as to materiality
shall be true and correct in all material respects as of the date of this
Agreement and the Closing Date except to the extent a representation or warranty
is expressly limited by its terms to another date.  The representations and
warranties of the Acquiror Company set forth in this Agreement or in any
Schedule or certificate delivered pursuant hereto that are qualified as to
materiality shall be true and correct in all respects as of the date of this
Agreement and the Closing Date, except to the extent a representation or
warranty is expressly limited by its terms to another date.
 
8.2           Performance by the Acquiror Company.
 
8.2.1           All of the covenants and obligations that the Acquiror Company
is required to perform or to comply with pursuant to this Agreement (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all respects.
 
8.2.2           Each document required to be delivered by the Acquiror Company
pursuant to this Agreement must have been delivered.
 
8.3           No Force Majeure Event.  There shall not have been any delay,
error, failure or interruption in the conduct of the business of the Acquiror
Company, or any loss, injury, delay, damage, distress, or other casualty, due to
force majeure including but not limited to (a) acts of God; (b) fire or
explosion; (c) war, acts of terrorism or other civil unrest; or (d) national
emergency.
 
8.4           Certificate of Officer.  The Acquiror Company will have delivered
to the Company a certificate, dated the Closing Date, executed by an officer of
the Acquiror Company, certifying the satisfaction of the conditions specified in
Sections 8.1, 8.2, and 8.3 and such other matters as the Company may reasonably
request.
 
 
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8.5           Consents. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required to be
made, by the Acquiror Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated by
this Agreement, shall have been obtained and made by the Acquiror Company,
except where the failure to receive such consents, waivers, approvals,
authorizations or orders or to make such filings would not have a Material
Adverse Effect on the Company or the Acquiror Company.
 
8.6           Documents.  The Acquiror Company must have caused the following
documents to be delivered to the Company and/or the Shareholders:
 
8.6.1           share certificates evidencing each Shareholder’s Acquiror
Company Common Shares in the amount set forth opposite such Shareholder’s name
on Schedule A;
 
8.6.2           a Secretary’s Certificate, dated the Closing Date, certifying
attached copies of (A) the Organizational Documents of the Acquiror Company, (B)
the resolutions of the Acquiror Company board of directors approving this
Agreement and the transactions contemplated hereby; and (C) the incumbency of
each authorized officer of the Acquiror Company signing this Agreement and any
other agreement or instrument contemplated hereby to which the Acquiror Company
is a party;
 
8.6.3           such other documents as the Company may reasonably request for
the purpose of (i) evidencing the accuracy of any representation or warranty of
the Acquiror Company pursuant to Section 8.1, (ii) evidencing the performance by
the Acquiror Company of, or the compliance by the Acquiror Company with, any
covenant or obligation required to be performed or complied with by the Acquiror
Company, (iii) evidencing the satisfaction of any condition referred to in this
Article VIII, or (iv) otherwise facilitating the consummation of any of the
transactions contemplated by this Agreement.
 
8.7           No Proceedings.  Since the date of this Agreement, there must not
have been commenced or threatened against the Acquiror Company, the Company or
the Shareholders, or against any Affiliate thereof, any Proceeding (which
Proceeding remains unresolved as of the date of this Agreement) (a) involving
any challenge to, or seeking damages or other relief in connection with, any of
the transactions contemplated hereby, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
transactions contemplated hereby.
 
ARTICLE IX
INDEMNIFICATION; REMEDIES
 
9.1           Survival.  All representations, warranties, covenants, and
obligations in this Agreement shall expire on the third anniversary of the date
of this Agreement, except that the representation and warranties contained in
Sections 4.1 and 4.2.7 shall survive indefinitely (the “Survival Period”) and
the representations and warranties contained in Sections 4.2.17 (Tax Returns and
Audits) shall survive until 60 days after the expiration of the applicable Tax
statute of limitations.  The right to indemnification, payment of Damages or
other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation.  The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
 
 
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9.2           Indemnification by the Shareholders.
 
9.2.1           From and after the execution of this Agreement until the
expiration of the Survival Period:
 
(a)           each Shareholder, severally and not jointly, shall indemnify and
hold harmless the Acquiror Company from and against any Damages arising,
directly or indirectly, from or in connection with any breach of any
representation or warranty made by such Shareholder in Section 4.1 of this
Agreement and the failure by such Shareholder to perform any covenants or
agreement in this Agreement to be performed by such Shareholder.
 
(b)           the Shareholders, jointly and not severally, shall indemnify and
hold harmless the Acquiror Company from and against any Damages arising,
directly or indirectly, from or in connection with (i) any breach of any
representation or warranty made by the Shareholders in Section 4.2 of this
Agreement; (ii) any breach by the Shareholders of any covenant or obligation of
the Company in this Agreement required to be performed by the Company or the
Shareholders on or prior to the Closing Date; (iii) any and all losses, claims,
damages, or liabilities against the Company or the Shareholders occurring on or
prior to the Closing Date or (iv) any Taxes arising from the transfer
contemplated in Section 7.10 hereof.
 
9.3           Third Party Claims.  If any legal proceedings are instituted or
any claim or demand is asserted by any Person (a “Third Party Claim”) in respect
of which the Acquiror Company may seek indemnification from the Shareholders
pursuant to the provisions of Article IX, the Acquiror Company shall promptly
cause written notice of the assertion of any such claim or demand to be made to
the Shareholders.  The Acquiror Party shall have the right at any time, at its
option and expense, to defend against, negotiate or, with the consent of the
Shareholders, settle any such claim, and in such case, the Shareholders shall
not be liable for the fees and expenses of counsel employed by the Acquiror
Company. Shareholders and Acquiror Company shall cooperate fully with each other
in connection with the defense, negotiation and settlement of any such legal
proceeding, claim or demand.
 
9.4           Limitations on Amount.  The Acquiror Company shall not be entitled
to indemnification unless and until the aggregate amount of Damages with respect
to such matters under Section 9.2 exceeds US$50,000, at which time, the Acquiror
Company shall be entitled to indemnification for the total amount of such
Damages; provided however, that this Section 9.4 will not apply to any breach of
the Shareholders representations and warranties of which Acquiror Company had
knowledge at any time prior to the date on which such representation and
warranty is made or any intentional breach of any covenant or obligation.
 
 
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9.5           Determining Damages.  Materiality qualifications to the
representations and warranties of the Shareholders shall not be taken into
account in determining the amount of Damages occasioned by a breach of any such
representation and warranty for purposes of determining whether the threshold
set forth in Section 9.4 have been met.
 
9.6           Characterization of Indemnification Payments. Acquiror Company and
the Shareholders agree to treat any indemnification payment under this
Agreement, to the maximum extent permitted by applicable Law, as an adjustment
to the consideration received by the Shareholders.
 
9.7           Exclusivity. From and after the Closing, the sole and exclusive
remedy of any party for Damages with respect to any and all claims arising out
of or in connection with this Agreement shall be pursuant to the provisions set
forth in this Article IX; provided, however, that the foregoing shall not limit
the right of any party to assert a claim based on fraud.
 
ARTICLE X
TERMINATION
 
10.1           Termination Procedures. This Agreement may be terminated before
the Closing Date only as follows:
 
(a)           by written agreement of Acquiror Company and the Shareholders at
any time;
 
(b)           by Acquiror Company, by notice to the Shareholders at any time, if
satisfaction of any of the conditions specified in Article VIII becomes
impossible and such condition has not been waived by the Shareholders; or
 
(c)           by the Shareholders, by notice to Acquiror Company at any time, if
satisfaction of any of the conditions specified in Article VII becomes
impossible and such condition has not been waived by Acquiror Company.
 
10.2           Frustration of Closing Conditions. Neither Acquiror Company nor
any of the Shareholders may rely on the failure of any condition set forth in
this Article X to be satisfied if such failure was caused by such party’s
failure to act in good faith or use its reasonable efforts to cause the Closing
to occur, as required in Section 6.8.
 
10.3           Effect of Termination. In the event that this Agreement is
terminated pursuant to Section 10.1, this Agreement shall terminate without any
liability or further obligation of any party or any of its officers, directors,
members or shareholders, Affiliates, advisors, agents or representatives to any
other Person, except for the obligations of Acquiror Company, the Shareholders
and the Company under Sections 6.3 (relating to confidentiality), 11.1 (relating
to payment of expenses), 11.3, 11.4, 11.7, 11.10, 11.11, which obligations shall
survive indefinitely. Notwithstanding termination of this Agreement, nothing in
this Section 10.3 shall be deemed to release any party from any liability for
any breach by such party of the terms and provisions of this Agreement prior to
the date of termination.
 
 
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ARTICLE XI
GENERAL PROVISIONS
 
11.1           Expenses.  Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated by this Agreement, including all
fees and expenses of agents, representatives, counsel, accountants and valuation
experts.
 
11.2           Notices.  All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt) or email,
or (c) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the appropriate
addresses and facsimile numbers set forth below (or to such other addresses and
facsimile numbers as a party may designate by written notice to the other
parties):
 

If to Acquiror Company:
NeuLion, Inc.
1600 Old Country Road
Plainview, NY 11803
USA
Attention: Roy E. Reichbach, General Counsel
Telephone No.: 516-622-8300
Facsimile No.: 516-622-7510
Email: roy.reichbach@neulion.com
   
If to the Company:
TransVideo International Ltd.
c/o Robert T. Bell
The Charles B. Wang Foundation
Park 80 West Plaza 2
Saddle Brook, NJ  07663
USA
Telephone No.: 201-368-7880
Facsimile No.:201-368-7884
Email: rtbell@cbwfoundation.org

 
 
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If to the Shareholders:
AvantaLion LLC
c/o Robert T. Bell
The Charles B. Wang Foundation
Park 80 West Plaza 2
Saddle Brook, NJ  07663
USA
Telephone No.: 201-368-7880
Facsimile No.:201-368-7884
Email: rtbell@cbwfoundation.org

 
11.3           Consent to Jurisdiction.  Each of the parties (a) consent to
submit itself to the personal jurisdiction of the Eastern District Court of New
York or any New York state court located in Nassau County, New York in the event
any dispute or controversy arises under this Agreement or the transaction
contemplated hereby, (b) shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
shall not bring any action related to this Agreement or the transaction
contemplated hereby in any court other than the courts specified herein.  Each
of the parties hereby irrevocable and unconditionally consents to service of
process in the manner provided for notice in Section 11.2.  Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by Law.
 
11.4           Waiver of Jury Trial.  EACH PARTY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
 
11.5           Further Assurances.  The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
 
11.6           Waiver.  The rights and remedies of the parties to this Agreement
are cumulative and not alternative.  Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege.  To the
maximum extent permitted by applicable Law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of  the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
 
 
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11.7           Entire Agreement and Modification.  This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter.  This Agreement may not be amended except by a
written agreement executed by the party against whom the enforcement of such
amendment is sought.
 
11.8           Assignments, Successors, and No Third-Party Rights.  No party may
assign any of its rights under this Agreement without the prior consent of the
other parties.  Subject to the preceding sentence, this Agreement will apply to,
be binding in all respects upon, and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties.  Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement.  This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
 
11.9           Severability.  If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect.  Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
 
11.10          Governing Law.  This Agreement will be governed by the laws of
the State of New York without regard to conflicts of laws principles.
 
11.11          Counterparts.  This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.

 
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IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange
Agreement as of the date first written above.
 

 
Acquiror Company:
 
NEULION, INC.
 
     By:  /s/ Roy E. Reichbach      Name: Roy E. Reichbach    
Title:
Secretary                      Company             TRANSVIDEO INTERNATIONAL LTD.
            By:   /s/ Robert T. Bell      Name:   Robert T. Bell     
Title:
Vice President                      Shareholders:             AVANTALION LLC    
        By: /s/ Robert T. Bell      Name:  Robert T. Bell      Title:
Manager/Vice President                    /s/ Wang Yunchuan      Wang Yunchuan  
              /s/ Hao Jingfang       Hao Jingfang                 /s/ Wang Qi  
    Wang Qi                 /s/ Tan Zhongjun     Tan Zhongjun                
/s/ Wang Xiaohong       Wang Xiaohong  

 
 
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  /s/  Shu Wei       Shu Wei                 /s/ Zhao Yun      Zhao Yun  

 
 
 
 
 
 
 
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SCHEDULE A
 

hareholder
Jurisdiction of
Residency
Shares
Acquiror
Company Common
Shares
AvantaLion LLC
Delaware
2,592,000
17,820,650
Wang Yunchuan
PRC
232,000
1,595,058
Hao Jingfang
PRC
232,000
1,595,058
Wang Qi
PRC
30,000
206,258
Tan Zhongjun
PRC
26,000
178,757
Wang Xiaohong
PRC
40,000
275,010
Shu Wei
PRC
40,000
275,010
Zhao Yun
PRC
8,000
55,002
Total
 
3,200,000
22,000,802

 
 

 
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Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to the Share
Exchange Agreement (the "Agreement") setting forth the exceptions to the
representations and warranties of shareholders made in Article IV of the
Agreement have been omitted from this filing.  NeuLion, Inc. agrees to furnish
supplementally a copy of the omitted Schedules to the Securities and Exchange
Commission upon request.
 

 
 
 
 
 
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EXHIBIT A
 
TRANSVIDEO INTERNATIONAL LTD.
(the "Company")
 
A BVI Business Company
with BVI Company Number 580404
 
SHARE TRANSFER FORM
 
[      ] ("the Transferor"), for good and valuable consideration received by
him/her/it from NeuLion, Inc. ("the Transferee") of 1600 Old Country Road,
Plainview, NY 11803, USA, does hereby:
 
1.
transfer to the Transferee the  [          ] fully paid shares in the Company
(of a par value of US$0.01 each) (the "Shares") standing in the Transferor's
name in the Register of Members of the Company to hold unto the Transferee, its
administrators and assigns, subject to the several conditions on which the
Transferor held the same at the time of execution of this Share Transfer Form;
and

 
2.
consents that the Transferor's name remains on the Register of Members of the
Company until such time as the Company enters the Transferee's name in the
Register of Members of the Company.

 
And the Transferee does hereby agree to take the Shares subject to the same
conditions.
 
This Share Transfer Form may be executed in counterparts each of which when
executed and delivered shall constitute an original but all such counterparts
together shall constitute one and the same instrument.
 
As Witness Our Hands
 
Signed by the Transferor on _____2010
 
in the presence of:
 

     
Witness
 
For and on behalf of the Transferor
[Name]
 

 
Signed by the Transferee on ____2010
in the presence of:
 
 
   
Witness
 
For and on behalf of the Transferee
NeuLion Inc.
 

 
 
 

 
 
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