__________

Exhibit 10.1

 

 

 

 

 

 

SHARE EXCHANGE AGREEMENT

 

 

 

 

 

 

Among each of

:

THE SOLE SHAREHOLDER OF POWER AIR TECH, INC.

 

 

And

:

POWER AIR TECH, INC.

 

 

And

:

HDH GROUP, LLC

 

 

And

:

H. DEAN HALEY

 

 

And

:

FORTUNE PARTNERS, INC.

 

 

 

 

Fortune Partners, Inc.

Suite 1100, 1050 West Pender Street, Vancouver, British Columbia, Canada, V6E
3S7

__________

SHARE EXCHANGE AGREEMENT

 

 

          THIS SHARE EXCHANGE AGREEMENT is made and dated for reference
effective as at August 22, 2005 (the "Effective Date") as fully executed on this
_____ day of September, 2005.

 

AMONG EACH OF

:

THE SOLE SHAREHOLDER OF POWER AIR TECH, INC.

, having an address for notice and delivery located at Level 2, 33 York Street,
Sydney, Australia, 2000

(the "Vendor");

OF THE FIRST PART

AND

:

POWER AIR TECH, INC.

, a company incorporated under the laws of the State of Delaware, U.S.A., and
having an address for notice and delivery located at Level 2, 33 York Street,
Sydney, Australia, 2000

(the "Company");

OF THE SECOND PART

AND

:

HDH GROUP, LLC

, a company incorporated under the laws of the State of Tennessee, U.S.A., and
having an address for notice and delivery located at 3801 Albert Matthews Road,
Columbia, Tennessee, U.S.A., 38401

(the "HDH Group");

OF THE THIRD PART

AND

:

H. DEAN HALEY

, having an address for notice and delivery located at 3801 Albert Matthews
Road, Columbia, Tennessee, U.S.A., 38401

(Mr. "Haley");

OF THE FOURTH PART

(the Vendor, the HDH Group and Mr. Haley being hereinafter collectively referred
to as the "Vendor Group" as the context so requires);

 

AND:

FORTUNE PARTNERS, INC.

, a company incorporated under the laws of the State of Nevada, U.S.A., and
having an address for notice and delivery located at Suite 1100, 1050 West
Pender Street, Vancouver, British Columbia, Canada, V6E 3S7

(the "Purchaser");

OF THE FIFTH PART

(the Vendor Group, the Company and the Purchaser being hereinafter singularly
also referred to as a "Party" and collectively referred to as the "Parties" as
the context so requires).

 

          WHEREAS

:

A.          The Company is a body corporate subsisting under and registered
pursuant to the laws of the State of Delaware, U.S.A., and the Company is
presently engaged in the business of developing, manufacturing and marketing a
zinc-air fuel technology that has been developed at the Lawrence Livermore
National Laboratory ("LLNL"), in Livermore, California, U.S.A., through its
exclusive world-wide license with LLNL, and that the Company now requires
additional external capital in order to fully develop and realize the potential
of its existing business (collectively, the "Company's Business");

B.          The Vendor is the legal and beneficial owners of all of the 1,000
presently issued and outstanding common shares in the capital of the Company
(each a "Purchased Share"); the particulars of the registered and beneficial
ownership of such Purchased Shares being set forth in Schedule "A" which is
attached hereto and which forms a material part hereof;

C.          In accordance with the terms and conditions of that certain
"Agreement In Principle" dated for reference August 22, 2005 (the "Agreement In
Principle"), as entered into among the Vendor Group, the Company and the
Purchaser, the parties thereto agreed to use their best efforts to initiate,
complete and enter into a formal agreement whereby the Vendor would sell all of
the Purchased Shares to the Purchaser upon the general terms and conditions as
set forth therein; a copy of which Agreement In Principle being attached hereto
as Schedule "B" and which forms a material part hereof, and the terms and
conditions of the Agreement In Principle setting forth the Parties general
intentions herein; and

D.          The Parties hereto have agreed to enter into this agreement (the
"Agreement") which formalizes and replaces, in its entirety, the Agreement In
Principle, as contemplated and required by the terms of the Agreement In
Principle, and which clarifies their respective duties and obligations in
connection with the purchase by the Purchaser from the Vendor of all of the
Purchased Shares together with the further development of the Company's Business
as a consequence thereof;

 

          NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual promises, covenants and agreements herein contained, THE PARTIES HERETO
COVENANT AND AGREE WITH EACH OTHER as follows:

 

 

Article 1

DEFINITIONS

1.1          Definitions. For the purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the
following words and phrases shall have the following meanings:

(a)     "Acquisition Shares" has the meaning ascribed to it in section "2.2"
hereinbelow;

(b)     "affiliate" and "associate" have the meanings ascribed to them under the
Company Act of the Province of British Columbia, R.S.B.C. 1996, as amended from
time to time;

(c)     "Agreement" means this "Share Exchange Agreement" as entered into among
the Vendor Group, the Company and the Purchaser herein, together with any
amendments thereto and any Schedules as attached thereto;

(d)     "Agreement In Principle" has the meaning ascribed to it in recital "C."
hereinabove; a copy of which Agreement In Principle being attached hereto as
Schedule "B" and forming a material part hereof;

(e)     "Arbitration Act" means the Commercial Arbitration Act of the Province
of British Columbia, R.S.B.C. 1996, as amended from time to time, as set forth
in Article "13" hereinbelow;

(f)     "Board of Directors" means, as applicable, the respective Board of
Directors of each of the Parties hereto as duly constituted from time to time;

(g)     "business day" means any day during which Canadian Chartered Banks are
open for business in the City of Vancouver, Province of British Columbia;

(h)     "Business Documentation" means any and all records and other factual
data and information relating to the Company's Business interests and assets and
including, without limitation, all plans, agreements and records which are in
the possession or control of any of the Vendor Group or the Company in that
respect;

(i)     "Cancellation of Shares" has the meaning ascribed to it in section "4.1"
hereinbelow;

(j)     "Change in Board and officers" has the meaning ascribed to it in section
"4.1" hereinbelow;

(k)     "Change in Name" has the meaning ascribed to it in section "4.1"
hereinbelow;

(l)     "Closing" has the meaning ascribed to it in section "6.1" hereinbelow;

(m)     "Closing Date" has the meaning ascribed to it in section "6.1"
hereinbelow;

(n)     "Commission" means the United States Securities and Exchange Commission;

(o)     "Company" means Power Air Tech, Inc., a company incorporated under the
laws of the State of Delaware, U.S.A., or any successor company, however formed,
whether as a result of merger, amalgamation or other action;

(p)     "Company Disclosure Schedule" has the meaning ascribed to it in section
"2.2" hereinbelow;

(q)     "Company's Assets" means all assets, contracts, equipment, goodwill,
inventory and Intellectual Property of the Company and including, without
limitation, all of the property interests, assets, contracts, equipment,
goodwill and inventory which are listed and described in Schedules "E" through
"I" which are attached hereto and which form a material part hereof;

(r)     "Company's Business" has the meaning ascribed to it in recital "A."
hereinabove;

(s)     "Company's Financial Statements" has the meaning ascribed to it in
section "3.2" hereinbelow; a copy of which Company's Financial Statements being
set forth in Schedule "C" which is attached hereto and which forms a material
part hereof;

(t)     "Company's Options" has the meaning ascribed to it in section "3.3"
hereinbelow;

(u)     "Compensation Shares" has the meaning ascribed to it in section "2.2"
hereinbelow;

(v)     "Confidential Information" has the meaning ascribed to it in section
"10.1" hereinbelow;

(w)     "Creditor" and "Creditors" has the meaning ascribed to them in section
"2.2" hereinbelow; a complete listing of such Creditors of the Company being set
forth in Schedule "C" which is attached hereto and which forms a material part
hereof;

(x)     "Creditor Shares" has the meaning ascribed to it in section "2.2"
hereinbelow; a complete listing of such Creditor Shares per Creditor of the
Purchaser being set forth in Schedule "C" which is attached hereto;

(y)     "Debt Amount" has the meaning ascribed to it in section "2.2"
hereinbelow;

(z)     "Defaulting Party" and "Non-Defaulting Party" have the meanings ascribed
to them in section "14.1" hereinbelow;

(aa)     "Disputed Contracts" has the meaning ascribed to it in section "2.2"
hereinbelow;

(ab)     "Effective Date" has the meaning ascribed to it on the front page of
this Agreement;

(ac)     "Employment Agreements" has the meaning ascribed to it in section "4.1"
hereinbelow; the proposed forms of which being attached hereto as Schedule "M"
and forming a material part hereof;

(ad)     "Escrow Agent" has the meaning ascribed to it in section "7.1"
hereinbelow;

(ae)     "Execution Date" means the actual date of the complete execution of
this Agreement and any amendment thereto by all Parties hereto as set forth on
the front page hereof;

(af)     "HDH Group" means HDH Group, LLC, a company incorporated under the laws
of the State of Tennessee, U.S.A., or any successor company, however formed,
whether as a result of merger, amalgamation or other action;

(ag)     "HDH Group and Mr. Haley Release of all Claims as against the Company
and the Vendor" has the meaning ascribed to it in section "2.2" hereinbelow;

(ah)     Mr. "Haley" means H. Dean Haley;

(ai)     "Indemnified Party" and "Indemnified Parties" have the meanings
ascribed to them in section "15.1" hereinbelow;

(aj)     "Initial Due Diligence" has the meaning ascribed to it in section "5.1"
hereinbelow;

(ak)     "Intellectual Property" means, with respect to the Company, all right
and interest to all patents, patents pending, inventions, know-how, any
operating or identifying name or registered or unregistered trademarks and
tradenames, all computer programs, licensed end-user software, source codes,
products and applications (and related documentation and materials) and other
works of authorship (including notes, reports, other documents and materials,
magnetic, electronic, sound or video recordings and any other work in which
copyright or similar right may subsist) and all copyrights (registered or
unregistered) therein, industrial designs (registered or unregistered),
franchises, licenses, authorities, restrictive covenants or other industrial or
intellectual property used in or pertaining to the Company and including,
without limitation, the items described in Schedule "F" which is attached hereto
and which forms a material part hereof, and all lists of customers, documents,
records, correspondence and other information pertaining to the Company;

(al)     "Interview Committee" has the meaning ascribed to it in section "4.1"
hereinbelow;

(am)     "Options" has the meaning ascribed to it in section "4.1" hereinbelow;

(an)     "OTCBB" means the NASD Over-the-Counter Bulletin Board, together with
its respective successors and permitted assigns as the context so requires;

(ao)     "Parties" or "Party" means, respectively, the Vendor Group, the Company
and the Purchaser hereto, as the case may be, together with their respective
successors and permitted assigns as the context so requires;

(ap)     "person" or "persons" means an individual, corporation, partnership,
party, trust, fund, association and any other organized group of persons and the
personal or other legal representative of a person to whom the context can apply
according to law;

(aq)     "President" has the meaning ascribed to it in section "4.1"
hereinbelow;

(ar)     "Private Placement" has the meaning ascribed to it in section "4.1"
hereinbelow;

(as)     "Purchased Share" has the meaning ascribed to it in recital "B."
hereinabove; the particulars of the registered and beneficial ownership of such
Purchased Shares being set forth in Schedule "A" which is attached hereto;

(at)     "Purchase Price" has the meaning ascribed to it in section "2.2"
hereinbelow;

(au)     "Purchaser" means Fortune Partners, Inc., a company incorporated
pursuant to the laws of the State of Nevada, U.S.A., or any successor company,
however formed, whether as a result of merger, amalgamation or other action;

(av)     "Purchaser Disclosure Schedule" has the meaning ascribed to it in
section "4.1" hereinbelow;

(aw)     "Purchaser's Financial Statements" has the meaning ascribed to it in
section "4.1" hereinbelow; a copy of which Purchaser's Financial Statements
being set forth in Schedule "J" which is attached hereto and which forms a
material part hereof;

(ax)     "Purchaser's Options" has the meaning ascribed to it in section "3.3"
hereinbelow;

(ay)     "Ratification" has the meaning ascribed to it in section "6.1"
hereinbelow;

(az)     "Registration Statement", "Regulation D", "Regulation S", "Rule 144",
"Rule 501", "Rule 506", "U.S. Person" and "Form S-8" have the meanings ascribed
to them in the Securities Act;

(ba)     "Regulation S Certificate" and "Accredited Investor Certificate" have
the meanings ascribed to them in section "4.1" hereinbelow; the proposed forms
of which being attached hereto as Schedule "N" and forming a material part
hereof;

(bb)     "Regulatory Approval" means the acceptance for filing, if required, of
the transactions contemplated by this Agreement by the Regulatory Authorities;

(bc)     "Regulatory Authority" and "Regulatory Authorities" means, either
singularly or collectively as the context so requires, the OTCBB, and/or such
other regulatory agencies who have or who may have jurisdiction over the affairs
of the Company, the Purchaser and/or the Vendor herein and including, without
limitation, and where applicable, all applicable securities commissions and
again including, without limitation, the Commission, and all other regulatory
authorities from whom any such authorization, approval or other action is
required to be obtained or to be made in connection with the transactions
contemplated by this Agreement;

(bd)     "Release" has the meaning ascribed to it in section "3.2" hereinbelow;

(be)     "Resulting Shareholder Group" means each of the Vendor, the HDH Group
and the Creditors of the Company;

(bf)     "Reverse Takeover" means that transaction or series of transactions
pursuant to which the Purchaser will acquire all of the Purchased Shares of the
Company from the Vendor in exchange for the issuance from treasury by the
Purchaser of the Shares and all matters necessarily ancillary thereto;

(bg)     "Securities" has the meaning ascribed to it in section "3.3"
hereinbelow; the particulars of which outstanding Securities being set forth in
Schedule "A" which is attached hereto;

(bh)     "Securities Act" means the United States Securities Act of 1933, as
amended, and all the Rules and Regulations promulgated under the United States
Securities Act of 1933; and "1934 Act" means the United States Securities
Exchange Act of 1934, as amended, and all the Rules and Regulations promulgated
under the United States Securities Exchange Act of 1934;

(bi)     "Share" has the meaning ascribed to it in section "2.2" hereinbelow,
and "Shares" means, collectively, each of the Acquisition Shares, Compensation
Shares and Creditor Shares referenced herein;

(bj)     "Shares for Debt Private Placement Subscription Agreement" has the
meaning ascribed to it in section "3.2" hereinbelow; the proposed form of which
being attached hereto as Schedule "N" and forming a material part hereof;

(bk)     "Subject Removal Date" has the meaning ascribed to it in section "5.1"
hereinbelow;

(bl)     "subsidiary" means any company or companies of which more than 50% of
the outstanding shares carrying votes at all times (provided that the ownership
of such shares confers the right at all times to elect at least a majority of
the board of directors of such company or companies) are for the time being
owned by or held for a company and/or any other company in like relation to the
company, and includes any company in like relation to the subsidiary;

(bm)     "Transfer Agent" means the Purchaser's existing registrar and transfer
agent for its common shares, or any successor company, however formed, whether
as a result of merger, amalgamation or other action;

(bn)     "Transfer Documents" has the meaning ascribed to it in section "7.2"
hereinbelow;

(bo)     "Unit" has the meaning ascribed to it in section "4.1" hereinbelow;

(bp)     "U.S. Person" has the meaning ascribed to it in Regulation S under the
Securities Act;

(bq)     "Vendor" means Power Air Dynamics Limited, a company incorporated
pursuant to the laws of Australia, U.S.A., or any successor company, however
formed, whether as a result of merger, amalgamation or other action;

(br)     "Vendor Group" means each of the Vendor, the HDH Group and Mr. Haley;
and

(bs)     "Warrant" has the meaning ascribed to it in section "4.1" hereinbelow.

1.2          Schedules. For the purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, the following shall
represent the Schedules which are attached to this Agreement and which form a
material part hereof:

Schedule

Description of Schedule

Schedule "A":

Purchased Shares, Vendor and Securities;

Schedule "B"

Agreement In Principle;

Schedule "C":

Company Creditors and Creditor Shares;

Schedule "D":

Company's Financial Statements;

Schedule "E":

Company's Intellectual Property;

Schedule "F":

Company's Lease;

Schedule "G":

Company's Contracts of Employment;

Schedule "H":

Company's Material Contracts;

Schedule "I":

Company's List of Bank Accounts etc.;

Schedule "J":

Purchaser's Financial Statements;

Schedule "K":

Purchaser's Material Contracts;

Schedule "L":

Purchaser's List of Bank Accounts etc.;

Schedule "M":

Employment Agreements; and

Schedule "N":

Vendor and Creditor Certificates.

1.3          Interpretation. For the purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires,:

(a)     the words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
section or other subdivision of this Agreement;

(b)     any reference to an entity shall include and shall be deemed to be a
reference to any entity that is a permitted successor to such entity; and

(c)     words in the singular include the plural and words in the masculine
gender include the feminine and neuter genders, and vice versa.

 

Article 2

PURCHASE AND SALE OF THE PURCHASED SHARES

2.1          Purchase and sale. Subject to the terms and conditions hereof and
based upon the representations, warranties and covenants contained in Articles
"3" and "4" hereinbelow and the prior satisfaction of the conditions precedent
which are set forth in Article "6" hereinbelow, the Vendor hereby agree to
assign, sell and transfer at the Closing Date (as hereinafter determined) all of
its respective right, entitlement and interest in and to all of the Purchased
Shares to the Purchaser and the Purchaser hereby agrees to purchase all of the
Purchased Shares from the Vendor on the terms and subject to the conditions
contained in this Agreement.

2.2          Purchase Price. The total purchase price (collectively, the
"Purchase Price") for all of the Purchased Shares will be satisfied by way of
the issuance and delivery by the Purchaser of an aggregate of 22,617,275
restricted common shares in the capital of the Purchaser (each a "Share") at the
Closing on the Closing Date (each as hereinafter determined) of this Agreement
in the following manner:

(a)     Acquisition Shares: the issuance of an aggregate of 14,693,423 of the
Shares (each herein an "Acquisition Share" herein) to the order and direction of
the Vendor, at a deemed issuance price of U.S. $0.65 per Acquisition Share;

(b)     Compensation Shares: the issuance of an aggregate of 7,381,577 of the
Shares (each herein a "Compensation Share") to the order and direction of the
HDH Group; with such Compensation Shares being issuable in consideration of each
of the HDH Group and Mr. Haley hereby agreeing to accept the same: (A) in
complete satisfaction of all claims and disputed claims previously advanced by
the HDH Group and Mr. Haley as against the Vendor, the Company and all of the
Vendor's subsidiaries (the "HDH Group and Mr. Haley Release of all Claims as
against the Company and the Vendor") and being sought in connection with each of
a certain disputed employment contract and a disputed consultancy contract
together with expenses incurred in connection with the same (collectively, the
"Disputed Contracts"); such HDH Group and Mr. Haley Release of all Claims as
against the Company and the Vendor to be evidenced by the form of Release (as
hereinafter defined and determined) to be entered into among each of the
Company, the Vendor, the HDH Group and Mr. Haley prior to Closing; and (B) in
consideration of HDH Group's efforts in continuing to commercialize the
Company's Business both prior to and after the execution of this Agreement. In
this regard, and for greater certainty, it is hereby acknowledged and agreed by
the Parties hereto that the Compensation Shares which are to issued to the order
and direction of the HDH Group at Closing are more particularly issuable in
consideration of the HDH Group and Mr. Haley Release of all Claims as against
the Company and the Vendor under the Release together with:

(i)     1,989,150 of such Compensation Shares being issuable in relation the
settlement of all amounts under the Disputed Contracts; that being the
previously disputed amount of U.S. $1,100,000 taken at a 15% discount and
issuable at a deemed issuance price of U.S. $0.553 per Compensation Share;

(ii)     846,971 of such Compensation Shares being issuable in relation the
settlement of all HDH Group expense claims under the Disputed Contracts; that
being the previously disputed amount of U.S. $467,961 taken at a 15% discount
and issuable at a deemed issuance price of U.S. $0.553 per Compensation Share;
and

(iii)     the balance of 4,545,456 of such Compensation Shares being issuable,
at a deemed issuance price of $0.65 per Compensation Share, in connection with
and in consideration of Mr. Haley's ongoing commitment to each of the Vendor,
the Company and the Purchaser to build out a successful public company and to
serve as the Executive Chairman of the resulting Purchaser company after the
Closing thereof; and

(c)     Creditor Shares: the issuance of an aggregate of the balance of 542,275
of the Shares (each herein a "Creditor Share") to the order and direction of a
substantial majority of the current creditors of the Company (each a
"Creditor"); a complete listing of the Creditors and the number of Creditor
Shares issuable to each at Closing being set forth in Schedule "C" which is
attached hereto; in consideration of such Creditors agreeing to accept the same
in complete satisfaction of all previous debts and/or services provided by such
Creditors to the Company; that being a collective and auditable amount
(collectively, the "Debt Amount") taken at a 15% discount and issuable at a
deemed issuance price of U.S. $0.5525 per Creditor Share. In this regard it is
hereby acknowledged and agreed by the Parties hereto that the Purchaser's
obligation to issue the Creditor Shares to the order and direction of the
Creditors is subject to the Debt Amount being confirmed by the auditors for the
Company prior to Closing; the reduction in any portion of the settled Debt
Amount as a consequence thereof meaning a reduction in the actual number of
Creditor Shares to be issued at Closing hereunder. In addition, and in
consideration of the Purchaser's within agreement to issue the final number of
Creditor Shares at Closing, it is hereby acknowledged and agreed by the Parties
hereto that each of the HDH Group and Mr. Haley has heretofore represented to
the Purchaser that they have compiled a complete listing of all bona fide
creditors (inclusive of the Creditors) of the Company in an updated "Company
Disclosure Schedule" prepared for, in part, that purpose; and which will
accompany the Vendor Group's execution and delivery of this Agreement; that such
creditor debts (inclusive of the Debt Amount) are validly due and owing by the
Company to such creditors and that the Creditors will accept the actual number
of Creditor Shares to be issued at Closing in complete settlement of their
audited Debt Amount; a copy of such Company Disclosure Schedule accompanying the
Company's acceptance of the terms and conditions of this Agreement;

(each of the Acquisition Shares, the Compensation Shares and the Creditor Shares
also being referred to as a "Share" herein; the Vendor, the HDH Group and Mr.
Haley being hereinafter collectively referred to as the "Vendor Group" herein;
and the Vendor, the HDH Group and the Creditors being hereinafter collectively
referred to as the "Resulting Shareholder Group" herein).

2.3          Resale restrictions and legending of Share certificates. The Vendor
Group hereby acknowledges and agrees that the Purchaser makes no representations
as to any resale or other restriction affecting the Shares and that it is
presently contemplated that the Shares will be issued by the Purchaser to the
Resulting Shareholder Group in reliance upon the registration and prospectus
exemptions contained in certain sections of the United States Securities Act of
1933 (the "Securities Act") or "Regulation S" promulgated under the Securities
Act which will impose a trading restriction in the United States on the Shares
for a period of at least 12 months from the Closing Date (as hereinafter
determined). In addition, the Vendor Group hereby also acknowledges and agrees
that the within obligation of the Purchaser to issue the Shares pursuant to
section "2.2" hereinabove will be subject to the Purchaser being satisfied that
an exemption from applicable registration and prospectus requirements is
available under the Securities Act and all applicable securities laws, in
respect of each of the Resulting Shareholder Group, the Purchased Shares and the
Shares, and the Purchaser shall be relieved of any obligation whatsoever to
purchase any Purchased Shares of the Vendor and to issue Shares in respect of
the Resulting Shareholder Group where the Purchaser reasonably determines that a
suitable exemption is not available to it.

The Vendor Group hereby also acknowledges and understands that neither the sale
of the Shares which the Resulting Shareholder Group is acquiring nor any of the
Shares themselves have been registered under the Securities Act or any state
securities laws, and, furthermore, that the Shares must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available. The Vendor Group also acknowledges and
understands that the certificates representing the Shares will be stamped with
the following legend (or substantially equivalent language) restricting transfer
in the following manner if such restriction is required by the Regulatory
Authorities:

"The transfer of the securities represented by this certificate is prohibited
except in accordance with the provisions of Regulation S promulgated under the
United States Securities Act of 1933, as amended (the "Act"), pursuant to
registration under the Act or pursuant to an available exemption from
registration. In addition, hedging transactions involving such securities may
not be conducted unless in compliance with the Act.".

or

"The securities represented by this certificate have not been registered under
the United States Securities Act of 1933, as amended, or the laws of any state,
and have been issued pursuant to an exemption from registration pertaining to
such securities and pursuant to a representation by the security holder named
hereon that said securities have been acquired for purposes of investment and
not for purposes of distribution. These securities may not be offered, sold,
transferred, pledged or hypothecated in the absence of registration, or the
availability of an exemption from such registration. Furthermore, no offer,
sale, transfer, pledge or hypothecation is to take place without the prior
written approval of counsel to the company being affixed to this certificate.
The stock transfer agent has been ordered to effectuate transfers only in
accordance with the above instructions.";

and the Vendor Group hereby consents to the Purchaser making a notation on its
records or giving instructions to any transfer agent of the Purchaser (the
"Transfer Agent") in order to implement the restrictions on transfer set forth
and described hereinabove.

The Vendor Group also acknowledges and understands that:

(a)     the Shares are restricted securities within the meaning of "Rule 144"
promulgated under the Securities Act;

(b)     the exemption from registration under Rule 144 will not be available in
any event for at least one year from the date of issuance of the Shares to the
Resulting Shareholder Group, and even then will not be available unless (i) a
public trading market then exists for the common stock of the Purchaser, (ii)
adequate information concerning the Purchaser is then available to the public
and (iii) other terms and conditions of Rule 144 are complied with; and

(c)     any sale of the Shares may be made by the Resulting Shareholder Group
only in limited amounts in accordance with such terms and conditions.

2.4          Costs. The Parties hereto shall bear their own costs in relation to
the negotiation and formalization of this Agreement and the matters contemplated
thereby, including any legal fees, accounting, regulatory and filing fees and
expenses. However, and to the extent that the same is not simply an
inter-company loan at Closing (as hereinafter determined), the cost of the
accounting and audit fees incurred as a result of the requirements of this
Agreement will be reimbursed at the Closing of this Agreement. In addition, Mr.
Haley and other officers of the Company will be reimbursed for certain costs
incurred by the same in completing the Closing of this Agreement, provided,
however, that such costs must be approved by the Board of the resulting
Purchaser company and may not be more than U.S. $75,000 in the aggregate.

2.5          Other securities. If and to the extent that the Vendor Group or any
other party related, associated or affiliated with the Vendor Group has any
absolute, contingent, optional, pre-emptive or other right to acquire any
securities in the capital of the Company, it is hereby acknowledged and agreed
by the Vendor Group that such party shall be conclusively deemed, as and from
the Closing (as hereinafter determined), to have transferred the same to the
Purchaser to the fullest extent permitted by law, and to otherwise hold the same
in trust for and at the discretion of the Purchaser.

2.6          Standstill provisions. In consideration of the Parties' within
agreement to purchase and sell the Purchased Shares and to enter into the terms
and conditions of this Agreement, each of the Parties hereby undertake for
themselves, and for each of their respective agents and advisors, that they will
not until the earlier of the Closing Date (as hereinafter determined) or the
termination of this Agreement approach or consider any other potential
purchasers, or make, invite, entertain or accept any offer or proposal for the
proposed sale of any interest in and to any of the Purchased Shares or the
assets or the respective business interests of the Company or the Purchaser, as
the case may be, or, for that matter, disclose any of the terms of this
Agreement, without the Parties' prior written consent. In this regard each of
the Parties hereby acknowledges that the foregoing restrictions are important to
the respective businesses of the Parties and that a breach by any of the Parties
of any of the covenants herein contained would result in irreparable harm and
significant damage to each affected Party that would not be adequately
compensated for by monetary award. Accordingly, the Parties hereby agree that,
in the event of any such breach, in addition to being entitled as a matter of
right to apply to a Court of competent equitable jurisdiction for relief by way
of restraining order, injunction, decree or otherwise as may be appropriate to
ensure compliance with the provisions hereof, any such Party will also be liable
to the other Parties, as liquidated damages, for an amount equal to the amount
received and earned by such Party as a result of and with respect to any such
breach. The Parties hereby also acknowledge and agree that if any of the
aforesaid restrictions, activities, obligations or periods are considered by a
Court of competent jurisdiction as being unreasonable, they agree that said
Court shall have authority to limit such restrictions, activities or periods as
the Court deems proper in the circumstances.

 

Article 3

REPRESENTATIONS, WARRANTIES AND COVENANTS

BY EACH OF THE VENDOR GROUP AND THE COMPANY

3.1          General representations, warranties and covenants by each of the
Vendor Group and the Company. In order to induce the Purchaser to enter into and
consummate this Agreement, each of the Vendor Group and the Company hereby
represents to, warrants to and covenants with the Purchaser, with the intent
that the Purchaser will rely thereon in entering into this Agreement and in
concluding the transactions contemplated herein, that, to the best of the
knowledge, information and belief of each of the Vendor Group and the Company,
after having made due inquiry (and for the purposes of the following warranties,
representations and covenants, "Vendor" and "Company" shall mean the Vendor, the
Company and any subsidiary of the Vendor and the Company, if any, as the context
so requires):

(a)     the Company and the Vendor are duly incorporated under the laws of their
respective jurisdictions of incorporation, are validly existing and are in good
standing with respect to all statutory filings required by the applicable
corporate laws, and the Company and the Vendor have the requisite power,
authority and capacity to own and use all of their respective business assets
and to carry on the Company's Business as presently conducted by them;

(b)     as represented by the HDH Group and Mr. Haley only, the HDH Group is
duly incorporated under the laws of its jurisdiction of incorporation, is
validly existing and is in good standing with respect to all statutory filings
required by the applicable corporate laws, and the HDH Group has the requisite
power, authority and capacity to own and use all of its business assets and to
carry on its business as presently conducted by it ;

(c)     the execution and delivery of this Agreement and the agreements
contemplated hereby have been duly authorized by all necessary action, corporate
or otherwise, on its respective part;

(d)     there are no other consents, approvals or conditions precedent to the
performance of this Agreement which have not been obtained;

(e)     this Agreement constitutes a legal, valid and binding obligation of it
enforceable against it in accordance with its terms, except as enforcement may
be limited by laws of general application affecting the rights of creditors;

(f)     no proceedings are pending for, and it is unaware of, any basis for the
institution of any proceedings leading to its respective dissolution or winding
up, or the placing of it in bankruptcy or subject to any other laws governing
the affairs of insolvent companies or persons;

     (g)     to the actual knowledge, information and belief of each of the
Vendor Group and the Company only in each of the following instances, the making
of this Agreement and the completion of the transactions contemplated hereby and
the performance of and compliance with the terms hereof does not and will not:

          (i)     if a corporation, conflict with or result in a breach of or
violate any of the terms, conditions or provisions of its respective constating
documents;

          (ii)     conflict with or result in a breach of or violate any of the
terms, conditions or provisions of any law, judgment, order, injunction, decree,
regulation or ruling of any Court or governmental authority, domestic or
foreign, to which it is subject, or constitute or result in a default under any
agreement, contract or commitment to which it is a party;

          (iii)     give to any party the right of termination, cancellation or
acceleration in or with respect to any agreement, contract or commitment to
which it is a party;

          (iv)     give to any government or governmental authority, or any
municipality or any subdivision thereof, including any governmental department,
commission, bureau, board or administration agency, any right of termination,
cancellation or suspension of, or constitute a breach of or result in a default
under, any permit, license, control or authority issued to it which is necessary
or desirable in connection with the conduct and operations of its respective
business and the ownership or leasing of its respective business assets; or

          (v)     constitute a default by it, or any event which, with the
giving of notice or lapse of time or both, might constitute an event of default,
under any agreement, contract, indenture or other instrument relating to any
indebtedness of it which would give any party to that agreement, contract,
indenture or other instrument the right to accelerate the maturity for the
payment of any amount payable under that agreement, contract, indenture or other
instrument; and

(i)     neither this Agreement nor any other document, certificate or statement
furnished to the Purchaser by or on behalf of any of the Vendor Group or the
Company in connection with the transactions contemplated hereby knowingly or
negligently contains any untrue or incomplete statement of material fact or
omits to state a material fact necessary in order to make the statements therein
not misleading which would likely affect the decision of the Purchaser to enter
into this Agreement; and

(j)     the Vendor Group and the Company are not aware of any fact or
circumstance which has not been disclosed to the Purchaser which should be
disclosed in order to prevent the representations and warranties contained in
this section from being misleading or which would likely affect the decision of
the Purchaser to enter into this Agreement.

3.2          Representations, warranties and covenants by each of the Vendor
Group and the Company respecting the Purchased Shares and the Shares. In order
to induce the Purchaser to enter into and consummate this Agreement, each of the
Vendor Group and the Company hereby also represents to, warrants to and
covenants with the Purchaser, with the intent that the Purchaser will also rely
thereon in entering into this Agreement and in concluding the transactions
contemplated herein, that, to the best of the knowledge, information and belief
of each of the Vendor Group and the Company, after having made due inquiry:

(a)     save and except as set forth in Schedule "A" which is attached hereto
and as set forth in the Company Disclosure Schedule, the Vendor has good and
marketable title to and are the legal and beneficial owner of all of the
Purchased Shares, and the Purchased Shares are fully paid and non-assessable and
are free and clear of liens, charges, encumbrances, pledges, mortgages,
hypothecations and adverse claims of any and all nature whatsoever and
including, without limitation, options, pre-emptive rights and other rights of
acquisition in favour of any person, whether conditional or absolute;

(b)     the Vendor has the power and capacity to own and dispose of the
Purchased Shares, and the Purchased Shares are not subject to any voting or
similar arrangement;

(c)     there are no actions, suits, proceedings or investigations (whether or
not purportedly against or on behalf of any of the Vendor Group or the Company),
pending or threatened, which may affect, without limitation, the rights of the
Vendor to transfer any of the Purchased Shares to the Purchaser at law or in
equity, or before or by any federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, and, without limiting the generality of the foregoing,
there are no claims or potential claims under any relevant family relations
legislation or other equivalent legislation affecting the Purchased Shares. In
addition, the Vendor Group and the Company are not now aware of any existing
ground on which any such action, suit or proceeding might be commenced with any
reasonable likelihood of success;

(d)     save and except as set forth in Schedule "A" which is attached hereto
and as set forth in the Company Disclosure Schedule, no other person, firm or
corporation has any agreement, option or right capable of becoming an agreement
for the purchase of any of the Purchased Shares;

(e)     the Vendor Group acknowledges that the Shares will be issued, and
reserved for issuance where applicable, under certain exemptions from the
registration and prospectus filing requirements otherwise applicable under the
Securities Act and all applicable securities laws, and that, as a result, the
Resulting Shareholder Group may be restricted from using most of the remedies
that would otherwise be available to the Resulting Shareholder Group, the
Resulting Shareholder Group will not receive information that would otherwise be
required to be provided to the Resulting Shareholder Group and the Purchaser is
relieved from certain obligations that would otherwise apply to the Purchaser,
in either case, under applicable securities legislation;

(f)     the Vendor Group realizes that the sale of the Purchased Shares in
exchange for the Shares will be a highly speculative investment and that the
each member of the Resulting Shareholder Group should be able, without impairing
that Resulting Shareholder Group member's financial condition, to hold the
Shares for an indefinite period of time and to suffer a complete loss on such
investment. In addition, each member of the Resulting Shareholder Group should
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the prospective investment;

(g)     the Vendor Group has not received, nor have any of the Vendor Group
requested or do any of the Vendor Group require to receive, any offering
memorandum or a similar document describing the business and affairs of the
Purchaser in order to assist the Vendor Group in entering into this Agreement
and in consummating the transactions contemplated herein;

(h)     if the Vendor or any Creditor is a "U.S. Person", as that term is
defined in Regulation S, then the Vendor and each such Creditor hereby and
thereby certifies that:

(i)     it qualifies as an "accredited investor" as that term is defined under
Rule 501 of Regulation D promulgated under the Securities Act, as amended;

(ii)     it is receiving the Shares solely for its own account for investment
and not with a view to or for sale or distribution of the Shares or any portion
thereof and not with any present intention of selling, offering to sell or
otherwise disposing of or distributing the Shares or any portion thereof in any
transaction other than a transaction exempt from registration under the
Securities Act;

(iii)     the entire legal and beneficial interest in the Shares it is receiving
is being acquired for, and will be held for the account of, itself only and
neither in whole nor in part for any other person;

(iv)     it understands that: (A) neither the sale of the Shares which it is
receiving nor the Shares themselves have been registered under the Securities
Act or any state securities laws, and the Shares must be held indefinitely
unless subsequently registered under the Securities Act or an exemption from
such registration is available; and (B) the share certificate representing the
Shares will be stamped with the following legend (or substantially equivalent
language) restricting transfer:

"The securities represented by this certificate have not been registered under
the United States Securities Act of 1933, as amended, or the laws of any state,
and have been issued pursuant to an exemption from registration pertaining to
such securities and pursuant to a representation by the security holder named
hereon that said securities have been acquired for purposes of investment and
not for purposes of distribution. These securities may not be offered, sold,
transferred, pledged or hypothecated in the absence of registration, or the
availability of an exemption from such registration. Furthermore, no offer,
sale, transfer, pledge or hypothecation is to take place without the prior
written approval of counsel to the company being affixed to this certificate.
The stock transfer agent has been ordered to effectuate transfers only in
accordance with the above instructions."; and

each such U.S. Person Vendor and Creditor will complete and provide the
Purchaser and the Company with an executed copy of the attached form of
"Accredited Investor Certificate"; which is attached hereto with Schedule "N"
and which forms a material hereof; contemporaneously with the Vendor's execution
of this Agreement and the Creditor's execution of a Shares for Debt Private
Placement Subscription Agreement (as hereinafter determined) at or before
Closing (as hereinafter determined);

(i)     if the Vendor or any Creditor is not a U.S. Person, as defined in
Regulation S, , then the Vendor and each such Creditor hereby and thereby
certifies that:

(i)     it is not a U.S. Person (as defined in Rule 902 of Regulation S under
the Securities Act, which definition includes, but is not limited to, any
natural person resident in the United States, any corporation or partnership
incorporated or organized under the laws of the United States or any estate or
trust of which any executor, administrator or trustee is a U.S. Person);

(ii)     it is not acquiring any of the Shares for the account or benefit of any
U.S. Person or for offering, resale or delivery for the account or benefit of
any U.S. Person or for the account of any person in any jurisdiction other than
the jurisdiction as set out for its name and address as stated in Schedules "A"
and "C" which are attached hereto;

(iii)     it was not offered any Shares in the United States and was outside the
United States at the time of execution and delivery of this Agreement or the
Shares for Debt Private Placement Subscription Agreement (as hereinafter
determined), as the case may be;

(iv)     it understands that the Shares have not been registered under the
Securities Act and any applicable securities laws;

(v)     it agrees to resell the Shares only in accordance with the provisions of
Regulation S, pursuant to a registration under the Securities Act, or pursuant
to an available exemption from such registration, and that hedging transactions
involving the Shares may not be conducted unless in compliance with the
Securities Act; and

(vi)     it understands that any certificate representing the Shares will bear a
legend setting forth the foregoing restrictions; and

each such non-U.S. Person Vendor and Creditor will complete and provide the
Purchaser and the Company with an executed copy of the attached form of
"Regulation S Certificate"; which is attached hereto with Schedule "N" and which
forms a material hereof; contemporaneously with the Vendor's execution of this
Agreement and the Creditor's execution of a Shares for Debt Private Placement
Subscription Agreement (as hereinafter determined) at or before Closing (as
hereinafter determined); and

(j)     the Vendor Group and the Company are not aware of any fact or
circumstance which has not been disclosed to the Purchaser which should be
disclosed in order to prevent the representations and warranties contained in
this section from being misleading or which would likely affect the decision of
the Purchaser to enter into this Agreement.

3.3          Representations, warranties and covenants by each of the Vendor
Group and the Company respecting the Company. In order to induce the Purchaser
to enter into and consummate this Agreement, each of the Vendor Group and the
Company hereby also represents to, warrants to and covenants with the Purchaser,
with the intent that the Purchaser will also rely thereon in entering into this
Agreement and in concluding the transactions contemplated herein, that, to the
best of the knowledge, information and belief of each of the Vendor Group and
the Company, after having made due inquiry (and for the purposes of the
following warranties, representations and covenants, "Vendor" and "Company"
shall mean the Vendor, the Company and any subsidiary of the Vendor and the
Company, if any, as the context so requires):

     (a)     the Company owns and possesses and has good and marketable title to
and possession of all of the Company's Business interests and the Company's
Assets free and clear of all actual or threatened liens, charges, options,
encumbrances, voting agreements, voting trusts, demands, limitations and
restrictions of any nature whatsoever; save and except for those actual or
threatened liens, charges, encumbrances, demands, limitations and restrictions
which are listed in Schedule "C" which is attached hereto and which forms a
material part hereof and as set forth in the Company Disclosure Schedule;

     (b)     save and except as set forth in Schedule "C" which is attached
hereto and as set forth in the Company Disclosure Schedule, the Company holds
all licenses and permits required for the conduct in the ordinary course of the
operations of the Company's Business and for the uses to which the Company's
Assets have been put and are in good standing, and such conduct and uses are in
compliance with all laws, zoning and other by-laws, building and other
restrictions, rules, regulations and ordinances applicable to the Company and to
the Company's Business and the Company's Assets, and neither the execution and
delivery of this Agreement nor the completion of the transactions contemplated
hereby will give any person the right to terminate or cancel any said license or
permit or affect such compliance;

(h)     the presently authorized and issued share capital of the Company is as
described in Schedule "A" which is attached hereto and which forms a material
part hereof, and there are, other than the present incentive stock options,
convertible equity instruments and share purchase warrants to acquire certain
common shares in and to the Company (collectively, the "Securities") which are
listed in Schedule "A" and in the Company Disclosure Schedule, if any, at
present no other shares in the capital of the Company issued or allotted or
agreed to be issued or allotted to any person. In addition, at Closing the
issued share capital of the Company, together with the names and the number,
class and kind of shares of the Company held by the Vendor, will be as set out
in Schedule "A";

(i)     the Purchased Shares are validly issued and outstanding and fully paid
and non-assessable in the capital of the Company and, save and except as set
forth in Schedule "A" which is attached hereto and as set forth in the Company
Disclosure Schedule, the Purchased Shares are free and clear of all actual or
threatened liens, charges, options, encumbrances, voting agreements, voting
trusts, demands, limitations and restrictions of any nature whatsoever;

(j)     save and except as set forth in Schedule "A" which is attached hereto
and as set forth in the Company Disclosure Schedule, no other person, firm or
corporation has any agreement, option or right capable of becoming an agreement
for the purchase of any of the Purchased Shares or any unissued shares in the
capital of the Company, and at Closing (as hereinafter determined) it is
presently contemplated that each of the presently issued and outstanding
incentive stock option Securities (collectively, the "Company's Options")
outstanding in and to the Company, if any, will be exchanged, on the same
exercise terms and conditions, for an equal number of incentive stock options
(collectively, the "Purchaser's Options") in and to the resulting Purchaser
company in consideration, in part, of the ongoing involvement of the existing
Company's Optionholders in and to the resulting Purchaser company and in
exchange for the agreed upon cancellation by said Company's Optionholders of all
of the then issued and outstanding Company's Options as a consequence thereof;

(k)     save and except as set forth in Schedule "A" which is attached hereto
and as set forth in the Company Disclosure Schedule, there are no actions,
suits, proceedings or investigations (whether or not purportedly against or on
behalf of any of the Vendor Group or the Company), pending or threatened, which
may affect, without limitation, the right of the Vendor to transfer the
Purchased Shares to the Purchaser at law or in equity, or before or by any
federal, state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, and,
without limiting the generality of the foregoing, there are no claims or
potential claims under any relevant family relations legislation or other
equivalent legislation affecting any of the Purchased Shares. In addition, the
Vendor Group and the Company are not now aware of any existing ground on which
any such action, suit or proceeding might be commenced with any reasonable
likelihood of success;

(l)     from August 22, 2005 (that being the reference date of the Agreement In
Principle) to and up to and including the Closing Date (as hereinafter
determined) the Company has not committed to making and until the Closing Date
will not make or commit itself, without the written consent of the Purchaser,
to:

          (i)     redeem or acquire any shares in its share capital;

(ii)     declare or pay any dividend;

(iii)     make any reduction in or otherwise make any payment on account of its
paid-up capital; or

(iv)     effect any subdivision, consolidation or reclassification of its share
capital;

(m)     other than as set forth in the Company Disclosure Schedule, from August
22, 2005 to and up to and including the Closing Date (as hereinafter determined)
the Company has not committed to making and until the Closing Date will not make
or commit itself, without the written consent of the Purchaser, to:

(i)     acquire or have the use of any property from a person, corporation or
entity with whom it was not dealing with at arm's length; or

(ii)     dispose of anything to a person, corporation or entity with whom it was
not dealing with at arm's length for proceeds less than the fair market value
thereof;

(n)     other than as set forth in Schedule "B" which is attached hereto and as
set forth in the Company Disclosure Schedule, from August 22, 2005 to and up to
and including the Closing Date (as hereinafter determined) the Company has not
committed to making and until the Closing Date will not make or commit itself,
without the written consent of the Purchaser, to provide any person, firm or
corporation with any agreement, option or right, consensual or arising by law,
present or future, contingent or absolute, or capable of becoming an agreement,
option or right:

(i)     to require it to issue any further or other shares in its share capital,
or any other security convertible or exchangeable into shares in its share
capital, or to convert or exchange any securities into or for shares in its
share capital;

(ii)     for the issue and allotment of any of the authorized but unissued
shares in its share capital;

(iii)     to require it to purchase, redeem or otherwise acquire any of the
issued and outstanding shares in its share capital; or

(iv)     to purchase or otherwise acquire any shares in its share capital;

(o)     save and except for those matters which are listed in Schedule "D" which
is attached hereto and in particular, however, without limitation, except for
liabilities which are disclosed, reflected or adequately provided for in the
Company's financial statements (collectively, the "Company's Financial
Statements") under generally accepted accounting principles; a copy of which
Company's Financial Statements being attached hereto as Schedule "D" and forming
a material part hereof; there are no other material liabilities, contingent or
otherwise, existing on the Execution Date hereof in respect of which the Company
may be liable on or after the completion of the transactions contemplated by
this Agreement other than:

(i)     liabilities disclosed or referred to in this Agreement; and

(ii)     liabilities incurred in the ordinary course of business, none of which
are materially adverse to the Company's Business, operations, affairs or
financial conditions of the Company;

(p)     no dividend or other distribution by the Company has been made, declared
or authorized since its incorporation, and from August 22, 2005 to and up to and
including the Closing Date (as hereinafter determined) the Company has not
committed to making and until the Closing Date will not make or commit itself,
without the written consent of the Purchaser, to confer upon, or pay to or to
the benefit of, any entity, any benefit having monetary value, any bonus or any
salary increases except in the normal course of its business;

(q)     save and except as set forth in Schedule "D" which is attached hereto
and as set forth in the Company Disclosure Schedule, there is no basis for and
there are no actions, suits, judgments, investigations or proceedings
outstanding or pending or, to the best of the knowledge, information and belief
of each of the Vendor Group and the Company, after having made due inquiry,
threatened against or affecting the Company at law or in equity or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau or agency;

(r)     save and except as set forth in Schedule "D" which is attached hereto
and as set forth in the Company Disclosure Schedule, the Company is not in
breach of any laws, ordinances, statutes, regulations, by-laws, orders or
decrees to which it is subject or which apply to it;

(s)     the Company is not a party to any collective agreement with any labour
union or other association of employees, and there is no pending application for
certification of any of the Company's employees as a collective bargaining unit.
In addition, and to the best of the knowledge, information and belief of the
Company, after having made due inquiry, the Company is not presently a party to
any complaint, grievance, arbitration or other labour matter referred to any
board or labour authority;

     (t)     there are no pension, profit sharing, group insurance or similar
plans or other deferred compensation plans affecting the Company or any of its
directors, officers or employees;

     (u)     the Company has not experienced, nor are any of the Vendor Group or
the Company aware of, any occurrence or event which has had, or might reasonably
be expected to have, a materially adverse affect on the Company's Business, the
Company's Assets or on the results of the Company's operations;

(v)     save and except as set forth in the Company Disclosure Schedule, the
Company holds or have applied for all permits, licenses, consents and
authorities issuable by any federal, state, regional or municipal government or
agency thereof which are necessary or desirable in connection with its
operations;

(w)     save and except as set forth in the Company Disclosure Schedule, from
August 22, 2005 to and up to and including the Closing Date (as hereinafter
determined) there has been prepared and will be prepared and filed on a timely
basis all federal and state income tax returns, elections and designations, and
all other governmental returns, notices and reports of which the Company has, or
ought reasonably to have had, knowledge required to be or reasonably capable of
being filed up to and including the Closing Date, with respect to the operations
of the Company, and no such returns, elections, designations, notices or reports
contain or will contain any material misstatement or omit any material statement
that should have been included, and each such return, election, designation,
notice or report, including accompanying schedules and statements, is and will
be true, correct and complete in all material respects;

(x)     save and except as set forth in the Company Disclosure Schedule, the
Company has been assessed for all federal, state and municipal income tax for
all years to and including its most recent taxation year, and from August 22,
2005 to and up to and including the Closing Date (as hereinafter determined) the
Company will have paid in full or accrued in accounts all amounts (including,
but not limited to, sales, use and consumption taxes and taxes measured on
income and all installments of taxes) due and payable to all federal, state and
municipal taxation authorities up to and including the Closing Date;

(y)     save and except as set forth in Schedule "D" which is attached hereto
and as set forth in the Company Disclosure Schedule, there is not now, and there
will not be by the Closing Date (as hereinafter determined), any proceeding,
claim or, to the best of the knowledge, information and belief of each of the
Vendor Group and the Company, after having made due inquiry, any investigation
by any federal, state or municipal taxation authority, or any matters under
discussion or dispute with such taxation authorities, in respect of taxes,
governmental charges, assessments or reassessments in connection with the
Company, and the Vendor Group and the Company are not aware of any contingent
tax liabilities or any grounds that could result in an assessment, reassessment,
charge or potentially adverse determination by any federal, state or municipal
taxation authority as against the Company;

(z)     the Company is not, nor until or at the Closing Date (as hereinafter
determined) will it be, in breach of any provision or condition of, nor has it
done or omitted to do anything that, with or without the giving of notice or
lapse or both, would constitute a breach of any provision or condition of, or
give rise to any right to terminate or cancel or accelerate the maturity of any
payment under, any deed of trust, contract, certificate, consent, permit,
license or other instrument to which it is a party, by which it is bound or from
which it derives benefit, any judgment, decree, order, rule or regulation of any
Court or governmental authority to which it is subject, or any statute or
regulation applicable to it, to an extent that, in the aggregate, has a material
adverse affect on it;

(aa)     adequate provision has been made and will be made for taxes payable by
the Company for the current period for which a tax return is not yet required to
be filed and, to the best of the knowledge, information and belief of the Vendor
Group and the Company, after having made due inquiry, there are no contingent
tax liabilities of the Company or any grounds which would prompt a re-assessment
of the Company and including, without limitation, the aggressive treatment of
income and expenses in the filing of earlier tax returns by the Company;

     (ab)     all amounts required to be withheld for taxes by the Company from
payments made to any present or former shareholder, officer, director,
non-resident creditor, employee, associate or consultant has been withheld and
paid on a timely basis to the property governmental body pursuant to applicable
legislation;

     (ae)     Schedule "E" which is attached hereto and which forms a material
part hereof contains an accurate and complete description of all of the
Company's Intellectual Property, and the Intellectual Property does not infringe
the rights of any other person;

     (af)     the Company does not have and does not use any service mark,
tradename or trademark except as disclosed as part of the Company's Intellectual
Property;

     (ag)     save and except as set forth in the Company Disclosure Schedule,
the Company has good and marketable title to all of its Company's Intellectual
Property, Company's Business, Company's Assets, properties and interests in
properties, real and personal, including those reflected in the Company's
Financial Statements or which have been acquired since the date of the latest
Company's Financial Statements (except for those which have been transferred,
sold or otherwise disposed of in the ordinary or normal course of business),
free and clear of all encumbrances, and none of the Company's properties or the
Company's Assets is in the possession of or under the control of any other
person;

     (ah)     save and except as set forth in the Company Disclosure Schedule,
the Company has no equipment, other than the personal property or fixtures in
the possession or custody of the Company which, as of the date hereof, is leased
or is held under license or similar arrangement;

     (ai)     except for the real property leases and the contracts of
employment which are set forth in Schedules "F" and "G", respectively, which are
attached hereto and which form a material part hereof, the Company is not party
to or bound by any other material contract, whether oral or written, other than
the contracts and agreements as set forth in Schedule "H" which is attached
hereto and which forms a material part hereof;

     (aj)     as to the contracts listed in Schedule "H" which is attached
hereto:

(i)     each such contract is in full force and effect and unamended;

(ii)     no material default exists in respect thereof on the part of either the
Company or any other party thereto;

(iii)     each such contract does not involve the Vendor or any non-arm's length
party except where described; and

(iv)     neither the Vendor Group nor the Company is aware of any intention on
the part of any other party thereto to terminate or materially alter any such
contract;

     (ak)     the Company has no consulting or employment agreements, whether
written or otherwise, except for those which are set forth in Schedule "H" which
is attached hereto;

     (al)     Schedule "I" which is attached hereto and which forms a material
part hereof is a true and complete list showing the name of each bank, trust
company or similar institution in which the Company has accounts or safety
deposit boxes, the identification numbers of each such account or safe deposit
box, the names of all persons authorized to draw therefrom or to have access
thereto and the number of signatories required on each account. In addition,
Schedule "I" also includes a list of all non-bank account numbers, codes and
business numbers used by the Company for the purposes of remitting tax, dues,
assessments and other fees;

     (am)     the Company maintains, and has maintained, insurance in force
against loss on the Company's Assets, against such risks, in such amounts and to
such limits, as is in accordance with prudent business practices prevailing in
its line of business and having regard to the location, age and character of its
properties and the Company's Assets, and has complied fully with all
requirements of such insurance, including the prompt giving of any notice of any
claim or possible claim thereunder, and all such insurance has been and is with
insurers which the Company believes to be responsible;

     (an)     the Company utilizes no product warranties, guarantees or product
return policies;

     (ao)     the most recently completed and consolidated audited Company's
Financial Statements as at June 30, 2005 are true and correct in every respect
and present fairly the financial position of the Company as at its most recently
completed financial period and the results of its operations for the period then
ended in accordance with generally accepted accounting principles on a basis
consistently applied; a copy of said Company's Financial Statements being
attached hereto as Schedule "D";

(ap)     the Company's Financial Statements and the books and records of the
Company are true and correct in every material respect, were prepared in
accordance with generally accepted accounting principles and fairly reflect the
Company's Business, property, the Company's Assets and the financial position of
the Company as at the date of the Company's Financial Statements and any such
books and records and the results of the operations for the period then ended,
and there have been no adverse changes in the Company's Business or affairs of
the Company since the date of the Company's Financial Statements and any such
books and records;

     (aq)     since June 30, 2005:

(i)     there has not been any material adverse change in the financial position
or condition of the Company or any damage, loss or other change in circumstances
materially affecting the Company's Business or properties or the Company's right
or capacity to carry on business;

(ii)     the Company has not waived or surrendered any right of material value;

(iii)     the Company has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current liabilities in the
ordinary course of business; and

(iv)     the Company's Business has been carried on in the ordinary course;

     (ar)     save and except for those matters which are listed in Schedule "D"
which is attached hereto, there are no liabilities, contingent or otherwise, of
the Company not disclosed or reflected in the Company's Financial Statements,
except those incurred in the ordinary course of business of the Company since
June 30, 2005;

     (as)     save and except for any outstanding advances, salaries, wages
and/or employment-related expenses which are set forth in the Company's
Financial Statements, the Company is not indebted to the Vendor or to any
affiliate or associate of the Company or of the Vendor;

     (at)     save and except as set forth in the Company's Financial
Statements, no payments of any kind have been made or authorized by or on behalf
of the Company to or on behalf of the Vendor or to or on behalf of any
directors, officers, shareholders or employees of the Company or under any
management agreements with the Company other than in the ordinary course of
business;

     (au)     except as otherwise provided for herein, the Vendor Group and the
Company have not retained, employed or introduced any broker, finder or other
person who would be entitled to a brokerage commission or finder's fee arising
out of the transactions contemplated hereby;

     (av)     save and except for those matters which are listed in Schedule "G"
which is attached hereto, the Company does not have any contracts, agreements,
undertakings or arrangements, whether oral, written or implied, with employees,
lessees, licensees, managers, accountants, suppliers, agents, distributors,
directors, officers, lawyers or others which cannot be terminated, without
penalty, on no more than 12 month's notice;

     (aw)     save and except as set forth in the Company's Financial
Statements, neither the Vendor, nor any directors, officers or employees of the
Company, are now indebted or under obligation to the Company on any account
whatsoever other than in the ordinary course of business;

(ax)     all material transactions of the Company and including, without
limitation, all directors' and shareholders' resolutions, have been promptly and
properly recorded or filed in or with its books and records;

(ay)     the Vendor Group and the Company have the full authority and capacity
required to enter into this Agreement and to perform their respective
obligations hereunder;

(az)     the present directors and officers of the Company are as follows:

Name

Position with the Company

H. Dean Haley

President, Chief Executive Officer and a director;

(ba)     prior to the Subject Removal Date (as hereinafter determined) the
Company will have obtained all authorizations and approvals or waivers that may
be necessary or desirable in connection with the transactions contemplated in
this Agreement, and other actions by, and have made all filings with, any and
all Regulatory Authorities, if applicable, from whom any such authorization,
approval or other action is required to be obtained or to be made in connection
with the transactions contemplated herein, and all such authorizations,
approvals and other actions will be in full force and effect, and all such
filings will have been accepted by the Company which will be in compliance with,
and have not committed any breach of, any securities laws, regulations or
policies of any Regulatory Authority to which the Company may be subject;

(bb)     the Company has not committed to making and until the Closing Date (as
hereinafter determined) will not make or commit itself, without the written
consent of the Purchaser, to:

(i)     guarantee, or agree to guarantee, any indebtedness or other obligation
of any person or corporation;

(ii)     other than the payment of ordinary course obligations, make any single
operating or capital expenditures in excess of U.S. $5,000.00; or

(iii)     waive or surrender any right of material value;

(bc)     until the Closing Date (as hereinafter determined) the Company will:

(i)     maintain its Company's Business and assets in a manner consistent with
and in compliance with applicable law; and

(ii)     not enter into any material transaction or assume or incur any material
liability outside the normal course of its business;

(bd)     the Company has not committed to making and until the Closing Date (as
hereinafter determined) will not make or commit itself, without the written
consent of the Purchaser, to:

(i)     declare or pay any dividend, or make any distribution of its properties
or assets to its shareholders, or purchase or retire any of its shares;

(ii)     sell all or any part of its Company's Business or assets or agree to do
or perform any act or enter into any transaction or negotiation which could
reasonably be expected to interfere with this Agreement or which would render
inaccurate any of the representations, warranties and covenants set forth in
this Agreement; or

(iii)     merge, amalgamate or consolidate into or with any entity, or enter
into any other corporate reorganization;

provided, however, that the provisions hereof shall not preclude the Company,
pending the Closing (as hereinafter determined) or the termination of this
Agreement, whichever shall first occur, from carrying on its business in the
normal course thereof;

(be)     at Closing (as hereinafter determined) each of the Vendor Group and the
Company will have executed and provided each other with an acceptable form of
final release and indemnification respecting any and all claims which either of
such Parties had, or may have had, against any such other Party prior to Closing
(the "Release") and including, without limiting the generality of the foregoing,
the HDH Group and Mr. Haley Release of all Claims as against the Company and the
Vendor in respect of, among all matters, the Disputed Contracts and all amounts
and expenses previously claimed thereunder;

     (bf)     the Company will, for a period of at least five business days
prior to the Closing Date (as hereinafter determined), during normal business
hours:

          (i)     make available for inspection by the counsel, auditors and
representatives of the Purchaser, at such location as is appropriate, all of the
Company's books, records, contracts, documents, correspondence and other written
materials, and afford such persons every reasonable opportunity to make copies
thereof and take extracts therefrom at the sole cost of the Purchaser; provided
such persons do not unduly interfere in the operations of the Company;

          (ii)     authorize and permit such persons at the risk and the sole
cost of the Purchaser, and only if such persons do not unduly interfere in the
operations of the Company, to attend at all of its respective places of business
and operations to observe the conduct of its business and operations, inspect
its properties and assets and make physical counts of its inventories, shipments
and deliveries; and

          (iii)     require the Company's management personnel to respond to all
reasonable inquiries concerning the Company's Business and assets or the conduct
of its business relating to its liabilities and obligations;

(bg)     the Vendor Group and the Company will give to the Purchaser, within at
least five business days prior to the Closing Date (as hereinafter determined),
by written notice, particulars of:

(i)     each occurrence within the Vendor Group's and the Company's knowledge
after the Execution Date of this Agreement that, if it had occurred before the
Execution Date, would have been contrary to any of the Vendor Group's or the
Company's respective representations or warranties contained herein; and

(ii)     each occurrence or omission within the Vendor Group's and the Company's
knowledge after the Execution Date that constitutes a breach of any of the
Vendor Group's or the Company's respective covenants contained in this
Agreement;

(bh)     each of the attached Schedules contains all material information for
each particular Schedule listed therein and there are no omissions of material
information by the Company; and

(bi)     the Vendor Group and the Company are not aware of any fact or
circumstance which has not been disclosed to the Purchaser which should be
disclosed in order to prevent the representations and warranties contained in
this section from being misleading or which would likely affect the decision of
the Purchaser to enter into this Agreement.

3.4          Continuity of the representations, warranties and covenants by each
of the Vendor Group and the Company. The representations, warranties and
covenants by each of the Vendor Group and the Company contained in this Article,
or in any certificates or documents delivered pursuant to the provisions of this
Agreement or in connection with the transactions contemplated hereby, will be
true at and as of the Closing Date (as hereinafter determined) as though such
representations, warranties and covenants were made at and as of such time.
Notwithstanding any investigations or inquiries made by the Purchaser or by the
Purchaser's professional advisors prior to the Closing Date, or the waiver of
any condition by the Purchaser, the representations, warranties and covenants of
each of the Vendor Group and the Company contained in this Article shall survive
the Closing Date and shall continue in full force and effect for a period of one
calendar year from the Closing Date; provided, however, that the Vendor Group
and the Company shall not be responsible for the breach of any representation,
warranty or covenant of either of the Vendor Group or the Company contained
herein caused by any act or omission of the Purchaser prior to the Execution
Date hereof of which any of the Vendor Group and the Company were unaware or as
a result of any action taken by the Purchaser after the Execution Date. In the
event that any of the said representations, warranties or covenants are found by
a Court of competent jurisdiction to be incorrect and such incorrectness results
in any loss or damage sustained directly or indirectly by the Purchaser, then
the Vendor Group and/or the Company, as the case may be, will, in accordance
with the provisions of Article "16" hereinbelow, pay the amount of such loss or
damage to the Purchaser within 30 calendar days of receiving notice of judgment
therefore; provided that the Purchaser will not be entitled to make any claim
unless the loss or damage suffered may exceed the amount of U.S. $1,000.00.

 

Article 4

WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE PURCHASER

4.1          Warranties, representations and covenants by the Purchaser. In
order to induce each of the Vendor Group and the Company to enter into and
consummate this Agreement, the Purchaser hereby warrants to, represents to and
covenants with each of the Vendor Group and the Company, with the intent that
each of the Vendor Group and the Company will rely thereon in entering into this
Agreement and in concluding the transactions contemplated herein, that, to the
best of the knowledge, information and belief of the Purchaser, after having
made due inquiry (and for the purposes of the following warranties,
representations and covenants, "Purchaser" shall mean the Purchaser and any
subsidiary of the Purchaser, if any, as the context so requires)::

(a)     the Purchaser is a corporation duly incorporated under the laws of its
jurisdiction of incorporation, is validly existing and is in good standing with
respect to all statutory filings required by the applicable corporate laws;

(b)     the Purchaser has the requisite power, authority and capacity to own and
use all of their respective business assets and to carry on their respective
businesses as presently conducted by them;

(c)     save and except as set forth in the updated "Purchaser Disclosure
Schedule" which will accompany the Purchaser's execution and delivery of this
Agreement, the Purchaser is qualified to do business in those jurisdictions
where it is necessary to fulfill its obligations under this Agreement, and it
has the full power and authority to enter into this Agreement and any agreement
or instrument referred to or contemplated by this Agreement;

(d)     the execution and delivery of this Agreement and the agreements
contemplated hereby has been duly authorized by all necessary corporate action
on its part;

(e)     there are no other consents, approvals or conditions precedent to the
performance of this Agreement which have not been obtained;

(f)     this Agreement constitutes a legal, valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms, except
as enforcement may be limited by laws of general application affecting the
rights of creditors;

(g)     no proceedings are pending for, and the Purchaser is unaware of, any
basis for the institution of any proceedings leading to the dissolution or
winding up of the Purchaser, or of any of the Purchaser's subsidiaries, if any,
or the placing of the Purchaser or any of the Purchaser's subsidiaries, if any,
in bankruptcy or subject to any other laws governing the affairs of insolvent
companies;

     (h)     the Purchaser owns and possesses and has good and marketable title
to and possession of all of its business assets free and clear of all actual or
threatened liens, charges, options, encumbrances, voting agreements, voting
trusts, demands, limitations and restrictions of any nature whatsoever, save and
except for those actual or threatened liens, charges, encumbrances, demands,
limitations and restrictions which are listed in Schedule "J" which is attached
hereto and which forms a material part hereof and as forth in the Purchaser
Disclosure Schedule;

     (i)     save and except as set forth in the Purchaser Disclosure Schedule,
the Purchaser holds all licenses and permits required for the conduct in the
ordinary course of the operations of its business and for the uses to which its
business assets have been put and are in good standing, and such conduct and
uses are in compliance with all laws, zoning and other by-laws, building and
other restrictions, rules, regulations and ordinances applicable to the
Purchaser and its business and assets, and neither the execution and delivery of
this Agreement nor the completion of the transactions contemplated hereby will
give any person the right to terminate or cancel any said license or permit or
affect such compliance;

(j)     the authorized capital of the Purchaser consists of 100,000,000 common
shares, with a par value of U.S. $0.001 per common share which, according to the
records of the Purchaser, an aggregate of 18,750,000 common shares of the
Purchaser are and will be, subject to the Cancellation of Shares (as hereinafter
determined), issued and outstanding as fully paid and non-assessable just prior
to the Closing Date (as hereinafter determined), and there are at present no
other shares in the capital of the Purchaser issued or allotted or agreed to be
issued or allotted to any person;

(k)     all of the issued and outstanding shares of the Purchaser are listed and
posted for trading on each of the NASD Over-the-Counter Bulletin Board (the
"OTCBB"), and the Purchaser is not in material default of any of its listing
requirements of the OTCBB or any rules or policies of the United States
Securities and Exchange Commission (the "Commission");

(l)     save and except as set forth in the Purchaser Disclosure Schedule, all
registration statements, reports and proxy statements filed by the Purchaser
with the Commission, and all registration statements, reports and proxy
statements required to be filed by the Purchaser with the Commission, have been
filed by the Purchaser under the United States Securities Act of 1934 (the "1934
Act"), were filed in all material respects in accordance with the requirements
of the 1934 Act and the rules and regulations thereunder and no such
registration statements, reports or proxy statements contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading;

(m)     the Purchaser will allot and issue the Shares on the Closing Date in
accordance with section "2.2" hereinbelow as fully paid and non-assessable in
the capital of the Purchaser, free and clear of all actual or threatened liens,
charges, options, encumbrances, voting agreements, voting trusts, demands,
limitations and restrictions of any nature whatsoever, other than hold periods
or other restrictions imposed under applicable securities legislation;

(n)     from August 22, 2005 (that being the reference date of the Agreement In
Principle) to and up to and including the Closing Date (as hereinafter
determined) the Purchaser has not committed to making and until the Closing Date
will not make or commit itself, without the written consent of the Company, to:

          (i)     redeem or acquire any shares in its share capital;

(ii)     declare or pay any dividend;

(iii)     make any reduction in or otherwise make any payment on account of its
paid-up capital; or

(iv)     effect any subdivision, consolidation or reclassification of its share
capital;

(o)     from August 22, 2005 to and up to and including the Closing Date (as
hereinafter determined) the Purchaser has not committed to making and until the
Closing Date will not make or commit itself, without the written consent of the
Company, to:

(i)     acquire or have the use of any property from a person, corporation or
entity with whom it was not dealing with at arm's length; or

(ii)     dispose of anything to a person, corporation or entity with whom it was
not dealing with at arm's length for proceeds less than the fair market value
thereof;

(p)     save and except as set forth in Schedule "J" which is attached hereto
and as set forth in the Purchaser Disclosure Schedule, from August 22, 2005 to
and up to and including the Closing Date (as hereinafter determined) the
Purchaser has not committed to making and until the Closing Date will not make
or commit itself, without the written consent of the Company, to provide any
person, firm or corporation with any agreement, option or right, consensual or
arising by law, present or future, contingent or absolute, or capable of
becoming an agreement, option or right:

(i)     to require it to issue any further or other shares in its share capital,
or any other security convertible or exchangeable into shares in its share
capital, or to convert or exchange any securities into or for shares in its
share capital;

(ii)     for the issue and allotment of any of the authorized but unissued
shares in its share capital;

(iii)     to require it to purchase, redeem or otherwise acquire any of the
issued and outstanding shares in its share capital; or

(iv)     to purchase or otherwise acquire any shares in its share capital;

(q)     the Purchaser is not aware of any court order which restricts or
prevents the issuance by the Purchaser of any shares from treasury;

(r)     save and except for those matters which are listed in Schedule "K" which
is attached hereto and as set forth in the Company Disclosure Schedule, there
are no material liabilities, contingent or otherwise, existing on the Execution
Date hereof in respect of which the Purchaser may be liable on or after the
completion of the transactions contemplated by this Agreement other than:

(i)     liabilities disclosed or referred to in this Agreement; and

(ii)     liabilities incurred in the ordinary course of business, none of which
are materially adverse to the business, operations, affairs or financial
conditions of the Purchaser;

(s)     save and except as set forth in Schedule "J" which is attached hereto
and as set forth in the Purchaser Disclosure Schedule, no other dividend or
other distribution by the Purchaser has been made, declared or authorized since
its incorporation, and from August 22, 2005 to and up to and including the
Closing Date (as hereinafter determined) the Purchaser has not committed to
making and until the Closing Date will not make or commit itself, without the
written consent of the Company, to confer upon, or pay to or to the benefit of,
any entity, any benefit having monetary value, any bonus or any salary increases
except in the normal course of its business;

(t)     save and except as set forth in Schedule "J" which is attached hereto
and as set forth in the Purchaser Disclosure Schedule, there is no basis for and
there are no actions, suits, judgments, investigations or proceedings
outstanding or pending or, to the best of the knowledge, information and belief
of the Purchaser, after making due inquiry, threatened against or affecting the
Purchaser at law or in equity or before or by any federal, state, municipal or
other governmental department, commission, board, bureau or agency;

(u)     save and except as set forth in the Purchaser Disclosure Schedule, the
Purchaser is not in breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which it is subject or which apply to it;

(v)     the Purchaser is not a party to any collective agreement with any labour
union or other association of employees, and there is no pending application for
certification of any of the Purchaser's employees as a collective bargaining
unit. In addition, and to the best of the knowledge, information and belief of
the Purchaser, after having made due inquiry, the Purchaser is not presently a
party to any complaint, grievance, arbitration or other labour matter referred
to any board or labour authority;

     (w)     there are no pension, profit sharing, group insurance or similar
plans or other deferred compensation plans affecting the Purchaser or any of its
directors, officers or employees;

     (x)     save and except as set forth in the Purchaser Disclosure Schedule,
the Purchaser has not experienced, nor is the Purchaser aware of, any occurrence
or event which has had, or might reasonably be expected to have, a materially
adverse affect on its business or on the results of its operations;

(y)     save and except as set forth in the Purchaser Disclosure Schedule, the
Purchaser holds or has applied for all permits, licenses, consents and
authorities issuable by any federal, state, regional or municipal government or
agency thereof which are necessary or desirable in connection with its
operations;

(z)     save and except as set forth in the Purchaser Disclosure Schedule, from
August 22, 2005 to and up to and including the Closing Date (as hereinafter
determined) there has been and there will be prepared and filed on a timely
basis all federal and state income tax returns, elections and designations, and
all other governmental returns, notices and reports of which the Purchaser had,
or ought reasonably to have had, knowledge required to be or reasonably capable
of being filed up to the Closing Date, with respect to the operations of the
Purchaser, and no such returns, elections, designations, notices or reports
contain or will contain any material misstatement or omit any material statement
that should have been included, and each such return, election, designation,
notice or report, including accompanying schedules and statements, is and will
be true, correct and complete in all material respects;

(aa)     save and except as set forth in the Purchaser Disclosure Schedule, the
Purchaser has been assessed for all federal, state and municipal income tax for
all years to and including its most recent taxation year, and at the Closing
Date (as hereinafter determined) the Purchaser will have paid in full or accrued
in accounts all amounts (including but not limited to sales, use and consumption
taxes and taxes measured on income and all installments of taxes) due and
payable to all federal, state and municipal taxation authorities up to the
Closing Date;

(ab)     save and except as set forth in the Purchaser Disclosure Schedule,
there is not now, and there will not be by the Closing Date (as hereinafter
determined), any proceeding, claim or, to the best of the knowledge, information
and belief of the Purchaser, after making due inquiry, any investigation by any
federal, state or municipal taxation authority, or any matters under discussion
or dispute with such taxation authorities, in respect of taxes, governmental
charges, assessments or reassessments in connection with the Purchaser, and the
Purchaser is not aware of any contingent tax liabilities or any grounds that
could result in an assessment, reassessment, charge or potentially adverse
determination by any federal, state or municipal taxation authority as against
the Purchaser;

(ac)     save and except as set forth in the Purchaser Disclosure Schedule, the
Purchaser is not in breach of any provision or condition of, nor have they done
or omitted anything that, with or without the giving of notice or lapse or both,
would constitute a breach of any provision or condition of, or give rise to any
right to terminate or cancel or accelerate the maturity of any payment under,
any deed of trust, contract, certificate, consent, permit, license or other
instrument to which it is a party, by which it is bound or from which it derives
benefit, any judgment, decree, order, rule or regulation of any court or
governmental authority to which it is subject, or any statute or regulation
applicable to it, to an extent that, in the aggregate, has a material adverse
affect on it;

(ad)     save and except as set forth in the Purchaser Disclosure Schedule,
adequate provision has been made and will be made for taxes payable by the
Purchaser for the current period for which a tax return is not yet required to
be filed and, to the best of the knowledge, information and belief of the
Purchaser, after having made due inquiry, there are no contingent tax
liabilities of the Purchaser or any grounds which would prompt a re-assessment
of the Purchaser and including, without limiting the generality of the
foregoing, the aggressive treatment of income and expenses in the filing of
earlier tax returns by the Purchaser;

     (ae)     the most recently completed audited and unaudited consolidated
financial statements of the Purchaser as at September 30, 2004 and June 30,
2005, respectively (collectively, the "Purchaser's Financial Statements"), are
true and correct in every respect and presently fairly the financial position of
the Purchaser as at its most recently completed financial period and the results
of its operations for the period then ended in accordance with generally
accepted accounting principles on a basis consistently applied; a copy of said
Purchaser's Financial Statements being attached hereto as Schedule "J" and
forming a material part hereof;

(af)     save and except as set forth in the Purchaser Disclosure Schedule, the
Purchaser's Financial Statements and the books and records of the Purchaser are
true and correct in every material respect, were prepared in accordance with
generally accepted accounting principles and fairly reflect the business,
property, assets and financial positions of the Purchaser as at the date of the
Purchaser's Financial Statements and any such books and records and the results
of its operations for the periods then ended, and there have been no adverse
changes in the business or affairs of the Purchaser since the date of the
Purchaser's Financial Statements and any such books and records;

     (ag)     save and except as set forth in the Purchaser Disclosure Schedule,
the Purchaser has good and marketable title to all of its assets, properties and
interests in properties, real and personal, including those reflected in the
Purchaser's Financial Statements or which have been acquired since the date of
the latest Purchaser's Financial Statements (except for those which have been
transferred, sold or otherwise disposed of in the ordinary or normal course of
business), free and clear of all encumbrances, and none of the Purchaser's
assets or properties is in the possession of or under the control of any other
person;

     (ah)     save and except as set forth in the Purchaser Disclosure Schedule,
the Purchaser has no equipment, other than the personal property or fixtures in
the possession or custody of the Purchaser which, as of the date hereof, is
leased or is held under license or similar arrangement;

     (ai)     except for the real property leases and the contracts of
employment which are set forth in Schedule "K" which is attached hereto and
which forms a material part hereof, the Purchaser is not party to or bound by
any other material contract, whether oral or written, other than the contracts
and agreements as set forth in Schedule "K";

     (aj)     save and except as set forth in the Purchaser Disclosure Schedule,
as to the contracts listed in Schedule "K" which is attached hereto:

(i)     each such contract is in full force and effect and unamended;

(ii)     no material default exists in respect thereof on the part of either the
Purchaser or any other party thereto;

(iii)     each such contract does not involve any non-arm's length party except
where described; and

(iv)     the Purchaser is not aware of any intention on the part of any other
party thereto to terminate or materially alter any such contract;

     (ak)     the Purchaser has no consulting or employment agreements, whether
written or otherwise, except for those which are set forth in Schedule "K" which
is attached hereto;

     (al)     Schedule "L" which is attached hereto and which forms a material
part hereof is a true and complete list showing the name of each bank, trust
company or similar institution in which the Purchaser has accounts or safety
deposit boxes, the identification numbers of each such account or safe deposit
box, the names of all persons authorized to draw therefrom or to have access
thereto and the number of signatories required on each account. In addition,
Schedule "L" also includes a list of all non-bank account numbers, codes and
business numbers used by the Purchaser for the purposes of remitting tax, dues,
assessments and other fees;

     (am)     save and except as set forth in the Purchaser Disclosure Schedule,
the Purchaser maintains, and has maintained, insurance in force against loss on
the Purchaser's assets and properties, against such risks, in such amounts and
to such limits, as is in accordance with prudent business practices prevailing
in its line of business and having regard to the location, age and character of
its assets and properties, and has complied fully with all requirements of such
insurance, including the prompt giving of any notice of any claim or possible
claim thereunder, and all such insurance has been and is with insurers which the
Purchaser believes to be responsible;

     (an)     the Purchaser utilizes no product warranties, guarantees or
product return policies;

     (ao)     save and except as set forth in the Purchaser Disclosure Schedule,
since June 30, 2005:

(i)     there has not been any material adverse change in the financial position
or condition of the Purchaser or any damage, loss or other change in
circumstances materially affecting the business or properties of the Purchaser
or its right or capacity to carry on business;

(ii)     the Purchaser has not waived or surrendered any right of material
value;

(iii)     the Purchaser has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current liabilities in the
ordinary course of business; and

(iv)     the business of the Purchaser has been carried on in the ordinary
course;

     (ap)     save and except for those matters which are listed in Schedule "J"
which is attached hereto and as set forth in the Purchaser Disclosure Schedule,
there are no liabilities, contingent or otherwise, of the Purchaser not
disclosed or reflected in the Purchaser's Financial Statements, except those
incurred in the ordinary course of business of the Purchaser since June 30,
2005;

     (aq)     save and except as set forth in the Purchaser Disclosure Schedule,
no payments of any kind have been made or authorized by or on behalf of the
Purchaser to or on behalf of directors, officers, shareholders or employees of
the Purchaser or under any management agreements with the Purchaser other than
in the ordinary course of business;

     (ar)     save and except for the proposed issuance of common shares of the
Company as a finder's fee in conjunction with the successful completion of the
within Reverse Takeover, and except for any finder's fees or commissions which
may be payable or issuable by the Purchaser in conjunction with the completion
of its proposed Private Placement (as hereinafter determined) as set forth
hereinbelow, the Purchaser has not retained, employed or introduced any other
broker, finder or other person who would be entitled to a brokerage commission
or finder's fee arising out of the transactions contemplated hereby;

     (as)     save and except as set forth in the Purchaser Disclosure Schedule,
the Purchaser does not have any contracts, agreements, undertakings or
arrangements, whether oral, written or implied, with employees, lessees,
licensees, managers, accountants, suppliers, agents, distributors, directors,
officers, lawyers or others which cannot be terminated, without penalty, on no
more than three month's notice;

     (at)     save and except as set forth in the Purchaser Disclosure Schedule,
none of directors, officers or employees of the Purchaser are now indebted or
under obligation to the Purchaser on any account whatsoever, other than in the
ordinary course of business;

(au)     save and except as set forth in the Purchaser Disclosure Schedule, all
material transactions of the Purchaser and including, without limitation, all
directors' and shareholders' resolutions, have been promptly and properly
recorded or filed in or with its books and records;

(av)     the present directors and officers of the Purchaser are as follows:

Name

Position with the Purchaser

Paul D. Brock

President, Chief Executive Officer and a director;

Donald M. Prest

Secretary, Treasurer, Principal Financial Officer, Principal Accounting Officer
and a director;

Francis Chiew

a director; and

Alan Whittingham

a director;

(aw)     save and except as set forth in the Purchaser Disclosure Schedule, the
Purchaser has good and marketable title to all of its properties, if any, and
assets, and such properties, if any, and assets are not subject to any mortgage,
pledge, deed of trust, lien, conditional sale agreement, encumbrance or charge;

(ax)     prior to the Subject Removal Date (as hereinafter determined) the
Purchaser will have obtained all authorizations, approvals, or waivers that may
be necessary or desirable in connection with the transactions contemplated in
this Agreement, and other actions by, and have made all filings with, any and
all Regulatory Authorities required to be made in connection with the
transactions contemplated herein, and all such authorizations, approvals and
other actions will be in full force and effect, and all such filings will have
been accepted by the Purchaser, which will be in compliance with, and have not
committed any breach of, any securities laws, regulations or policies of any
Regulatory Authority to which the Purchaser may be subject;

(ay)     save and except as set forth in the Purchaser Disclosure Schedule, the
Purchaser has not committed to making and until the Closing Date (as hereinafter
determined) will not make or commit itself, without the written consent of the
Company, to:

(i)     guarantee, or agree to guarantee, any indebtedness or other obligation
of any person or corporation;

(ii)     other than the payment of ordinary course obligations, make any
operating or capital expenditures in excess of U.S. $5,000.00; or

(iii)     waive or surrender any right of material value;

(az)     until the Closing Date (as hereinafter determined) the Purchaser will:

(i)     maintain its assets in a manner consistent with and in compliance with
applicable law; and

(ii)     not enter into any material transaction or assume or incur any material
liability outside the normal course of its business;

(ba)     save and except as set forth in the Purchaser Disclosure Schedule, the
Purchaser has not committed to making and until the Closing Date (as hereinafter
determined) will not make or commit itself, without the written consent of the
Company, to:

(i)     declare or pay any dividend, or make any distribution of its properties
or assets to its shareholders, or purchase or retire any of its shares;

(ii)     sell all or any part of its assets or agree to do or perform any act or
enter into any transaction or negotiation which could reasonably be expected to
interfere with this Agreement or which would render inaccurate any of the
representations, warranties and covenants set forth in this Agreement; or

(iii)     merge, amalgamate or consolidate into or with any entity, or enter
into any other corporate reorganization;

provided, however, that the provisions hereof shall not preclude the Purchaser
pending the Closing (as hereinafter determined) or the termination of this
Agreement, whichever shall first occur, from carrying on its business in the
normal course thereof;

     (bb)     the Purchaser will, for a period of at least five business days
prior to the Closing Date (as hereinafter determined), during normal business
hours:

          (i)     make available for inspection by the counsel, auditors and
representatives of the Company, at such location as is appropriate, all of the
Purchaser's books, records, contracts, documents, correspondence and other
written materials, and afford such persons every reasonable opportunity to make
copies thereof and take extracts therefrom at the sole cost of the Company;
provided such persons do not unduly interfere in the operations of the
Purchaser;

          (ii)     authorize and permit such persons at the risk and the sole
cost of the Company, and only if such persons do not unduly interfere in the
operations of the Purchaser, to attend at all of its respective places of
business and operations to observe the conduct of its business and operations,
inspect its properties and assets and make physical counts of its inventories,
shipments and deliveries; and

          (iii)     require the Purchaser's management personnel to respond to
all reasonable inquiries concerning the Purchaser's business assets or the
conduct of its business relating to its liabilities and obligations;

(bc)     the Purchaser will give to the Company, within at least five business
days prior to the Closing Date (as hereinafter determined), by written notice,
particulars of:

(i)     each occurrence within the Purchaser's knowledge after the Execution
Date of this Agreement that, if it had occurred before the Execution Date, would
have been contrary to any of the Purchaser's representations or warranties
contained herein; and

(ii)     each occurrence or omission within the Purchaser's knowledge after the
Execution Date that constitutes a breach of any of the Purchaser's covenants
contained in this Agreement;

(bd)     save and except as set forth in the Purchaser Disclosure Schedule, the
shares in the capital of the Purchaser are not subject to or affected by any
actual or, to the knowledge of the Purchaser, pending or threatened cease
trading, compliance or denial of use of exemptions orders of, or action,
investigation or proceeding by or before, any securities regulatory authority,
Court, administrative agency or other tribunal;

     (be)     the making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and compliance with the
terms hereof does not and will not:

          (i)     conflict with or result in a breach of or violate any of the
terms, conditions or provisions of the constating documents of the Purchaser;

          (ii)     conflict with or result in a breach of or violate any of the
terms, conditions or provisions of any law, judgment, order, injunction, decree,
regulation or ruling of any Court or governmental authority, domestic or
foreign, to which the Purchaser is subject, or constitute or result in a default
under any agreement, contract or commitment to which the Purchaser is a party;

          (iii)     give to any party the right of termination, cancellation or
acceleration in or with respect to any agreement, contract or commitment to
which the Purchaser is a party;

          (iv)     give to any government or governmental authority, or any
municipality or any subdivision thereof, including any governmental department,
commission, bureau, board or administration agency, any right of termination,
cancellation or suspension of, or constitute a breach of or result in a default
under, any permit, license, control or authority issued to the Purchaser which
is necessary or desirable in connection with the conduct and operations of its
businesses and the ownership or leasing of its business assets; or

          (v)     constitute a default by the Purchaser or any event which, with
the giving of notice or lapse of time or both, might constitute an event of
default, under any agreement, contract, indenture or other instrument relating
to any indebtedness of the Purchaser which would give any party to that
agreement, contract, indenture or other instrument the right to accelerate the
maturity for the payment of any amount payable under that agreement, contract,
indenture or other instrument;

(bf)     at or prior to Closing (as hereinafter determined) the Purchaser will
cause up to 3,000,000 but not less than 1,550,000 founder's common shares of the
Purchaser which are currently issued and outstanding in the share capital of the
Purchaser to be cancelled voluntarily (collectively, the "Cancellation of
Shares"):

(bg)     at and subsequent to Closing (as hereinafter determined) the following
changes will be effected to the Board of Directors and officers of the resulting
Purchaser company (collectively, the "Change in Board and officers"):

(i)     at Closing, and save and except for Paul D. Brock, the current President
and Chief Executive Officer of the Purchaser, who will remain a director of the
resulting Purchaser company at Closing, and Donald M. Prest, the current
Secretary, Treasurer, Principal Financial Officer and Principal Accounting
Officer of the Purchaser, who will resign as a director, however, remain in his
positions as an officer of the resulting Purchaser company at Closing, all
remaining directors of the Purchaser will resign and the Purchaser will appoint
Messrs. Haley and Stephen Harrison as directors of the resulting Purchaser
company; it being acknowledged and agreed by the Parties hereto that two
additional independent directors (for five in total) will be appointed as
directors of the Purchaser by the resulting Board of Directors of the Purchaser
within 60 calendar days of Closing;

(ii)     at Closing Mr. Haley will be appointed the Executive Chairman of the
Purchaser; and

(iii)     commensurate with or as soon as reasonably practicable subsequent to
Closing it is being acknowledged and agreed that the resulting Board of
Directors of the Purchaser will appoint a President (the "President") for the
Purchaser; the final decision respecting the President to be based ultimately on
the recommendation of an "Interview Committee" to be comprised of Messrs. Haley,
Brock, Harrison and Richard W. Evans;

     (bh)     the Purchaser will raise prior to and/or commensurate with Closing
(as hereinafter determined) a common share or unit private placement funding for
the Purchaser, under "Rule 506" or "Regulation S" under the Securities Act, of a
minimum of U.S. $2,250,000 and a maximum of up to U.S. $3,000,000, and at a
subscription price of not less than U.S. $0.65 per restricted common share or
unit (each a "Unit") forming part thereof (collectively, the "Private
Placement"); with an understanding that any Unit Private Placement financing
shall be conducted at a subscription price of not less U.S. $0.65 per Unit, with
each such Unit being comprised of not greater than one common share and one
non-transferable share purchase warrant of the Purchaser (each a "Warrant"), and
with each such Warrant being exercisable for not greater than one additional
common share of the Company for a period of up to two years from the date of
issuance thereof at an exercise price of not less than U.S. $1.00 per Warrant
common share in each such instance; and with the further understanding that not
less than U.S. $2,000,000 from the Private Placement shall be advanced by the
Purchaser to the Company at Closing with the balance, if any, being available
for unallocated working capital for the resulting Purchaser company together
with the payment of any finder's fees in connection with the closing of the
Private Placement;

(bi)     commensurate with or as soon as reasonably practicable subsequent to
Closing (as hereinafter determined) the Purchaser will file, with the within
acknowledgement of the Company, a "Form S-8" registration statement for a stock
option plan in the estimated amount of not less than 2,000,000 common shares of
the Purchaser, at an exercise price of U.S. $0.65 per common share
(collectively, the "Purchaser Options"); and in such amounts and with such
optionees as may be determined by management for the Purchaser and the Vendor,
acting reasonably, prior to the Closing Date, and as may be acceptable with the
appropriate Regulatory Authorities; it being acknowledged and agreed that all
such Options may be exchanged as Purchaser's Options for any Company's Options
then outstanding or allotted to be outstanding to directors, officers, employees
or consultants of the Company and the Vendor at Closing or from time to time
after Closing, in consideration of the ongoing involvement of such directors,
officers, employees or consultants of the Company and the Vendor in and to the
resulting Purchaser company and in exchange for the agreed upon cancellation by
said Company's Optionholders, if any, of all of the then issued and outstanding
or allotted Company's Options as a consequence thereof;

(bj)     commensurate with or as soon as reasonably practicable subsequent to
Closing (as hereinafter determined) the resulting Purchaser company will seek
the approval of its shareholders, if required, to change the name of the
resulting Purchaser company to "Power Air Corporation", or to such other name as
the Purchaser's resulting Board of Directors may determine at Closing (the
"Change in Name"); and subsequent to Closing the resulting Purchaser company
shall be in the process of preparing or filing the necessary documentation with
all Regulatory Authorities to effect the Change in Name and which shall include,
without limitation, obtaining a new trading symbol and CUSIP number for the
resulting Purchaser company;

     (bk)     the Purchaser will use its commercially reasonable efforts prior
to and/or commensurate with the Closing (as hereinafter determined) hereunder to
enter into proposed "Employment Agreements" with each of Mr. Haley, as the
proposed Executive Chairman of the resulting Purchaser company and, unless
otherwise determined by the Interview Committee, with Steve Williams, as the
proposed President of the resulting Purchaser company; a copy of form of which
proposed Employment Agreements being attached hereto as Schedule "M" and forming
a material part hereof;

(bl)     neither this Agreement nor any other document, certificate or statement
furnished to any of the Vendor Group or the Company by or on behalf of the
Purchaser in connection with the transactions contemplated hereby knowingly or
negligently contains any untrue or incomplete statement of material fact or
omits to state a material fact necessary in order to make the statements therein
not misleading; and

(bm)     it is not aware of any fact or circumstance which has not been
disclosed to the Vendor Group and the Company which should be disclosed in order
to prevent the representations, warranties and covenants contained in this
section from being misleading or which would likely affect the decision of the
Vendor Group and the Company to enter into this Agreement.

4.2          Continuity of the representations, warranties and covenants by the
Purchaser. The representations, warranties and covenants of the Purchaser
contained in this Article, or in any certificates or documents delivered
pursuant to the provisions of this Agreement or in connection with the
transactions contemplated hereby, will be true at and as of the Closing Date (as
hereinafter determined) as though such representations, warranties and covenants
were made at and as of such time. Notwithstanding any investigations or
inquiries made by either of the Vendor Group or the Company, or by the Vendor
Group's or the Company's respective professional advisors prior to the Closing
Date, or the waiver of any condition by either of the Vendor Group or the
Company, the representations, warranties and covenants of the Purchaser
contained in this Article shall survive the Closing Date and shall continue in
full force and effect for a period of one calendar year from the Closing Date;
provided, however, that the Purchaser shall not be responsible for the breach of
any representation, warranty or covenant of the Purchaser contained herein
caused by any act or omission of either of the Vendor Group or the Company prior
to the Execution Date hereof of which the Purchaser was unaware or as a result
of any action taken by either of the Vendor Group or the Company after the
Execution Date. In the event that any of the said representations, warranties or
covenants are found by a Court of competent jurisdiction to be incorrect and
such incorrectness results in any loss or damage sustained directly or
indirectly by either of the Vendor Group and/or the Company, then the Purchaser
will, in accordance with the provisions of Article "15" hereinbelow, pay the
amount of such loss or damage to either of the Vendor Group and/or the Company,
as the case may be, within 30 calendar days of receiving notice of judgment
therefore; provided that the Vendor and the Company will not be entitled to make
any claim unless the loss or damage suffered may exceed the amount of U.S.
$1,000.00.

 

Article 5

CONDITIONS PRECEDENT TO CLOSING

5.1          Parties' conditions precedent prior to the Closing Date. All of the
rights, duties and obligations of each of the Parties hereto under this
Agreement are subject to the following conditions precedent for the exclusive
benefit of each of the Parties to be fulfilled in all material aspects in the
reasonable opinion of each of the Parties or to be waived by each or any of the
Parties, as the case may be, as soon as possible after the Execution Date;
however, unless specifically indicated as otherwise, not later than five
calendar days prior to the Closing Date (as hereinafter determined; such date
being the "Subject Removal Date"):

     (a)     the specific ratification of the terms and conditions of this
Agreement by the Board of Directors of each of the Purchaser and the Company
within one business day of the due and completion execution of this Agreement by
each of the Parties hereto (collectively, the "Ratification");

     (b)     the completion by each of the Purchaser and the Company of an
initial due diligence and operations review of the other Party's respective
businesses and operations within five calendar days of the prior satisfaction of
the Ratification (collectively, the "Initial Due Diligence");

     (c)     if required under applicable corporate and securities laws, the
receipt of all necessary approvals from any Regulatory Authority having
jurisdiction over the transactions contemplated by this Agreement on or before
September 15, 2005;

(d)     if required under applicable corporate and securities laws, shareholders
of the Purchaser and/or the Company passing an ordinary resolution or, where
required, a special resolution, approving the terms and conditions of this
Agreement and all of the transactions contemplated hereby, and the Purchaser
and/or the Company sending all required notice to the Purchaser's and/or the
Company's shareholders in connection therewith, or, in the alternative and if
allowable in accordance with applicable corporate and securities laws,
shareholders of the Purchaser and/or the company holding over 50% of the issued
shares of the Purchaser and the Company providing written consent resolutions
evidencing their approval to the terms and conditions of this Agreement and all
of the transactions contemplated hereby together with certification of any
required notice to all shareholders of the Purchaser and/or Company of such
written consent resolutions; and

(e)     the Board of Directors of the Purchaser and/or the shareholders of the
Purchaser, if required, approving of the within issuance by the Purchaser to the
order and direction of the Resulting Shareholder Group of all of the referenced
Shares in accordance with section "2.2" hereinabove and, in addition, the Board
of Directors and/or shareholders of the Purchaser, if required, having also
approved and received any required notice of:

(i)     the proposed Cancellation of Shares by certain founders of the
Purchaser;

(ii)     the proposed Change in Board and officers of the Purchaser together
with the appointment of the proposed President through the Interview Committee
established therefore;

(iii)     a proposed common share or unit Private Placement funding for the
Purchaser of a minimum of U.S. $2,250,000 and a maximum of up to U.S.
$3,000,000, and at a subscription price of not less than U.S. $0.65 per
restricted common share or Unit forming part thereof; with an understanding that
any Unit Private Placement financing shall be conducted at a subscription price
of not less U.S. $0.65 per Unit, with each such Unit being comprised of not
greater than one common share and one non-transferable share purchase Warrant of
the Purchaser, and with each such Warrant being exercisable for not greater than
one additional common share of the Company for a period of up to two years from
the date of issuance thereof at an exercise price of not less than U.S. $1.00
per Warrant common share in each such instance; and with the further
understanding that not less than U.S. $2,000,000 from the Private Placement
shall be advanced by the Purchaser to the Company at Closing with the balance,
if any, being available for unallocated working capital for the resulting
Purchaser together with the payment of any finder's fees in connection with the
closing of the Private Placement;

(iv)     the proposed filing by the Purchaser, with the within acknowledgement
of the Company, of a Form S-8 registration statement for a stock option plan in
the estimated amount of not less than 2,000,000 common shares of the Purchaser,
at an exercise price of U.S. $0.65 per common share; and in such amounts and
with such optionees as may be determined by management for the Purchaser and the
Vendor, acting reasonably, prior to the Closing Date, and as may be acceptable
with the appropriate Regulatory Authorities; it being acknowledged and agreed
that all such Options may be exchanged as Purchaser's Options for any Company's
Options then outstanding or allotted to be outstanding to directors, officers,
employees or consultants of the Company and the Vendor at Closing or from time
to time after Closing, in consideration of the ongoing involvement of such
directors, officers, employees or consultants of the Company and the Vendor in
and to the resulting Purchaser company and in exchange for the agreed upon
cancellation by said Company Optionholders, if any, of all of the then issued
and outstanding or allotted Company options as a consequence thereof;

(v)     if required and possible, the proposed Change in Name of the Purchaser;

(vi)     the proposed entering into by the Purchaser prior to and/or
commensurate with the Closing (as hereinafter determined) hereunder of the
proposed Employment Agreements with each of Messrs. Haley and Williams; and

(vii)     such other matters as may be agreed to as between the Parties hereto
prior the completion of the transactions contemplated by this Agreement.

5.2          Parties' waiver of conditions precedent. The conditions precedent
set forth in section "5.1" hereinabove are for the exclusive benefit of each of
the Parties hereto and may be waived by each or any of the Parties in writing
and in whole or in part at any time; however, not later than five calendar days
prior to the Subject Removal Date.

5.3          The Vendor Group's and the Company's conditions precedent. The
rights, duties and obligations of each of the Vendor Group and the Company under
this Agreement are also subject to the following conditions precedent for the
exclusive benefit of each of the Vendor Group and the Company to be fulfilled in
all material aspects in the reasonable opinion of the Vendor Group and the
Company or to be waived by each or any of the Vendor Group and the Company as
soon as possible after the Execution Date, however; unless specifically
indicated as otherwise, not later than five calendar days prior to the Subject
Removal Date:

     (a)     the Purchaser shall have complied with all warranties,
representations, covenants and agreements herein agreed to be performed or
caused to be performed by the Purchaser on or before the Closing Date (as
hereinafter determined);

     (b)     the Purchaser shall have complied with all applicable securities
laws in connection with the issuance of the Shares to the Resulting Shareholder
Group on or before the Closing Date (as hereinafter determined);

(c)     the Purchaser will have obtained all authorizations, approvals, or
waivers that may be necessary or desirable in connection with the transactions
contemplated in this Agreement, and other actions by, and have made all filings
with, any and all Regulatory Authorities required to be made in connection with
the transactions contemplated herein, and all such authorizations, approvals and
other actions will be in full force and effect, and all such filings will have
been accepted by the Purchaser who will be in compliance with, and have not
committed any breach of, any securities laws, regulations or policies of any
Regulatory Authority to which the Purchaser may be subject;

     (d)     all matters which, in the opinion of counsel for the Vendor Group
and the Company, are material in connection with the transactions contemplated
by this Agreement shall be subject to the favourable opinion of such counsel,
and all relevant records and information shall be supplied to such counsel for
that purpose;

     (e)     no material loss or destruction of or damage to the Purchaser shall
have occurred since the Execution Date;

(f)     written confirmation that the Purchaser has raised into trust or
otherwise sufficient funding in order to close the minimum required Private
Placement at Closing (as hereinafter determined) on the terms as set forth in
paragraph "4.1(bh)" hereinabove;

     (g)     no action or proceeding at law or in equity shall be pending or
threatened by any person, company, firm, governmental authority, regulatory body
or agency to enjoin or prohibit:

          (i)     the purchase or transfer of any of the Purchased Shares
contemplated by this Agreement or the right of the Vendor to dispose of any of
the Purchased Shares; or

          (ii)     the right of the Purchaser to conduct its operations and
carry on, in the normal course, its business and operations as it has carried on
in the past;

     (h)     the delivery to the Vendor Group and the Company by the Purchaser,
on a confidential basis, of the following documentation and information:

(i)     a copy of all material contracts, agreements, reports and title
information of any nature respecting the Purchaser; and

(ii)     details of any lawsuits, claims or potential claims relating to the
Purchaser of which the Purchaser is aware and the Vendor Group and the Company
are unaware;

     (i)     the Purchaser will, for a period of at least five business days
prior to the Closing Date (as hereinafter determined), during normal business
hours:

          (i)     make available for inspection by the counsel, auditors and
representatives of the Vendor Group and the Company, at such location as is
appropriate, all of the Purchaser's books, records, contracts, documents,
correspondence and other written materials, and afford such persons every
reasonable opportunity to make copies thereof and take extracts therefrom at the
sole cost of the Vendor Group and the Company; provided such persons do not
unduly interfere in the operations of the Purchaser;

          (ii)     authorize and permit such persons at the risk and the sole
cost of the Vendor Group and the Company, and only if such persons do not unduly
interfere in the operations of the Purchaser, to attend at all of its places of
business and operations to observe the conduct of its business and operations,
inspect its properties and assets and make physical counts of its inventories,
shipments and deliveries; and

          (iii)     require the Purchaser's management personnel to respond to
all reasonable inquiries concerning the Purchaser's business assets or the
conduct of its business relating to its liabilities and obligations;

     (j)     the completion by the Vendor Group and the Company, and by the
Vendor Group's and the Company's professional advisors, of a thorough due
diligence and operations review of the business and operations of the Purchaser
to the sole and absolute satisfaction of each of the Vendor Group and the
Company; and

     (k)     the completion by the Vendor Group and the Company, and by the
Vendor Group's and the Company's professional advisors, of a thorough due
diligence and operations review of the business and operations of the Purchaser
to the sole and absolute satisfaction of each of the Vendor Group and the
Company.

4.4          The Vendor Group's and the Company's waiver of conditions
precedent. The conditions precedent set forth in section "5.3" hereinabove are
for the exclusive benefit of each of the Vendor Group and the Company and may be
waived by each or any of the Vendor Group and the Company in writing and in
whole or in part at any time after the Execution Date; however, unless
specifically indicated as otherwise, not later than five calendar days prior to
the Subject Removal Date.

5.5          Purchaser's conditions precedent prior to the Closing Date. The
rights, duties and obligations of the Purchaser under this Agreement are also
subject to the following conditions precedent for the exclusive benefit of the
Purchaser to be fulfilled in all material aspects in the reasonable opinion of
the Purchaser or to be waived by the Purchaser as soon as possible after the
Execution Date; however, unless specifically indicated as otherwise, not later
than five calendar days prior to the Subject Removal Date:

     (a)     the Vendor Group and the Company shall have complied with all
warranties, representations, covenants and agreements herein agreed to be
performed or caused to be performed by the Vendor Group and the Company on or
before the Closing Date (as hereinafter determined);

(b)     the Vendor Group and the Company will have obtained all authorizations,
approvals or waivers that may be necessary or desirable in connection with the
transactions contemplated in this Agreement, and other actions by, and have made
all filings with, any and all Regulatory Authorities from whom any such
authorization, approval or other action is required to be obtained or to be made
in connection with the transactions contemplated herein, and all such
authorizations, approvals and other actions will be in full force and effect,
and all such filings will have been accepted by the Vendor Group and the Company
who will be in compliance with, and have not committed any breach of, any
securities laws, regulations or policies of any Regulatory Authority to which
the Vendor Group or the Company may be subject;

     (c)     all matters which, in the opinion of counsel for the Purchaser, are
material in connection with the transactions contemplated by this Agreement
shall be subject to the favourable opinion of such counsel, and all relevant
records and information shall be supplied to such counsel for that purpose;

     (d)     no material loss or destruction of or damage to the Company, any of
the Company's Assets, any of the Company's Business or the Purchased Shares
shall have occurred;

     (e)     no action or proceeding at law or in equity shall be pending or
threatened by any person, company, firm, governmental authority, regulatory body
or agency to enjoin or prohibit:

          (i)     the purchase or transfer of any of the Purchased Shares
contemplated by this Agreement or the right of the Vendor to dispose of any of
the Purchased Shares; or

          (ii)     the right of the Company to conduct its operations and carry
on, in the normal course, its Company's Business and operations as it has
carried on in the past;

     (f)     the delivery to the Purchaser by the Vendor Group and the Company,
on a confidential basis, of all Business Documentation and including, without
limitation, the following documentation and information:

(i)     a copy of all material contracts, agreements, reports and information of
any nature respecting the Company, its assets and the Company's Business; and

(ii)     details of any lawsuits, claims or potential claims relating to either
the Company, its assets, the Company's Business or the Purchased Shares of which
either of the Vendor Group or the Company is aware and the Purchaser is unaware;

     (g)     the Vendor Group and the Company will, for a period of at least
five business days prior to the Closing Date (as hereinafter determined), during
normal business hours:

          (i)     make available for inspection by the counsels, auditors and
representatives of the Purchaser, at such location as is appropriate, all of the
Company's books, records, contracts, documents, correspondence and other written
materials, and afford such persons every reasonable opportunity to make copies
thereof and take extracts therefrom at the sole cost of the Purchaser; provided
such persons do not unduly interfere in the operations of the Company;

          (ii)     authorize and permit such persons at the risk and the sole
cost of the Purchaser, and only if such persons do not unduly interfere in the
operations of the Company, to attend at all of its places of business and
operations to observe the conduct of its business and operations, inspect its
properties and assets and make physical counts of its inventories, shipments and
deliveries; and

          (iii)     require the Company's management personnel to respond to all
reasonable inquiries concerning the Company's Business and assets or the conduct
of its business relating to its liabilities and obligations;

(h)     the delivery to the Purchaser by the Company and Vendor Group of an
acceptable form of final Release respecting any and all claims which either of
such Parties had, or may have had, against any such other Party prior to Closing
and including, without limiting the generality of the foregoing, the HDH Group
and Mr. Haley Release of all Claims as against the Company and the Vendor in
respect of, among all matters, the Disputed Contracts and all amounts and
expenses previously claimed thereunder;

(i)     the delivery to the Purchaser by the Company and the Vendor Group of an
opinion of the counsel for the Company, in a form satisfactory to the
Purchaser's counsel, dated as at the date of delivery, to the effect that:

(i)     the Company is a corporation duly incorporated under the laws of its
jurisdiction of incorporation, is validly existing and is in good standing with
respect to all statutory filings required by the applicable corporate laws;

(ii)     the Company has the power, authority and capacity to own and use all of
its assets and to carry on its Company's Business as presently conducted by it;

(iii)     the Company, as the legal and beneficial owner of all of its assets,
holds all of the assets free and clear of all liens, charges and claims of
others;

(iv)     the number of authorized and issued shares in the share capital of the
Company are as warranted by the Vendor Group and the Company, and all of such
issued shares are duly authorized, validly issued and outstanding as fully paid
and non-assessable;

(v)     all necessary steps and corporate proceedings have been taken by the
Vendor and the Company to permit the Purchased Shares to be duly and validly
transferred to and registered in the name of the Purchaser as at the Closing
Date and to cancel any and all outstanding Company's Options in and to the
Company, if any, in consideration of and exchange for the granting of an equal
number of Options as contemplated herein;

(vi)     based on actual knowledge and belief, such counsel knows of no claims,
judgments, actions, suits, litigation, proceedings or investigations, actual,
pending or threatened, against either the Vendor Group or the Company which
might materially affect either the Company, its assets or the Company's Business
or which could result in any material liability to either of the Company, its
assets or the Company's Business; and

(vii)     as to all other legal matters of a like nature pertaining to the
Vendor Group, the Company, its assets, the Company's Business and to the
transactions contemplated hereby as the Purchaser or the Purchaser's counsel may
reasonably require; and

     (j)     the completion by the Purchaser and by the Purchaser's professional
advisors of a thorough due diligence and operations review of both the Company's
Business and the operations of the Company together with the transferability of
the Purchased Shares as contemplated by this Agreement, to the sole and absolute
satisfaction of the Purchaser.

5.6          Purchaser's waiver of conditions precedent. The conditions
precedent set forth in section "5.5" hereinabove are for the exclusive benefit
of the Purchaser and may be waived by the Purchaser in writing and in whole or
in part at any after the Execution Date; however, unless specifically indicated
as otherwise, not later than five calendar days prior to the Subject Removal
Date.

 

Article 6

CLOSING AND EVENTS OF CLOSING

6.1          Closing and Closing Date. The closing (the "Closing") of the within
purchase and delivery of the Purchased Shares, as contemplated in the manner as
set forth in Article "2" hereinabove, together with all of the transactions
contemplated by this Agreement, shall occur on such day which is five calendar
days following the due and complete satisfaction of all of the conditions
precedent which are set out in Article "5" hereinabove (the "Closing Date"), or
on such earlier or later Closing Date as may be agreed to in advance and in
writing by each of the Parties hereto, and will be closed, in each such
instance, at the offices of Lang Michener LLP, Lawyers - Patent & Trade Mark
Agents, located at 1500 Royal Centre, 1055 West Georgia Street, Vancouver,
British Columbia, V6E 4N7, at 2:00 p.m. (Vancouver time) on the Closing Date.

6.2          Latest Closing Date. If the Closing Date has not occurred by
October 3, 2005 this Agreement will be terminated and unenforceable unless the
Parties hereto agree in writing to grant an extension of the Closing Date.

6.3          Documents to be delivered by the Vendor Group and the Company prior
to the Closing Date. Not later than two calendar days prior to the Closing Date,
and in addition to the documentation which is required by the agreements and
conditions precedent which are set forth hereinabove, the Vendor Group and the
Company shall also execute and deliver, or cause to be delivered, to the
Purchaser, the Transfer Agent and/or the Escrow Agent, as applicable, all such
other documents, resolutions and instruments as may be necessary, in the opinion
of counsel for the Purchaser, acting reasonably, to complete all of the
transactions contemplated by this Agreement and including, without limitation,
the necessary transfer all of the Purchased Shares to the Purchaser free and
clear of all liens, charges and encumbrances, and in particular including, but
not being limited to, the following materials:

(a)     a certified copy of an ordinary resolution of the shareholders of the
Vendor Group and/or the Company approving the terms and conditions of this
Agreement and the transactions contemplated hereby and thereby or, in the
alternative, shareholders of the Vendor Group and/or the Company holding over
50% of the issued shares of the Vendor Group and/or the Company providing
written consent resolutions evidencing their approval to the terms and
conditions of this Agreement and all of the transactions contemplated thereunder
together with certification of any required notice to all shareholders of the
Vendor Group and/or the Company of such written consent resolutions;

     (b)     all documentation as may be necessary and as may be required by
counsel for the Purchaser, acting reasonably, to ensure that all of the
Purchased Shares have been transferred, assigned and are registerable in the
name of and for the benefit of the Purchaser, and to ensure that all outstanding
Company Options in and to the Company, if any, have been cancelled, under all
applicable corporate and securities laws;

     (c)     certificate(s) representing the Purchased Shares registered in the
name of the Vendor, duly endorsed for transfer to the Purchaser or irrevocable
stock powers transferring the Purchased Shares to the Purchaser;

     (d)     a certificate representing the Purchased Shares registered in the
name of the Purchaser;

     (e)     written evidence of the cancellation of all outstanding Company
Options in and to the Company;

     (f)     written evidence of the Release having been obtained;

     (g)     a certified copy of the resolutions of the Board of Directors of
the Company (and of the Vendor if necessary) authorizing the transfer by the
Vendor to the Purchaser of the Purchased Shares and canceling all outstanding
Company Options in and to the Company;

(h)     consents to act and similar documentation required in order to effect
the proposed Change in Board and officers of the Purchaser together with the
appointment of the proposed President through the Interview Committee
established therefore;

     (i)     a copy of all corporate records and books of account of the Company
and its subsidiaries, if any, and including, without limiting the generality of
the foregoing, a copy of all minute books, share register books, share
certificate books and annual reports of the Company and its subsidiaries, if
any;

     (j)     all necessary consents and approvals in writing to the completion
of the transactions contemplated herein;

     (k)     a certificate of an officer of the Company, dated as of the Closing
Date, acceptable in form to counsel for the Purchaser, acting reasonably,
certifying that the warranties, representations, covenants and agreements of the
Vendor Group and the Company contained in this Agreement are true and correct in
all respects and will be true and correct as of the Closing Date as if made by
the Vendor Group and the Company on the Closing Date;

(l)     an opinion of counsel to the Vendor Group and the Company, dated as at
the Closing Date, and addressed to the Purchaser and its counsel, in form and
substance satisfactory to the Purchaser's counsel, acting reasonably, and
including the following:

(i)     the due incorporation, existence and standing of each of the Company and
its qualification to carry on business;

(ii)     the authorized and issued capital of the Company;

(iii)     that all Purchased Shares have been duly authorized and issued and are
fully paid and non-assessable;

(iv)     all necessary steps and proceedings have been taken in connection with
the execution, delivery and performance of this Agreement and the transactions
contemplated herein;

(v)     that the Purchased Shares have been duly issued to and registered in the
name of the Purchaser and that all outstanding Company Options in and to the
Company, if any, have been cancelled in compliance with all applicable corporate
and securities laws; and

     (m)     all remaining Business Documentation; and

     (n)     all such other documents and instruments as the Purchaser's counsel
may reasonably require.

6.4          Documents to be delivered by the Purchaser prior to the Closing
Date. Not later than two calendar days prior to the Closing Date, and in
addition to the documentation which is required by the agreements and conditions
precedent which are set forth hereinabove, the Purchaser shall also execute and
deliver, or cause to be delivered, to the Company, the Transfer Agent and/or the
Escrow Agent, as applicable, all such other documents, resolutions and
instruments as are necessary, in the opinion of counsel for the Vendor Group and
the Company, acting reasonably, to issue to the Resulting Shareholder Group the
entire Purchase Price Shares free and clear of all liens, charges and
encumbrances, however, subject to the normal U.S. resale provisions applicable
thereto, and in particular including, but not being limited to, the following
materials:

     (a)     a Closing agenda;

(b)     a certified copy of an ordinary resolution of the shareholders of the
Purchaser approving the terms and conditions of this Agreement and the
transactions contemplated hereby and thereby or, in the alternative,
shareholders of the Purchaser holding over 50% of the issued shares of the
Purchaser providing written consent resolutions evidencing their approval to the
terms and conditions of this Agreement and all of the transactions contemplated
thereunder together with certification of any required notice to all
shareholders of the Purchaser of such written consent resolutions;

     (c)     a certified copy of the resolutions of the directors of the
Purchaser providing for the approval of all of the transactions contemplated
hereby and including, without limitation, each of the matters provided for in
paragraph "5.1(e)" hereinabove;

     (d)     share certificates, subject to the normal U.S. resale provisions
applicable thereto, representing all of the Purchase Price Shares issued and
registered in the names of the Resulting Shareholder Group as notified by the
Vendor to the Purchaser prior to Closing in accordance with section "2.2"
hereinabove;

     (e)     all necessary consents and approvals in writing to the completion
of the transactions contemplated herein;

     (f)     a certificate of an officer of the Purchaser, dated as of the
Closing Date, acceptable in form to counsel for the Vendor Group and the
Company, acting reasonably, certifying that the warranties, representations,
covenants and agreements of the Purchaser contained in this Agreement are true
and correct and will be true and correct as of the Closing Date as if made by
the Purchaser on the Closing Date and, in addition, certifying that the issued
and outstanding common shares of the Company immediately subsequent to Closing
is not more than 43,500,000 common shares on a non-fully diluted basis;

(g)     resignations and similar documentation required in order to effect the
proposed Change in Board and officers of the Purchaser together with the
appointment of the proposed President through the Interview Committee
established therefore;

     (h)     a certified copy of the resolutions of the Board of Directors of
the Purchaser accepting the proposed Change in Board and officers of the
Purchaser together with the appointment of the proposed President through the
Interview Committee established therefore;

(i)     confirmation that the Purchaser has raised into trust or otherwise
sufficient funding in order to close the minimum required Private Placement at
Closing on the terms as set forth in paragraph "4.1(bh)" hereinabove; such that
the sum of not less than U.S. $2,000,000 in liquid funds is available to the
Company at Closing from the Private Placement proceeds;

(j)     an opinion of counsel to the Purchaser, dated as at the Closing Date,
and addressed to the Vendor Group, the Company and their counsel, in form and
substance satisfactory to the Vendor Group's and the Company's counsel, acting
reasonably, and including the following:

(i)     the due incorporation, existence and standing of the Purchaser and its
qualification to carry on business;

(ii)     the authorized and issued capital of the Purchaser (relying on a
certificate of the registrar and transfer agent of the Purchaser as to the
number and class of securities issued);

(iii)     all necessary steps and proceedings have been taken in connection with
the execution, delivery and performance of this Agreement, any Formal Agreement
and the transactions contemplated herein and therein, respectively;

(iv)     the due Cancellation of Shares by certain founders of the Purchaser;

(v)     if applicable, the filing by the Purchaser of a Form S-8 registration
statement for a stock option plan in the estimated amount of not less than
2,000,000 common shares of the Purchaser; and

(vi)     the due issuance of the Shares as fully paid and non-assessable and
having been issued in accordance with an applicable registration and prospectus
exemption available under the Securities Act; and

(k)     all such other documents and instruments as the Vendor Group's and the
Company's counsel may reasonably require.

 

 

Article 7

APPOINTMENT OF ESCROW AGENT AND TRANSFER DOCUMENTS

7.1          Appointment of Escrow Agent. The Parties hereto hereby acknowledge
and initially appoint Lang Michener LLP, Lawyers - Patent & Trade Mark Agents,
located at 1500 Royal Centre, 1055 West Georgia Street, Vancouver, British
Columbia, V6E 4N7, counsel for the Purchaser herein, as escrow agent (the
"Escrow Agent") herein, or such other Escrow Agent as may be mutually determined
by the Parties hereto prior to the Subject Removal Date.

7.2          Escrow of Transfer Documents. Subject to and in accordance with the
terms and conditions hereof and the requirements of Articles "2", "5" and "6"
hereinabove, and without in any manner limiting the obligations of each of the
Parties hereto as contained therein and hereinabove, it is hereby acknowledged
and confirmed by the Parties hereto that each of the Parties will execute,
deliver, or cause to be delivered, all such documentation as may be required by
the requirements of Articles "2", "5" and "6" hereinabove (herein, collectively,
the "Transfer Documents") and deposit the same with the Escrow Agent, or with
such other mutually agreeable escrow agent, together with a copy of this
Agreement, there to be held in escrow for release by the Escrow Agent to the
Parties in accordance with the strict terms and provisions of Articles "2", "5"
and "6" hereinabove.

7.3          Resignation of Escrow Agent. The Escrow Agent may resign from its
duties and responsibilities if it gives each of the Parties hereto three
calendar days' written notice in advance. Upon receipt of notice of the Escrow
Agent's intention to resign, the Parties shall, within three calendar days,
select a replacement escrow agent and jointly advise the Escrow Agent in writing
to deliver the Transfer Documents to the replacement escrow agent. If the
Parties fail to agree on a replacement escrow agent within three calendar days
of such notice, the replacement escrow agent shall be selected by a Judge of the
Supreme Court of the Province of British Columbia upon application by any Party
hereto. The Escrow Agent shall continue to be bound by this Agreement until the
replacement escrow agent has been selected and the Escrow Agent receives and
complies with the joint instructions of the Parties to deliver the Transfer
Documents to the replacement escrow agent. The Parties agree to enter into an
escrow agreement substantially in the same form of this Agreement with the
replacement escrow agent.

7.4          Instructions to Escrow Agent. Instructions given to the Escrow
Agent pursuant to this Agreement shall be given by duly authorized signatories
of the respective Parties hereto.

7.5          No other duties or obligations. The Escrow Agent shall have no
duties or obligations other than those specifically set forth in this Article.

7.6          No obligation to take legal action. The Escrow Agent shall not be
obligated to take any legal action hereunder which might, in its judgment,
involve any expense or liability unless it shall have been furnished with a
reasonable indemnity by all of the Parties hereto together with such other third
parties as the Escrow Agent may require in its sole and absolute discretion.

7.7          Not bound to any other agreements. The Escrow Agent is not bound in
any way by any other contract or agreement between the Parties hereto whether or
not it has knowledge thereof or of its terms and conditions and its only duty,
liability and responsibility shall be to hold and deal with the Transfer
Documents as herein directed.

7.8          Notice. The Escrow Agent shall be entitled to assume that any
notice and evidence received by it pursuant to these instructions from anyone
has been duly executed by the Party by whom it purports to have been signed and
that the text of any notice and evidence is accurate and the truth. The Escrow
Agent shall not be obliged to inquire into the sufficiency or authority of the
text or any signatures appearing on such notice or evidence.

7.9          Indemnity. The Parties hereto, jointly and severally, covenant and
agree to indemnify the Escrow Agent and to hold it harmless against any loss,
liability or expense incurred, without negligence or bad faith on its part,
arising out of or in connection with the administration of its duties hereunder
including, without limitation, the costs and expenses of defending itself
against any claim or liability arising therefrom.

7.10          Not required to take any action. In the event of any disagreement
between any of the Parties hereto to these instructions or between them or
either or any of them and any other person, resulting in adverse claims or
demands being made in connection with the Transfer Documents, or in the event
that the Escrow Agent should take action hereunder, it may, at its option,
refuse to comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists,
and in any such event, it shall not be or become liable in any way or to any
person for its failure or refusal to act, and it shall be entitled to continue
so to refrain from acting until:

     (a)     the rights of all Parties shall have been fully and finally
adjudicated by a court of competent jurisdiction; or

     (b)     all differences shall have been adjusted and all doubt resolved by
agreement among all of the interested persons, and it shall have been notified
thereof in writing signed by all such persons.

 

Article 8

DUE DILIGENCE INVESTIGATION

8.1          Due diligence. Each of the Parties hereto shall forthwith conduct
such further due diligence examination of the other Parties hereto as it deems
appropriate.

8.2          Confidentiality. Each Party may in a reasonable manner carry out
such investigations and due diligence as to the other Parties hereto, at all
times subject to the confidentiality provisions of Articles "9" and "10"
hereinbelow, as each Party deems necessary. In that regard the Parties agree
that each shall have full and complete access to the other Parties' books,
records, financial statements and other documents, articles of incorporation,
by-laws, minutes of Board of Directors' meetings and its committees, investment
agreements, material contracts and as well such other documents and materials as
the Parties hereto, or their respective solicitors, may deem reasonable and
necessary to conduct an adequate due diligence investigation of each Party, its
respective operations and financial condition prior to the Closing.

 

Article 9

NON-DISCLOSURE

9.1          Non-disclosure. Subject to the provisions of section "9.3"
hereinbelow, the Parties hereto, for themselves, their officers, directors,
shareholders, consultants, employees and agents, agree that they each will not
disseminate or disclose, or knowingly allow, permit or cause others to
disseminate or disclose to third parties who are not subject to express or
implied covenants of confidentiality, without the other Parties' express written
consent, either: (i) the fact or existence of this Agreement or discussions
and/or negotiations between them involving, inter alia, possible business
transactions; (ii) the possible substance or content of those discussions; (iii)
the possible terms and conditions of any proposed transaction; (iv) any
statements or representations (whether verbal or written) made by either Party
in the course of or in connection with those discussions; or (v) any written
material generated by or on behalf of any Party and such contacts, other than
such disclosure as may be required under applicable securities legislation or
regulations, pursuant to any order of a Court or on a "need to know" basis to
each of the Parties' respective professional advisors.

9.2          Documentation. Any document or written material generated by either
Party hereto in the course of, or in connection with, the due diligence
investigations conducted pursuant to this Agreement shall be marked or deemed
"Confidential" and shall be treated by each Party as a trade secret of the other
Parties. Upon termination of this Agreement prior to Closing all copies of any
and all documents obtained by any Party from any other Party herein, whether or
not marked "Confidential", shall be returned to the other Parties forthwith.

9.3          Public announcements. Notwithstanding the provisions of this
Article, the Parties hereto agree to make such public announcements of this
Agreement promptly upon its execution in accordance with the requirements of
applicable securities legislation and regulations.

 

Article 10

PROPRIETARY INFORMATION AND

ADDITIONAL OBLIGATIONS OF THE PARTIES HERETO

10.1          Confidential Information. Each Party hereto acknowledges that any
and all information which a Party may obtain from, or have disclosed to it,
about the other Parties constitutes valuable trade secrets and proprietary
confidential information of the other Parties (collectively, the "Confidential
Information"). No such Confidential Information shall be published by any Party
without the prior written consent of the other Parties hereto, however, such
consent in respect of the reporting of factual data shall not be unreasonably
withheld, and shall not be withheld in respect of information required to be
publicly disclosed pursuant to applicable securities or corporation laws.
Furthermore, each Party hereto undertakes not to disclose the Confidential
Information to any third party without the prior written approval of the other
Parties and to ensure that any third party to which the Confidential Information
is disclosed shall execute an agreement and undertaking on the same terms as
contained herein.

10.2          Impact of breach of confidentiality. The Parties hereto
acknowledge that the Confidential Information is important to the respective
businesses of each of the Parties and that, in the event of disclosure of the
Confidential Information, except as authorized hereunder, the damage to each of
the Parties hereto, or to either of them, may be irreparable. For the purposes
of the foregoing sections the Parties recognize and hereby agree that a breach
by any of the Parties of any of the covenants therein contained would result in
irreparable harm and significant damage to each of the other Parties that would
not be adequately compensated for by monetary award. Accordingly, the Parties
agree that in the event of any such breach, in addition to being entitled as a
matter of right to apply to a Court of competent equitable jurisdiction for
relief by way of restraining order, injunction, decree or otherwise as may be
appropriate to ensure compliance with the provisions hereof, any such Party will
also be liable to the other Parties, as liquidated damages, for an amount equal
to the amount received and earned by such Party as a result of and with respect
to any such breach. The Parties also acknowledge and agree that if any of the
aforesaid restrictions, activities, obligations or periods are considered by a
Court of competent jurisdiction as being unreasonable, the Parties agree that
said Court shall have authority to limit such restrictions, activities or
periods as the Court deems proper in the circumstances. In addition, the Parties
further acknowledge and agree that all restrictions or obligations in this
Agreement are necessary and fundamental to the protection of the respective
businesses of each of the Parties and are reasonable and valid, and all defenses
to the strict enforcement thereof by either of the Parties are hereby waived by
the other Parties.

10.3          Compliance with applicable laws. The Parties will comply with all
Canadian, U.S. and foreign laws, whether federal, provincial or state,
applicable to their respective duties hereunder and, in addition, hereby
represent and warrant that any information which they may provide to any person
or company hereunder will, to the best of their respective knowledge,
information and belief, be accurate and complete in all material respects and
not misleading, and will not omit to state any fact or information which would
be material to such person or company.

10.4          Opinions, reports and advice of the Vendor Group. The Vendor Group
acknowledges and agrees that all written and oral opinions, reports, advice and
materials provided by the Vendor Group to the Purchaser or the Company in
connection with purchase and sale contemplated herein are intended solely for
the Purchaser's benefit and for the Purchaser's use only, and that any such
written and oral opinions, reports, advice and information are the exclusive
property of the Purchaser. In this regard the Vendor Group covenants and agrees
that the Purchaser may utilize any such opinion, report, advice and materials
for any other purpose whatsoever and, furthermore, may reproduce, disseminate,
quote from and refer to, in whole or in part, at any time and in any manner, any
such opinion, report, advice and materials in the Purchaser's sole and absolute
discretion. The Vendor Group further covenants and agrees that no public
references to the Purchaser, the Company or the Vendor Group, or disclosure of
the Vendor Group's role in respect of the Purchaser or the Company, be made by
the Vendor Group without the prior written consent of the Purchaser in each
specific instance and, furthermore, that any such written opinions, reports,
advice or materials shall, unless otherwise required by the Purchaser, be
provided by the Vendor Group to the Purchaser in a form and with such substance
as would be acceptable for filing with and approval by any Regulatory Authority
having jurisdiction over the affairs of the Purchaser and the Company from time
to time.

 

Article 11

ASSIGNMENT AND VARIATIONS

11.1          Assignment. Save and except as provided herein, no Party hereto
may sell, assign, pledge or mortgage or otherwise encumber all or any part of
its respective interest herein without the prior written consent all of the
other Parties hereto.

11.2          Amendment. This Agreement and any provision thereof may only be
amended in writing and only by duly authorized signatories of each of the
respective Parties hereto.

11.3          Variation in the terms of this Agreement upon review. It is hereby
acknowledged and agreed by each of the Parties hereto that where any variation
in the terms and/or conditions of this Agreement is reasonably required by any
of the Regulatory Authorities as a condition of their respective Regulatory
Approval to any of the terms and conditions of this Agreement, any such
reasonable variation, having first been notified to all Parties, will be deemed
to be accepted by each of the Parties hereto and form part of the terms and
conditions of this Agreement. If any such Party, acting reasonably, deems any
such notified variation unreasonable, that Party may, in its sole and absolute
discretion, and within a period of not greater than 10 calendar days from its
original notification and at its cost, make such further applications or
submissions to the relevant Regulatory Authority as it considers necessary in
order to seek an amendment to any such variation; provided, however, that the
final determination by any such Regulatory Authority to any such application or
submission by such objecting Party will be deemed binding upon such Party who
must then provide notification to all other Parties as provided for hereinabove.

 

Article 12

FORCE MAJEURE

12.1          Events. If any Party hereto is at any time prevented or delayed in
complying with any provisions of this Agreement by reason of strikes, walk-outs,
labour shortages, power shortages, fires, wars, acts of God, earthquakes,
storms, floods, explosions, accidents, protests or demonstrations by
environmental lobbyists or native rights groups, delays in transportation,
breakdown of machinery, inability to obtain necessary materials in the open
market, unavailability of equipment, governmental regulations restricting normal
operations, shipping delays or any other reason or reasons beyond the control of
that Party, then the time limited for the performance by that Party of its
respective obligations hereunder shall be extended by a period of time equal in
length to the period of each such prevention or delay.

12.2          Notice. A Party shall, within seven calendar days, give notice to
the other Parties of each event of force majeure under section "12.1"
hereinabove, and upon cessation of such event shall furnish the other Parties
with notice of that event together with particulars of the number of days by
which the obligations of that Party hereunder have been extended by virtue of
such event of force majeure and all preceding events of force majeure.

 

Article 13

ARBITRATION

13.1          Matters for Arbitration. The Parties hereto agree that all
questions or matters in dispute with respect to this Agreement shall be
submitted to arbitration pursuant to the terms hereof.

13.2          Notice. It shall be a condition precedent to the right of any
Party to submit any matter to arbitration pursuant to the provisions hereof that
any Party intending to refer any matter to arbitration shall have given not less
than 10 calendar days' prior written notice of its intention to do so to the
other Parties together with particulars of the matter in dispute. On the
expiration of such 10 calendar days the Party who gave such notice may proceed
to refer the dispute to arbitration as provided in section "14.3" hereinbelow.

13.3          Appointments. The Party desiring arbitration shall appoint one
arbitrator, and shall notify the other Parties of such appointment, and the
other Parties shall, within 10 calendar days after receiving such notice,
appoint an arbitrator, and the two arbitrators so named, before proceeding to
act, shall, within 10 calendar days of the appointment of the last appointed
arbitrator, unanimously agree on the appointment of a third arbitrator, to act
with them and be chairman of the arbitration herein provided for. If the other
Parties shall fail to appoint an arbitrator within 10 calendar days after
receiving notice of the appointment of the first arbitrator, or if the two
arbitrators appointed by the Parties shall be unable to agree on the appointment
of the chairman, the chairman shall be appointed under the provisions of the
Arbitration Act. Except as specifically otherwise provided in this section, the
arbitration herein provided for shall be conducted in accordance with such
Arbitration Act. The chairman, or in the case where only one arbitrator is
appointed, the single arbitrator, shall fix a time and place in Vancouver,
British Columbia, for the purpose of hearing the evidence and representations of
the Parties, and he shall preside over the arbitration and determine all
questions of procedure not provided for under such Arbitration Act or this
section. After hearing any evidence and representations that the Parties may
submit, the single arbitrator, or the arbitrators, as the case may be, shall
make an award and reduce the same to writing, and deliver one copy thereof to
each of the Parties. The expense of the arbitration shall be paid as specified
in the award.

13.4          Award. The Parties hereto agree that the award of a majority of
the arbitrators, or in the case of a single arbitrator, of such arbitrator,
shall be final and binding upon each of them.

 

Article 14

DEFAULT AND TERMINATION

14.1          Default. The Parties hereto agree that if any Party hereto is in
default with respect to any of the provisions of this Agreement (herein called
the "Defaulting Party"), the non-defaulting Parties (herein called,
collectively, the "Non-Defaulting Party") shall give notice to the Defaulting
Party designating such default, and within 10 calendar days after its receipt of
such notice, the Defaulting Party shall either:

(a)     cure such default, or commence proceedings to cure such default and
prosecute the same to completion without undue delay; or

(b)     give the Non-Defaulting Party notice that it denies that such default
has occurred and that it is submitting the question to arbitration as herein
provided.

14.2          Arbitration. If arbitration is sought, a Party shall not be deemed
in default until the matter shall have been determined finally by appropriate
arbitration under the provisions of Article "13" hereinabove.

14.3          Curing the Default. If:

(a)     the default is not so cured or the Defaulting Party does not commence or
diligently proceed to cure the default; or

(b)     arbitration is not so sought; or

(c)     the Defaulting Party is found in arbitration proceedings to be in
default, and fails to cure it within five calendar days after the rendering of
the arbitration award,

the Non-Defaulting Party may, by written notice given to the Defaulting Party at
any time while the default continues, terminate the interest of the Defaulting
Party in and to this Agreement.

14.4          Termination. In addition to the foregoing it is hereby
acknowledged and agreed by the Parties hereto that this Agreement will be
immediately terminated, unless otherwise extended in accordance with section
"6.2" hereinabove, in the event that:

     (a)     the entire Ratification is not received within one business day of
the Execution Date;

(b)     either of the Parties hereto has not either satisfied or waived each of
their respective conditions precedent prior to the Subject Removal Date in
accordance with the provisions of Article "5" hereinabove;

(c)     either of the Parties hereto has failed to deliver or caused to be
delivered any of their respective documents required to be delivered by Articles
"5", "6" and "7" hereinabove prior to each of the Subject Removal Date and the
Closing Date in accordance with the provisions of Articles "5", "6" and "7";

(d)     the final Closing has not occurred on or before October 3, 2005 in
accordance with section "6.2" hereinabove; or

(e)     by agreement in writing by each of the Parties hereto;

and in such event this Agreement will be terminated and be of no further force
and effect other than the obligations under Articles "9" and "10" hereinabove.

 

Article 15

INDEMNIFICATION AND LEGAL PROCEEDINGS

15.1          Indemnification. The Parties hereto agree to indemnify and save
harmless the other Parties hereto and including, where applicable, their
respective affiliates, directors, officers, employees and agents (each such
party being an "Indemnified Party") harmless from and against any and all
losses, claims, actions, suits, proceedings, damages, liabilities or expenses of
whatever nature or kind, including any investigation expenses incurred by any
Indemnified Party, to which an Indemnified Party may become subject by reason of
the terms and conditions of this Agreement.

15.2          No indemnification. This indemnity will not apply in respect of an
Indemnified Party in the event and to the extent that a court of competent
jurisdiction in a final judgment shall determine that the Indemnified Party was
grossly negligent or guilty of willful misconduct.

15.3          Claim of indemnification. The Parties hereto agree to waive any
right they might have of first requiring the Indemnified Party to proceed
against or enforce any other right, power, remedy, security or claim payment
from any other person before claiming this indemnity.

15.4          Notice of claim. In case any action is brought against an
Indemnified Party in respect of which indemnity may be sought against any of the
Parties hereto, the Indemnified Party will give the relevant Party hereto prompt
written notice of any such action of which the Indemnified Party has knowledge
and such Party will undertake the investigation and defense thereof on behalf of
the Indemnified Party, including the prompt Consulting of counsel acceptable to
the Indemnified Party affected and the payment of all expenses. Failure by the
Indemnified Party to so notify shall not relieve any Party hereto of such
Party's obligation of indemnification hereunder unless (and only to the extent
that) such failure results in a forfeiture by any Party hereto of substantive
rights or defenses.

15.5          Settlement. No admission of liability and no settlement of any
action shall be made without the consent of each of the Parties hereto and the
consent of the Indemnified Party affected, such consent not to be unreasonable
withheld.

15.6          Legal proceedings. Notwithstanding that the relevant Party hereto
will undertake the investigation and defense of any action, an Indemnified Party
will have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
will be at the expense of the Indemnified Party unless:

(a)     such counsel has been authorized by the relevant Party hereto;

(b)     the relevant Party hereto has not assumed the defense of the action
within a reasonable period of time after receiving notice of the action;

(c)     the named parties to any such action include any Party hereto and the
Indemnified Party shall have been advised by counsel that there may be a
conflict of interest between any Party hereto and the Indemnified Party; or

(d)     there are one or more legal defenses available to the Indemnified Party
which are different from or in addition to those available to any Party hereto.

15.7          Contribution. If for any reason other than the gross negligence or
bad faith of the Indemnified Party being the primary cause of the loss claim,
damage, liability, cost or expense, the foregoing indemnification is unavailable
to the Indemnified Party or insufficient to hold them harmless, the relevant
Party hereto shall contribute to the amount paid or payable by the Indemnified
Party as a result of any and all such losses, claim, damages or liabilities in
such proportion as is appropriate to reflect not only the relative benefits
received by any Party hereto on the one hand and the Indemnified Party on the
other, but also the relative fault of the Parties and other equitable
considerations which may be relevant. Notwithstanding the foregoing, the
relevant Party hereto shall in any event contribute to the amount paid or
payable by the Indemnified Party, as a result of the loss, claim, damage,
liability, cost or expense (other than a loss, claim, damage, liability, cost or
expenses, the primary cause of which is the gross negligence or bad faith of the
Indemnified Party), any excess of such amount over the amount of the fees
actually received by the Indemnified Party hereunder.

 

Article 16

NOTICE

16.1          Notice. Each notice, demand or other communication required or
permitted to be given under this Agreement shall be in writing and shall be sent
by prepaid registered mail deposited in a post office addressed to the Party
entitled to receive the same, or delivered to such Party, at the address for
such Party specified above. The date of receipt of such notice, demand or other
communication shall be the date of delivery thereof if delivered, or, if given
by registered mail as aforesaid, shall be deemed conclusively to be the third
calendar day after the same shall have been so mailed, or 15 calendar days in
the case of an addressee with an address for service in a country other than a
country in which the Party giving the notice, demand or other communication
resides, except in the case of interruption of postal services for any reason
whatsoever, in which case the date of receipt shall be the date on which the
notice, demand or other communication is actually received by the addressee.

16.2          Change of address. Either Party may at any time and from time to
time notify the other Parties in writing of a change of address and the new
address to which notice shall be given to it thereafter until further change.

 

Article 17

GENERAL PROVISIONS

17.1          Entire agreement. This Agreement constitutes the entire agreement
to date between the Parties hereto and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, between the
Parties hereto with respect to the subject matter of this Agreement and
including, without limitation, the Agreement In Principle as between the
Purchaser and the Company.

17.2          Enurement. This Agreement will enure to the benefit of and will be
binding upon the Parties hereto, their respective heirs, executors,
administrators and assigns.

17.3          Schedules. The Schedules to this Agreement are hereby incorporated
by reference into this Agreement in its entirety.

17.4          Time of the essence. Time will be of the essence of this
Agreement.

17.5          Representation and costs. It is hereby acknowledged by each of the
Parties hereto that Lang Michener LLP, Lawyers - Patent & Trade Mark Agents, act
solely for the Purchaser, and, correspondingly, that each of the Vendor Group
and the Company have been required by each of Lang Michener LLP and the
Purchaser to obtain independent legal advice with respect to their respective
reviews and execution of this Agreement. In addition, it is hereby further
acknowledged and agreed by the Parties hereto that Lang Michener LLP, and
certain or all of its principal owners or associates, from time to time, may
have both an economic or shareholding interest in and to the Purchaser and/or a
fiduciary duty to the same arising from either a directorship, officership or
similar relationship arising out of the request of the Purchaser for certain of
such persons to act in a similar capacity while acting for the Purchaser as
counsel. Correspondingly, and even where, as a result of this Agreement, the
consent of each Party hereto to the role and capacity of Lang Michener LLP, and
its principal owners and associates, as the case may be, is deemed to have been
received, where any conflict or perceived conflict may arise, or be seen to
arise, as a result of any such capacity or representation, each Party hereto
acknowledges and agrees to, once more, obtain independent legal advice in
respect of any such conflict or perceived conflict and, consequent thereon, Lang
Michener LLP, together with any such principal owners or associates, as the case
may be, shall be at liberty at any time to resign any such position if it or any
Party hereto is in any way affected or uncomfortable with any such capacity or
representation. Each Party to this Agreement will also bear and pay its own
costs, legal and otherwise, in connection with its respective preparation,
review and execution of this Agreement and, in particular, that the costs
involved in the preparation of this Agreement, and all documentation necessarily
incidental thereto, by Lang Michener LLP, shall be at the cost of the Company.

17.6          Applicable law. The situs of this Agreement is Vancouver, British
Columbia, and for all purposes this Agreement will be governed exclusively by
and construed and enforced in accordance with the laws and Courts prevailing in
the Province of British Columbia.

17.7          Further assurances. The Parties hereto hereby, jointly and
severally, covenant and agree to forthwith, upon request, execute and deliver,
or cause to be executed and delivered, such further and other deeds, documents,
assurances and instructions as may be required by the Parties hereto or their
respective counsel in order to carry out the true nature and intent of this
Agreement.

17.8          Invalid provisions. If any provision of this Agreement is at any
time unenforceable or invalid for any reason it will be severable from the
remainder of this Agreement and, in its application at that time, this Agreement
will be construed as though such provision was not contained herein and the
remainder will continue in full force and effect and be construed as if this
Agreement had been executed without the invalid or unenforceable provision.

17.9          Currency. Unless otherwise stipulated, all payments required to be
made pursuant to the provisions of this Agreement and all money amount
references contained herein are in lawful currency of the United States.

17.10          Severability and construction. Each Article, section, paragraph,
term and provision of this Agreement, and any portion thereof, shall be
considered severable, and if, for any reason, any portion of this Agreement is
determined to be invalid, contrary to or in conflict with any applicable present
or future law, rule or regulation in a final unappealable ruling issued by any
court, agency or tribunal with valid jurisdiction in a proceeding to any of the
Parties hereto is a party, that ruling shall not impair the operation of, or
have any other effect upon, such other portions of this Agreement as may remain
otherwise intelligible (all of which shall remain binding on the Parties and
continue to be given full force and agreement as of the date upon which the
ruling becomes final).

17.11          Captions. The captions, section numbers, Article numbers and
Schedule numbers appearing in this Agreement are inserted for convenience of
reference only and shall in no way define, limit, construe or describe the scope
or intent of this Agreement nor in any way affect this Agreement.

17.12          Counterparts. This Agreement may be signed by the Parties hereto
in as many counterparts as may be necessary and, if required, by facsimile, each
of which so signed being deemed to be an original, and such counterparts
together shall constitute one and the same instrument and, notwithstanding the
date of execution, will be deemed to bear the Execution Date as set forth on the
front page of this Agreement.

17.13          No partnership or agency. The Parties hereto have not created a
partnership and nothing contained in this Agreement shall in any manner
whatsoever constitute any Party the partner, agent or legal representative of
any other Party, nor create any fiduciary relationship between them for any
purpose whatsoever. No Party shall have any authority to act for, or to assume
any obligations or responsibility on behalf of, any other party except as may
be, from time to time, agreed upon in writing between the Parties or as
otherwise expressly provided.

17.14          Consents and waivers. No consent or waiver expressed or implied
by either Party hereto in respect of any breach or default by any other Party in
the performance by such other of its obligations hereunder shall:

     (a)     be valid unless it is in writing and stated to be a consent or
waiver pursuant to this section;

     (b)     be relied upon as a consent to or waiver of any other breach or
default of the same or any other obligation;

     (c)     constitute a general waiver under this Agreement; or

     (d)     eliminate or modify the need for a specific consent or waiver
pursuant to this section in any other or subsequent instance.

 

IN WITNESS WHEREOF

each of the Parties hereto has hereunto set its seal by the hand of its duly
authorized signatory as of the Execution Date as set forth on the front page of
this Agreement.

The COMMON SEAL of
POWER AIR DYNAMICS LIMITED,
the sole Vendor herein, was hereunto
in the presence of:

                    s/s Stephen Williams
________________________________
Authorized Signatory

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Number of Purchased Shares: 1,000

(C/S)

The COMMON SEAL of
POWER AIR TECH, INC.,
the Company herein, was hereunto affixed
in the presence of:

                    s/s H. Dean Haley
________________________________
Authorized Signatory

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(C/S)

The COMMON SEAL of
HDH GROUP, LLC,
HDH Group herein, was hereunto affixed
in the presence of:

                    s/s H. Dean Haley
________________________________
Authorized Signatory

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(C/S)

SIGNED, SEALED and DELIVERED by
H. DEAN HALEY,
Mr. Haley herein, in the presence of:

________________________________
Witness Signature

________________________________
Witness Address

________________________________
Witness Name and Occupation

 

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         s/s H. Dean Haley           
H. DEAN HALEY

The COMMON SEAL of
FORTUNE PARTNERS, INC.,
the Purchaser herein, was hereunto affixed
in the presence of:

                    s/s Paul D. Brock
________________________________
Authorized Signatory

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(C/S)

 

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