Exhibit 10.2


 


 


 


 


 


 


 


AMENDED AND RESTATED STOCK
PURCHASE AGREEMENT


by
and among


TRADESTAR SERVICES, INC.,


1297181
ALBERTA LTD.,


383210 ALBERTA LTD.,


DAVE HUNTER RESOURCES INC.,


BARRY AHEARN


and


DAVE HUNTER


Dated as of
March 2, 2007
















 


	
  ARTICLE I DEFINITIONS

  	
  2

  
	
   

  	
   

  
	
  ARTICLE II PURCHASE AND SALE OF THE STOCK;
  AMENDMENT AND RESTATEMENT OF ORIGINAL PURCHASE AGREEMENT

  	
  

  8

  
	
   

  	
  2.1

  	
  Transfer of Stock by Sellers

  	
  8

  
	
   

  	
  2.2

  	
  Purchase Price

  	
  8

  
	
   

  	
  2.3

  	
  Payment of Management Bonus in respect of Management
  Services Previously Rendered

  	
  8

  
	
   

  	
  2.4

  	
  Payment of Purchase Price

  	
  8

  
	
   

  	
  2.5

  	
  The Closing

  	
  9

  
	
   

  	
  2.6

  	
  Closing Deliveries by the Shareholders and the
  Sellers

  	
  9

  
	
   

  	
  2.7

  	
  Closing Deliveries by the Parent and the Purchaser

  	
  11

  
	
   

  	
  2.8

  	
  Amendment and Restatement of the Original Purchase
  Agreement

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF
  THE SELLERS AND THE SHAREHOLDERS

  	
  11

  
	
   

  	
  3.1

  	
  Organization and Qualification of the Company

  	
  12

  
	
   

  	
  3.2

  	
  Capitalization

  	
  12

  
	
   

  	
  3.3

  	
  Stock Ownership by Sellers

  	
  13

  
	
   

  	
  3.4

  	
  Authorization; Enforceability

  	
  13

  
	
   

  	
  3.5

  	
  No Conflict; Governmental Consents

  	
  13

  
	
   

  	
  3.6

  	
  Financial Statements and Undisclosed Liabilities

  	
  13

  
	
   

  	
  3.7

  	
  Labor Matters

  	
  14

  
	
   

  	
  3.8

  	
  Absence of Certain Changes or Events

  	
  14

  
	
   

  	
  3.9

  	
  Taxes

  	
  15

  
	
   

  	
  3.10

  	
  Material Contracts

  	
  17

  
	
   

  	
  3.11

  	
  Personal Property; Title to Property; Leases

  	
  19

  
	
   

  	
  3.12

  	
  Condition and Sufficiency of Tangible Assets

  	
  19

  
	
   

  	
  3.13

  	
  Licenses, Permits and Authorizations

  	
  20

  
	
   

  	
  3.14

  	
  Intellectual Property

  	
  20

  
	
   

  	
  3.15

  	
  Litigation; Compliance with Laws

  	
  21

  
	
   

  	
  3.16

  	
  Insurance

  	
  21

  
	
   

  	
  3.17

  	
  Employee Benefit Plans

  	
  22

  
	
   

  	
  3.18

  	
  Transactions with Affiliates

  	
  22

  
	
   

  	
  3.19

  	
  No Brokers or Finders

  	
  23

  
	
   

  	
  3.20

  	
  Accuracy of Information

  	
  23

  
	
   

  	
  3.21

  	
  Receivables; Payables

  	
  23

  
	
   

  	
  3.22

  	
  Environmental

  	
  23

  
	
   

  	
  3.23

  	
  Restrictions on Business Activities

  	
  24

  
	
   

  	
  3.24

  	
  Internal Controls

  	
  24

  
	
   

  	
  3.25

  	
  Absence of Certain Payments

  	
  25

  
	
   

  	
  3.26

  	
  Bank Accounts

  	
  25

  
	
   

  	
  3.27

  	
  Sellers’ Investment Representations

  	
  25

  



 













 


	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER AND THE PARENT

  	
  25

  
	
   

  	
  4.1

  	
  Organization and Authority

  	
  25

  
	
   

  	
  4.2

  	
  No Conflict; Governmental Consents

  	
  25

  
	
   

  	
  4.3

  	
  Financial Statements

  	
  26

  
	
   

  	
  4.4

  	
  No Brokers or Finders

  	
  26

  
	
   

  	
  4.5

  	
  Parent SEC Documents

  	
  26

  
	
   

  	
  4.6

  	
  Authorization; Enforceability

  	
  27

  
	
   

  	
  4.7

  	
  Absence of Certain Changes or Events

  	
  27

  
	
   

  	
  4.8

  	
  Taxes

  	
  28

  
	
   

  	
  4.9

  	
  Intellectual Property

  	
  28

  
	
   

  	
  4.10

  	
  Litigation; Compliance with Laws

  	
  29

  
	
   

  	
  4.11

  	
  Insurance

  	
  29

  
	
   

  	
  4.12

  	
  Restrictions on Business Activities

  	
  30

  
	
   

  	
  4.13

  	
  Internal Controls

  	
  30

  
	
   

  	
  4.14

  	
  U.S. Environmental Laws

  	
  30

  
	
   

  	
  4.15

  	
  Benefit Plans

  	
  31

  
	
   

  	
  4.16

  	
  Accuracy of Information

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE V COVENANTS OF THE SELLERS AND THE
  SHAREHOLDERS PRIOR TO CLOSING DATE

  	
  31

  
	
   

  	
  5.1

  	
  Access and Investigation

  	
  31

  
	
   

  	
  5.2

  	
  Operation of the Business of the Company prior to
  the Closing Date

  	
  31

  
	
   

  	
  5.3

  	
  Required Approvals

  	
  32

  
	
   

  	
  5.4

  	
  Notification

  	
  33

  
	
   

  	
  5.5

  	
  No Negotiations

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI COVENANTS OF THE PARENT AND THE
  PURCHASER PRIOR TO THE CLOSING DATE

  	
  33

  
	
   

  	
   

  
	
  ARTICLE VII CONDITIONS PRECEDENT

  	
  34

  
	
   

  	
  7.1

  	
  Conditions Precedent to the Parent’s and the
  Purchaser’s Obligation to Close

  	
  34

  
	
   

  	
  7.2

  	
  Conditions Precedent to the Sellers’ and the
  Shareholders’ Obligation to Close

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII TERMINATION

  	
  36

  
	
   

  	
  8.1

  	
  Termination Events

  	
  36

  
	
   

  	
  8.2

  	
  Effect of Termination

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX TAX MATTERS

  	
  37

  
	
   

  	
  9.1

  	
  Liability for Transaction Taxes

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE X INDEMNIFICATION

  	
  37

  
	
   

  	
  10.1

  	
  Obligations of Sellers and Shareholders

  	
  37

  
	
   

  	
  10.2

  	
  Obligations of the Parent and the Purchaser

  	
  38

  



 



 iii
 









 


	
   

  	
  10.3

  	
  Procedure

  	
  38

  
	
   

  	
  10.4

  	
  Survival

  	
  39

  
	
   

  	
  10.5

  	
  Notice by Indemnifying Party

  	
  39

  
	
   

  	
  10.6

  	
  Indemnity Threshold and Cap

  	
  39

  
	
   

  	
  10.7

  	
  Exclusive Remedy

  	
  40

  
	
   

  	
  10.8

  	
  Set-Off

  	
  40

  
	
   

  	
  10.9

  	
  Mitigation

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  40

  
	
   

  	
  11.1

  	
  Requirement for Personal Information

  	
  40

  
	
   

  	
  11.2

  	
  Confidentiality Obligation

  	
  40

  
	
   

  	
  11.3

  	
  Pre-Closing Use of Personal Information

  	
  41

  
	
   

  	
  11.4

  	
  Post-Closing Use of Disclosed Personal
  Information

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII GENERAL

  	
  41

  
	
   

  	
  12.1

  	
  Amendments; Waivers

  	
  41

  
	
   

  	
  12.2

  	
  Schedules; Exhibits; Integration

  	
  41

  
	
   

  	
  12.3

  	
  Governing Law

  	
  41

  
	
   

  	
  12.4

  	
  No Assignment

  	
  41

  
	
   

  	
  12.5

  	
  Headings

  	
  41

  
	
   

  	
  12.6

  	
  Counterparts

  	
  42

  
	
   

  	
  12.7

  	
  Publicity and Reports

  	
  42

  
	
   

  	
  12.8

  	
  Parties in Interest

  	
  42

  
	
   

  	
  12.9

  	
  Notices

  	
  42

  
	
   

  	
  12.10

  	
  Remedies; Waiver

  	
  43

  
	
   

  	
  12.11

  	
  Attorney’s Fees

  	
  43

  
	
   

  	
  12.12

  	
  Severability

  	
  43

  
	
   

  	
  12.13

  	
  Entire Agreement

  	
  44

  
	
   

  	
  12.14

  	
  Time is of the
  Essence

  	
  44

  
	
   

  	
  12.15

  	
  Arbitration

  	
  44

  
	
   

  	
  12.16

  	
  Expenses

  	
  44

  
	
   

  	
  12.17

  	
  Further
  Assurances

  	
  44

  
	
   

  	
  12.18

  	
  Confidentiality

  	
  44

  



 



 iv















AMENDED AND RESTATED STOCK
PURCHASE AGREEMENT


This Amended and Restated Stock Purchase Agreement is entered into as
of March 2, 2007 by and among (i) TRADESTAR SERVICES, INC., a Nevada
corporation (the “Parent”);
(ii) 1297181 ALBERTA LTD., a
corporation organized and existing under the laws of Alberta, Canada and a
wholly-owned subsidiary of the Parent (the “Purchaser”);
(iii) 383210 ALBERTA LTD., a corporation organized and existing under the laws
of Alberta, Canada;  and  DAVE HUNTER RESOURCES INC., a corporation organized and
existing under the laws of Alberta, Canada, each a holder of capital stock of
the Company (each individually a “Seller” and
collectively, the “Sellers”);
and (iv) BARRY AHEARN and  DAVE HUNTER,
residents of Sylvan Lake and Ardrossan, Canada, respectively, and holders of
all of the issued and outstanding capital stock of the Sellers (each
individually a “Shareholder” and collectively,
the “Shareholders”).  The Parent, the Purchaser, the Sellers and
the Shareholders are each a “party” and together
are “parties” to this Agreement.


R E C I T A
L S


WHEREAS, the Parent, the Sellers and the Shareholders are parties to
that certain Stock Purchase Agreement, dated as of February 2, 2007, as amended
by that certain Letter Agreement, dated February 28, 2007 (as amended, the “Original Purchase Agreement”);


WHEREAS, pursuant to Section 12.4 of the Original Purchase
Agreement, the Parent is entitled to assign the Original Purchase Agreement or
any or all of its rights and/or obligations thereunder to a wholly-owned
subsidiary, provided that such subsidiary agrees to become jointly and
severally liable with the Parent, as a principal and not as a surety, with
respect to all of the obligations of the Parent under the Original Purchase
Agreement;


WHEREAS, the Purchaser desires to become a party to this Agreement and
the Parent desires to assign the Original Purchase Agreement and its rights and
obligations thereunder to the Purchaser;


WHEREAS, the parties desire to amend and restate the Original Purchase
Agreement in its entirety as set forth herein to reflect the joinder of the
Purchaser to this Agreement and other agreed upon changes to the Original
Purchase Agreement;


WHEREAS, as of the date hereof, the Sellers own 100% of the Stock (as
defined below) of Decca Consulting Ltd., a corporation organized and existing
under the laws of Alberta, Canada (the “Company”);


WHEREAS, the Sellers desire to sell, and the Purchaser desires to buy,
all of the Stock for the consideration described herein; and


WHEREAS, the parties desire to make certain
representations, warranties, covenants and agreements in connection with the
sale of all of the Stock and also to prescribe various conditions to such sale.


A G R E E M E N T


NOW,
THEREFORE, in consideration of the mutual promises contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound the parties agree as follows:













ARTICLE I


DEFINITIONS


 


For
all purposes of this Agreement, except as otherwise expressly provided,


(a)           the terms defined in this
Article I have the meanings assigned to them in this Article I and
include the plural as well as the singular,


(b)           all accounting terms not otherwise
defined herein have the meanings assigned under GAAP,


(c)           all references in this Agreement to
designated “Articles,” “Sections” and other subdivisions are to the designated
Articles, Sections and other subdivisions of the body of this Agreement,


(d)           pronouns of either gender or neuter
shall include, as appropriate, the other pronoun forms, and


(e)
          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.


As
used in this Agreement and the Disclosure Schedules delivered pursuant to this
Agreement, the following definitions shall apply:


“2006
Payables” means the trade accounts payable and outstanding
bank borrowings from Toronto-Dominion of the Company as of the close of
business on December 31, 2006 as reflected on the December 2006 Balance Sheet.


“2006
Receivables” means the trade accounts receivable of the Company
as of the close of business on December 31, 2006 as reflected on the December
2006 Balance Sheet.


“AAA
Rules” has the meaning set forth in Section
12.15.


“Action” means any action,
complaint, claim, charge, petition, investigation, suit or other proceeding,
whether civil or criminal, in law or in equity, or before any mediator,
arbitrator or Governmental Entity.


“Affiliate” means with respect to any
specified Person, any other Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such specified Person.


“Agreement” means this Amended and
Restated Stock Purchase Agreement, as amended or supplemented, together with
all schedules attached or incorporated by reference.


“Approval” means any approval,
authorization, consent, qualification or registration, or any waiver of any of
the foregoing, required to be obtained from, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental
Entity or any other Person.


“Assets” has the
meaning set forth in Section 3.11(c).


“Benefit Plans” has the meaning set forth
in Section 3.17.



 2
 









“Business” means the business of the
Company, and shall be deemed to include any of the following incidents of such
business: income, cash flow, operations, condition (financial or other),
assets, anticipated revenues, prospects, liabilities and personnel.


“Business
Day” means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by law to be closed in the City of Houston,
Texas.


“Cash
Portion of the Purchase Price” has the meaning set forth
in Section 2.4(x).


“Claim” has the
meaning set forth in Section 10.3.


“Claim
Notice” has the meaning set forth in Section 10.3.


“Closing” has the meaning set forth
in Section 2.5.


“Closing
Date” means the date of the Closing as set forth in Section 2.5.


“Company” has the
meaning set forth on the Recitals to this Agreement.


“Company
Financial Statements” means the unaudited balance sheets of the
Company as of May 31, 2005 and 2006, and December 31, 2006 (the “December 2006 Balance Sheet”) and the related statements of
income, changes in stockholders’ equity, and cash flow for each of the
foregoing fiscal years ended May 31, 2006 and the seven (7) month period
ended December 31, 2006 then ended, together with the notice to reader letter pertaining to the financial statements
for the years ended May 31, 2005 and 2006.


“Consultant”
or “Consultants” means any individual
who is a consultant of the Company or immediately prior to the Closing Date.


“Contract” means any
agreement, contract, arrangement, bond, loan commitment, franchise, indemnity,
indenture, instrument, lease, license or understanding, whether or not in
writing.


“Decca
Engineering” means Decca Engineering Ltd., a corporation
organized and existing under the laws of Alberta, Canada.


“December 2006 Balance Sheet” has the meaning given in
the definition of Company Financial Statements.


“DE
Purchase Agreement” means that certain Agreement,
dated June 1, 2005, by and between the Company and Decca Engineering.


“Disclosed Personal Information” means any Personal Information
intentionally or unintentionally disclosed by the Company, the Sellers or the
Shareholders to the Parent or the Purchaser or their respective agents,
contractors or advisors in connection with the transactions contemplated
herein.


“Encumbrance” means any
claim, charge, easement, encumbrance, lease, covenant, security interest, lien,
option, pledge, rights of others, or restriction (whether on voting, sale,
transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise, except for any restrictions on
transfer generally arising under any applicable federal, or state or provincial
securities law.


“Environmental Defect” shall mean a
condition with respect to the Assets that constitutes a violation of Environmental
Law; provided that an Environmental Defect shall not be deemed to exist for 



 3
 









the purposes of this
Agreement unless the estimated Lowest Cost Response for remedying such
Environmental Defect exceeds $25,000.


“Environmental
Laws” means all applicable statutes, regulations, ordinances, by-laws,
and codes and all international treaties and agreements, now in existence in
Canada (whether federal, provincial or municipal) relating to the protection
and preservation of the environment, occupational health and safety, product
safety, product liability or Hazardous Substances, including, without
limitation, the Environmental Protection and Enhancement Act
(Alberta), and the Canadian Environmental
Protection Act.


“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and the related
regulations and published interpretations.


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder.


“GAAP” means
generally accepted accounting principles in the United States, as in effect
from time to time.


“Governmental
Entity” means any government or any agency, bureau, board, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state, provincial, municipal or local,
domestic or foreign.


“Hazardous
Substance” means, collectively, any contaminant (as defined in
the Environmental Protection and Enhancement Act
(Alberta)), toxic substance (as defined in the Canadian
Environmental Protection Act), dangerous goods (as defined in the Transportation of Dangerous Goods Act (Canada) or pollutant
or any other substance that when released to the natural environment is likely
to cause, at some immediate or future time, material harm or degradation to the
natural environment or material risk to human health.


“Indemnified
Party” has the meaning set forth in Section 10.3.


“Indemnifying
Party” has the meaning set forth in Section 10.3.


“Intellectual
Property” has the meaning set forth in Section 3.14(a).


“IRS” means the US
Internal Revenue Service.


“Knowledge of the Parent and the Purchaser” or “Known to the Parent and the
Purchaser” or any permutation thereof shall
mean, with respect to (i) the Parent, the actual knowledge (without
investigation) of any of the directors of the Parent or the Chief Executive
Officer of the Parent; and (ii) the Purchaser, the actual knowledge (without
investigation) of any of the directors of the Purchaser (excluding Stuart M.
Olley) or the Chief Executive Officer of the Purchaser


“Knowledge of the Sellers and the Shareholders” or “Known to the Sellers and the Shareholders” or any
permutation thereof shall mean, with respect to the Sellers and the
Shareholders, the actual knowledge (without investigation) of any of officers,
directors or key employees of the Sellers or the Shareholders.


“Law” means any constitutional provision, statute
or other law, rule, regulation, or interpretation of any Governmental Entity
and any Order.



 4
 









“Leased Real Property” has the meaning set forth in Section
3.11(a).


“Loss” means any action, cost, damage,
disbursement, expense, liability, loss, deficiency, diminution in value,
obligation, penalty or settlement of any kind or nature, whether foreseeable or
unforeseeable, including but not limited to, interest or other carrying costs,
penalties, legal (on a solicitor and client basis), accounting and other
professional fees and expenses incurred in the investigation, collection,
prosecution and defense of claims and amounts paid in settlement, that may be
imposed on or otherwise incurred or suffered by the specified Person.


“Lowest Cost Response” shall mean
the response required or allowed under Environmental Laws that addresses the
condition present at the lowest cost (considered as a whole taking into
consideration any material negative impact such response may have on the
operations of the relevant assets and any potential material additional costs
or liabilities that may likely arise a result of such response) as compared to
any other response that is consistent with Environmental Laws.


“Management
Bonus” has the meaning set forth in Section 2.3.


“Material Adverse Effect” means, with respect to any Person, (i) a material adverse effect
on the condition (financial or otherwise), business, prospects, assets,
liabilities, or results of operations of such Person in an amount individually
or in the aggregate equal to or greater than $100,000; or (ii) a material
adverse effect on the ability of such Person to consummate the transactions
contemplated by this Agreement.


“Material
Contract” means any Contract deemed material by Section 3.10.


“Net
Accounts Receivable Amount” means an amount equal to
the sum (i) all of the 2006 Receivables collected by the Company from the
period of January 1, 2007 until the second (2nd) anniversary of the Closing Date minus (ii) all of the 2006 Payables
paid by the Company from the period of January 1, 2007 until the second (2nd) anniversary of the Closing
Date and minus (iii) an amount equal to the
Canadian income tax liability attributable to the period from June 1, 2006
through December 31, 2006 that is to be included in the income tax return filed
by the Company for the period ending on the Closing Date, as calculated by the
auditors of the Parent, acting reasonably.


“Note” and “Notes” has the meaning set forth in Section 2.4(y).


“Note Portion of the Purchase Price” has the meaning set
forth in Section 2.4(y).


“Order”
means any decree, injunction, judgment, order, ruling, assessment or
writ of any Governmental Entity.


“Original
Purchase Agreement” has the meaning set forth in the Recitals to this
Agreement.


“Parent” has the meaning set forth in opening
paragraph to this Agreement.


“Parent Financial Statements” means the (a) audited consolidated balance
sheets of the Parent as of December 31, 2003, 2004 and 2005, and the related
audited consolidated statements of income, changes in stockholders’ equity, and
cash flow for each of the fiscal years then ended, together with the auditor’s
report pertaining to such financial statements of Gordon Hughes & Banks,
independent certified public accountants; and (b) unaudited consolidated
balance sheet of the Parent as of September 30, 2006 



 5
 









(the “Parent
Interim Balance Sheet”) and the related unaudited consolidated
statement of income for the nine (9) months then ended.


“Parent Interim Balance Sheet” has the meaning set forth in the definition
of Parent Financial Statements.


“Parent Intellectual Property” has the meaning set forth in Section
4.9(a).


“Parent/Purchaser Indemnified
Party” has the
meaning set forth in Section 10.1.


“Parent/Purchaser Indemnifying
Party” and “Parent/Purchaser Indemnifying Parties” has the meaning set
forth in Section 10.2.


“Parent/Purchaser’s Advisors” has the meaning set forth in Section 5.1.


“Parent SEC Documents” has the meaning set forth in Section
4.5(a).


“Parent Shares” mean shares of common stock, par value
$0.001 per share, of the Parent.


“Permit” means any license, permit, franchise,
certificate of authority, or order, or any waiver of the foregoing, required to
be issued by any Governmental Entity.


“Permitted Encumbrances” means (i) Encumbrances for Taxes, assessments and governmental
charges not yet due and payable or the validity of which are being contested in
good faith by appropriate proceedings; (ii) statutory liens arising in the
ordinary course of business relating to obligations as to which there is no
default on the part of the Company, excluding any mortgage; and (iii) the
Encumbrances listed on Schedule 1.3.


“Person” means an association, a corporation, an
individual, a partnership, a limited liability company, a trust or any other
entity or organization, including a Governmental Entity.


“Personal Information” means information about an identifiable
individual, but does not include an individual’s name, position name or title,
business telephone number, business address, business email or business fax
number.


“Personal Property” has the meaning set forth in Section
3.11(a).


“Purchase Price” has the meaning set forth in Section 2.2.


“Purchaser” has the meaning set forth in the opening
paragraph.


“Receivables Note” has the meaning set forth in Section 2.3.


“Registration Rights Agreement” has the meaning set forth in Section
2.6(j).


“Release” means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through air, soil, surface
water, ground water, wetlands, land or subsurface strata.



 6
 









“Representative”
means  with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants, and
financial advisors.


“SEC” means the United States Securities and
Exchange Commission.


“Securities Act” means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.


“Security Agreement” has the meaning set forth in Section 2.6(p).


“Seller” and “Sellers” has
the meaning set forth in the opening paragraph.


“Seller/Shareholder Indemnified
Party” has the
meaning set forth in Section 10.2.


“Seller/Shareholder Indemnifying
Party” and “Seller/Shareholder Indemnifying Parties” have the meanings
set forth in Section 10.1.


“Shareholder” and “Shareholders”
has the meaning set forth in the opening paragraph.


“Stock” means the issued and outstanding capital
stock of the Company.


“Stock Portion of the Purchase
Price” has the
meaning set forth in Section 2.4(b).


“Subscription Agreement” has
the meaning set forth in Section 2.6(c).


“Subsidiary” means, with respect to any Person, (a) any
corporation 50% or more of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person, directly or
indirectly through Subsidiaries; and (b) any partnership, limited liability
company, association, joint venture, trust or other entity in which such
Person, directly or indirectly through Subsidiaries, is either a general partner,
has a 50% or greater equity interest at the time or otherwise owns a
controlling interest.


“Tax” (and, with correlative meaning, “Taxes”) means:  (i) any federal, state, provincial,
local or foreign income, gross receipts, windfall, profits, gains, capital,
capital stock, production, recapture, land transfer, severance, property,
production, sales, goods and services, harmonized sales, use, license, excise,
franchise, employment, payroll, workers compensation, withholding, alternative
or add-on minimum, ad valorem, value added, transfer, stamp, or environmental
tax, or any other tax, custom, duty, governmental fee or other like assessment
or charge of any kind whatsoever, including all employment insurance, health
insurance and government pension plan premiums or contributions, together with
any interest or penalty, addition to tax or additional amount imposed by any
governmental authority; and (ii) any liability of the Company for the
payment of amounts with respect to payments of a type described in clause (i)
as a result of being a member of an affiliated, consolidated, combined or
unitary group, or as a result of any obligation of the Company under any Tax
Sharing Arrangement or Tax Indemnity Agreement.


“Tax Act” means the Income
Tax Act, R.S.C. 1985 (5th Supp.) c.1, as amended.



 7
 









“Tax Indemnity Agreement” means any written or unwritten agreement or
arrangement pursuant to which the Company may be required to indemnify or
reimburse another party for any liability relating to Taxes.


“Tax Return” means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including any information return, claim for refund, amended return
or declaration of estimated Tax.


“Tax Sharing Arrangement” means any written or unwritten agreement or
arrangement for the allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return which
includes the Company.


“Threshold” has the meaning set forth in Section
10.6(a).


“Third Party Intellectual Rights” has the meaning set forth in Section
3.14(b).


“Toronto-Dominion” means The Toronto-Dominion Bank.


“U.S.
Environmental Laws”
shall mean all U.S. Laws relating to (a) the control of any pollutant
or protection of the air, water, land or protected species, (b) solid, gaseous
or liquid waste generation, handling, treatment, storage, disposal or
transportation and (c) the regulation of or exposure to hazardous
or toxic materials.


ARTICLE
II

PURCHASE AND SALE OF THE STOCK; AMENDMENT AND RESTATEMENT OF ORIGINAL PURCHASE
AGREEMENT


2.1          Transfer of Stock by
Sellers.  Subject to the terms and
conditions of this Agreement, the Sellers agree to sell and transfer all of the
Stock and deliver the certificates evidencing all of the Stock to the Purchaser
at the Closing, and the Purchaser will purchase all of the Stock from the
Sellers at the Closing.  The certificates
will be properly endorsed for transfer to, or accompanied by a duly executed
stock powers in favor of, the Purchaser and otherwise in a form acceptable for
transfer on the books of the Company.


2.2          Purchase Price.  Subject to the terms and conditions of
this Agreement, the Purchaser agrees to purchase and acquire all of the Stock
from the Sellers for an aggregate purchase price of Cdn $5,500,000 (the “Purchase Price”).


2.3          Payment of Management Bonus in
respect of Management Services Previously Rendered.  In consideration for past management services
provided by the Sellers, at the Closing, the Sellers shall cause the Company to
declare and pay a bonus to the Sellers in respect of management services
previously rendered in an aggregate amount equal to the Net Accounts Receivable
Amount (the “Management Bonus”), payment of
which shall be satisfied by the delivery of one (1) unsecured non-recourse
promissory note to the Sellers in an original principal amount equal to the Net
Accounts Receivable Amount (the “Receivables Note”),
the Receivable Note being in a form mutually acceptable to the Parent and the
Sellers, acting reasonably.


2.4          Payment of Purchase Price.  Subject to the terms and
conditions of this Agreement, in reliance on the representations and warranties
of the Sellers and the Shareholders, and in consideration of the obligations of
the Sellers and the Shareholders herein, the Purchaser will pay the Purchase
Price for all of the Stock to the Sellers as follows:



 8
 









(a)         the
aggregate sum of Cdn $4,050,000 in cash to the Sellers; and


(b)        414,286
Parent Shares to each Seller (the “Stock Portion of the
Purchase Price”).


In satisfaction of the Purchaser’s obligations under subsection (a)
above, the Sellers hereby direct the Purchaser, and the Purchaser hereby agrees
to,:


(x)         pay
Cdn $1,300,000 in cash to each Seller on the Closing Date by wire transfer of
immediately available funds to such account as shall have been designated in
writing by each Seller at least two (2) days prior to the Closing
(collectively, the “Cash Portion of the
Purchase Price”); and


(y)        pay
Cdn $1,450,000 in cash to the Parent in consideration of the Parent for and on
behalf of the Sellers issuing on the Closing Date two (2) secured promissory
notes made by the Parent each in the original principal amount of Cdn $725,000
(each a “Note” and collectively, the “Notes”), with one (1) Note in favor of each
Seller (the “Note Portion of the Purchase Price”),
each Note being in a form mutually acceptable to the Parent, the Purchaser and
the Sellers, acting reasonably, and each Note secured by the Stock in
accordance with the terms of the Security Agreement.


In exchange for the consideration set forth in subsection (y) above,
the Parent agrees to issue the Notes to the Sellers at the Closing as set forth
in subsection (y) above.


2.5          The Closing.  Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Article 8 and subject to the satisfaction or waiver of the
conditions set forth in Article 7, the closing of the transactions
contemplated herein (the “Closing”)
shall take place at 10:00 a.m. on March 2, 2007 or on such other date mutually
agreed by the parties (the “Closing Date”)
at the offices of Haynes and Boone, LLP, legal counsel to the Parent and the
Purchaser, located at 1221 McKinney Street, Suite 2100, Houston, Texas 77010,
unless another date, time or place is agreed to in writing by the parties
hereto.  The Closing may, with the
consent of all parties, take place by delivering an exchange of documents by
facsimile transmission or electronic mail with originals to follow by overnight
mail service or courier.


2.6          Closing Deliveries by the
Shareholders and the Sellers. 
At the Closing, against delivery of, among other things, the Purchase
Price, the Sellers and the Shareholders shall deliver or cause to be delivered
to the Parent and the Purchaser:


(a)         stock
certificates evidencing all of the Stock duly endorsed in blank, or accompanied
by stock powers duly executed in blank, in a form satisfactory to the Purchaser
and the Parent;


(b)        each
in form and substance satisfactory to the Purchaser and the Parent in their
reasonable discretion, all Approvals of all Governmental Entities and officials
which are necessary for the consummation of the transactions contemplated by
this Agreement and all third party consents and estoppel certificates
identified on Schedule 3.5;


(c)         a
subscription agreement (a “Subscription Agreement”),
in a form mutually acceptable to the Parent and the Sellers, acting reasonably,
relating to the issuance of 414,286 Parent Shares pursuant to Section 2.4(b)  duly executed by each Seller;



 9
 









(d)        all
minute books, seals and other records of the Company;


(e)         certificate
of status issued by the Alberta Corporate Registry, dated not more than one (1)
day prior to the Closing Date, attesting to the incorporation and good standing
of the Company as a corporation in its jurisdiction of incorporation;


(f)         copies,
certified by the Secretary or Assistant Secretary of the Company as of the
Closing Date, of the Articles of Incorporation of the Company, and all
amendments thereto;


(g)        copies,
certified the by Secretary or Assistant Secretary of the Company as of the
Closing Date, of the Bylaws of the Company, and all amendments thereto;


(h)        a
release duly executed by the Sellers and the Shareholders in a form mutually
acceptable to the Purchaser, the Parent and the Sellers, acting reasonably;


(i)          any
Permits necessary to the operations of the Business amended to adequately
reflect any change of control or other amendment necessary to reflect the sale
of all of the Stock;


(j)          a
Registration Rights Agreement by and among the Sellers and the Parent providing
for piggy-back registration rights for the Sellers, in a form mutually
acceptable to the Parent and the Sellers, acting reasonably (the “Registration Rights Agreement”), duly executed by each
Seller;


(k)         a
duly executed resignation of each director and officer of the Company;


(l)          a
copy, certified as of the Closing Date by the Secretary or Assistant Secretary
of each Seller, of the resolutions of the Board of Directors of each Seller
authorizing such Seller’s execution, delivery and performance of this
Agreement, the consummation the transactions contemplated herein, and the
taking of all such other corporate action as shall have been required as a
condition to, or in connection with the consummation of the contemplated
transactions;


(m)        the
consents of any Person required for the consummation by the Sellers, the
Company and the Shareholders of the transactions contemplated hereby;


(n)           written evidence that the trademarks,
service marks and tradenames of the Company and all related Intellectual
Property have been assigned to the Purchaser as of the Closing Date, including
without limitation to the assignment of all trademarks, tradenames or other
rights to use the name “Decca” necessary to operate the business of the Company
in the ordinary course and a Consent to Use Name duly executed by Decca
Engineering;


(o)           written evidence of
(i) the declaration of the Management Bonus by the Company and payment of the
same with the issuance of the Receivables Note and (ii) the fulfillment of the
obligations of the Company set forth in Section 2.3;


(p)           a Pledge and
Security Agreement by and among the Sellers, the Parent and the Purchaser
granting a security interest in the Stock to the Sellers until the payment in
full of the Notes, in a form mutually acceptable to the Parent, the Purchaser
and the Sellers, acting reasonably (the “Security Agreement”),
duly executed by each Seller; and


(q)           an Agreement to
Rescind Shareholder Agreement by and among the Company and the Sellers,
pursuant to which that certain Shareholder Agreement, dated October 24, 2003, 



 10
 









entered
into among the Company, Decca Engineering, Roger D. Gordon, and the
Shareholders, is terminated in full, duly executed by the Company and the Sellers.


2.7          Closing Deliveries by the
Parent and the Purchaser.  At
the Closing, against delivery of, among other things, stock certificate(s)
representing all of the Stock, the Parent and the Purchaser shall deliver to
the applicable Seller or Shareholder:


(a)         the
Cash Portion of the Purchase Price by wire transfer in immediately available
funds to the bank accounts designated by the Sellers;


(b)        stock
certificates evidencing the Stock Portion of the Purchase Price (which the
parties agree will be delivered to the Sellers as soon as reasonably
practicable following the Closing);


(c)         the
Notes evidencing the Note Portion of the Purchase Price;


(d)        certificates
of the Secretary of State and the taxing authorities of the State of Nevada or
other appropriate government authority, dated not more than five (5) days prior
to the Closing Date, attesting to the incorporation and good standing of the
Parent as a corporation in its jurisdiction of incorporation, and to the
payment of all state taxes due and owing thereby;


(e)         certificate
of status issued by the Alberta Corporate Registry, dated not more than one (1)
day prior to the Closing Date, attesting to the incorporation and good standing
of the Purchaser as a corporation in its jurisdiction of incorporation;


(f)            the Registration
Rights Agreement duly executed by the Parent;


(g)           a copy, certified as of the Closing
Date by the Secretary or Assistant Secretary of the Parent, of resolutions of
the Board of Directors of the Parent authorizing the Parent’s execution, delivery
and performance of this Agreement, the consummation the transactions
contemplated herein, and the taking of all such other corporate action as shall
have been required as a condition to, or in connection with the consummation of
the contemplated transactions;


(h)           a copy, certified as
of the Closing Date by the Secretary or Assistant Secretary of the Purchaser,
of resolutions of the Board of Directors of the Purchaser authorizing the
Purchaser’s execution, delivery and performance of this Agreement, the consummation
the transactions contemplated herein, and the taking of all such other
corporate action as shall have been required as a condition to, or in
connection with the consummation of the contemplated transactions; and


(i)            the Security
Agreement, duly executed by the Parent and the Purchaser.


2.8          Amendment and Restatement of the Original Purchase
Agreement.  The Parent,
the Sellers and the Shareholders who are parties to the Original Purchase
Agreement agree that the Original Purchase Agreement is hereby amended and
restated in its entirety, and upon execution of this Agreement all rights and
obligations of the Parent, the Sellers and the Shareholders under the Original
Purchase Agreement shall be superseded by this Agreement.


ARTICLE
III

REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE SHAREHOLDERS


 



 11















The Sellers and
the Shareholders, jointly and severally, represent and warrant to the Parent
and the Purchaser as follows


3.1          Organization and
Qualification of the Company.


(a)           The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Province of Alberta.  The Company has all
necessary corporate power and authority to own, operate or lease the properties
and assets now owned, operated or leased by it and to carry on the Business as
it has been and is currently conducting. 
The Company is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of the Business makes such licensing or qualification
necessary.  Schedule 3.1 correctly
lists with respect to the Company its jurisdiction of incorporation, each
jurisdiction in which it is qualified to do business as an extra-provincial or
a foreign corporation, and its directors and executive officers.  The Sellers and the Shareholders have
delivered to the Parent complete and correct copies of the articles and bylaws
of the Company as now in effect.


(b)        The Company owns all assets and rights necessary to conduct
the Business of the Company as presently conducted.  The Company has no Subsidiaries.  Schedule 3.1 correctly lists all
capital stock, partnership interests, membership interests or other ownership
interests that the Company owns in any Person and all joint ventures that the
Company is a party to.


(c)           The Company, the Sellers and the Shareholders are not
non-residents of Canada within the meaning of the Tax Act.


3.2          Capitalization.


 


(a)         The authorized capital of the Company consists of an
unlimited number of Class “A” Shares, an unlimited number of Class “B” Shares,
an unlimited number of Class “C” Shares, an unlimited number of Class “D”
Shares, an unlimited number of Class “E” Shares, an unlimited number of Class “F”
Shares, an unlimited number of Class “G” Shares, an unlimited number of Class “H”
Shares and an unlimited number of Class “I” Shares.  As of the date hereof, 99.9  Class “A” shares are issued and outstanding and each
registered owner of shares of Stock and the number of shares of Stock held by
each registered owner is set forth on Schedule 3.2.  Except as set forth on Schedule 3.2, there
are no shares of capital stock of the Company issued and outstanding.  All of the shares of Stock have been duly
authorized and validly issued and are fully paid and non-assessable.  None of the shares of Stock was issued in violation
of any preemptive rights or is subject to any preemptive rights of any
Person.  All of the shares of Stock have
been issued and granted in all material respects in compliance with applicable
securities Laws and other requirements of Law. 
No legend or other reference to any Encumbrance appears upon any
certificate representing shares of Stock.


(b)        There are no outstanding options, warrants, agreements,
conversion rights, preemptive rights or other rights to subscribe for or
purchase from any of the Seller or the Shareholders or the Company, or any
plans, contracts or commitments providing for the issuance of, or the granting
of rights to acquire, (i) any capital stock or other ownership interests
of the Company, including, but not limited to the shares of Stock; or
(ii) any securities convertible into or exchangeable for any such capital
stock or other ownership interests. 
Except for the DE Purchase Agreement and the Company’s obligations
hereunder, there are no outstanding contractual obligations or plans of any of
the Sellers, the Shareholders or the Company to transfer, issue, repurchase,
redeem or otherwise acquire any outstanding shares of capital stock or 


 


 



 12
 









other ownership interests of the Company, including, but not limited to
the all of the shares of Stock.  Except
as described on Schedule 3.1, the Company owns no or has no contract, agreement
or understanding to acquire, any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business.


3.3          Stock Ownership by Sellers.  Each Seller has good and marketable title to,
and sole record and beneficial ownership of, the shares of Stock as listed on Schedule
3.2 and the shares of Stock are free and clear of any and all covenants,
conditions, marital property rights or other Encumbrances.  Upon consummation of the transactions
contemplated by this Agreement, the Purchaser will own all the issued and
outstanding capital stock of the Company free and clear of all Encumbrances,
and such capital stock will be fully paid and nonassessable.  Except for the DE Purchase Agreement, there
are no voting trusts, stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
shares of Stock, except for customary legends with respect to transfer
restrictions under the laws of the Province of Alberta.


3.4          Authorization; Enforceability.  The execution, delivery and performance of
this Agreement by each Seller and each Shareholder and the consummation by each Seller and each
Shareholder of the transactions contemplated hereby have been duly authorized
by all requisite action on the part of each Seller and each Shareholder.  This Agreement has been duly executed and
delivered by each Seller and each Shareholder, and assuming due
authorization, execution and delivery by the Parent and the Purchaser, this
Agreement constitutes a valid and binding obligation of each of the Sellers and
the Shareholders enforceable against each of the Sellers and the Shareholders
in accordance with its terms, except to the extent that the enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
Laws, or by equitable principles relating to the rights of creditors generally.


3.5          No Conflict; Governmental
Consents.


 


(a)         The execution, delivery and performance of this Agreement by
each of the Sellers and the Shareholders do not and will not (i) violate,
conflict with or result in the breach of any provision of the articles or bylaws
of the Company or the Sellers; (ii) except as set forth in Schedule 3.5,
to the Knowledge of the Sellers and the Shareholders, conflict with or violate
in any material respect any Law or Order applicable to any of the Sellers, the
Shareholders or the Company; or (iii) except as set forth in Schedule 3.5,
conflict with, result in any breach of, constitute a default (or event which
with the giving of notice or lapse of time, or both, would become a default)
under, require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result
in the creation of any Encumbrance on any of the shares of Stock or on any of
the assets or properties of the Sellers, the Shareholders or the Company
pursuant to, any note, bond, mortgage, indenture, license, permit, lease,
sublease or other Contract to which any of the Sellers, the Shareholders or the
Company is a party or by which any of the Stock or any of such assets or
properties is bound or affected.


(b)        The execution, delivery and performance of this Agreement by
each of the Sellers and the Shareholders does not and will not require any
Approval or Order of any Governmental Entity, except as described in Schedule
3.5.


3.6          Financial Statements and
Undisclosed Liabilities.


 


(a)         The Sellers have
delivered to the Parent and the Purchaser true, correct and complete copies of
the Company Financial Statements.  The
Company Financial Statements have been prepared in conformity with Canadian
generally accepted accounting principles applied on a 



 13
 









consistent basis (except that such Company
Financial Statements may not include footnotes which may be required by
Canadian generally accepted accounting principles and may be subject to normal
year-end adjustments).  Such statements
of operations and cash flow present fairly in all material respects the results
of operations and cash flows of the Company for the respective periods covered,
and the balance sheets present fairly in all material respects the financial
condition of the Company as of their respective dates.  Schedule 3.6 contains  true, correct and complete copies of the
Company Financial Statements and, except as disclosed on Schedule 3.6,
since May 31, 2005, there has been no change in any of the significant
accounting policies, practices or procedures of Company.


(b)        The Company has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise), except for liabilities or obligations reflected or reserved against
the December 2006 Balance Sheet, current liabilities incurred in the
ordinary course of business and consistent with past practice since
December 31, 2006 and liabilities that would not be reasonably expected to
result in a Material Adverse Effect on the Company.


(c)         Since December 31, 2006, there has not been any
material adverse change in the business, operations, properties, prospects,
assets, or condition of the Company, and no event has occurred or circumstance
exists that may result in such a material adverse change.


3.7          Labor Matters.  Neither the Company nor any Affiliate of the
Company has any common-law employees, nor have they had any common-law
employees since the date of its incorporation.  Schedule 3.7
contains a list of all of the names of the consultants or other contingent
workers engaged by the Company and a description of the services they provide
for the Company.  The Company has not
entered into any collective bargaining agreements.  With respect to the Company, there are no
presently pending, or to the Knowledge of any of the Sellers or the
Shareholders, threatened (x) arbitration proceedings, labor strikes, slowdowns
or stoppages, grievances or other labor disputes; (y) actions related to an
alleged material violation pertaining to labor relations or employment matters,
including but not limited to claims for unpaid wages or penalties,
discrimination, harassment, or retaliation, or wrongful discharge in violation
of public policy; or (z) any scheduled vote or application for certification of
a collective bargaining agent or, to the Knowledge of any of the Sellers or the
Shareholders, any organizing campaign. 
The Company is not delinquent in any material respect in payments to any
of its consultants for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it or amounts required to be
reimbursed to such consultants.  There
are no pending claims against the Company under any workers’ compensation plan
or policy or for long term disability. 
To the Knowledge of the Sellers and the Shareholders, no consultant of
the Company is in any material respect in violation of any term of any
consulting contract, non-disclosure agreement, non-competition agreement, or
any restrictive covenant to a former consultant relating to the right of any
such consultant to be hired by the Company because of the nature of the
business conducted by it or to the use of trade secrets or proprietary
information of others.


3.8          Absence of Certain Changes or Events.  Except as set forth in Schedule 3.8
(with subsection references corresponding to those set forth below), since
January 1, 2006, the Company has operated the Business only in the ordinary
course and consistent with past practice. 
As amplification and not limitation of the foregoing, since January 1,
2006, except as described on Schedule 3.8,  there has not been:


(a)           any
change in the Company’s authorized or issued capital stock;


(b)           any
amendment to the Company’s articles or bylaws;



 14
 









(c)           the
occurrence of any event that might reasonably be deemed to have a Material
Adverse Effect on the Company;


(d)           to
the Knowledge of the Sellers and the Shareholders, any damage, destruction or
loss, whether covered by insurance or not, adversely affecting the Company’s
properties or businesses which might reasonably be expected to result in a
Material Adverse Effect on the Company;


(e)           any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to, or the incurrence of any
obligation to repurchase, any shares of any class of capital stock of the
Company other than the payment of the Management Bonus pursuant to
Section 2.3 of this Agreement;


(f)            any
entry into a consulting, employment or severance agreement or any understanding
for payments to any consultant, employee or former consultant or employee of
the Company which might reasonably be expected to result in a Material Adverse
Effect on the Company;


(g)           any
material increase in compensation or benefits expense to the Company, any
increase in the compensation or other benefits payable or to become payable by
the Company to its directors, officers, consultants or employees or any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
to, for or with any of its directors, officers, consultants or employees, other
than the items disclosed on Schedule 3.8;


(h)           any
entry into any commitment or transaction material to the Company (including but
not limited to, any borrowing, sale, lease or other disposition of an asset or
group of assets with an original cost in excess of $75,000 in the aggregate or
capital expenditure or group of capital expenditures in excess of $75,000 in
the aggregate);


(i)            any
entry into any transaction with any director, officer, shareholder or Affiliate
of the Company that is either not in the ordinary course of business, or on
terms less favorable to the Company than those that would have been obtained in
a comparable transaction by the Company with an unrelated Person;


(j)            to
the Knowledge of the Sellers and the Shareholders, any cancellation or waiver
of any claims or rights which might reasonably be expected to result in a
Material Adverse Effect on the Company;


(k)           any
material change in the Tax or accounting methods used by the Company;


(l)            to
the Knowledge of the Sellers and the Shareholders, any cancellation,
termination or amendment to any Material Contract; or


(m)          to
the Knowledge of the Sellers and the Shareholders, any agreement, whether oral
or written, to do any of the foregoing.


3.9          Taxes.  Except as set forth in Schedule 3.9 (with
subsection references corresponding to those set forth below):


(a)           The
Company has filed or caused to be filed with the appropriate Governmental
Entity, within the times and in the manner prescribed by applicable Law, all
federal, provincial, 



 15
 









local and foreign Tax Returns which are required to be filed by or with
respect to it.  The information contained
in such Tax Returns is correct and complete in all respects and such Tax
Returns reflect accurately all liability for Taxes of the Company for the
periods covered thereby;


(b)           The
Company has paid all Taxes which are due and payable within the time required
by applicable Law, and has paid all assessments and reassessments it has
received in respect of Taxes.  The
Company has made full and adequate provision in the Company Financial
Statements as at and for the year ended December 31, 2006 for all Taxes
which are not yet due and payable but which relate to periods ending on or
before December 31, 2006.  The Company
has not received any refund of Taxes to which it not entitled;


(c)           To
the Knowledge of the Sellers and the Shareholders, no claim has ever been made
by an authority in a jurisdiction where the Company does not file a Tax Return
that the Company may be subject to taxation in that jurisdiction and no basis
exists for any such claim.  There is no
proposed assessment and no audit, claim, action, proceedings, examination,
suit, investigation or similar proceeding pending, proposed or threatened with
respect to Taxes of the Company and, to the Knowledge of the Sellers and the
Shareholders, no basis exists therefore;


(d)           There
are no outstanding waivers extending the statutory period of limitation relating
to the payment of Taxes due from the Company which are expected to be
outstanding as of the Closing Date;


(e)           All
Tax Sharing Arrangements and Tax Indemnity Agreements relating to the Company
(other than this Agreement) will terminate prior to the Closing Date and the
Company will not have any liability thereunder on or after the Closing Date;


(f)            There
are no Encumbrances for Taxes upon the assets of the Company except
Encumbrances relating to current Taxes not yet due and payable;


(g)           No
power of attorney granted by or with respect to the Company relating to Taxes
is currently in force;


(h)           All
amounts which the Company is required by Law to withhold or to collect on
account of Taxes have been duly withheld and collected, and have been remitted
to the appropriate Governmental Entity within the time prescribed under
applicable law.  To the Knowledge of the
Sellers and the Shareholders, the Company has complied with all information
reporting and backup withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts owing to any employee,
independent contractor, creditor, stockholder or other third party;


(i)            The
Company has not prepared or filed any Tax Return inconsistent with past
practice or, on any such Tax Return, taken any position, made any election, or
adopted any method that is inconsistent with positions taken, elections made or
methods used in preparing or filing similar Tax Returns in prior periods
(including, without limitation, positions, elections or methods which would
have the effect of deferring income to periods after the Closing Date or
accelerating deductions to periods on or prior to the Closing Date);


(j)            No
Tax rulings have been requested by the Company;


(k)           The
Company does not have any income reportable for a period ending after the
Closing Date but attributable to a transaction (e.g., installment sale) or a
change in accounting 



 16
 









method occurring in or made for a period ending on or prior to the
Closing Date which results in a deferred reporting on income from such
transaction or from such change in accounting method.  The Sellers have delivered to the Parent and
the Purchaser (i) a schedule of the filing dates of all Tax Returns required to
be filed by the Company, and (ii) a list of the countries, states, provinces,
territories and jurisdictions (whether foreign or domestic) to which any Tax is
properly payable by the Company.  The
Company have retained all supporting and backup papers, receipts, spreadsheets
and other information necessary for (i) the preparation of all Tax Returns that
have not yet been filed, and (ii) the defense of all Tax audits involving
taxable periods either ending on or during the six (6) years prior to the
Closing Date or from which there are unutilized net operating losses, capital
losses or investment tax credit carryovers;


(l)            There
are no circumstances existing which could result in the application of section
17, section 78, section 79, or sections 80 to 80.04 of the Tax Act, or any
equivalent provision under applicable provincial law, to the Company.  The Company has not claimed nor will it claim
any reserve under any provision of the Tax Act or any equivalent provincial
provision, if any amount could be included in the income of the Company for any
period ending after the Closing Date;


(m)          The
Company has not acquired property or services from, or disposed of property or
provided services to, a person with whom it does not deal at arm’s length
(within the meaning of the Tax Act) for an amount that is other than the fair
market value of such property or services, nor has the Company been deemed to
have done so for purposes of the Tax Act. 
For all transactions between the Company, on the one hand, and any
non-resident person with whom the Company was not dealing at arm’s length, for
the purposes of the Tax Act, on the other hand, during a taxation year
commencing after 1998 and ending on or before the Closing Date, the Company has
made or obtained records or documents that satisfy the requirements of paragraphs
247(4)(a) to (c) of the Tax Act.  The
Company has not entered into an agreement contemplated by Section 191.3 of the
Tax Act; and


(n)           The
Company is not subject to any joint venture, partnership or other arrangement
or contract that is treated as a partnership for income tax purposes in any
jurisdiction.


3.10        Material Contracts.  The following shall be deemed to be Material
Contracts and identified on Schedule 3.10, and each such Contract was
entered into in the ordinary course of business by the Company:


(a)           any
Contract for the furnishing of services to or by the Company or otherwise
related to the Business under the terms of which the Company:  (A) is likely to pay or otherwise give
consideration of more than $50,000 in the aggregate during the calendar years
ended December 31, 2006 and December 31, 2007, (B) is likely to pay or
otherwise give consideration of more than $50,000 in the aggregate over the
remaining term of such Contract or (C) cannot be canceled by the Company
without penalty or further payment and without more than thirty (30) days’
notice;


(b)           any
Contract that represents a contract upon which the Business is substantially
dependent or which is otherwise material to the Business;


(c)           any
Contract that limits or restricts the ability of Company to compete or
otherwise to conduct its Business in any manner or place;



 17
 









(d)           any
Contract for the engagement, employment, severance or retention of any
director, officer, agent, shareholder, consultant or advisor or any other
Contract with any director, officer, agent, shareholder, consultant or advisor
that does not provide for termination at will by the Company without further
cost or liability to the Company as of or at any time after the date of this
Agreement;


(e)           any
Contract in the nature of a profit sharing, bonus, stock option, stock
purchase, pension, deferred compensation or retirement, severance,
hospitalization, insurance or other plan or contract providing benefits to any
Person or former director, officer, employee, agent, shareholder, consultant or
advisor or such Persons’ dependents, beneficiaries or heirs;


(f)            any
Contract in an amount exceeding $50,000 or with a value exceeding $50,000 in
the nature of an indenture, mortgage, promissory note, loan or credit agreement
or other Contract relating to the borrowing of money or a line of credit by or
from the Company or to the direct or indirect guaranty or assumption by the
Company of obligations of others;


(g)           any
Contract for capital expenditures in an amount exceeding $50,000 in any individual
case or in the aggregate;


(h)           any
Contract that is a joint venture, partnership, or other agreement (however
named) involving a sharing of profits, losses, costs, or liabilities involving
an amount exceeding $50,000 individually or in the aggregate;


(i)            any
Contracts that are leases, rental or occupancy agreements, licenses,
installments and conditional sale agreements, and other agreements affecting
the ownership of, leasing of, title to, use of, or any leasehold or other
interest in, any real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $50,000 and with terms of less than one (1)
year), including but not limited to the lease agreements for the Lease Real
Property;


(j)            any
Contracts that are licensing agreements or other agreements with respect to
patents, trademarks, copyrights, or other Intellectual Property, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of the Intellectual
Property;


(k)           any
Contracts in an amount exceeding or with a value exceeding $50,000 to which the
Company is a party with any Governmental Entity;


(l)            any
Contracts between or among the Company and any of the Sellers, the
Shareholders, Decca Engineering, Roger Gordon or any Affiliate of any of the
Sellers, the Shareholders, Decca Engineering or Roger Gordon; and


(m)          any
Contract that was not made in the ordinary course of business, including
agreements with:


(i)            consequential or liquidated damages
or other indemnity provisions that are not based upon the Company’s negligence
in the performance of its services;


(ii)           fitness for purpose warranties or
process, efficacy or similar guarantees;


(iii)          lump sum turn key, or similar contract
risks or arrangements; or



 18
 









(iv)          provisions relating to the testing,
discovery, removal, remediation or disposal of any Hazardous Substance.


True
and complete copies of the Contracts appearing on Schedule 3.10,
including all amendments and supplements, have been delivered or made available
to the Parent and the Purchaser.  Each
Material Contract is valid and legally binding and the Company has duly
performed all its obligations thereunder to the extent that such obligations to
perform have accrued.  No breach or
default, alleged breach or default, or event which would (with the passage of
time, notice or both) constitute a breach or default thereunder by the Company
or, to the Knowledge of the Sellers and the Shareholders, any other party or
obligor with respect thereto, has occurred or as a result of this Agreement or
performance thereof will occur. 
Consummation of the transactions contemplated by this Agreement will not
(and will not give any person a right to) terminate or modify any rights of, or
accelerate or augment any obligation of, the Company under any of those
agreements to the extent such termination, modification, acceleration or
augmentation could be reasonably expected to have a Material Adverse Effect on
the Company.


3.11        Personal Property; Title
to Property; Leases.


 


(a)           The
Company owns no real property.  Schedule
3.11 accurately identifies all real property leased by the Company (the “Leased Real Property”) and all personal property owned or
leased by the Company (collectively, the “Personal Property”).  Each of the Sellers has delivered or made
available to the Parent and the Purchaser copies of the lease agreements in the
possession of such Seller or the Company and relating to such Leased Real
Property or the leased Personal Property by which the Company leased such
Leased Real Property or leased Personal Property.


(b)           The
Personal Property is free and clear of all Encumbrances.


(c)           The
Company owns, leases or has the legal right to use all the properties and
assets, including, without limitation, the Intellectual Property, the Leased
Real Property and the Personal Property, used or intended to be used in the
conduct of the Business or otherwise owned, leased or used by the Companies
(all such properties and assets being the “Assets”).


(d)           The
Assets constitute all the properties, assets and rights forming a part of,
used, held or intended to be used in, and all such properties, assets and
rights as are necessary in the conduct of, the Business as it is currently
conducted as of the date hereof.  The
Assets are free and clear of all Encumbrances or other third party interests of
any nature whatsoever, except (i) those set forth on Schedule 3.11
hereto and (ii) Permitted Encumbrances.


(e)           Immediately
following the consummation of the transactions contemplated by this Agreement,
the Company will continue to own, or lease, under valid and subsisting
Contracts, or otherwise retain its respective interest in the Assets without
incurring any penalty or other adverse consequence, including, without
limitation, any increase in rentals, royalties, or licenses or other fees
imposed as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement, except for Permitted Encumbrances.  Immediately following the Closing, either the
Company shall own and possess all documents, books, records, agreements and
financial data of any sort used by the Company in the conduct of the Business.


3.12        Condition and Sufficiency of Tangible Assets.  To the Knowledge of the Sellers and the
Shareholders, the buildings, plants, structures, and equipment of the Company
are structurally sound, are in good operating condition and repair, except for
ordinary wear and tear, and are adequate for the 



 19
 









uses
to which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost.  To the Knowledge of the Sellers and the
Shareholders, the building, plants, structures, and equipment of the Company
are sufficient for the continued conduct of the Business after the Closing in
substantially the same manner as conducted prior to the Closing.


3.13        Licenses, Permits and Authorizations.  The Company and, to the Knowledge of the
Sellers and the Shareholders, the Consultants hold all licenses, permits,
franchises and other authorizations required by any Governmental Entity that
are necessary for the Business as presently conducted or, in the case of such
Consultants, to carry out their services for the Company.  Such licenses, permits, franchises and other
authorizations of the Company and, to the Knowledge of the Sellers and the
Shareholders, the Company’s Consultants are valid and in full force and effect
and will remain so upon consummation of the transactions contemplated by this
Agreement.  None of the Sellers or the
Shareholders Knows of any threatened suspension, cancellation or invalidation
of, or challenge to, any such license, permit, franchise or other
authorization.


3.14        Intellectual Property.  


 


(a)         To the Knowledge of the Sellers and the Shareholders, the
Company owns, or is licensed or otherwise possesses legally enforceable rights
to use, all patents, trademarks, trade names, service marks, domain names,
copyrights, and any applications therefor, trade secrets, and computer software
programs or applications (collectively, the “Intellectual
Property”) that is used in the Business as currently conducted.  Schedule 3.14 sets forth each item of
Intellectual Property and lists the owners of all right, title and interest in
and to any item of Intellectual Property not solely owned by the Company.  All requisite renewals and affidavits of use
have been filed with respect to each of the registrations set forth in Schedule
3.14, and each is presently in full force and effect and each of the trade
names and trademarks is valid, and is in good standing and active use and none
has been abandoned.


(b)        To the Knowledge of the Sellers and the Shareholders, there
is no unauthorized use, disclosure, infringement or misappropriation of any
Intellectual Property rights of the Company, or any third party patents,
trademarks or copyrights, including software (collectively, the “Third Party Intellectual Property Rights”) to the extent
licensed by or through the Company, by any third party.


(c)         To the Knowledge of the Sellers and the Shareholders, the
Company is not in breach of any license or other agreement relating to the
Intellectual Property of the Company or any Third Party Intellectual Property
Rights.


(d)        Within the last three (3) years, the Company (i) not has
been a party to, or to the Knowledge of the Sellers and the Shareholders, not
been notified or advised of, any suit, action or proceeding that involves a
claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party; or
(ii) has not brought any action, suit or proceeding for infringement of
Intellectual Property or breach of any license agreement involving Intellectual
Property against any third party.  To the
Knowledge of the Sellers and the Shareholders, the design, development, distribution,
marketing, licensing or sale of products or services of the Company does not
infringe on any patent, trademark, service mark or copyright of any third
party.


(e)         Except where failure to do would not have a Material Adverse
Effect on the Company, the Company has secured valid written assignments or
work for hire agreements from 



 20
 









all consultants and employees who contributed
to the creation and development of Intellectual Property of the rights to such
contributions that the Company does not already own by operation of law.


(f)         To the Knowledge of the Sellers and the Shareholders, the
Company has taken reasonable steps to protect its rights in its confidential
information and trade secrets that reasonably require protection.


3.15        Litigation; Compliance
with Laws.  


 


(a)         Except as set forth on Schedule 3.15, there is no
Action pending or, to the Knowledge of the Sellers and the Shareholders,
threatened against or affecting any of the Sellers, the Shareholders, the
Company, or any of their respective assets, and there is no basis Known to any
such Seller or Shareholder for any such Action.


(b)        Except as disclosed on Schedule 3.15, neither the
Sellers, the Shareholders, nor the Company is (i) to the Knowledge of the
Sellers and the Shareholders, in violation of any applicable Law or
(ii) subject to or in default with respect to any Order to which any of
them, or any of their respective properties or assets (owned or used), is
subject.  At all times since June 1,
2004, the Company has been in full compliance with each Law that is or was
applicable to it or to the conduct or operation of the Business or the
ownership or use of any of its Assets.


(c)         To the Knowledge of the Sellers and the Shareholders, no
event has occurred or circumstance exists that (with or without notice or lapse
of time) may constitute or result in a violation by the Company of, or a
failure on the part of any of them, to comply with, any Law.


(d)        Except as provided in Schedule 3.15, none of the
Sellers, the Shareholders nor the Company has received any notice or other communication
(whether oral or written) from any Governmental Entity or any other Person
regarding (i) any actual, alleged, possible, or potential violation of, or
failure to comply with, any Law or (ii) any actual, alleged, possible, or
potential obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.


3.16        Insurance.  


 


(a)           Schedule
3.16 sets forth the following information with respect to each insurance
policy under which the Company has been an insured, a named insured or
otherwise the principal beneficiary of coverage at any time within the past
year:


(i)            the
name, address and telephone number of the agent or broker;


(ii)           the
name of the insurer and the names of the principal insured and each named
insured; and


(iii)          the
policy number, general description of coverage and the period of coverage.


The Company has delivered or made available to the Parent and the
Purchaser copies of all such insurance policies.



 21
 









(b)           Except
as set forth in Schedule 3.16, there is no actual, pending, or, to the
Knowledge of the Sellers and the Shareholders, threatened claims against the
Company that would come within the scope of such coverage listed on Schedule
3.16, nor has any current carrier provided notice to the Company that it
intends to terminate any policy or to deny coverage with respect to any
claim.  There are no actual, pending or,
to the Knowledge of the Sellers and the Shareholders, threatened claims against
the Company that would not come within the scope of the insurance coverage of
the Company listed in Schedule 3.16.


(c)           The
Company has maintained during the past three (3) years and currently maintains
(i) insurance on all of the Assets used in connection with the Business of
a type customarily insured, covering property damage and loss of income by fire
or other casualty, and (ii) adequate insurance protection (subject to the
deductible amounts and dollar limits of coverage set forth in Schedule 3.16)
against all errors and omissions and other liabilities, claims, and risks,
which it is customary and reasonable to insure with respect to the
Business.  The Company has not, within
the past three (3) years, allowed any insurance policy to lapse for failure to
renew or for any other reason.  The
Company has not failed to give any notice or present any claim under any
insurance policy in due and timely fashion under the applicable insurance
policy.


(d)           None
of the Sellers or the Shareholders has Knowledge of (i) any proposed
material increases in the premiums for insurance or for contributions for
worker’s compensation or unemployment insurance applicable to the Company,
(ii) any conditions or circumstances applicable to the Business as
currently conducted that could reasonably be expected to result in such
increase, or (iii) any material decrease in coverage or other policy
benefits.  Further, none of the Sellers
or the Shareholders has Knowledge that any existing insurer of the Company has
denied the Company coverage on any claim or refused to approve any proposed
settlement.


3.17        Employee Benefit Plans.  Neither the Company nor any Affiliate of the
Company currently maintains, administers, or contributes to, nor has the
Company or any Affiliate of the Company maintained, administered, or
contributed to, in the last six (6) years, any employee benefit plans, any
specified fringe benefit plans, or any other bonus, incentive
compensation, deferred compensation, profit sharing, stock option, stock
appreciation right, stock bonus, stock purchase, employee stock ownership,
savings, severance, supplemental unemployment, layoff, salary continuation,
retirement, pension, health, life insurance, dental, disability, accident,
group insurance, vacation, holiday, sick leave, fringe benefit or welfare plan,
or any other employee compensation or benefit plan, agreement, policy,
practice, commitment, contract, or understanding (whether qualified or
nonqualified, currently effective or terminated, written or unwritten), or any
trust, escrow or other agreement related thereto (collectively, “Benefit Plans”), nor does the Company have any liability,
contingent or otherwise, with respect to any Benefit Plan.


3.18        Transactions with Affiliates.  To the Knowledge of the Sellers and the
Shareholders, except (i) for employment and benefit arrangements,
(ii) arrangements on arm’s length terms in the ordinary course of business
and (iii) agreements set forth on Schedule 3.18, no director,
officer or Affiliate of the Company or, to the Knowledge of the Sellers and the
Shareholders, any Person with whom any such director, officer or Affiliate has
any direct or indirect relation by blood, marriage or adoption, or any entity
in which any such director, officer or Affiliate owns any beneficial interest
(other than a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than one percent
(1%) of the stock of which is beneficially owned by all such Persons), has any
interest in (a) any Contract with the Company or relating to the Business,
including any Contract for or relating to indebtedness of the Company; or
(b) any Assets, including Intellectual Property, the Leased Real Property
and the Personal Property, used or currently intended to be used in, the Business.



 22
 









3.19        No Brokers or Finders.  Except as disclosed to the Parent and the
Purchaser, no agent, broker, finder, or investment or commercial banker, or
other Person or firm engaged by or acting on behalf of any of the Sellers or
the Shareholders, the Company, or any of their respective Affiliates, in
connection with the negotiation, execution or performance of this Agreement or
the transactions contemplated by this Agreement, is or will be entitled to any
brokerage or finder’s or similar fee or other commission as a result of this
Agreement or such transactions.


3.20        Accuracy of Information.  To the Knowledge of the Sellers and the
Shareholders, none of the information supplied in writing by or on behalf any
of the Sellers or the Shareholders or the 
Company, to the Parent and the Purchaser or their Representatives in
connection with the transactions contemplated in this Agreement, this Agreement
or the negotiations leading up to this Agreement contain, or at the respective
times such information was delivered, contained any untrue statement of a
material fact, or omit or omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.


3.21        Receivables; Payables.


(a)           All
receivables of the Company since January 1, 2007, including “work in process”
inventory and accrued and unbilled revenues, represent actual revenues invoiced
or expected to be invoiced in the ordinary course of business, and are, or when
invoiced, will be, fully collectible net of any reserves.  The Sellers have delivered to the Parent and
the Purchaser a complete and accurate aging list of all receivables of the
Company.  None of the receivables of the
Company are subject to assignments, pledges, liens or other interests of third
parties nor are they subject to any counterclaim or set-off, other than a
security interest held by Toronto-Dominion as security for the performance of
the Company’s obligations under its credit facilities.


(b)           The
trade accounts payable of the Company are not greater than the trade accounts
payable set forth in the December 2006 Balance Sheet.


(c)           All
2006 Receivables not paid to the Company prior to the Closing Date:


(i)            were
included in the calculation of the Management Bonus, whether reflected on the
December 2006 Balance Sheet or otherwise;


(ii)          
represent actual revenues invoiced in the ordinary course of business,; and


(iii)          are,
or when invoiced will be, fully collectible net of any reserves shown on the
December 2006 Balance Sheet (which reserves are adequate and were
calculated on a basis consistent with the Company Financial Statements and past
practices).


(d)           None
of the 2006 Receivables are subject to assignments, pledges, liens or other
interests of third parties nor are they subject to any counterclaim or set-off
other than a security interest held by Toronto-Dominion as security for the
performance of the Company’s obligations under its credit facilities.


3.22        Environmental.  


 


(a)           Except as set forth in Schedule 3.22, to the
Sellers’ and the Shareholders’ Knowledge, the Assets and the Company are free
of any Environmental Defects, except as would not reasonably be expected to
have a Material Adverse Effect on the Company or the Assets.



 23
 









(b)           With respect to the Assets, except as set forth in Schedule
3.22, the Company has not entered into, or is subject to, any agreements,
consents, orders, decrees, judgments or other directives of Governmental
Entities in existence at this time based on any Environmental Laws.


(c)           Except as set forth in Schedule
3.22, to the Sellers’ and the Shareholders’ Knowledge, the Company
has not received written notice from any Person of, and no investigation or
written claim is pending regarding, any Release, disposal, event, condition,
circumstance, activity, practice or incident concerning the Company, the
Assets, the Company’s current or prior operations or any land, facility, asset
or property currently or formerly owned or leased by the Company and alleging
either (i) a violation of Environmental Law, including common law, or (ii)
obligations, including remediation or other liabilities under Environmental
Law, except, in the case of either clause (i) or (ii) hereof, as would not
reasonably be expected to have a Material Adverse Effect on the Company or the
Assets.


(d)           Except as set out in Schedule 3.22, (i) the
operation of the Business, the property and assets owned or used by the
Corporation and the use, maintenance and operation thereof have been and are in
compliance with all Environmental Laws, (ii) the Company has complied with all
reporting and monitoring requirements under all Environmental Laws, and (iii)
the Company has, at all times, used, generated, treated, stored, transported,
disposed of or otherwise handled its Hazardous Substances in compliance with
all Environmental Laws and all licenses, permits or other authorizations
granted to the Company under Environmental Laws.


(e)           Except as set forth in Schedule 3.22, to the
Sellers’ and the Shareholders’ Knowledge, there has been no Release on or from
the Assets or on or from any property currently or formerly owned, leased, or
operated by the Company of any Hazardous Materials in any substantial amount or
concentration that is reasonably likely to have a Material Adverse Effect on
the Company or the Assets.


(f)            Except as set forth in Schedule 3.22, the Company,
or, to the Sellers’ and the Shareholders’ Knowledge, an operator of the Assets,
holds those licenses, permits, or other authorizations necessary under
Environmental Laws to carry on operations connected with the Assets to the
extent of and as currently conducted, except where the failure to obtain such
licenses, permits, or other authorizations could not reasonably be expect to
have a Material Adverse Effect on any of the Company or the Assets.


3.23        Restrictions on Business
Activities.  There is no agreement, judgment, injunction,
order or decree binding upon the Company that has, or could reasonably be
expected to have, the effect of prohibiting or materially impairing the conduct
of the Business as presently conducted.


3.24        Internal Controls.   The Company maintains a system of internal
controls sufficient to provide reasonable assurances that:


(a)         transactions are executed in accordance with management’s
general or specific authorization;


(b)        transactions are recorded as necessary (1) to permit
preparation of financial statements in conformity with GAAP or any other
criteria applicable to such statements and (2) to maintain accountability
for assets; and


(c)         access to proprietary assets is permitted only in accordance
with management’s general or specific authorization.



 24
 









3.25        Absence of Certain Payments.  None of the Sellers, the Shareholders, the
Company, nor, to the Knowledge of the Sellers and the Shareholders, any
director, officer, agent, employee, consultant or Affiliate of any of them, has
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, or made any direct or
indirect unlawful payments to government officials or employees from corporate
funds, or established or maintained any unlawful or unrecorded funds.


3.26        Bank Accounts.  Schedule 3.26 sets forth an
accurate list of each bank, trust company, savings institution or other
financial institution with which the Company has an account or safe deposit box
and the names and identification of all Persons authorized to draw thereon or
to have access thereto, and sets forth the names of each Person holding powers
of attorney or agency authority from the Company and a summary of the terms
thereof.


3.27        Sellers’
Investment Representations.  Each of the Sellers has made representations
and warranties contained in the Subscription Agreement.


ARTICLE
IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND THE PARENT


The Parent and the Purchaser, jointly and severally, represent and
warrant to the Sellers as follows:


4.1          Organization and
Authority.


 


(a)           The Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and the
execution, delivery and performance of this Agreement by the Parent and the
consummation by the Parent of the transactions contemplated hereby have been
duly authorized by all requisite action on the part of the Parent.  The Parent Shares to be issued to the Sellers
as part of the Purchase Price have been duly authorized by all necessary
corporate action on the part of the Parent and, upon the Purchaser’s receipt of
all of the Stock from the Sellers, will be validly issued, fully paid and
nonassessable.  This Agreement has been
duly executed and delivered by the Parent, and assuming due authorization,
execution and delivery by the Sellers, the Shareholders and the Purchaser this
Agreement constitutes a valid and binding obligation of the Parent enforceable
against the Parent in accordance with its terms, except to the extent that the
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws, or by equitable principles relating to the rights
of creditors generally.


(b)           The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the Province of Alberta and the
execution, delivery and performance of this Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated hereby have been
duly authorized by all requisite action on the part of the Purchaser.  This Agreement has been duly executed and
delivered by the Purchaser, and assuming due authorization, execution and delivery
by the Sellers, the Shareholders and the Parent this Agreement constitutes a
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms, except to the extent that the enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws, or by equitable principles relating to the rights of creditors generally.


4.2          No Conflict; Governmental
Consents.


 



 25















(a)         The
execution, delivery and performance of this Agreement by the Parent or the
Purchaser does not and will not (i) violate, conflict with or result in
the breach of any provision of the articles or bylaws of the Parent or the
Purchaser, (ii) conflict with or violate in any material respect any Law
or Order applicable to the Parent or the Purchaser, or (iii) conflict
with, result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, or result
in the creation of any Encumbrance on any of the assets or properties of the
Parent or the Purchaser pursuant to, any note, bond, mortgage, indenture,
license, permit, lease, sublease or other material contract, agreement, or
instrument or arrangement to which the Parent or the Purchaser is a party or by
which any of their assets or properties is bound or affected, except for
conflicts or violations which would not have a material adverse effect on the
ability of the Parent or the Purchaser to consummate the transactions
contemplated by this Agreement.


(b)        The
execution, delivery and performance of this Agreement by the Parent and the
Purchaser does not and will not require any Approval or Order of any
Governmental Entity.


4.3           Financial Statements.


(a)           The Parent has
delivered or made available to the Sellers true, correct and complete copies of
the Parent Financial Statements.  The
Parent Financial Statements have been prepared in conformity with GAAP applied
on a consistent basis.  The statements of
operations and cash flow of the Parent present fairly in all material respects
the respective results of operations and cash flows of the Purchaser for the
respective periods covered, and the balance sheets of the Parent present fairly
in all material respects the respective financial condition of the Parent as of
their respective dates.  Since the date of
the Parent Interim Balance Sheet, there has been no change in any of the
significant accounting policies, practices or procedures of the Parent.


(b)           The Parent has no
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise), except for liabilities or
obligations reflected or reserved against the Parent Interim Balance Sheet,
current liabilities incurred in the ordinary course of business and consistent
with past practice since September 30, 2006 and liabilities that would not
be reasonably expected to result in a Material Adverse Effect on the Parent.


(c)           Since the date of
the Parent Interim Balance Sheet, there has not been any material adverse
change in the business, operations, properties, prospects, assets, or condition
of the Parent, and no event has occurred or circumstance exists that may result
in such a material adverse change.


4.4           No Brokers or Finders.  No agent, broker, finder, or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of
the Parent, the Purchaser or their Affiliates, in connection with the
negotiation, execution or performance of this Agreement or the transactions
contemplated by this Agreement, is or will be entitled to any brokerage or
finder’s or similar fee or other commission as a result of this Agreement or
such transactions.


4.5           Parent SEC Documents.


(a)         The
Parent has made available to the Sellers a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed
by the Parent with the



 26
 









SEC since January 1, 2004 (the “Parent SEC
Documents”), including the Parent’s 2005 Form 10-KSB, which are all
the documents (other than preliminary documents) that the Parent was required
to file with the SEC since January 1, 2004. 
As of their respective dates, the Parent SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Parent SEC Documents, and none of the Parent SEC Documents
contained as of their respective dates any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.


(b)        The
financial statements of the Parent included in the Parent SEC Documents,
including the notes and schedules thereto, complied as to form in all material
respects with the rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Rule 10-01 of Regulations S-X
of the SEC) and fairly present the consolidated financial position of the
Parent and its consolidated Subsidiaries as of their respective dates and the
consolidated results of operations and the consolidated cash flows of the
Parent and its consolidated Subsidiaries for the periods presented therein in
accordance with applicable requirements of GAAP (subject, in the case of the
unaudited statements, to normal, recurring adjustments, none of which are
material) applied on a consistent basis during the periods presented.


(c)         No
Material Adverse Effect with respect to the Parent has occurred since the date
of the Parent’s Form 10-QSB for the nine (9) month period ended September 30,
2006 (the “September 2006 Form 10-QSB”).


4.6           Authorization;
Enforceability.  The
execution, delivery and performance of this Agreement by the Parent and the
Purchaser and
the consummation by the Parent and the Purchaser of the transactions contemplated
hereby have been duly authorized by all requisite action on the part of each of
the Parent and the Purchaser. 
This Agreement has been duly executed and delivered by the Parent
and the Purchaser
and assuming due authorization, execution and delivery by the Sellers and the
Shareholders, this Agreement constitutes a valid and binding obligation of the Parent
and the Purchaser
enforceable against each the Parent and the Purchaser in
accordance with its terms, except to the extent that the enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws,
or by equitable principles relating to the rights of creditors generally.


4.7           Absence of Certain Changes
or Events.  Except as set
forth in Schedule 4.7 (with subsection references corresponding to those
set forth below) or as disclosed in the Parent SEC Documents, since the date of
the September 2006 Form 10-QSB, the Parent 
has operated its business only in the ordinary course and consistent
with past practice.  As amplification and
not limitation of the foregoing, since the date of the September 2006 Form
10-QSB, except as described on Schedule 4.7,  there has not been:


(a)           the occurrence of
any event that might reasonably be deemed to have a Material Adverse Effect on
the Parent;


(b)           to the Knowledge of
the Parent and the Purchaser, any damage, destruction or loss, whether covered
by insurance or not, adversely affecting the Parent’s properties or businesses
which might reasonably be expected to result in a Material Adverse Effect on
the Parent;



 27
 









(c)           any entry into a
consulting, employment or severance agreement or any understanding for payments
to any consultant, employee or former consultant or employee of the Parent
which might reasonably be expected to result in a Material Adverse Effect on
the Parent;


(d)           any material
increase in compensation or benefits expense to the Parent, any increase in the
compensation or other benefits payable or to become payable by the Parent to
its directors, officers, consultants or employees or any bonus, insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with any of its directors, officers, consultants or employees, other than the
items disclosed on Schedule 4.7 or in the Parent SEC Documents;


(e)           any entry into any
transaction with any director, officer, shareholder or Affiliate of the Parent
that is either not in the ordinary course of business, or on terms less
favorable to the Parent than those that would have been obtained in a
comparable transaction by the Parent with an unrelated Person; or


(f)            to the Knowledge of
the Parent and the Purchaser, any agreement, whether oral or written, to do any
of the foregoing.


4.8          Taxes.  The Parent has duly filed when due, including
any extensions, all Tax Returns in connection with and in respect of its
business, its assets and employees, and have timely paid and discharged all
Taxes shown thereon.  The Parent has not
received notice of any Tax deficiency outstanding, proposed or assessed against
or allocable to the Parent, nor has the Parent executed any waiver of any
statute of limitation on the assessment or collection of any tax or executed or
filed with the IRS or any other Governmental Entity any agreement now in effect
extending the period for assessment or collection of any Taxes against the Parent.  There is no proposed assessment and no audit,
claim, action, proceedings, examination, suit, investigation or similar
proceeding pending, proposed or threatened with respect to Taxes of the Parent
and, to the Knowledge of the Parent and the Purchaser, no basis exists
therefore.


4.9          Intellectual Property.


(a)         To
the Knowledge of the Parent and the Purchaser, the Parent owns, or is licensed
or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, domain names, copyrights, and any
applications therefor, trade secrets, and computer software programs or
applications (collectively, the “Parent Intellectual
Property”) that is used in its business as currently conducted.  All requisite renewals and affidavits of use
have been filed with respect to each of the registrations for the Parent
Intellectual Property (where applicable), and each is presently in full force
and effect and each of the trade names and trademarks is valid, and is in good
standing and active use and none has been abandoned.


(b)        To
the Knowledge of the Parent and the Purchaser, there is no unauthorized use,
disclosure, infringement or misappropriation of any Parent Intellectual
Property rights of the Parent, or any Third Party Intellectual Property Rights
to the extent licensed by or through the Parent, by any third party.


(c)         To
the Knowledge of the Parent and the Purchaser, the Parent is not in breach of
any license or other agreement relating to the Parent Intellectual Property of
the Parent or any Third Party Intellectual Property Rights.



 28
 









(d)        Within
the last three (3) years, the Parent (i) not has been a party to, or to
the Knowledge of the Parent and the Purchaser, not been notified or advised of,
any suit, action or proceeding that involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party; or (ii) has not brought any
action, suit or proceeding for infringement of Parent Intellectual Property or
breach of any license agreement involving Parent Intellectual Property against
any third party.  The design,
development, distribution, marketing, licensing or sale of products or services
of the Parent does not infringe on any patent, trademark, service mark or
copyright of any third party.


(e)         To
the Knowledge of the Parent and the Purchaser, the Parent has secured valid
written assignments or work for hire agreements from all consultants and
employees who contributed to the creation and development of Parent
Intellectual Property of the rights to such contributions that the Parent does
not already own by operation of law.


(f)         To
the Knowledge of the Parent and the Purchaser, the Parent has taken reasonable
steps to protect its rights in its confidential information and trade secrets
that reasonably require protection.


4.10        Litigation; Compliance with Laws.


(a)         Except
as set forth on Schedule 4.10 or the Parent SEC Documents, there is no
Action pending or, to the Knowledge of the Parent and the Purchaser, threatened
against or affecting the Parent or the Purchaser or any of their respective
assets, and there is no basis Known to the Parent and the Purchaser for any
such Action.


(b)        Except
as disclosed on Schedule 4.10 or the Parent SEC Documents, the
Parent  and the Purchaser are not
(i) to the Knowledge of the Parent and the Purchaser, in violation of any
applicable Law or (ii) subject to or in default with respect to any Order
to which any of them, or any of their respective properties or assets (owned or
used), is subject.  To the Knowledge of
the Parent and the Purchaser, at all times since January 1, 2006, the Parent
has been in full compliance with each Law that is or was applicable to it or to
the conduct or operation of its business or the ownership or use of any of its
assets.


(c)         To
the Knowledge of the Parent and the Purchaser, no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
constitute or result in a violation by the Parent or the Purchaser of, or a
failure on the part of it, to comply with, any Law.


Except
as provided in Schedule 4.10 or the Parent SEC Documents, the Parent and
the Purchaser have not received any notice or other communication (whether oral
or written) from any Governmental Entity or any other Person regarding
(i) any actual, alleged, possible, or potential violation of, or failure
to comply with, any Law or (ii) any actual, alleged, possible, or
potential obligation on the part of the Parent or the Purchaser to undertake,
or to bear all or any portion of the cost of, any remedial action of any
nature.


4.11        Insurance.


(a)           Except as set forth
in Schedule 4.11 or in the Parent SEC Documents, there is no actual,
pending, or, to the Knowledge of the Parent and the Purchaser, threatened
claims against the Parent that would come within the scope of the Parent’s
insurance coverage, nor has any current carrier provided notice to the Parent
that it intends to terminate any policy or to deny coverage with respect to any
claim.  There are no actual, pending or,
to the Knowledge of the



 29
 









Parent and the Purchaser, threatened claims against the Parent that
would not come within the scope of the insurance coverage of the Parent.


(b)           The Parent has
maintained during the past three (3) years and currently maintains
(i) insurance on all of the Assets used in connection with its business of
a type customarily insured, covering property damage and loss of income by fire
or other casualty, and (ii) adequate insurance protection (subject to
applicable deductible amounts and dollar limits of such coverage) against all
errors and omissions and other liabilities, claims, and risks, which it is
customary and reasonable to insure with respect to the Parent’s business.  The Parent has not, within the past three (3)
years, allowed any insurance policy to lapse for failure to renew or for any
other reason.  The Parent has not failed
to give any notice or present any claim under any insurance policy in due and
timely fashion under the applicable insurance policy.


4.12        Restrictions on Business Activities.  There is no
agreement, judgment, injunction, order or decree binding upon the Parent or the
Purchaser that has, or could reasonably be expected to have, the effect of
prohibiting or materially impairing the conduct of its business as presently
conducted.


4.13        Internal Controls.
 The Parent maintains a system of
internal controls sufficient to provide reasonable assurances that:


(a)         transactions
are executed in accordance with management’s general or specific authorization;


(b)        transactions
are recorded as necessary (1) to permit preparation of financial
statements in conformity with GAAP or any other criteria applicable to such
statements and (2) to maintain accountability for assets; and


(c)         access
to proprietary assets is permitted only in accordance with management’s general
or specific authorization.


4.14        U.S. Environmental Laws


(a)         To
the Knowledge of the Parent and the Purchaser, the Parent’s operations are
compliant with U.S. Environmental Laws in all material respects.


(b)        Neither the Parent,
nor any of its Subsidiaries has entered into, or is subject to, any agreements,
consents, orders, decrees, judgments or other directives of Governmental
Entities in existence at this time based on any U.S. Environmental Laws.


(c)         To
the Knowledge of the Parent and the Purchaser, neither the Parent,
nor any of its Subsidiaries has received written notice from any Person
of, and no investigation or written claim is pending regarding, any Release,
disposal, event, condition, circumstance, activity, practice or incident
concerning the Parent, any of its Subsidiaries, or its or
their prior operations or any land, facility, asset or property currently or
formerly owned or leased by any of the Parent or its Subsidiaries and
alleging either (i) a violation of U.S. Environmental Law, including
common law, or (ii) obligations, including remediation or other liabilities
under Environmental Law.



 30
 









4.15        Benefit Plans


.  The Parent does not maintain or contribute to
any multi-employer plan (as defined in Section 3(37) of ERISA) or any
employee pension benefit plan (as defined in Section 3(2) of ERISA) that
is subject to the minimum funding requirements of Section 412 of the Internal
Revenue Code of 1986, as amended.


4.16        Accuracy of Information


.  To the Knowledge of the
Parent and the Purchaser, none of the information supplied in writing by or on
behalf of the Parent to the Sellers, the Shareholders or their respective
Representatives in connection with the transactions contemplated in this
Agreement, this Agreement or the negotiations leading up to this Agreement
contain, or at the respective times such information was delivered, contained
any untrue statement of a material fact, or omit or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading.


ARTICLE
V

COVENANTS OF THE SELLERS AND THE SHAREHOLDERS PRIOR TO CLOSING DATE


5.1          Access and Investigation.  Between the date of this Agreement and the
Closing Date, the Sellers and the Shareholders will, and will cause the Company
to, (a) afford the Parent, the Purchaser and their Representatives and
prospective lenders and their Representatives (collectively, the “Parent/Purchaser’s Advisors”) full and free access to the
Company’s personnel, properties, contracts, books and records, and other
documents and data; (b) furnish the Parent and the Purchaser and the
Parent/Purchaser’s Advisors with copies of all such contracts, books and
records, and other existing documents and data as the Parent or the Purchaser
may reasonably request; and (c) furnish the Parent or the Purchaser and the
Parent/Purchaser’s Advisors with such additional financial, operating, and
other data and information as the Parent or the Purchaser may reasonably
request.


5.2          Operation of the Business of the Company prior to the Closing Date.  Between
the date of this Agreement and the Closing Date, the Sellers and the
Shareholders will, and will cause the Company to,:


(a)         conduct
the business of the Company only in the ordinary course of business consistent
with past practice;


(b)           use their
commercially reasonable efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, consultants, and agents of the Company, and maintain the relations
and good will with suppliers, customers, landlords, creditors, consultants,
employees, agents, and others having business relationships with the Company;


(c)           confer with the
Parent concerning operational matters of a material nature; and


(d)           otherwise report
periodically to the Parent concerning the status of the business, operations,
and finances of the Company.


Without limiting the generality of the foregoing, from the date of this
Agreement until the Closing or a termination of this Agreement, and except as
contemplated by this Agreement, the Company shall, and the Sellers and the
Shareholders shall cause the Company to,:


(a)           not adopt or propose
any change in the Company’s Articles of Incorporation or Bylaws or other
organizational documents;



 31
 









(b)           not enter into or
amend any consulting agreements (oral or written) or increase the compensation
payable or to become payable by the Company to any of its officers, directors
or consultants or adopt or amend any employee benefit plan or arrangement (oral
or written);


(c)           not issue any Stock;


(d)           not terminate any
existing directors and officers or similar liability insurance and not modify
or reduce the coverage thereunder;


(e)           not pay any dividend
or make any other distribution to holders of Stock except in accordance with Section
2.3;


(f)            not, directly or
indirectly, dispose of or acquire any properties or assets of the Company
except in the ordinary course of business consistent with past practice;


(g)           not incur any
additional indebtedness for borrowed money except pursuant to existing
arrangements which have been disclosed to the Parent prior to the date hereof;


(h)           not (i) change
accounting methods; (ii) amend or terminate any contract, agreement or
license to which they are a party (except pursuant to arrangements previously
disclosed in writing to the Parent or disclosed in the Disclosure Schedules
hereto) except those amended or terminated in the ordinary course of business
consistent with past practice; (iii) lend any amount to any Person, other
than advances for travel and expenses which are incurred in the ordinary course
of business consistent with past practice; (iv) enter into any guarantee
or suretyship for any obligation except for the endorsements of checks and
other negotiable instruments in ordinary course of business consistent with
past practice; (v) waive or release any material right or claim;
(vi) agree to any audit assessment by any Tax authority or file any
federal or province income or franchise Tax return unless copies of such
returns have been delivered to the Parent for its review prior to such
agreement or filing; and (vii) terminate the services of any key
consultant or officer; and


(i)            not, directly or
indirectly, agree or commit to do any of the foregoing.


The parties agree that if the Company pays any cash or other dividend
or distribution to the Sellers or the Shareholders or any other third party
prior to the Closing in violation of this Section 5.2, then the Cash
Portion of the Purchase Price will be reduced by the amount of such dividend or
distribution.  Payment of amounts
required to satisfy the Company’s obligations under the DE Purchase Agreement
and the Company’s purchase and redemption of 33 1/3% of the Stock from Decca Engineering
and issuance of the Receivables Note prior to the Closing are not violations of
this Section 5.2.


5.3           Required Approvals.  As
promptly as practicable after the date of this Agreement, the Sellers and the
Shareholders will, and will cause the Company to, make all filings required by
Law to be made by the Company, the Sellers or the Shareholders in order to
consummate the transactions contemplated herein.  Between the date of this Agreement and the
Closing Date, the Sellers and the Shareholders will, and will cause the Company
to, (a) cooperate with the Parent with respect to all filings that the Parent
elects to make or is required by Law to make in connection with the
transactions contemplated herein; and (b) cooperate with the Parent in obtaining
all consents required for the consummation of the transactions contemplated
herein.



 32
 









5.4           Notification. 
Between the date of this Agreement and the Closing Date, each Seller and
Shareholder will promptly notify the Parent in writing if such Seller or Shareholder
or the Company becomes aware of any fact or condition that causes or
constitutes a breach of any of the Sellers’ or the Shareholders’
representations and warranties as of the date of this Agreement, or if such
Seller or Shareholder or the Company becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition.  Should any such fact or condition require any
change in the Disclosure Schedules if the Disclosure Schedules were dated the
date of the occurrence or discovery of any such fact or condition, the Sellers
and the Shareholders will promptly deliver to the Parent a supplement to the
Disclosure Schedules specifying such change. 
All such supplements to the Disclosure Schedules delivered by the Sellers
and the Shareholders prior to the Closing Date shall not prevent or cure any
misrepresentation or breach of warranty of the Sellers or the
Shareholders.  During the same period,
each Seller and Shareholder will promptly notify the Parent of the occurrence
of any breach of any covenant of the Sellers the Shareholders or the Company in
this Article 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Article 7 impossible or unlikely.


5.5           No
Negotiations.  Until such time, if any, as this Agreement is
terminated pursuant to Article VIII, the Sellers and the Shareholders
will not, and will cause the Company and each of its Representatives not to,
directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, consider the merits of, or enter into any agreement with respect to any
unsolicited inquiries or proposals from, any Person (other than the Parent)
relating to any transaction involving the sale of the business or assets (other
than in the ordinary course of business consistent with past practice) of the
Company, or any of the capital stock of the Company, or any merger,
consolidation, business combination, or similar transaction involving the
Company.  The Sellers and the
Shareholders shall promptly advise the Parent orally and in writing of any
proposal for such transaction or any inquiry with respect to or that could lead
to any proposal for such a transaction (including the financing for such
proposal and a copy of such documents conveying such proposal), the material
terms and conditions of such inquiry or proposal and the identity of the person
making any such proposal or inquiry.  The
Sellers and the Shareholders agree to keep the Parent fully informed of the
status and details of any such proposal or inquiry.


ARTICLE
VI

COVENANTS OF THE PARENT AND THE PURCHASER PRIOR TO THE CLOSING DATE


As promptly as practicable
after the date of this Agreement, the Parent and the Purchaser will make all
filings required by Law to be made by the Parent or the Purchaser in order to
consummate the transactions contemplated herein.  Between the date of this Agreement and the
Closing Date, the Parent and the Purchaser will (a) cooperate with the Sellers
and the Shareholders with respect to all filings that the Sellers or the
Shareholders elect to make or is required by Law to make in connection with the
transactions contemplated herein; (b) cooperate with the Sellers and the
Shareholders in obtaining all consents required for the consummation of the
transactions contemplated herein; and (c) cooperate with the Shareholders to
ensure that all personal guarantees provided by the Shareholders which
guarantee the payment and performance of the Company under its banking
arrangements with Toronto-Dominion are released as soon as reasonably
practicable following the Closing Date.



 33
 









ARTICLE
VII

CONDITIONS PRECEDENT


7.1           Conditions Precedent to the Parent’s and the
Purchaser’s Obligation to Close. 
The Purchaser’s obligation to purchase all of the Stock and the Parent’s
and the Purchaser’s obligations to take the other actions required to be taken
by the Parent and the Purchaser at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by the Parent and the Purchaser, in whole or in part):


(a)         Accuracy of Representations.


(i)            All of the Sellers’ and the
Shareholders’ representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement, and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Schedules.


(ii)           Each of the Sellers’ and the
Shareholders’ representations and warranties in Sections 3.2, 3.3
and 3.6 must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date, without giving effect to any supplement to the
Disclosure Schedules.


(iii)          The Parent and the
Purchaser shall have received a certificate signed on behalf of each Seller by
the Chief Executive Officer of each Seller and each Shareholder the effect set
forth in this Section 7.1(a).


(b)           Sellers’ and Shareholders’ Performance.


(i)            All of the
covenants and obligations that the Sellers and the Shareholders are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all respects and the Parent and the Purchaser shall have received a certificate
signed on behalf of each Seller by the Chief Executive Officer of each Seller
and each Shareholder to such effect.


(ii)           Each
document required to be delivered pursuant to Section 2.6 must have
been delivered.


(c)           Consents.  Each of the consents identified in Sections
2.6(b) and (m) must have been obtained and must be in full force and
effect.


(d)           No
Actions.  Since the date
of this Agreement, there must not have been commenced or threatened against the
Parent or the Purchaser, or against any Person affiliated with the Parent or
the Purchaser, any Action (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the transactions
contemplated herein, or (b) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the transactions
contemplated herein.


(e)           No Claim
Regarding Stock Ownership or Sale Proceeds.  There must not have been made or
threatened by any Person any claim asserting that such Person (a) is the
holder or the beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any stock



 34
 









of, or any other voting, equity, or ownership interest in, the Company,
or (b) is entitled to all or any portion of the Purchase Price payable for
all of the Stock.


(f)            No Prohibition.  Neither the consummation nor the
performance of any of the transactions contemplated herein will, directly or
indirectly (with or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause the Parent or the
Purchaser or any Person affiliated with the Parent or the Purchaser to suffer
any material adverse consequence under, (a) any applicable Law or Order,
or (b) any Law or Order that has been published, introduced, or otherwise
proposed by or before any Governmental Entity.


(g)           Absence
of Material Changes.  Since the date hereof, there shall not have
occurred any event, circumstance or fact that has resulted in, or which is
reasonably likely to result in, the occurrence of any material adverse change
with respect to the Company, its assets or business, whether individually or
taken as a whole.


(h)           Parent
Board Approval.  The Board of Directors of the Parent shall
have approved the transactions contemplated herein, including but not limited
to the issuance of the Stock Portion of the Purchase Price to the Sellers.


(i)            Financing.  The Parent and the Purchaser shall have
obtained satisfactory financing of the Purchase Price as determined by the
Parent and the Purchaser in their sole discretion.


(j)            Due Diligence.  The Parent and the Purchaser shall have
completed their due diligence investigation of the Company and the results of
which shall be satisfactory to the Parent and the Purchaser in their sole discretion.


(k)           Delivery
of Schedules.  The Sellers
shall have delivered to the Parent and the Purchaser each of the Schedules
described in Article I or Article III of this Agreement, and the
Parent and the Purchaser shall have determined that the form of such Schedules
and the information disclosed therein are acceptable to the Parent and the
Purchaser, in their sole discretion.


7.2     Conditions Precedent to the Sellers’ and
the Shareholders’ Obligation to Close.  The
Sellers’ obligation to sell all of the Stock and the Sellers’ and the
Shareholders’ obligations to take the other actions required to be taken by the
Sellers and the Shareholders at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by the Sellers or the Shareholders, in whole or in part):


(a)         Accuracy of Representations.


(i)            All of the Parent’s and the
Purchaser’s representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement, and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.


(ii)           The Sellers and the
Shareholders shall have received a certificate signed on behalf of the Parent
and the Purchaser by the Chief Executive Officer of the Parent and the
Purchaser, respectively, to the effect set forth in this Section 7.2(a).



 35
 









(b)           Performance.


(i)            All of the
covenants and obligations that the Parent and the Purchaser are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all respects and the Sellers and the Shareholders shall have received a
certificate signed on behalf of the Parent and the Purchaser by the Chief
Executive Officer of the Parent and the Purchaser, respectively, to such
effect.


(ii)           Each
document required to be delivered pursuant to Section 2.7 must have
been delivered.


(c)           No Injunction.  There must not be in effect any Law or
any injunction or other Order that (a) prohibits the sale of the shares of
Stock by the Sellers to the Purchaser, and (b) has been adopted or issued,
or has otherwise become effective, since the date of this Agreement.


(d)           Delivery of Schedules.  The Parent and the Purchaser shall have
delivered to the Sellers the Disclosure Schedules described in Article IV
of this Agreement and the Sellers shall have determined that the form of such
Schedules and the information disclosed therein are acceptable to the Sellers
in their sole discretion.


ARTICLE
VIII

TERMINATION


8.1   Termination Events.  This
Agreement may, by notice given prior to or at the Closing, be terminated:


(a)           by either the Parent
and the Purchaser or the Sellers and the Shareholders if a material breach of
any provision of this Agreement has been committed by the other party(ies) and
such breach has not been waived;


(b)           by the Parent and
the Purchaser if any of the conditions in Section 7.1 have not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of the Parent or the
Purchaser to comply with its obligations under this Agreement) and the Parent
and the Purchaser have not waived such condition on or before the Closing Date;


(c)           by the Sellers and
the Shareholders, if any of the conditions in Section 7.2 has not been
satisfied of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of the Sellers, the
Shareholders or the Company to comply with their obligations under this
Agreement) and the Sellers and the Shareholders have not waived such condition
on or before the Closing Date;


(d)           by mutual consent of
the Parent, the Purchaser, the Sellers and the Shareholders; or


(e)           by either the Parent
and the Purchaser or the Sellers and the Shareholders if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before March 2, 2007, or such later date as the parties may agree upon.


 



 36















                8.2          Effect of Termination.  Each party’s right of termination under Section
8.1 is in addition to any other rights it or he may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies.  If this
Agreement is terminated pursuant to Section 8.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Sections 12.16 and 12.17 will survive; provided,
however, that if this Agreement is terminated by a party because of the breach
of the Agreement by the other party(ies) or because one or more of the
conditions to the terminating party(ies)’s obligations under this Agreement is
not satisfied as a result of the other party(ies)’s failure to comply with its
obligations under this Agreement, the terminating party(ies)’s right to pursue
all legal remedies will survive such termination unimpaired.


ARTICLE IX

TAX MATTERS


9.1          Liability
for Transaction Taxes.  Each of the Sellers shall pay any real
property transfer or gains, sales, use, transfer, value added, stock transfer,
and stamp taxes, any transfer, recording, registration, and other fees, and any
similar Taxes which become payable in connection with the transactions
contemplated by this Agreement, and shall file such applications and documents
as shall permit any such Tax to be assessed and paid on or prior to the Closing
Date in accordance with any available pre-sale filing procedure.  Each party hereto shall execute and deliver
all instruments and certificates necessary to enable the other party or parties
to comply with the foregoing. 
Notwithstanding the foregoing, the Purchaser shall pay any goods and
services taxes applicable to the purchase of the Stock by the Purchaser
hereunder.


ARTICLE
X

INDEMNIFICATION


                10.1        Obligations of Sellers and
Shareholders.  The Sellers
and the Shareholders (each a “Seller/Shareholder
Indemnifying Party” and collectively, the “Seller/Shareholder
Indemnifying Parties”), jointly and severally, agree to indemnify
and hold harmless the Parent, the Purchaser, the Company and their respective
directors, officers, agents, managers, employees, representatives and
Affiliates and their successors and assigns (each a “Parent/Purchaser
Indemnified Party”) from and against any and all Losses of the
Parent/Purchaser Indemnified Parties, directly or indirectly, as a result of,
or based upon or arising from:


(a)         the
breach of any representation or warranty made by any of the Sellers or the
Shareholders contained in this Agreement;


(b)        the
breach of any covenant
or agreement by any Seller or any Shareholder or the Company contained in this
Agreement;


(c)         the
ownership of the Stock prior to the Closing Date, including but not limited to
any claims from Decca Engineering, Roger Gordon or their Affiliates;


(d)        the
ownership, management or use of the Assets and the operation of the Business,
all as prior to the Closing Date;


(e)           the purchase and redemption of 33
1/3% of the Stock from Decca Engineering; or



 37
 









 


(f)            any and all Taxes (i) in respect of
any taxation year or period ending prior to the Closing Date at such time as
the Company, the Purchaser or the Parent receives an assessment, reassessment
or other form of recognized document assessing liability for such Taxes; and
(ii) in the case of any taxation year or period beginning before and ending on
or after the Closing Date, the Taxes attributable to the portion of that year
or period ending on December 31, 2006.


                10.2        Obligations of the Parent
and the Purchaser.  The
Parent and the Purchaser (each a “Parent/Purchaser
Indemnifying Party” and collectively, the “Parent/Purchaser
Indemnifying Parties”), jointly and severally, agree to indemnify
and hold harmless each of the Sellers and the Shareholders and their respective
directors, officers, agents, managers, employees, representatives and
Affiliates and their successors and assigns (each a “Seller/Shareholder
Indemnified Party”) from and against any and all Losses of the
Seller/Shareholder Indemnified Parties, directly or indirectly, as a result of,
or based upon or arising from:


(a)         the
breach of any representation or warranty made by the Parent or the Purchaser
contained in this Agreement;


(b)        the
breach of any covenant or agreement by the Parent or the Purchaser contained in
this Agreement; and


(c)         the
ownership, management or use of the Assets and the operation of the Business,
all as after the Closing Date, unless and to the extent that such Losses arise
solely from any action or inaction of any Seller or any Shareholder or any of
their Affiliates after the Closing Date.


                10.3        Procedure.  A Seller/Shareholder Indemnified Party or a
Parent/Purchaser Indemnified Party (each, an “Indemnified Party”)
shall give the Parent/Purchaser Indemnifying Party or the Seller/Shareholder
Indemnifying Party (each, an “Indemnifying Party”),
as applicable, notice (a “Claim Notice”)
of any matter which an Indemnified Party has determined has given or could give
rise to a right of indemnification under this Agreement (a “Claim”), within sixty (60) days of such
determination; provided, however, that any failure of the
Indemnified Party to provide such Claim Notice shall not release the
Indemnifying Party from any of its obligations under this Article X
except to the extent the Indemnifying Party is materially prejudiced by such
failure and shall not relieve the Indemnifying Party  from any other obligation or liability that
it may have to any Indemnified Party otherwise than under this Article X.  Upon receipt of the Claim Notice, the
Indemnifying Party shall be entitled to assume and control the defense of such
Claim at its expense if it gives notice of its intention to do so to the
Indemnified Party within five (5) Business Days of the receipt of such Claim
Notice from the Indemnified Party; provided, however, that (i) Indemnified
Party must approve of the selection of legal counsel by Indemnifying Party,
which approval shall not be unreasonably withheld or delayed and (ii) if
there exists or is reasonably likely to exist a conflict of interest that would
make it inappropriate in the judgment of the Indemnified Party, in its sole and
absolute discretion, for the same counsel to represent both the Indemnified
Party and the Indemnifying Party, then the Indemnified Party shall be entitled
to retain its own counsel, in each jurisdiction for which the Indemnified Party
determines counsel is required, at the expense of the Indemnifying Party.  In the event the Indemnifying Party exercises
the right to undertake any such defense against any such Claim as provided
above, the Indemnified Party shall cooperate with the Indemnifying Party in
such defense and make available to the Indemnifying Party, at the Indemnifying
Party’s expense, all witnesses, pertinent records, materials and information in
the Indemnified Party’s possession or under the Indemnified Party’s control
relating thereto as is reasonably required by the Indemnifying Party.  Similarly, in the event the Indemnified Party
is, directly or indirectly, conducting the defense against any such Claim, the
Indemnifying Party shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at the Indemnifying Party’s
expense, all such witnesses, records, materials and information in the
Indemnifying Party’s



 38
 









possession or under the
Indemnifying Party’s control relating thereto as is reasonably required by the
Indemnified Party.  No such Claim may be
settled by the Indemnifying Party without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld so long as
(a) there is no payment or other consideration required of the Indemnified
Party and (b) such settlement does not require or otherwise involve any
restrictions on the conduct of business by the Indemnified Party.


                10.4        Survival.  


(a)         The
representations and warranties of the Sellers, the Shareholders, the Parent and
the Purchaser contained in this Agreement, including the Exhibits and the
Disclosure Schedules to this Agreement, shall survive the Closing until the
third (3rd) anniversary of the Closing Date; provided,
however, that the representations and warranties in Section 3.2
(Capitalization), Section 3.3 (Stock Ownership by Sellers), Section
3.4 (Authorization; Enforceability), Section 3.17 (Employee Benefit
Plans), Section 3.21(c) (Receivables; Payables), Section 3.22
(Environmental), and the second sentence of Section 4.1(a) (Organization
and Authority of the Parent and the Purchaser) shall survive the Closing
indefinitely; provided further that the representations and warranties in Section
3.9 (Taxes), Section 4.8 (Taxes) and the covenants and agreements in
Article IX (Tax Matters) shall survive until sixty (60) days after the
expiration of the statute of limitations period or periods legally applicable
to them.  Neither the period of survival
nor the liability of the Sellers or the Shareholders or the Parent or the
Purchaser with respect to the Sellers’ or the Shareholders’ or the Parent’s or
the Purchaser’s representations and warranties shall be reduced by any
investigation made at any time by or on behalf of the Parent or the Purchaser
or the Sellers or the Shareholders, respectively.  An Indemnifying Party is not required to make
any indemnification payment hereunder unless a Claim is initiated prior to
expiration of the survival period set forth in this Section 10.4(a),
except with respect to claims based on fraud committed by the Indemnifying
Party.


(b)        Any
matter as to which a Claim has been asserted by a Claim Notice to the other
party that is pending or unresolved at the end of any applicable limitation
period shall continue to be covered by this Article X notwithstanding
any applicable statute of limitations (which the parties hereby waive) until
such matter is finally terminated or otherwise resolved by the parties under
this Agreement or by a court of competent jurisdiction and any amounts payable
hereunder are finally determined and paid.


                10.5        Notice by Indemnifying Party.  The Indemnifying Party agrees to notify the
Indemnified Party of any liabilities, claims or misrepresentations, breaches or
other matters covered by this Article X upon discovery or receipt
of notice thereof (other than such claims from the Indemnified Party).


                10.6        Indemnity Threshold and Cap.  


(a)         The
Sellers and the Shareholders shall not have any liability to any
Parent/Purchaser Indemnified Party with respect to Losses arising out of any of
the matters referred to in Section 10.1, except with respect to Claims
based on fraud committed by the Sellers, the Shareholders or the Company, until
such time as the amount of all such liability shall collectively exceed
$150,000 (the “Threshold”), whereupon the Losses
exceeding the Threshold shall be payable by the Sellers and the
Shareholders.  Also, in no event shall
the Sellers’ and the Shareholders’ aggregate liability to any Indemnified Party
under Section 10.1 exceed the aggregate Purchase Price plus the original principal amount of the Receivables Note,
except with respect to Claims based on (i) fraud committed by any of the
Sellers, the Shareholders or the Company or (i) the breach of any
representations and warranties in Section 3.2 (Capitalization),



 39
 









Section 3.3
(Stock Ownership by Sellers), Section 3.4 (Authorization;
Enforceability), Section 3.9 (Taxes), Section 3.17 (Employee
Benefit Plans) and Section 3.22 (Environmental).


(b)         The
Parent and the Purchaser shall not have any liability to any Seller/Shareholder
Indemnified Party with respect to Losses arising out of any of the matters
referred to in Section 10.2, except with respect to Claims based on fraud committed
by the Parent or the Purchaser, until such time as the amount of all such
liability shall collectively exceed the Threshold, whereupon the Losses
exceeding the Threshold shall be payable by the Parent and the Purchaser.  Also, in no event shall the Parent’s and the
Purchaser’s combined aggregate liability under Section 10.2 exceed the
aggregate Purchase Price (which, for greater certainty does not include the
Receivables Note), less the Cash Portion of the Purchase Price, except with
respect to Claims based on (i) fraud committed by the Parent or the Purchaser
or (ii) the breach of any representations and warranties in Section 4.8
(Taxes).


                10.7        Exclusive Remedy.  Other than rights to equitable relief or
claims for fraud to the extent available under applicable Law, each of the
Sellers, the Shareholders, the Parent and the Purchaser acknowledge and agree
that the sole and exclusive remedy for any Losses arising from Claims described
in Sections 10.1 and 10.2 shall be indemnification in accordance
with this Article X.


                10.8        Set-Off.   Notwithstanding any other
provision of this Agreement and without prejudice to and supplemental to any
other rights or remedies which the Parent or the Purchaser may have under this
Agreement, the Parent and the Purchaser may set-off against any amounts owing
under the Receivables Notes the amount of any Claims brought by the Parent or
the Purchaser pursuant to this Article X arising out of a breach of
the representatives and warranties in Section 3.21(d).


                10.9        Mitigation.            Prior to the resolution of
any Claim for indemnification under this Agreement, the Indemnified Party shall
utilize all commercially reasonable efforts, consistent with normal past
practices and policies and good commercial practice, to mitigate such Losses.  All indemnification or reimbursement payments
required pursuant to this Agreement shall be made after all insurance benefits
actually received by the Indemnified Party.


ARTICLE XI


PROTECTION OF PERSONAL INFORMATION


                11.1        Requirement for Personal Information.  Each of the parties acknowledges and confirms
that the disclosure of Personal Information is necessary for the purposes of
determining if the parties shall proceed with the transactions contemplated
herein, and that the disclosure of Personal Information relates solely to the
carrying on of the Business, or the completion of the transactions contemplated
herein.


                11.2        Confidentiality Obligation.  Unless otherwise required by Law, the Parent
and the Purchaser shall at all times keep strictly confidential all Disclosed
Personal Information provided to them, and shall instruct those employees,
contractors, agents and advisors responsible for storing, processing,
organizing or analyzing such Disclosed Personal Information to protect the
confidentiality of that information in a manner consistent with the obligations
of the Parent and the Purchaser hereunder. 
The Parent and the Purchaser shall ensure that access to the Disclosed
Personal Information shall be restricted to those employees or service providers
of the Parent or the Purchaser who have a bona fide need to access that
Disclosed Personal Information.



 40
 









 


                11.3        Pre-Closing Use of Personal
Information.  Prior to
Closing, the Parent and the Purchaser shall at all times collect, use and
disclose the Disclosed Personal Information only for those purposes that relate
to the transactions contemplated herein.


                11.4        Post-Closing Use of Disclosed
Personal Information.  The
Parent and the Purchaser undertake, after Closing, to utilize the Disclosed
Personal Information only for those purposes for which the Disclosed Personal
Information was initially collected in accordance with Laws.


ARTICLE
XII

GENERAL


                12.1        Amendments; Waivers.  This Agreement and any schedule or exhibit
attached hereto may be amended only by agreement in writing of all
parties.  No waiver of any provision nor
consent to any exception to the terms of this Agreement or any agreement
contemplated hereby shall be effective unless in writing and signed by the
party to be bound and then only to the specific purpose, extent and instance so
provided.


                12.2        Schedules; Exhibits;
Integration.  Each
schedule and exhibit delivered pursuant to the terms of this Agreement shall be
in writing and shall constitute a part of this Agreement, although schedules need
not be attached to each copy of this Agreement. 
This Agreement, together with such schedules and exhibits, constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior agreements and understandings of the parties in
connection therewith.


                12.3        Governing Law.  This Agreement, the legal relations between
the parties and any Action, whether contractual or non-contractual, instituted
by any party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement, including but not limited to
the negotiation, execution, interpretation, coverage, scope, performance,
breach, termination, validity, or enforceability of this Agreement, shall be
governed by and construed in accordance with the laws of the State of Texas.


                12.4        No Assignment.  Neither this Agreement nor any rights or
obligations under it are assignable without the express written consent of the
Sellers, the Shareholders, the Parent and the Purchaser, except that the Parent
or the Purchaser may assign its rights hereunder to the purchaser of all or
substantially all of the assets or capital stock of the Parent or the Purchaser
(by merger or otherwise); provided that, upon giving notice to the Sellers at any time on or prior to the Closing Date,
the Parent or the Purchaser is entitled to assign this Agreement or any or all
of its rights and/or obligations under this Agreement to a wholly-owned
subsidiary, and a Seller is entitled to assign its Stock to the Shareholder
holding all the shares of such Seller (or the spouse thereof) prior to Closing,
subject to the following conditions:


(a)           the
assignee will become jointly and severally liable with the assignor, as a
principal and not as a surety, with respect to all of the obligations of the
assignor, including the representations, warranties, covenants, indemnities and
agreements of the assignor; and


(b)           the
assignee must execute an agreement confirming the assignment and the assumption
by the assignee of all obligations of the assignor under this Agreement,
including the obligation to buy or sell the Stock, as applicable.


                12.5        Headings.  The descriptive headings of the Articles,
Sections and subsections of this Agreement are for convenience only and do not
constitute a part of this Agreement.



 41
 









 


                12.6        Counterparts.  This Agreement and any amendment hereto or
any other agreement (or document) delivered pursuant hereto may be executed in
one or more counterparts and by different parties in separate counterparts.  All of such counterparts shall constitute one
and the same agreement (or other document) and shall become effective (unless
otherwise provided therein) when one or more counterparts have been signed by
each party and delivered to the other party.


                12.7        Publicity and Reports.  The Sellers, the Shareholders, the Parent and
the Purchaser shall coordinate all publicity relating to the transactions
contemplated by this Agreement and no party shall issue any press release,
publicity statement or other public notice relating to this Agreement, or the
transactions contemplated by this Agreement, without obtaining the prior
consent of all of the Sellers, the Shareholders, the Parent and the Purchaser.


                12.8        Parties in Interest.  This Agreement shall be binding upon and
inure to the benefit of each party, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.  Nothing in this Agreement is intended to
relieve or discharge the obligation of any third person to any party to this
Agreement.


                12.9        Notices.  Any notice or other communication hereunder
must be given in writing and (a) delivered in person, (b) transmitted
by facsimile or (c) mailed by certified mail, postage prepaid, return receipt
requested as follows:


(a)           If to the Parent or the Purchaser, addressed to:


Tradestar Services, Inc. or 1297181 Alberta Ltd.


Three Riverway, Suite 1500


Houston, Texas 77056


Attn.: Chief Executive Officer


Telephone: (713) 479-7000


Facsimile: (713) 975-6271


With a copy to:


(i)                                     Haynes and Boone, LLP


One
Houston Center


1221
McKinney Street, Suite 2100


Houston,
Texas 77010


Attn.:  Bryce D. Linsenmayer, Esq.


Telephone:
(713) 547-2007


Facsimile: (713) 236-5540


(ii)           Stikeman
Elliott LLP


4300 Bankers Hall


888-3rd Street SW


Calgary, AB T2P 5C5


Attn.: Stuart M. Olley, Esq.


Telephone: (403) 266-9057


Facsimile: (403) 266-9034


(b)           If to the Sellers or the Shareholders, addressed to:



 42
 









 


(i)            383210 Alberta Ltd. or Barry Ahearn


#2 Fieldstone Way


Sylvan Lake, AB 
T4S 2L3


Attn.: Barry Ahearn


Telephone: (403) 318-2852


Facsimile: (403) 263-3374


(ii)           Dave
Hunter Resources Inc. or Dave Hunter


53360 Range Road 220


Ardrossan, AB T8E 2BS


Attn.: Dave Hunter


Telephone: (403) 860-4331


Facsimile: (780) 922-0176


With a copy to:


Douglas Dunscombe, Esq.


Suite 900


800 6th Avenue S.W.


Calgary, AB T2P 3G3


Telephone: (403) 262-7221


Facsimile: (403) 269-8246


or to such other address or
to such other person as either party shall have last designated by such notice
to the other party.  Each such notice or
other communication shall be effective (i) if given by facsimile, when
transmitted to the applicable number so specified in (or pursuant to) this Section 12.9
and an appropriate answerback is received, (ii) if given by mail, five (5)
days after such communication is deposited in the mails by certified mail,
return receipt requested, with postage prepaid and addressed as aforesaid or
(iii) if given by any other means, when actually delivered at such address.


                12.10      Remedies; Waiver.  Subject to Section 10.7, to the extent
permitted by Law, all rights and remedies existing under this Agreement are
cumulative to and not exclusive of, any rights or remedies otherwise available
under applicable Law.  No failure on the
part of any party to exercise or delay in exercising any right hereunder shall
be deemed a waiver thereof, nor shall any single or partial exercise preclude
any further or other exercise of such or any other right.


                12.11      Attorney’s Fees.  In the event of any Action by any party to
enforce against another party a right or claim, the prevailing party shall be
entitled to reasonable attorney’s fees, costs and expenses incurred in such
Action (on a solicitor and client basis). 
Attorney’s fees incurred in enforcing any judgment in respect of this
Agreement are recoverable as a separate item.


                12.12      Severability.  If any provision of this Agreement is
determined to be invalid, illegal or unenforceable by any Governmental Entity,
the remaining provisions of this Agreement to the extent permitted by Law shall
remain in full force and effect; provided that the essential terms and
conditions of this Agreement for all parties remain valid, binding and
enforceable.  In event of any such
determination, the parties agree to negotiate in good faith to modify this
Agreement to fulfill as closely as possible the original intents and purposes
hereof.  To the extent permitted by Law,
the parties hereby to the same extent waive any provision of Law that renders
any provision hereof prohibited or unenforceable in any respect.



 43
 









 


                12.13      Entire Agreement.  This Agreement
constitutes and includes that entire agreement of the parties with reference to
the subject matter hereof and supersedes all prior agreements and understandings
relating to the subject matter hereof. 
No promise or representation of any kind has been made to any of the
parties to this Agreement by any other party or parties to this Agreement or
anyone acting for any of such parties, except as is expressly stated in this
Agreement.


                12.14      Time is of the Essence.  Time is of the essence in interpreting and
enforcing this Agreement.


                12.15      Arbitration.  Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be resolved by binding
arbitration administered by the American Arbitration Association under its
Commercial Arbitration Rules in effect on the date of this Agreement (herein
the “AAA Rules”), and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.  The arbitrator shall be
selected pursuant to the AAA Rules and shall be a neutral and impartial lawyer
with excellent academic and professional credentials (i) who is or has been practicing
law for at least fifteen (15) years, specializing in general commercial
litigation or general corporate and commercial matters and (ii) who has both
training and experience as an arbitrator and is generally available to serve as
an arbitrator.  The arbitration shall be
governed by the arbitration law of the Federal Arbitration Act and shall be
held in Houston, Texas.


12.16      Expenses.  Except as otherwise expressly provided in
this Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the transactions contemplated herein, including all fees and
expenses of agents, representatives, counsel, and accountants.  The Sellers and the Shareholders will cause
the Company not to incur any out-of-pocket expenses in connection with this
Agreement, except for the payment of Cdn $200,000 to Decca Engineering in
accordance with the DE Purchase Agreement. 
In the event of termination of this Agreement, the obligation of each
party to pay its own expenses will be subject to any rights of such party
arising from a breach of this Agreement by another party.  The parties hereto agree that in the event
the Closing occurs on a date after March 2, 2007, an additional aggregate
payment of Cdn $5,000 shall be made by the Parent to the Sellers in order to
compensate the Sellers for additional legal fees incurred in connection
with  the transaction.


                12.17      Further Assurances.  From
time-to-time after the Closing Date, each party hereto shall at the request of
any other party execute and deliver such conveyances, transfers and other
assurances as may be reasonably required to effectively transfer the Stock to
the Purchaser and to carry out the intent of this Agreement.


                12.18      Confidentiality. 
Between the date of this Agreement and the Closing Date, the
Parent,  Purchaser, the Sellers and the
Shareholders will maintain in confidence, and will cause the directors,
officers, employees, agents, and advisors of the Parent, the Purchaser, the
Sellers and the Shareholders to maintain in confidence, any written, oral, or
other information obtained in confidence from another party in connection with
this Agreement or the transactions contemplated herein, unless (a) such
information is already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the transactions contemplated herein, or (c) the furnishing or
use of such information is required by legal proceedings.


[Remainder of Page Left Intentionally Blank]



 44














 


IN
WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first written above and effective as of the
date first written above.




	
  

  	
  PARENT:

  
	
   

  	
   

  
	
   

  	
  TRADESTAR
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. Hughes
  Watler Jr.

  
	
   

  	
   

  	
  D. Hughes Watler
  Jr.

  
	
   

  	
   

  	
  Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
  1297181
  ALBERTA LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ D. Hughes Watler Jr.

  
	
   

  	
   

  	
  D. Hughes Watler Jr.

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  SELLERS:

  
	
   

  	
   

  
	
   

  	
  383210
  ALBERTA LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry Ahearn

  
	
   

  	
   

  	
  Barry Ahearn

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
  DAVE
  HUNTER RESOURCES INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dave Hunter

  
	
   

  	
   

  	
  Dave Hunter

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHAREHOLDERS:

  
	
   

  	
   

  
	
   

  	
  /s/ Barry Ahearn

  
	
   

  	
  BARRY
  AHEARN

  
	
   

  	
   

  
	
   

  	
  /s/ Dave Hunter

  
	
   

  	
  DAVE
  HUNTER