EXHIBIT 10.25  






EXECUTION COPY  









ARRANGEMENT AGREEMENT




AMONG 




MDSI MOBILE DATA SOLUTIONS INC. 




FORTEZZA HOLDINGS S.À.R.L. 




AND




BEECH INVESTMENT CORP. 







July 29, 2005 


















TABLE OF CONTENTS






		Page
	
ARTICLE I   THE ARRANGEMENT 	 	2	 
	         Section 1.01     Interim Order	 	2	 
	         Section 1.02      Final Order	 	2	 
	         Section 1.03      Articles of Arrangement and Effective Date	 	2	 
	         Section 1.04      Meeting	 	2	 
	         Section 1.05      Securityholder Approval	 	2	 
	
ARTICLE II   REPRESENTATIONS AND WARRANTIES OF THE COMPANY 	 	3	 
	         Section 2.01      Organization and Qualification	 	3	 
	         Section 2.02      Organizational Documents	 	3	 
	         Section 2.03      Capitalization	 	3	 
	         Section 2.04      Subsidiaries	 	4	 
	         Section 2.05      Authority Relative to this Agreement	 	4	 
	         Section 2.06      No Conflict; Required Filings and Consents	 	5	 
	         Section 2.07      Reports; Financial Statements	 	5	 
	         Section 2.08      Material Adverse Effect; Undisclosed Liabilities	 	7	 
	         Section 2.09      Absence of Certain Changes or Events	 	8	 
	         Section 2.10    Absence of Litigation	 	9	 
	         Section 2.11    Opinion of Financial Advisor	 	10	 
	         Section 2.12    Brokers	 	10	 
	         Section 2.13     Information Circular	 	10	 
	         Section 2.14     Environmental Matters	 	10	 
	         Section 2.15     Real Property	 	11	 
	         Section 2.16     Personal Property	 	11	 
	         Section 2.17     Contracts	 	12	 
	         Section 2.18     Insurance Policies	 	13	 
	         Section 2.19     Compliance with Laws	 	13	 
	         Section 2.20     Tax Matters	 	13	 
	         Section 2.21     Change of Control Provisions	 	14	 
	         Section 2.22     Employees	 	15	 
	         Section 2.23     Permits	 	15	 
	         Section 2.24     Employee Benefit Plans	 	15	 
	         Section 2.25    Intellectual Property Rights	 	17	 
	         Section 2.26     Customers and Suppliers	 	19	 
	         Section 2.27     Investment Canada Act	 	19	 
	         Section 2.28     Approval of Arrangement	 	20	 
	         Section 2.29     Working Capital	 	20	 
	
ARTICLE III   REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBCO 	  	
20	 
	         Section 3.01      Organization and Qualification	 	20	 
	         Section 3.02      Authority Relative to this Agreement	 	20	 
	         Section 3.03      No Conflict; Required Filings and Consents	 	21	 








– i – 





















TABLE OF CONTENTS
(Cont'd)







		Page
	 	 	 	 
	         Section 3.04      Information Supplied	 	21	 
	         Section 3.05      Brokers	 	21	 
	         Section 3.06      Sufficient Funds	 	21	 
	
ARTICLE IV CONDUCT OF BUSINESS PENDING THE ARRANGEMENT 	  	
21	 
	         Section 4.01      Conduct of Business by the Company Pending the Arrangement	 	21	 
	         Section 4.02      Subsequent Company Documents; Monthly Financial Statements	 	24	 
	
ARTICLE V ADDITIONAL AGREEMENTS 	  	
25	 
	         Section 5.01      Interim Order; Information Circular; Final Order	 	25	 
	         Section 5.02      Appropriate Action; Consents; Filings	 	26	 
	         Section 5.03      Access to Information	 	27	 
	         Section 5.04      No Solicitation	 	28	 
	         Section 5.05      D&O Indemnification	 	31	 
	         Section 5.06      Notification of Certain Matters	 	31	 
	         Section 5.07      Public Announcements	 	32	 
	         Section 5.08      Shareholder Approval	 	32	 
	         Section 5.09      Securities Exchange Filings	 	32	 
	         Section 5.10    Stock Purchase Plans	 	32	 
	         Section 5.11     Company Stock Options	 	33	 
	         Section 5.12     Further Assurances	 	33	 
	
ARTICLE VI CONDITIONS TO THE ARRANGEMENT 	  	
33	 
	         Section 6.01      Conditions to the Obligations of Each Party	 	33	 
	         Section 6.02      Conditions to the Obligations of Parent and Subco	 	34	 
	         Section 6.03      Conditions to the Obligations of the Company	 	35	 
	         Section 6.04      Merger of Conditions	 	36	 
	
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 	  	
36	 
	         Section 7.01      Termination	 	36	 
	         Section 7.02      Method of Termination; Effect of Termination	 	37	 
	         Section 7.03      Payments on Termination	 	38	 
	         Section 7.04      Amendment	 	39	 
	         Section 7.05      Waiver	 	39	 
	
ARTICLE VIII GENERAL PROVISIONS 	  	
40	 
	         Section 8.01      Non-Survival of Representations, Warranties and Agreements	 	40	 
	         Section 8.02      Expenses	 	40	 
	         Section 8.03      Notices	 	40	 
	         Section 8.04      Certain Definitions	 	42	 
	         Section 8.05      Interpretation	 	49	 
	         Section 8.06      Severability	 	49	 
	         Section 8.07      Entire Agreement; Assignment	 	49	 
	         Section 8.08      Parties in Interest	 	50	 







– ii – 





















TABLE OF CONTENTS
(Cont'd)






		Page
	 	 	 	 
	         Section 8.09      Specific Performance	 	50	 
	         Section 8.10     Governing Law; Jurisdiction; Waiver of Jury Trial	 	50	 
	         Section 8.11     Headings	 	50	 
	         Section 8.12     Counterparts	 	50	 
	         Section 8.13     Construction	 	50	 
	         Section 8.14     Disclosure Schedule	 	51	 
	         Section 8.15     Confidentiality Agreement	 	51	 





Schedule  



Disclosure Schedule 




Exhibits  




Exhibit A     —      Plan of Arrangement

Exhibit B      —    Support Agreement 

Exhibit C      —      Form of Confidentiality and Work Product
Agreement 








– iii – 






















ARRANGEMENT AGREEMENT 



        This
ARRANGEMENT AGREEMENT dated July 29, 2005 (this “Agreement”)
is made and entered into by and among Fortezza Holdings S.à.r.l., a Luxembourg
société à responsabilité limitée
(“Parent”), Beech Investment Corp., a corporation incorporated under the
laws of the Province of British Columbia and a wholly-owned Subsidiary of Parent
(“Subco”), and MDSI Mobile Data Solutions Inc., a corporation
incorporated under the federal laws of Canada (the “Company”). Parent,
Subco and the Company are sometimes referred to herein individually as a
“Party” and collectively as the “Parties”. Capitalized
terms used but not otherwise defined herein have the meanings set forth in Section 8.04
hereof. 



        WHEREAS,
subject to the terms and conditions hereof, Parent, through its wholly-owned subsidiary,
Subco, is offering to acquire all of the outstanding common shares in the capital of the
Company (the “Company Common Shares”) for $8.00 per Company Common Share
in cash (the “Purchase Price”); 



        WHEREAS,
the Company intends to propose to its Shareholders at the Meeting a statutory plan of
arrangement under section 192 of the CBCA as a result of which, among other things,
Subco will acquire all of the outstanding Company Common Shares for the Purchase Price per
Company Common Share; 



        WHEREAS,
Erik Dysthe (“Dysthe”) is either the beneficial owner of, or controls or
directs the voting in respect of, 370,193 Company Common Shares, representing in the
aggregate approximately 3.9% of the issued and outstanding Company Common Shares (on a
fully diluted basis) and Dysthe has, pursuant to and subject to the terms and conditions
of the Support Agreement, agreed to vote the Company Common Shares beneficially owned by
him, or in respect of which he controls or directs the voting rights attaching thereto, in
favor of the Arrangement Resolution; 



        WHEREAS,
the Company’s Board of Directors, after consultation with its advisors, has
unanimously (subject to any abstention requirement set forth in Section 120 of the CBCA)
determined that the Arrangement is fair to the Securityholders and in the best interests
of the Company and has resolved to enter into this Agreement and to recommend that the
Shareholders vote in favor of the Arrangement Resolution, all on the terms and subject to
the conditions contained herein; and 



        WHEREAS,
the Arrangement described herein is subject to the approval of Shareholders holding at
least two-thirds of the Company Common Shares represented at the Meeting and satisfaction
of certain other conditions described in this Agreement. 



        NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained and intending to be legally bound hereby, the Parties hereby agree as
follows: 





















ARTICLE I 

THE ARRANGEMENT 



        Section
1.01  Interim Order. As soon as practicable following the
execution of this Agreement, but in any event not later than August 31, 2005, the
Company shall apply to the Court pursuant to section 192 of the CBCA for the Interim
Order providing for, among other things, the calling and holding of the Meeting for the
purpose of obtaining the approval of the Shareholders set forth in Section 1.05 and the
granting of Dissent Rights.  



        Section
1.02  Final Order. If the Interim Order and the approval of
Shareholders set forth in Section 1.05 are obtained, the Company shall promptly
thereafter take all steps necessary or desirable to submit the Arrangement to the Court
and apply for the Final Order in accordance with Section 5.01(e).  



        Section
1.03  Articles of Arrangement and Effective Date. As soon as
practicable following receipt of the Final Order, the Company shall file, pursuant to
section 192(6) of the CBCA, articles of arrangement to give effect to the
Arrangement in accordance with Section 5.01(f) and implement the Plan of Arrangement. The
steps of the Arrangement shall become effective in the order set out in the Plan of
Arrangement.  



        Section
1.04   Meeting. Subject to receipt of the Interim Order:  



        (a)              the
Company shall, by no later than September 15, 2005 (the “Mailing
          Deadline”): (i) prepare the Information Circular in form and
          substance satisfactory to Parent and Subco and will provide Parent and Subco
          with a reasonable opportunity to review and comment on drafts of the
Information           Circular and will take account of such comments; (ii) file the
Information           Circular in all jurisdictions where the same is required to be
filed by it; and           (iii) mail the Information Circular to Securityholders in
accordance with the           Interim Order and applicable Law;  



        (b)              the
Meeting shall be held as soon as reasonably practicable following the           Interim
Order, having regard to applicable Laws including National Instrument           54-101 of
the Canadian Securities Authorities, but in any event not later than           October 7,
2005 (the “Meeting Deadline”), and shall be held on           a Business
Day to be agreed upon by the Parties; and  



        (c)              the
Company shall, subject to Section 5.04, (i) through the Company’s
          Board of Directors, recommend that Shareholders vote in favor of the
Arrangement           Resolution and include such recommendation in the Information
Circular; (ii) use           its reasonable best efforts to secure the approval of the
Arrangement Resolution           by Shareholders as provided in Section 2.05; and (iii)
solicit proxies from           Shareholders to be voted at the Meeting in favor of the
Arrangement Resolution.  



        Section
1.05  Securityholder Approval. The Arrangement Resolution shall be
subject to the approval of two-thirds of the votes cast by or on behalf of those
Shareholders present or represented by proxy at the Meeting.  







2 



















ARTICLE II 

REPRESENTATIONS ANDWARRANTIES OF THE COMPANY 



        Except
as disclosed in a separate disclosure schedule referring to the Sections contained in this
Agreement, which has been delivered by the Company to Parent and Subco prior to the
execution of this Agreement (the “Disclosure Schedule”), the Company
hereby represents and warrants to Parent and Subco that: 



        Section
2.01  Organization and Qualification. Except as set forth in
Section 2.01 of the Disclosure Schedule, each of the Company and its Subsidiaries is a
corporation or other legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has the requisite
organizational power and authority and all necessary governmental approvals to own, lease
and operate the properties and assets it currently owns, operates or holds under lease
and to carry on its business as it is now being conducted. Each of the Company and its
Subsidiaries is duly qualified or licensed as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, have a Company Material
Adverse Effect. The term “Company Material Adverse Effect” means, when
used in connection with the Company, any change, effect, event, occurrence, condition or
development that is or is reasonably likely to be materially adverse to (i) the
business, assets, liabilities, properties, results of operations, or condition (financial
or otherwise) of the Company and its Subsidiaries, taken as a whole, or (ii) the
ability of the Company to perform its obligations under this Agreement; provided,
however, that a change in the trading price or the trading volume of the Company’s
equity securities shall not in and of themselves, either alone or in combination,
constitute a Company Material Adverse Effect; providedfurther, that a
Company Material Adverse Effect shall not include the impact attributable to (a) any
change in US GAAP or Canadian GAAP made after the date hereof, (b) any act or omission of
the Company made with the prior written consent of Parent or Subco where the Company has
provided full disclosure of such act or omission, (c) any change in general economic
conditions or in the industry in which the Company is engaged in business to the extent
that such change does not disproportionately affect the Company or its Subsidiaries, or
(d) any change or effects arising out of the announcement of the Transactions or the
consummation of the Transactions.  



        Section
2.02  Organizational Documents. The Company has heretofore
furnished to Parent and Subco complete and correct copies of its and each of its
Subsidiaries’constating documents (collectively, the “Organizational
Documents”), each as amended to the date hereof. Except as set forth in Section
2.02 of the Disclosure Schedule, the Organizational Documents are in full force and
effect. Neither the Company nor any of its Subsidiaries is in violation in any material
respect of any provision of its Organizational Documents.  



        Section
2.03  Capitalization. The authorized capital of the Company
consists of an unlimited number of Company Common Shares. There are 8,415,466 Company
Common Shares and Company Stock Options to purchase 1,074,334 Company Common Shares that
are issued and outstanding as of the date hereof. All outstanding Company Common Shares
have been duly authorized and validly issued and are outstanding as fully paid and
non-assessable  








3 


















shares in the capital of the Company.
Section 2.03 of the Disclosure Schedule identifies and describes the number of Company
Common Shares to be received upon exercise (and the holder and the exercise price thereof)
of each Company Stock Option. Except for the Company Stock Options and except as set forth
on Section 2.03 of the Disclosure Schedule, there are no existing options, warrants,
convertible securities, calls, subscriptions, or other rights or other agreements or
commitments obligating the Company to issue, transfer or sell, or cause to be issued,
transferred or sold, contingently or otherwise, any shares in the capital of the Company
or any other securities convertible into or evidencing the right to subscribe for any such
shares. Except as set forth on Section 2.03 of the Disclosure Schedule, there are no
outstanding stock appreciation rights or similar phantom equity securities issued by the
Company with respect to the capital of the Company. All outstanding Company Common Shares
and all outstanding Company Stock Options have been issued and granted in compliance with
all applicable Securities Laws and other Laws. 



        Section
2.04  Subsidiaries. Except as set forth in Section 2.04 of the
Disclosure Schedule, the Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or exercisable for
any equity or similar interest in, any corporation, partnership, limited liability
company, joint venture or other business association or entity. Except as set forth in
Section 2.04 of the Disclosure Schedule, all outstanding shares of stock (or other
interest of equity ownership) of each Subsidiary of the Company have been duly authorized
and validly issued and, if applicable, are fully paid and non-assessable, and are owned,
directly or indirectly, by the Company free and clear of any Liens, and there are no
outstanding options, warrants, convertible securities, calls, rights, commitments,
preemptive rights or agreements or instruments or understandings of any character,
obligating any Subsidiary of the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, contingently or otherwise, additional shares of such
Subsidiary or any securities or obligations convertible or exchangeable for such shares
or to grant, extend or enter into any such option, warrants, convertible security, call,
right, commitment, preemptive right or agreement.  



        Section
2.05   Authority Relative to this Agreement.  



        (a)              The
Company has all necessary corporate power and authority to execute and           deliver
this Agreement, to perform its obligations hereunder and to consummate           the
Transactions. The execution and delivery of this Agreement by the Company           and
the consummation by the Company of the Transactions have been duly and           validly
authorized by all necessary corporate action and no other corporate           proceedings
on the part of the Company are necessary to authorize this Agreement           or to
consummate the Transactions (other than (x) the approval of the
          Arrangement Resolution by the Shareholders as contemplated herein and
          (y) the approval of the Information Circular by the Company’s Board
of           Directors). This Agreement has been duly and validly executed and delivered
by           the Company and constitutes a legal, valid and binding obligation of the
          Company, enforceable against the Company in accordance with its terms, subject
          to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
          similar laws of general applicability relating to or affecting creditors’          rights
and to general equity principles.  







4 


















        (b)              Except
as may be required by the Court, the affirmative vote of the Shareholders
          holding two-thirds of the Company Common Shares represented at the Meeting is
          the only vote of the holders of any class or series of capital stock of the
          Company or any of its Subsidiaries required to approve this Agreement or any of
          the Transactions. No other vote of the Securityholders or directors of the
          Company or any of its Subsidiaries is required by Law, the Organizational
          Documents of the Company or any of its Subsidiaries or otherwise in order for
          the Company to consummate the Transactions.  



        (c)              The
Company has not adopted a shareholder rights plan or any similar plan or
          instrument that is in effect on the date hereof.  



        Section
2.06   No Conflict; Required Filings and Consents.  



        (a)              The
execution and delivery of this Agreement by the Company does not, and the
          consummation by the Company of the Transactions will not, (i) conflict
with           or violate the Organizational Documents of the Company or any of its
          Subsidiaries, (ii) conflict with or violate any United States (federal,
          state or local), Canadian (federal, provincial or local) or foreign law, rule,
          regulation, order, judgment, decree or common law (collectively,
          “Laws”) applicable to the Company or any of its Subsidiaries
or           by which any of its properties or assets is bound or affected, except for
such           conflicts or violations that, individually or in the aggregate, would not
have a           Company Material Adverse Effect or (iii) result in a violation or
breach of           or constitute a default (or an event which with notice or lapse of
time or both           would become a default) under, or give to others any right of
termination,           amendment, acceleration or cancellation of, or result in the
creation of a Lien           on any property or asset of the Company or any of its
Subsidiaries pursuant to,           any note, bond, mortgage, indenture, contract,
agreement, lease, license,           permit, franchise or other instrument or obligation
to which the Company or any           of its Subsidiaries is a party or by which the
Company, any of its Subsidiaries           or any of their respective properties or
assets is bound or affected, except as           disclosed in Section 2.06 of the
Disclosure Schedule and except for any such           violations, breaches, defaults or
other occurrences that, individually or in the           aggregate, would not have a
Company Material Adverse Effect or will not prevent           or delay the consummation
of the Transactions.  



        (b)              Except
as disclosed in Section 2.06 of the Disclosure Schedule, the execution           and
delivery of this Agreement by the Company do not, and the consummation by           the
Company of the Transactions will not, require any consent, approval,
          authorization or permit of, or filing with or notification to, any Governmental
          Authority or subdivision thereof, or any administrative, governmental or
          regulatory authority, agency, commission, tribunal or body, domestic, foreign
or           supranational, except (i) for the Interim Order and the Final Order,
and           (ii) where failure to obtain such consents, approvals, authorizations
or           permits, or to make such filings or notifications, individually or in the
          aggregate, would not have a Company Material Adverse Effect.  




        Section
2.07   Reports; Financial Statements.  



        (a)              Except
as set forth in Section 2.07 of the Disclosure Schedule, all forms,           reports,
schedules, prospectuses, circulars, statements and other documents           (together
with any amendments thereto) filed by it with any of the Canadian           Securities
Authorities, the SEC, TSX  






5 

















and Nasdaq since December 31,
2003 and any correspondence related thereto (such forms, reports, schedules, prospectuses,
circulars, statements and other documents, including any financial statements or other
documents, including any schedules included therein, are referred to as the
“Company Documents”), at the time filed (and if amended or superseded by
a filing prior to the date of this Agreement then, on the date of such filing),
(i) did not contain any misrepresentation of a material fact (as defined in
applicable Securities Laws), did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) complied in all
material respects with the requirements of applicable Securities Laws. The Company has not
filed any confidential material change report with the Canadian Securities Authorities,
the SEC or any other securities authority or regulator or any stock exchange or other
self-regulatory authority which as of the date hereof remains confidential. None of
Company’s Subsidiaries is required to file any reports or other documents with any of
the Canadian Securities Authorities, the SEC, TSX or Nasdaq. 



        (b)              The
annual audited consolidated financial statements and the quarterly unaudited
          consolidated financial statements of Company, including the notes thereto,
          included in the Company Documents (the “Company Financial
          Statements”) complied as to form in all material respects with
          applicable accounting requirements in Canada and the U.S. and with the
published           rules and regulations of applicable Governmental Authorities, the
Canadian           Securities Authorities, the SEC, TSX and Nasdaq with respect thereto
as of their           respective dates, and (with respect to the Company Financial
Statements           contained in documents filed in Canada prior to the Accounting
Changeover) have           been prepared in accordance with generally accepted accounting
principles of           Canada applied on a basis consistent throughout the periods
indicated and           consistent with each other (except as may be indicated in the
notes thereto) (“Canadian GAAP”) and (with respect to the Company
Financial           Statements contained in documents filed in the United States) in
accordance with           generally accepted accounting principles of the U.S. applied on
a basis           consistent throughout the periods indicated and consistent with each
other           (except as may be indicated in the notes thereto) (“US GAAP”)
          (it being acknowledged and agreed that the Company has commenced filing in
          Canada financial statements prepared in accordance with US GAAP effective the
          beginning of the fiscal year ending December 31, 2004, in accordance with
          Canadian Securities Administrators’ National Instrument 52-107 (the “Accounting
Changeover”)). The Company Financial Statements           present fairly, in all
material respects, the consolidated financial position,           results of operations
and cash flows of Company and its Subsidiaries at the           dates and during the
periods indicated therein (subject, in the case of           unaudited statements, to
normal, recurring year-end adjustments and the absence           of footnotes thereto)
and reflect appropriate and adequate reserves in respect           of contingent
liabilities, if any, of Company and its Subsidiaries on a           consolidated basis.
Since December 31, 2003, there has been no change in           Company’s
accounting policies, except as described in the notes to the           Company Financial
Statements or except as set forth in Section 2.07 of the           Disclosure Schedule.  



        (c)              The
books and records of the Company and its Subsidiaries, in all material
          respects, (i) have been maintained in accordance with good business
          practices on a basis consistent with prior years, (ii) state in reasonable
          detail the material transactions and dispositions of the assets of Company and
          its Subsidiaries and (iii) accurately and fairly reflect the basis for the
          Company Financial Statements. The Company has devised and maintains a  







6 

















system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorization; and
(ii) transactions are recorded as necessary (A) to permit preparation of
consolidated financial statements in conformity with Canadian GAAP and US GAAP and (B) to
maintain accountability of the assets of the Company and its Subsidiaries. 



        (d)              Since
July 31, 2002, the Company’s principal executive officer and its
          principal financial officer have disclosed, based on their most recent
          evaluation, to the Company’s auditors and the audit committee of the
          Company’s Board of Directors (i) all significant deficiencies and
          material weaknesses in the design or operation of internal controls over
          financial reporting which are reasonably likely to adversely affect the
          Company’s ability to record, process, summarize and report financial
          information and (ii)  any fraud, whether or not material, that involves
          management or other employees who have a significant role in the Company’s
          internal controls over financial reporting, and the Company has provided to
          Parent copies of any written materials relating to the foregoing and disclosed
          the foregoing in Section 2.07 of the Disclosure Schedule. The Company has
          established and maintains disclosure controls and procedures (as such term is
          defined in Rule 13a-15 under the Exchange Act); such disclosure controls
          and procedures are designed to ensure that material information relating to the
          Company, including its consolidated Subsidiaries, is made known to the
          Company’s principal executive officer and its principal financial officer
          by others within those entities, particularly during the periods in which the
          periodic reports required under the Exchange Act are being prepared; and such
          disclosure controls and procedures are effective in alerting the Company’s
          principal executive officer and its principal financial officer in a timely
          manner of all material information required to be included in the Company’s
          periodic reports required under the Exchange Act. There are no outstanding
loans           made by the Company or any of its Subsidiaries to any executive officer
(as           defined in Rule 3b-7 under the Exchange Act) or director of the
Company.           Since the enactment of the Sarbanes-Oxley Act of 2002, neither the
Company nor           any of its Subsidiaries has made any loans to any executive officer
(as defined           in Rule 3b-7 under the Exchange Act) or director of the
Company or any of           its Subsidiaries.  



        (e)              The
Company does not hold assets located in the United States (other than
          investment assets, voting or nonvoting securities of another person, and assets
          included pursuant to Section 801.40(d)(2) of the HSR Act) having a total value
          of over $50,000,000, and Company has not made aggregate sales in or into the
          United States of over $50,000,000 in its most recent fiscal year, all within
the           meaning of the HSR Act.  



        Section
2.08   Material Adverse Effect; Undisclosed Liabilities.  



        (a)              Since
December 31, 2004, there has not been any Company Material Adverse           Effect,
or any event, condition or development which is reasonably likely to           result in
a Company Material Adverse Effect.  



        (b)              Neither
the Company nor any of its Subsidiaries has any liabilities or           obligations
(whether known or unknown, whether asserted or unasserted, whether           absolute or
contingent, whether accrued or unaccrued, whether liquidated or           unliquidated
and whether due or to become due, including any liability for           Taxes) other than
such liabilities or obligations (i) disclosed in Section           2.08 of the
Disclosure Schedule, (ii) that have been specifically disclosed  






7 

















or provided for in the most recent
audited consolidated balance sheet, including the notes thereto, of the Company filed with
the SEC, (iii) that have been incurred in the ordinary course of business consistent
with past practice since the date of the most recent audited consolidated balance sheet of
the Company filed with the SEC, or (iv) that are not required by Canadian GAAP or US
GAAP to have been included in the Company’s consolidated balance sheet. 



        (c)              Except
as set forth in Section 2.08 of the Disclosure Schedule, none of the           Company or
its Subsidiaries has any outstanding Indebtedness.  



        Section
2.09  Absence of Certain Changes or Events. Except as disclosed in
Section 2.09 of the Disclosure Schedule or as expressly contemplated by this Agreement,
since December 31, 2004, neither the Company nor any of its Subsidiaries has,
directly or indirectly:  



        (a)              redeemed,
purchased, otherwise acquired, or agreed to redeem, purchase or           otherwise
acquire, any shares of its capital stock, or declared, set aside or           paid any
dividend or otherwise made a distribution (whether in cash, stock or           property
or any combination thereof) in respect of its capital stock (other than           between
the Company and a wholly-owned Subsidiary thereof);  



        (b)              authorized
for issuance, issued, sold, delivered, granted or issued any options,           warrants,
calls, subscriptions or other rights for, or otherwise agreed or           committed to
issue, sell, deliver or grant any shares of any class of its           capital stock or
any securities convertible into or exchangeable or exercisable           for shares of
any class of its capital stock, other than pursuant to and in           accordance with
(i) the Company Stock Option Plans or the Stock Purchase           Plans or (ii) as
listed in Section 2.03 of the Disclosure Schedule;  



        (c)              except
in the ordinary course of business consistent with past practice, (i)           created
or incurred any Indebtedness, (ii) assumed, guaranteed, endorsed or
          otherwise as an accommodation become responsible for the obligations of any
          other individual, firm or corporation, made any loans or advances to any other
          individual, firm or corporation, (iii) entered into any commitment or
          transaction material to the Company and its Subsidiaries, taken as a whole,
          (iv) incurred any material liabilities outside the ordinary course of
          business consistent with past practice or (v) subjected any asset to any
          Lien;  



        (d)              other
than the Accounting Changeover, instituted any material change in its
          accounting methods, principles or practices except as required by US GAAP;  



        (e)              revalued
any of its respective assets in any material respect, including without
          limitation, writing down the value of inventory or writing off notes or
accounts           receivables, except for amounts previously reserved as reflected in
the           December 31, 2004 balance sheet;  



        (f)              suffered
any damage, destruction or loss, whether covered by insurance or not,           except
for such as would not, individually or in the aggregate, have a Company
          Material Adverse Effect;  



        (g)              granted
any increase in the base compensation of, or made any other material           change in
the employment terms for, any of its directors, officers and           employees, except  







8 



















for increases or changes reflecting
or based upon changed responsibilities or duties made in the ordinary course of business
consistent with past practice and ordinary annual adjustments not to exceed 10% of the
base compensation of such director, officer or employee prior to such adjustment; 



        (h)              adopted,
modified or terminated any bonus, profit-sharing, incentive, severance           or other
plan or contract for the benefit of any of its directors, officers and
          employees other than changes which do not materially increase the aggregate
cost           of such plan or contract;  



        (i)              except
for provision of services or sales in the ordinary course of business
          consistent with past practice, sold, leased, licensed, assigned, transferred,
          conveyed or otherwise disposed of any of its assets or property having a book
or           market value in excess of $50,000;  



        (j)              entered
into any new line of business, or, except for transactions in the           ordinary
course of business consistent with past practices, incurred or           committed to
incur any capital expenditures, obligations or liabilities in           connection
therewith in excess of $50,000 in the aggregate;  



        (k)              acquired
or agreed to acquire by merging or consolidating with, or agreed to           acquire by
purchasing a substantial portion of the assets of, or in any other           manner, any
business of any other Person;  



        (l)              made
any cancellation or waiver of (i) any right material to the operation           of
the business of the Company or any of its Subsidiaries or (ii) any
          material debts or claims of the Company or a Subsidiary;  



        (m)              made
any disposition (including any license) of, or abandoned or failed to           maintain
or enforce any material Intellectual Property Rights owned or used by           the
Company or any of its Subsidiaries;  



        (n)              except
in the ordinary course of business consistent with past practices,           entered into
any agreement, arrangement or transaction with any Affiliate of the           Company; or  



        (o)              agreed
to (i) do any of the things described in the preceding clauses (a)           through
(n) or (ii) take, whether in writing or otherwise, any action           which, if
taken prior to the date of this Agreement, would have made any           representation
or warranty in this Article II untrue or incorrect.  



        Section
2.10  Absence of Litigation. Except as disclosed in Section 2.10
of the Disclosure Schedule, there is no claim, action, proceeding or investigation
pending or, to the Company’s Knowledge, threatened against the Company, any of its
Subsidiaries, or any of its properties or assets, before any court, arbitrator or
Governmental Authority, which, if adversely determined, could result in, individually or
in the aggregate, a Company Material Adverse Effect or prevent or materially delay the
consummation of the Transactions. Except as disclosed in Section 2.10 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries nor any of their respective
properties or assets is subject to any order, writ, judgment, injunction, decree,
determination or award.  







9 



















        Section
2.11   Opinion of Financial Advisor. The Company has received the opinion, dated as
of the date hereof, of CIBC World Markets Inc. (the “Company Financial Advisor”)
to the effect that, as of the date thereof, and subject to the qualifications and
limitations set forth therein, the consideration to be received under the Arrangement by
the Shareholders is fair from a financial point of view to the Shareholders and such
opinion has not been withdrawn, amended or modified in any way.  



        Section
2.12  Brokers. No broker, finder or investment banker (other than
the Company Financial Advisor and Bear Stearns & Co. Inc.) is entitled to any
brokerage, finder’s or other fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent and Subco a complete and correct copy of all agreements between the
Company and the Company Financial Advisor and between the Company and Bear Stearns & Co.
Inc. pursuant to which such firms would be entitled to any payment relating to the
Transactions, and there have been no amendments to such agreements.  



        Section
2.13  Information Circular. None of the Information Circular or
the other documents to be filed with the Canadian Securities Authorities or other
Governmental Authorities in connection with the Transactions (the “Other Filings”)
(other than information supplied or to be supplied by or on behalf of Parent or Subco in
writing specifically for inclusion therein), at the respective time filed with the
Canadian Securities Authorities or such other Governmental Authority, and, in addition,
in the case of the Information Circular, at the date it is first mailed to the
Securityholders or at the time of the Meeting, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Information Circular
(except for those portions relating to Parent or Subco) at the time of the mailing
thereof to the Securityholders will comply as to form in all material respects with the
provisions of the applicable Securities Laws.  




        Section
2.14   Environmental Matters.  



        (a)              Each
of the Company and its Subsidiaries has complied, and is in compliance, in           all
material respects with all Environmental and Safety Laws, which compliance           has
included obtaining and complying with all Permits required pursuant to
          Environmental and Safety Laws for its occupation of the facilities and the
          operation of its business.  



        (b)              Neither
the Company nor any of its Subsidiaries has received any notice from any
          Governmental Authority or any other Person alleging that the Company or such
          Subsidiary has liability under or has violated any Environmental and Safety
Law.  



        (c)              Neither
the Company nor any of its Subsidiaries, nor any of their respective
          predecessors or affiliates has treated, stored, disposed of, arranged for the
          disposal of, transported, handled or released, or exposed any Person to, any
          substance, including without limitation any hazardous substance, or owned or
          operated any property or facility (and no such property or facility is
          contaminated by any such substance) so as to give rise to any current or future
          liabilities or investigative, corrective or remedial obligations, pursuant to
          any Environmental and Safety Law.  







10 
















        (d)              The
Company and its Subsidiaries have furnished to Parent and Subco all
          environmental reports, audits, assessments and other documents materially
          bearing on environmental, health or safety liabilities relating to their past
or           present facilities or operations which are in their possession or under
their           reasonable control.  



        Section
2.15   Real Property.  



        (a)              Section
2.15 of the Disclosure Schedule identifies by street address each of the           Leased
Premises and sets forth a complete list of all Leases (including all
          amendments, extensions, renewals, guaranties and other agreements with respect
          thereto) for such Leased Premises. All of the Leased Premises are leased to the
          Company or any of its Subsidiaries pursuant to written leases and true and
          complete copies of each document and each other agreement relating to the
Leases           have been made available to Subco. Except as disclosed in Section 2.15
of the           Disclosure Schedule with respect to each Lease: (i) the Company or
any of           its Subsidiaries, as applicable, has a good and valid leasehold interest
in and           to all of the Leased Premises under such Lease, and, to the Company’s
          Knowledge, such leasehold interest is subject to no Liens; (ii) each Lease
          is in full force and effect and is legal, valid, binding and enforceable in
          accordance with its terms subject to bankruptcy, insolvency, fraudulent
          transfer, reorganization, moratorium and similar laws of general applicability
          relating to or affecting creditors’ rights and to general equity
principles           and neither the Company nor any of its Subsidiaries has assigned,
transferred,           conveyed, mortgaged, deeded in trust, or encumbered any interest
in such Lease;           (iii) there exists no breach or default by the Company, any
of its           Subsidiaries or other party to such Lease or condition which, with the
giving of           notice, the passage of time or both, could become a breach or default
under such           Lease; and (iv) no consent, waiver, approval or authorization
is required           from the landlord under such Lease as a result of the execution of
this           Agreement or the consummation of the Transactions.  



        (b)              The
Leased Premises constitute all of the real property owned, leased, occupied           or
otherwise utilized or intended to be utilized in connection with the business
          of the Company or any of its Subsidiaries as currently conducted. The Leased
          Premises are in good condition and repair (subject to normal wear and tear) and
          are sufficient and appropriate for the conduct of business by the Company and
          its Subsidiaries. To the Company’s Knowledge, (i) all permits,
          licenses and other approvals required to be obtained by the Company or any of
          its Subsidiaries that are necessary to the current occupancy and use of the
          Leased Premises have been obtained, are in full force and effect and have not
          been violated by the Company or any of its Subsidiaries and (ii) there
          exists no material violation by the Company or any of its Subsidiaries of any
          covenant, condition, restriction, easement, agreement or order affecting any
          portion of the Leased Premises. All facilities located on the Leased Premises
          are supplied with adequate utilities and other services necessary for the
          conduct of the Company’s business as currently conducted. There is no
          pending or, to the Company’s Knowledge, threatened condemnation
proceeding,           or lawsuit or administrative action affecting any portion of the
Leased Premises           to which the Company or any of its Subsidiaries is a named
party.  



        Section
2.16   Personal Property.  



        (a)              Each
of the Company and its Subsidiaries has good title to all material personal
          property of any kind or nature which the Company or any of its Subsidiaries
          purports to  







11 



















own, free and clear of all Liens,
except for (i) Liens disclosed on Section 2.16 of the Disclosure Schedule,
(ii) Liens for non-delinquent Taxes and non-delinquent statutory liens arising other
than by reason of default, (iii) statutory Liens of landlords or Liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course of business for
sums not yet due and (iv) Liens incurred or deposits made in the ordinary course of
business in connection with worker’s compensation, unemployment insurance and other
types of social security. The Company and its Subsidiaries, as lessees, have the right
under valid and subsisting leases to use, possess and control all personal property leased
by and material to the Company or any of its Subsidiaries as now used, possessed and
controlled by the Company or any of its Subsidiaries, as applicable. 



        (b)              All
machinery, equipment and other tangible assets currently being used by the
          Company or any of its Subsidiaries which are owned or leased by the Company or
          any of its Subsidiaries and material to the business of the Company or any of
          its Subsidiaries are in good operating condition, maintenance and repair,
          ordinary wear and tear excepted, are usable in the ordinary course of business
          and are reasonably adequate and suitable for the uses to which they are being
          put.  



        Section
2.17  Contracts. Section 2.17 of the Disclosure Schedule is a
complete list (organized by reference to the applicable clauses (i) through (xiii) below)
of all agreements of the Company or any of its Subsidiaries that are currently in effect
(except for those set forth in clause (x) below) and that are (i) leases, sales
contracts and other agreements with respect to any property, real or personal, of the
Company or any of its Subsidiaries which provide for the receipt or expenditure by the
Company or any of its Subsidiaries after June 30, 2005 of more than $150,000; (ii) contracts
or commitments for capital expenditures or acquisitions in excess of $150,000 for one
project or set of related projects; (iii) guarantees of third party obligations; (iv) agreements
(including settlement, co-existence, non-competition or standstill agreements) which
restrict the kinds of businesses in which the Company or any of its Subsidiaries may
engage or the geographical area in which any of them may conduct their business; (v) indentures,
mortgages, loan agreements or other agreements relating to the borrowing of money by the
Company or any of its Subsidiaries, the granting of Liens or lines of credit by the
Company or any of its Subsidiaries, in each case, involving an amount in excess of
$150,000; (vi) collective bargaining agreements or agreement with any labor council;
(vii) material licenses, agreements, assignments or contracts (whether as licensor
or licensee, assignor or assignee) relating to any Intellectual Property Rights; (viii) brokerage
or finder’s agreements; (ix) joint venture agreements, partnership agreements,
development or similar agreements; (x) stock purchase agreements, asset purchase
agreements or other acquisition or divestiture agreements executed within the last five
years, in each case, involving an amount in excess of $150,000; (xi) employment,
consulting or management agreements; (xii) agreements with any Governmental Authority or
(xiii) agreements or other arrangements with any director or executive officer of
the Company or its Affiliates (other than customary at will employment arrangements) (all
items required to be disclosed in Section 2.17 of the Disclosure Schedule being
hereinafter referred to as “Contracts”). True and correct copies of all
the Contracts have been made available to Parent and Subco. Except as disclosed in
Section 2.17 of the Disclosure Schedule, (a) all Contracts are valid and subsisting
and in full force and effect, (b) each of the Company and its Subsidiaries has duly
performed its respective obligations thereunder in all material respects to the extent
such obligations have accrued, (c) neither the Company nor any of  







12 
















its Subsidiaries is in breach or
default in any material respect under any Contract and (d) to the Company’s
Knowledge, no other party to any Contract is in breach or default in any material respect
under such Contract. Except as disclosed in Section 2.17 of the Disclosure Schedule, no
approval or consent of any Person is needed in order that any Contract that is material to
the business of the Company or its Subsidiaries continue in full force and effect
following the consummation of the Transactions. 



        Section
2.18  Insurance Policies. Section 2.18 of the Disclosure Schedule
is a complete list of all insurance policies of the Company and each of its Subsidiaries.
The Company has made available to Parent and Subco true and correct copies of all such
insurance policies, and each such policy is in full force and effect. No written notice
of cancellation or termination has been received by the Company or any of its
Subsidiaries with respect to any such policy. To the Company’s Knowledge, there are
no pending claims against such insurance by the Company or any of its Subsidiaries as to
which the insurers have denied coverage or otherwise reserved rights. Such insurance
policies are of the type and in amounts which the Company believes are reasonably
appropriate for the Company and its Subsidiaries to conduct its business and are in
amounts sufficient to meet the requirements under the terms of the Leases and the
Contracts.  



        Section
2.19  Compliance with Laws. Neither the Company nor any of its
Subsidiaries is in violation of or has violated or failed to comply with any Law
applicable to its business, Leased Premises or operations, except for violations and
failures to comply that would not, individually or in the aggregate, have a Company
Material Adverse Effect.  



        Section
2.20   Tax Matters.  



        (a)              The
Company and each of its Subsidiaries have timely filed all material Tax           Returns
that they were required to file prior to the date hereof. All such Tax           Returns
were correct and complete in all material respects. All material Taxes           due and
payable by the Company and each of its Subsidiaries (whether or not           shown on
any Tax Return) have been paid. None of the Company or any of its           Subsidiaries
currently is the beneficiary of any extension of time within which           to file any
Tax Return or pay any Taxes. Except as set forth in Section 2.20 of           the
Disclosure Schedule, no claim has ever been made by an authority in a
          jurisdiction where any of the Company or any of its Subsidiaries does not file
          Tax Returns that the Company or such Subsidiary is or may be subject to
taxation           by that jurisdiction.  



        (b)              Except
as set forth in Section 2.20 of the Disclosure Schedule, the Company and           each
Subsidiary of the Company have collected and withheld all amounts required           to
be collected or withheld by it on account of Taxes or otherwise and has
          remitted the same to the appropriate Governmental Authority in the manner and
          within the time required by applicable Law.  



        (c)              Except
as set forth in Section 2.20 of the Disclosure Schedule, there are no           actions,
suits, proceedings, investigations, disputes or claims pending or, to           the
Company’s Knowledge, threatened against the Company or any Subsidiary
          concerning any Tax liability of any of the Company or any Subsidiary of the
          Company or any matters under discussion with any Governmental Authority
relating           to Taxes asserted by any such authority. The Company has  







13 

















delivered to Parent and Subco correct
and complete copies of all material income Tax Returns, examination reports, notices of
assessment or reassessment, notices of determination of loss and statements of
deficiencies assessed against or agreed to by any of the Company or any Subsidiary of the
Company since December 31, 2002. 



        (d)              Neither
the Company nor any Subsidiary of the Company has waived any statute of
          limitations in respect of Taxes or agreed to any extension of time with respect
          to a Tax filing, assessment, reassessment or deficiency.  



        (e)              Except
as set forth in Section 2.20 of the Disclosure Schedule, neither the           Company
nor any Subsidiary of the Company has any liability for the Taxes of any           Person
other than the Company and the Subsidiaries of the Company (i) under
          Treas. Reg. §1.1502-6 (or any similar provision of state, local, or
foreign           law), (ii) as a transferee or successor, (iii) by contract,
or           (iv) otherwise.  



        (f)              Except
as set forth in Section 2.20 of the Disclosure Schedule, neither the           Company
nor any Subsidiary of the Company owns an interest in an entity either           treated
as a partnership or whose separate existence is ignored for federal           income tax
purposes.  



        (g)              No
Person has been granted a power of attorney that is currently in force with
          respect to any Tax matter.  



        (h)              Neither
the Company nor any Subsidiary is a party to any tax sharing,           allocation,
indemnity or similar agreement or arrangement (whether or not           written) pursuant
to which it will have any obligation to make payments on or           after the Effective
Date.  



        (i)              The
charges, accruals and reserves for material amounts of Taxes with respect to
          Company and its Subsidiaries reflected on the Company Financial Statements of
          Company and its Subsidiaries (whether or not due and whether or not shown on
any           Tax Return but excluding any provision for deferred income Taxes) are
adequate           to cover such Taxes, other than any liability for unpaid Taxes that
may have           accrued since the last date of such Company Financial Statements in
connection           with the operation of its business in the ordinary course,
consistent with past           practice.  



        (j)              To
the Company’s Knowledge, except for limitations placed on tax attributes
          (including net operating losses), the consummation of the Transactions will not
          in and of themselves (i) cause any Tax to become payable by the Company or
          any of its Subsidiaries or (ii) have any adverse effect on the continued
          validity and effectiveness of any material Tax exemption, Tax holiday or other
          Tax reduction agreement or order applying to the Company or any of its
          Subsidiaries.  



        Section
2.21  Change of Control Provisions. Except as disclosed on Section
2.21 of the Disclosure Schedule, none of the arrangements, agreements or understandings
listed in the Disclosure Schedule and none of the Company’s employee benefit plans,
programs or arrangements contains any provision that would create any liability or
obligation of the Company as the result of a change of control of the Companyor
that will create any liability or obligation of the Company as a result of the
consummation of the Transactions (or as a result of termination following such change of
control or consummation).  







14 


















        Section
2.22   Employees.  



        (a)              To
the Company’s Knowledge, no employee of the Company or any of its
          Subsidiaries set forth on Section 2.22 of the Disclosure Schedule has any plans
          to terminate employment with the Company.  



        (b)              The
Company and each of its Subsidiaries has complied in all material respects           with
all Laws relating to the employment of labor, including provisions thereof
          relating to wages, hours, equal opportunity and collective bargaining, and does
          not have any labor relations problems (including, without limitation,
threatened           or actual strikes or work stoppages or material grievances) other
than such           problems that would not have a Company Material Adverse Effect. The
Company and           its Subsidiaries have not incurred any liability under, and have
complied in all           respects with, the Worker Adjustment Retraining Notification
Act (the           “WARN Act”), and no fact or event exists that could
give rise           to liability under the WARN Act. Each of Company and its Subsidiaries
has           withheld, reported and remitted all amounts required by Law or by agreement
to           be withheld, reported and remitted with respect to wages, salaries and other
          payments to its employees.  



        Section
2.23  Permits. Each of the Company and its Subsidiaries has all
Permits, except for those Permits that the failure to have would not, individually or in
the aggregate, have a Company Material Adverse Effect. Section 2.23 of the Disclosure
Schedule contains a complete list of all material Permits (each a “Material Permit”),
other than any Permits with respect to state or local sales, use or other Taxes or
business or occupational licenses. To the Company’s Knowledge, all of the Material
Permits are in full force and effect. No outstanding notice of cancellation or
termination has been delivered to the Company or any of its Subsidiaries in writing in
connection with any such Material Permit nor, to the Company’s Knowledge, has any
such cancellation or termination been threatened. To the Company’s Knowledge, no
application, action or proceeding for the modification of any such Material Permits is
pending or threatened that may result in the revocation, modification, nonrenewal or
suspension of any Material Permits. The Company and each of its Subsidiaries has filed
when due all documents required to be filed with any Governmental Authority in connection
with such Material Permits and, at the time of the filing thereof, all such filings were
accurate and complete in all material respects. All Material Permits shall continue to be
effective and any required renewals thereof shall be available in order for the Company
and each of its Subsidiaries to continue to conduct their respective businesses as they
are currently being conducted and in accordance with the existing plans of the Company
and its Subsidiaries.  



        Section
2.24   Employee Benefit Plans.  



        (a)              Section
2.24 of the Disclosure Schedule contains a complete and correct list of           each
employee benefit plan (as defined in Section 3(3) of the Employee           Retirement
Income Security Act of 1974, as amended (“ERISA”)),           and each
retirement, pension, bonus, stock purchase, profit sharing, stock           option,
deferred compensation, severance or termination pay, insurance, medical,
          hospital, dental, vision care, drug, sick leave, disability, salary
          continuation, legal benefits, unemployment benefits, vacation, incentive or
          other employee benefit plan and each other benefit plan, program, policy,
          practice, arrangement or contract (whether group or individual) maintained,
          sponsored, contributed or required to be contributed to  







15 



















by the Company or with respect to
which the Company has any liability or potential liability. For purposes of this Section
2.24 only, “Company” shall be deemed to include the Subsidiaries and any entity
required to be aggregated with the “Company” under Section 414(b), (c), (m) or
(o) of the Code or Section 4001 of ERISA, at any relevant time. Each item listed in
Section 2.24 of the Disclosure Schedule is a “Benefit Plan.” 



        (b)              Each
Benefit Plan that is intended to be qualified within the meaning of Section
          401(a) of the Code has received a determination from the Internal Revenue
          Service (the “IRS”) that such Benefit Plan is qualified under
          Section 401(a) of the Code, and nothing has occurred since the date of such
          determination that would reasonably be expected to adversely affect the
          qualification of such Benefit Plan. Each such Benefit Plan has been timely
          amended to comply with the requirements of the legislation commonly known as
          “GUST” and “EGTRRA” and has filed for a determination
letter           from the IRS covering the GUST requirements within the remedial
amendment period           prescribed by GUST, except for a Benefit Plan that is
maintained on a prototype           plan document, which is the subject of a favorable
opinion from the IRS on the           form of such plan.  



        (c)              Neither
the Company nor any Subsidiary has any liability or potential liability
          (including, but not limited to, withdrawal liability) with respect to
          (i) any “employee pension benefit plan” (as such term is defined
          in Section 3(2) of ERISA) that is or was subject to Section 302 of Title I of
          ERISA, Title IV of ERISA or Section 412 of the Code, or (ii) any
          “multiemployer plan” (as such term is defined in Section 3(37) of
          ERISA).  



        (d)              Except
as disclosed on Section 2.24 of the Disclosure Schedule, none of the           Benefit
Plans obligates the Company or its Subsidiaries to pay any separation,
          severance, termination or similar benefit to any director, officer or employee
          of the Company or any of its Subsidiaries upon termination or as a result of
the           consummation of the Transactions or as a result of a change in control or
          ownership within the meaning of Section 280G of the Code.  



        (e)              Except
as disclosed on Section 2.24 of the Disclosure Schedule, each Benefit           Plan and
any related trust, insurance contract or fund has been maintained,           funded and
administered in compliance in all material respects with its           respective terms
and in compliance in all material respects with all applicable           Laws, including,
but not limited to, ERISA and the Code.  



        (f)              The
Company has complied with the health care continuation requirements of Part           6
of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar
          state law (“COBRA”) in all material respects; and the Company
          has no obligation under any Benefit Plan or otherwise to provide health or life
          insurance benefits or other welfare-type benefits to former employees of the
          Company or any other Person, except as specifically required by COBRA.  



        (g)              With
respect to each Benefit Plan, the Company has provided to Parent and Subco
          true, complete and correct copies of (to the extent applicable) (i) all
          documents pursuant to which the Benefit Plan is maintained, funded and
          administered, (ii) the most recent annual reports filed with the relevant
          Governmental Authorities (with applicable attachments), (iii) the most
          recent financial statement, (iv) the most recent summary plan description
          provided to participants, (v) the most recent determination letter
received           from the IRS, (vi) all related  








16 

















trust agreements, insurance contracts
and other funding arrangements that implement each Benefit Plan and (vii) the actuarial
valuations, if any, prepared for each Benefit Plan during the past three (3) years. 



        (h)              With
respect to each Benefit Plan, all required or recommended payments,           premiums,
contributions, distributions, reimbursements or accruals for all           periods (or
partial periods) ending prior to or as of the Effective Date shall           have been
made or properly accrued on the audited consolidated balance sheet of           the
Company and its consolidated Subsidiaries as of December 31, 2004. None           of
the Benefit Plans has any material unfunded liabilities.  



        (i)              There
have been no “prohibited transactions” (as defined in Section           406 of
ERISA and Section 4975 of the Code) with respect to any Benefit Plan. No           “fiduciary” (as
defined in Section 3(21) of ERISA) has any liability           for breach of fiduciary
duty or any other failure to act or comply in connection           with the
administration or investment of the assets of any Benefit Plan. No           action,
audit, suit, proceeding, claim, hearing or investigation with respect to           the
administration or the investment of the assets of any Benefit Plan (other           than
routine claims for benefits) is pending or, to the Company’s           Knowledge,
threatened, and, to the Company’s Knowledge, there is no basis           for any
such action, audit, suit, proceeding, claim, hearing or investigation.  



        (j)              No
notice has been received by the Company or any Subsidiary of any complaints           or
other proceeding of any kind involving the Company or any Subsidiary or, to           the
Company’s Knowledge, any of the employees of the Company before any
          pension board or committee relating to any Benefit Plan.  



        (k)              All
material reports, returns and similar documents (including applications for
          approval of contributions) with respect to any Benefit Plan required to be
filed           with any Governmental Authority or distributed to any Benefit Plan
participant           have been duly filed in a timely manner or distributed.  



        (l)              No
step has been taken, no event has occurred and no condition or circumstance
          exists that has resulted in or could reasonably be expected to result in any
          Benefit Plan being ordered or required to be terminated or wound up in whole or
          in part or having its registration under applicable Laws refused or revoked, or
          being placed under the administration of any trustee or receiver or regulatory
          authority or being required to pay any material taxes, fees, penalties or
levies           under applicable Laws.  



        (m)              Each
Benefit Plan that is maintained for the benefit of employees located           outside of
the United States and Canada (each, an “International           Plan”)
has been maintained, funded and administered in accordance with           applicable
local Laws. There are no unfunded liabilities associated with any           International
Plan.  



        Section
2.25   Intellectual Property Rights.  



        (a)              Section
2.25(a) of the Disclosure Schedule sets forth a complete and correct           list
(including particulars of registration or application for registration) of           all:
(i) patented or registered Intellectual Property Rights and pending           patent
applications and other applications for registration of Intellectual           Property
Rights owned or filed by or on behalf of the Company or  







17 

















any of its Subsidiaries;
(ii) all trade names and unregistered trademarks and service marks owned or used by
the Company or any of its Subsidiaries and material to the conduct of its business;
(iii) all computer software owned or used by the Company or any of its Subsidiaries
(other than off-the-shelf software purchased or licensed for less than a total cost of
$10,000); and (iv) all material licenses or similar agreements or arrangements for
Intellectual Property Rights to which the Company or any of its Subsidiaries is a party
(either as a licensor or licensee). 



        (b)              Except
as disclosed in Section 2.25(b) of the Disclosure Schedule: (i) the
          Company and each of its Subsidiaries owns and possesses all right, title and
          interest in and to, or has a valid and enforceable license (and such license is
          set forth in Section 2.25(a) of the Disclosure Schedule) to use in a manner
          consistent with past practice, all of the Intellectual Property Rights
necessary           or used for the operation of its business as currently conducted,
free and clear           of all Liens; (ii) the Company and its Subsidiaries are not
a party to or           bound by any Contract or any other obligation that limits their
ability to sell,           transfer, license, assign, convey, or use any material
Intellectual Property           Rights owned by the Company or its Subsidiaries; (iii) all
Intellectual           Property Rights owned or used by the Company or any of its
Subsidiaries in the           operation of its business as of the date hereof will be
owned or available for           use by the Company or its Subsidiaries, as applicable,
on identical terms and           conditions immediately following the Closing; (iv) no
claim by any third           party contesting the validity, enforceability, use or
ownership of any of the           Intellectual Property Rights owned or used by the
Company or any of its           Subsidiaries has been made within the past six (6) years,
is currently           outstanding or, to the Knowledge of the Company, is threatened,
and to the           Company’s Knowledge, there are no grounds for the same; (v) to
the           Company’s Knowledge, no loss or expiration of any material
Intellectual           Property Right owned or used by the Company or any of its
Subsidiaries is           threatened, pending or reasonably foreseeable; (vi) neither
the Company nor           any of its Subsidiaries has received any written notices of,
and, to the           Company’s Knowledge, there is no, infringement or
misappropriation by, or           conflict with, any third party with respect to any
Intellectual Property Right           owned or used by the Company or any of its
Subsidiaries (including any demand or           request that the Company or any of its
Subsidiaries license any rights from a           third party); (vii) neither the
Company nor any of its Subsidiaries, to the           Company’s Knowledge, has
infringed, misappropriated or otherwise conflicted           with any Intellectual
Property Rights or other rights of any third parties and,           to the Company’s
Knowledge, there is no infringement, misappropriation or           conflict which will
occur as a result of the continued operation of the business           of the Company and
each of its Subsidiaries as currently conducted and as           currently proposed to be
conducted; (viii) to the Company’s Knowledge,           no third party has
infringed, misappropriated or conflicted with any of the           material Intellectual
Property Rights of the Company or any of its Subsidiaries;           (ix) neither the
Company nor any of its Subsidiaries has developed or produced,           or is presently
developing or producing, any software or Intellectual Property           (other than
software sold or to be sold by the Company or any of its           Subsidiaries in the
ordinary course of business) on behalf of any Person other           than the Company or
any of its Subsidiaries and (x) the Company and each of           its Subsidiaries
have taken all necessary steps to protect, maintain and           safeguard the material
Intellectual Property Rights owned or used by it.  



        (c)              Except
as disclosed in Section 2.25(c) of the Disclosure Schedule, each current           and
former employee of or consultant to the Company or any Subsidiary has           executed
an agreement with the Company or such Subsidiary (i) requiring such           employee or
consultant to maintain the confidentiality of the Company’s           and/or such
Subsidiary’s trade secrets and other  







18 


















proprietary information and (ii)
acknowledging that all work, research or development produced or created by such employee
or consultant shall be the sole and exclusive property of the Company and/or such
Subsidiary. No current or former employee of, or consultant to, the Company or any
Subsidiary owns in his/her own name, or has any other right, title or interest in or to,
any material Intellectual Property Rights created or developed by such employee or
consultant in the course of his/her relationship with the Company or such Subsidiary and
relating to the business of the Company or such Subsidiary, and all such Intellectual
Property Rights created or developed by such employee or consultant were properly assigned
to the Company or such Subsidiary. 



        (d)              The
computer systems, including the software, hardware, networks and interfaces,
          used by the Company and each of its Subsidiaries in the conduct of its business
          are sufficient for the immediate and future needs of the Company and each of
its           Subsidiaries, as currently contemplated, including as to capacity and
ability to           process current and anticipated peak volumes in a timely manner.  



        (e)              The
software included in the Intellectual Property Rights owned or used by the
          Company or its Subsidiaries (collectively, the “Company
          Software”) is not subject to any “copyleft” or other
          obligation or condition (including any obligation or condition under any
          “open source” license such as the GNU Public License, Lesser GNU
          Public License, or Mozilla Public License) that could (i) require, or condition
          the use or distribution of such software, on the disclosure, licensing, or
          distribution of any source code for any portion of such software or (ii)
          otherwise impose any limitation, restriction, or condition on the right or
          ability of the Company or any of its Subsidiaries to use, license or distribute
          any software. No event has occurred, and no circumstance or condition exists
          (including the consummation of the Transactions), that (with or without notice
          or lapse of time) will, or could reasonably be expected to, result in the
          delivery, license, or disclosure of the source code for any Company Software to
          any third party.  



        Section
2.26   Customers and Suppliers.  



        (a)              Section
2.26 of the Disclosure Schedule sets forth the names of the customers           with
sales in excess of $500,000 and its suppliers with disbursements in excess           of
$250,000 for the 12-month period ended December 31, 2004, in each case           for
the Company and its Subsidiaries on a consolidated basis. Since           December 31,
2004, there has been no termination or cancellation of, and no           modification or
change that is materially adverse to the Company or any of its           Subsidiaries in,
the business relationship of the Company or any of the           Subsidiaries with (i)
any such customer or (ii) any such supplier.  



        (b)              To
the Company’s Knowledge, other than as may be caused by any action or
          inaction by the Company, Parent or Subco after the Effective Date, there is no
          reason to believe that the benefits of any relationship with any customer or
          supplier set forth in Section 2.26 of the Disclosure Schedule will not continue
          after the Effective Date in substantially the same manner as prior to the date
          of this Agreement.  



        Section
2.27  Investment Canada Act. Neither the Company nor any of its
Subsidiaries is engaged in any business listed in Subsection 14.1(5) of the ICA.  








19 




















        Section
2.28   Approval of Arrangement.  



        (a)              The
Company’s Board of Directors has unanimously determined (subject to any
          abstention requirement set forth in Section 120 of the CBCA), after
consultation           with its advisors, that the Arrangement is fair to the
Securityholders and in           the best interests of the Company and the Company’s
Board of Directors has           unanimously resolved to recommend that Shareholders vote
in favor of the           Arrangement.  



        (b)              After
reasonable inquiry, the Company’s Board of Directors has been advised           and
believes that each of the members of the Company’s Board of Directors
          intends to vote in favor of the Arrangement Resolution all Company Common
Shares           (including any Company Common Shares issued on the exercise of the
Company Stock           Options) of which he or she is the beneficial owner or over which
he or she has           direction or control.  



        Section
2.29   Working Capital.  



        (a)              On
the date hereof, the Company and its Subsidiaries, taken as a whole, have at
          least $20,000,000 of freely available cash and cash equivalents (after giving
          effect to the payment of all Company Transaction Expenses incurred or expected
          to be incurred in connection with the consummation of the Transactions).  



        (b)              As
of June 30, 2005, the Company and its Subsidiaries, taken as a whole, have
          $(10,925,578)in Working Capital.  



ARTICLE III 

REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBCO 



        Each
of Parent and Subco hereby represents and warrants to the Company that: 



        Section
3.01  Organization and Qualification. Parent is a sociétéà responsabilité limitée
duly organized, validly existing and in good standing under the laws of Luxembourg. Subco
is a corporation duly organized, validly existing and in good standing under the laws of
the Province of British Columbia.  



        Section
3.02  Authority Relative to this Agreement. Each of Parent and
Subco has all necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by Parent and Subco and the consummation by Parent and Subco
of the Transactions have been duly and validly authorized by all necessary action and no
other proceedings on the part of the Parent and Subco are necessary to authorize this
Agreement or to consummate the Transactions. This Agreement has been duly and validly
executed and delivered by Parent and Subco and constitutes a legal, valid and binding
obligation of each of Parent and Subco enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors’ rights and to
general equity principles.  







20 
















        Section
3.03   No Conflict; Required Filings and Consents.  



        (a)              The
execution and delivery of this Agreement does not, and the consummation of           the
Transactions will not (i) conflict with or violate the organizational
          documents of Parent or Subco or (ii) conflict with or violate any Law
          applicable to Parent or Subco or by which any property or asset of Parent or
          Subco is bound or affected, except for such conflicts or violations which would
          not, individually or in the aggregate, materially impair the ability of the
          Parent or Subco to perform its obligations under this Agreement.  



        (b)              The
execution and delivery of this Agreement does not, and the consummation of           the
Transactions will not, require any consent, approval, authorization or           permit
of, or filing with or notification to, any Governmental Authority, except           (i) for
the Interim Order and the Final Order and (ii) where the           failure to obtain
such other consents, approvals, authorizations, or permits, or           to make such
filings or notifications, individually or in the aggregate would           not materially
impair the ability of the Parent or Subco to perform its           obligations under this
Agreement.  



        Section
3.04  Information Supplied. None of the information supplied or to
be supplied by Parent or Subco in writing specifically for inclusion in the Information
Circular or the Other Filings, at the respective time filed with the Canadian Securities
Authorities, the SEC or the other Governmental Authorities, and, in addition, in the case
of the Information Circular, at the date it is first mailed to the Securityholders or at
the time of the Meeting, contains or omits or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.  



        Section
3.05  Brokers. Except for SVB Alliant, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or commission
in connection with the Transactions based upon arrangements made by or on behalf of
Parent or Subco for which the Company or any of its Subsidiaries could become liable or
obligated.  



        Section
3.06  Sufficient Funds. On the Effective Date, Parent and Subco
will have sufficient committed funds to make the payments required to be made by them
under this Agreement and the Plan of Arrangement to the extent that the conditions set
forth in Section 6.02(g) have been satisfied.  



ARTICLE IV 

CONDUCT OF BUSINESS PENDING THE ARRANGEMENT 



        Section
4.01  Conduct of Business by the Company Pending the Arrangement.
Between the date of this Agreement and the Effective Time, except as set forth in Section
4.01 of the Disclosure Schedule or as otherwise expressly provided for in this Agreement,
unless Subco shall otherwise agree in writing, the Company shall, and shall cause each of
its Subsidiaries to, conduct its business in the ordinary course and in a manner
consistent in all material respects with past practice (including with respect to the
management of Working Capital). Between the date of this Agreement and the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, use all
commercially reasonable efforts to (i) preserve  







21 


















intact its business organization,
(ii) keep available the services of the current officers, employees and consultants
of the Company and each of its Subsidiaries, (iii) preserve the current relationships
of the Company and each of its Subsidiaries with customers, distributors, suppliers,
licensors, licensees, contractors and other Persons with which the Company or any of its
Subsidiaries has significant business relations, (iv) maintain all of the Leased
Premises and other material assets in good repair and condition (except for ordinary wear
and tear) other than those disposed of in the ordinary course of business,
(v) maintain all insurance necessary to the conduct of the Company’s business as
currently conducted, (vi) maintain its books of account and records in the usual,
regular and ordinary manner and (vii) maintain, protect and enforce all of its
material Intellectual Property Rights in a manner consistent in all material respects with
past practice. By way of amplification and not limitation, except as contemplated by this
Agreement, or as set forth in Section 4.01 of the Disclosure Schedule, the Company shall
not, and shall cause each of its Subsidiaries not to, between the date of this Agreement
and the Effective Time, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Subco: 



        (a)              amend
or otherwise change any Organizational Document;  



        (b)              issue,
sell, pledge, dispose of, grant or encumber, or authorize the issuance,           sale,
pledge, disposition, grant or encumbrance of, (i) any shares of           capital
stock of any class of the Company or any of its Subsidiaries, or any           options,
warrants, convertible securities or other rights of any kind to acquire           any
shares of such capital stock, or any other ownership interest (including,
          without limitation, any phantom interests), of the Company or any of its
          Subsidiaries or (ii) any assets of the Company or any of its Subsidiaries,
          except for (A) sales of inventory in the ordinary course of business
          consistent with past practice and (B) issuance of Company Common Shares
          upon exercise of Company Stock Options that are issued and outstanding on the
          date hereof or the issuance of Common Shares pursuant to the Stock Purchase
          Plans;  



        (c)              declare,
set aside, make or pay any dividend or other distribution, payable in           cash,
stock, property or otherwise, with respect to any of its capital stock           (other
than between any wholly-owned Subsidiary and the Company);  



        (d)              reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire,           or propose
to redeem, purchase or otherwise acquire, directly or indirectly, any           of its
capital stock;  



        (e)              acquire
(including, without limitation, by merger, amalgamation, arrangement,
          consolidation or acquisition of stock or assets or otherwise) or agree to
          acquire any corporation, partnership, limited liability company, or other
          business organization or division thereof;  



        (f)              reduce
the stated capital of any class of shares of the Company or any of its
          Subsidiaries;  



        (g)              enter
into any joint venture or similar agreement, arrangement or relationship;  







22 
















        (h)              reorganize,
amalgamate or merge the Company or any of its Subsidiaries with any           other
Person;  



        (i)              (i) incur
any Indebtedness or make any loans, advances, or capital           contributions to, or
investments in, any other Person or (ii) (A) authorize           any unbudgeted
capital expenditures which are, in the aggregate, in excess of           $25,000, or (B)
fail to make any capital expenditure that has been budgeted by           the Company or
any of its Subsidiaries to be made during such period;  



        (j)              (i) enter
into, establish, adopt, amend or renew any material employment,           consulting,
severance or similar agreement or arrangements with any director,           officer, or
employee or otherwise hire or terminate any employee, (ii) grant any           salary,
wage or bonus increase or (iii) amend or modify any severance policy as           in
effect on December 31, 2004;  



        (k)              establish,
adopt, amend or increase benefits under any Benefit Plan or under any           pension,
retirement, stock option, stock purchase, savings, profit sharing,           deferred
compensation, consulting or welfare benefit contract, plan or           arrangement
(other than as may be required by applicable Law);  



        (l)              discharge
or satisfy any material Lien or pay or satisfy any material obligation           or
liability (fixed or contingent) except in the ordinary course of business
          consistent with past practice, or commence any voluntary petition, proceeding
or           action under any bankruptcy, insolvency or other similar Law;  



        (m)              make
or institute any change in accounting procedures or practices unless           mandated
by Canadian GAAP or US GAAP or otherwise required by law or the rules           and
policies of the TSX or NASDAQ;  



        (n)              take
any action that, if taken after December 31, 2004 but prior to the           date
hereof, would have been required to be disclosed in Section 2.09 of the
          Disclosure Schedule, unless otherwise permitted under this Section 4.01;  



        (o)              enter
into any agreement or other arrangement or amend any existing agreement or
          other arrangement with any director, officer, employee or stockholder of the
          Company, or, except in the ordinary course of business consistent with past
          practices, any of its Subsidiaries or any Affiliate of the foregoing;  



        (p)              enter
into any agreement or other arrangement or amend any existing agreement or
          other arrangement that is reasonably likely to be material to the business of
          the Company or any of its Subsidiaries, except in the ordinary course of
          business consistent with past practice, or renew any agreement for the license
          of software or the provision of services (including any maintenance contract)
          for a price or a fee less than the price or fee for such software or services
in           effect immediately prior to such renewal;  



        (q)              make
or change any election, change an annual accounting period, adopt or change           any
accounting method (except as permitted under Section 4.01(m) above), file           any
amended Tax Return, enter into any closing agreement, settle any Tax claim           or
assessment relating to the Company or any of its Subsidiaries, surrender any
          right to claim a refund of  







23 

















Taxes, consent to any extension or
waiver of the limitation period applicable to any Tax claim or assessment relating to the
Company or any of its Subsidiaries, fail to timely file any Tax Return, take a position on
a Tax Return not in keeping with prior practice or take any other similar action, or omit
to take any action relating to the filing of any Tax Return or the payment of any Tax, if
such election, adoption, change, amendment, agreement, settlement, surrender, consent or
other action or omission could have the effect of increasing the present or future Tax
liability or decreasing any present or future Tax asset of the Company or any of its
Subsidiaries; 



        (r)              take
any action or omit to take any action which would result in a violation of           any
applicable Law or would cause a breach of any agreement, contract or
          commitment, which violation or breach would reasonably be expected to have a
          Company Material Adverse Effect;  



        (s)              sell,
license, assign, convey or otherwise transfer to any Person any material
          Intellectual Property Rights owned or used by the Company or any of its
          Subsidiaries, except in the ordinary course of business consistent with past
          practice;  



        (t)              abandon,
fail to maintain or enforce, or otherwise dispose of any material           Intellectual
Property Rights owned or used by the Company or any of its           Subsidiaries, except
in the ordinary course of business consistent with past           practice;  



        (u)              amend,
modify, extend, renew or terminate any Lease, or enter into any new           lease,
sublease, license or other agreement for the use or occupancy of any real
          property; or  



        (v)              authorize
or propose, or agree to take, any of the foregoing actions prohibited           under
Section 4.01.  



        Section
4.02   Subsequent Company Documents; Monthly Financial Statements.  



        (a)    Subsequent
Company Documents. Between the date of this Agreement and the           Effective
Time, the Company shall file all Company Documents when and as           required to be
filed by it with the Canadian Securities Authorities, the SEC,           TSX and Nasdaq
and shall deliver true and complete copies of the same to Parent           and Subco as
soon as they become available. Such Company Documents shall           (i) comply in
all material respects with the requirements of Securities           Laws and (ii) shall
not contain any untrue statement of a material fact or           omit to state a material
fact required to be stated therein or necessary in           order to make the statements
made therein, in the light of the circumstances           under which they were made, not
misleading.  



        (b)    Monthly
Financial Statements. Not later than the 20th day           after the end
of each month ending after the date of this Agreement, the Company           shall
deliver to Parent and Subco a consolidated balance sheet of the Company as           of
the last day of such month together with an income statement for the month
          ended on such date. Such financial statements shall be prepared in accordance
          with US GAAP applied on a consistent basis throughout the periods indicated,
          each fairly presenting in all material respects the consolidated financial
          position and results of operations of the Company as at the respective dates
          thereof and for the respective periods indicated therein and each shall be
          correct and complete in all material respects and shall  







24 


















be consistent with the books and
records of the Company and its Subsidiaries (subject, in each case, to the absence of
notes to the financial statements and to normal and recurring year-end adjustments none of
which would, individually or in the aggregate, have a Company Material Adverse Effect). 



ARTICLE V 

ADDITIONAL AGREEMENTS 



        Section
5.01  Interim Order; Information Circular; Final Order. Subject to
Section 5.04, the Company hereby covenants and agrees with Parent and Subco that, unless
Parent and Subco otherwise agree in writing or except as expressly contemplated or
permitted by this Agreement:  



        (a)
              in a timely and expeditious manner and in cooperation with Parent and Subco, it
          will file, proceed with and diligently pursue an application to the Court for
          the Interim Order on a date acceptable to Parent and Subco and in any event no
          later than August 31, 2005;  



        (b)
              in a timely and expeditious manner it will:  



	  	        (i)
               prepare the Information Circular and provide Parent and Subco with reasonable
          opportunity to review and comment on drafts thereof, taking account of any
          comments of Parent, file the Information Circular in all jurisdictions where
the           same is required to be filed and mail the Information Circular as ordered
by the           Interim Order in any event not later than the Mailing Deadline and in
accordance           with all applicable Laws, such Information Circular complying in all
material           respects with all such Laws on the date of mailing thereof and not
containing           any misrepresentation (as defined under applicable Securities Laws)
with respect           thereto;  







	  	        (ii)
               convene and conduct the Meeting in accordance with the Interim Order, the
          by-laws of the Company and applicable Laws; and  







	  	        (iii)
               provide notice to Parent and Subco of the Meeting and allow the representatives
          of Parent and Subco to attend the Meeting;  







        (c)
              it will not adjourn, postpone or cancel the Meeting (or propose to do so),
          except if quorum is not present at the Meeting or if required by applicable Law
          or the Shareholders;  



        (d)
              in a timely and expeditious manner, it will prepare (in consultation with
Parent           and Subco) and file any mutually agreed (or otherwise required by
applicable           Securities Laws) amendments or supplements to the Information
Circular and mail           the same as required by the Interim Order or the Court and in
accordance with           all applicable Securities Laws, in all jurisdictions where the
same is required,           complying in all material respects with all applicable legal
requirements on the           date of mailing thereof;  



        (e)
              subject to the approval of the Arrangement Resolution at the Meeting in
          accordance with the provisions of the Interim Order: (i) it will as soon as
          possible thereafter, but in no event later than five (5) Business Days
          thereafter, file, proceed with and diligently pursue  







25 


















an application for the Final Order in
cooperation with Parent and Subco and, in applying for the Final Order, it will seek to
cause the terms thereof to be consistent with the provisions of this Agreement and will
oppose any proposal from any interested party that the Final Order contain any provision
inconsistent with this Agreement; and (ii) if at any time after the issuance of the Final
Order and prior to the Effective Date, the Company is required by the terms of the Final
Order or by Law to return to Court with respect to the Final Order, it shall do so after
notice to, and in consultation and cooperation with, Parent and Subco; 



        (f)              it
will carry out the terms of the Interim Order and the Final Order as soon as
          reasonably practicable after the issuance of the Interim Order and the Final
          Order, respectively, and, subject to the receipt of the Final Order, the
          satisfaction or waiver of the conditions precedent in favor of the Company and
          the receipt of the written confirmation of Parent and Subco that the conditions
          precedent in favor of Parent and Subco have been satisfied or waived (which
such           confirmation each of Parent and Subco shall provide upon the satisfaction
or           waiver of all of the said conditions precedent), file articles of
arrangement           and the Final Order with the Director in order for the Arrangement
to become           effective and the Plan of Arrangement to be implemented; and  



        (g)              it
will furnish promptly to Parent and Subco a copy of each notice, report,
          schedule or other document or communication delivered or filed by the Company
in           connection with the Arrangement or the Interim Order, or the Meeting with
any           Governmental Authority in connection with, or in any way affecting, the
          transactions contemplated herein.  



        Section
5.02   Appropriate Action; Consents; Filings.  



        (a)              Subject
to Section 5.04 hereof, each of the Parties shall use its commercially
          reasonable efforts to (i) take, or cause to be taken, all appropriate
          action and do, or cause to be done, all things necessary, proper or advisable
          under applicable Law or otherwise to consummate the Transactions and to
complete           the Arrangement as promptly as practicable, (ii) obtain
expeditiously from           any Governmental Authorities any consents, licenses,
permits, waivers,           approvals, authorizations or orders required to be obtained
or made by the           Parties or any of their Subsidiaries in connection with the
authorization,           execution and delivery of this Agreement and the consummation of
the           Transactions, (iii) participate and appear in any proceeding relating
to           the Transactions before Governmental Authorities; and (iv) as promptly
as           practicable, make all necessary filings, and thereafter make any other
required           submissions, with respect to this Agreement and the Transactions
required under           applicable Laws; provided, that the Parties shall
cooperate with each           other in connection with the making of all such filings,
including providing           copies of all such documents to the non-filing Party and
its advisors prior to           filing. From the date of this Agreement until the
Effective Time, each of the           Parties shall promptly notify the other Parties in
writing of any pending or, to           the Knowledge of the first Party, threatened
action, proceeding or investigation           by any Governmental Authority or any other
Person (i) challenging or           seeking material damages in connection with the
Arrangement or the Transactions,           (ii) seeking to restrain or prohibit the
consummation of the Transactions           or otherwise limit the right of Parent or
Subco to own or operate all or any           portion of the businesses or assets of the
Company or any of its Subsidiaries or           (iii) that is reasonably likely to
have a Company Material Adverse Effect.  







26 

















        (b)              The
Parties shall furnish to each other all information required for any
          application or other filing to be made pursuant to the rules and regulations of
          any applicable Law (including all information required to be included in the
          Information Circular) in connection with the Transactions.  



        (c)              The
Parties shall give (or shall cause their respective Subsidiaries to give)           any
notices to third parties and use, and cause their respective Subsidiaries to
          use, their reasonable best efforts to obtain any third party consents,
          (i) necessary, proper or advisable to consummate the Transactions, (ii)
          disclosed or required to be disclosed in the Disclosure Schedule or (iii)
          required to prevent a Company Material Adverse Effect from occurring. In the
          event that any Parties shall fail to obtain any third party consent described
          above, it shall use its commercially reasonable efforts, and shall take any
such           actions reasonably requested by the other Party or Parties, to minimize
any           adverse effect upon the Parties, their respective Subsidiaries, and their
          respective businesses resulting, or which could reasonably be expected to
result           after the Effective Time, from the failure to obtain such consent.  



        (d)              If
any takeover statute or similar statute or regulation becomes applicable to
          this Agreement or any of the Transactions, the Parties shall, to the extent
          permitted by applicable law, take all action necessary to ensure that the
          Arrangement and the other Transactions may be consummated as promptly as
          practicable on the terms contemplated by this Agreement and otherwise to
          minimize the effect of such statute or regulation on the Arrangement and the
          other Transactions.  



        Section
5.03   Access to Information.  



        (a)              From
the date hereof to the Effective Time, the Company shall (and shall cause           each
of its Subsidiaries to) provide to Parent and Subco (and their respective
          officers, directors, employees, accountants, consultants, legal counsel, agents
          and other representatives, collectively, “Representatives”)
          full access to all information and documents which Parent and Subco may
          reasonably request regarding the business, assets, liabilities, employees and
          other aspects of the Company or any of its Subsidiaries. Parent, Subco and
their           respective affiliates will treat and hold as such any confidential
information           received from the Company or any of its Subsidiaries in the course
of the           reviews contemplated by this Section 5.03, except to the extent that any
such           confidential information (i) becomes generally known to and available for
use by           the public other than as a result of Parent’s, Subco’s or
their           respective affiliates’ violation of this Section 5.03, (ii) was
          obtained by Parent, Subco or their respective affiliates from a source other
          than the Company or its Representatives and not known to Parent, Subco or their
          respective affiliates to be subject to non-disclosure agreement with the
Company           or (iii) is required to be disclosed pursuant to applicable Law or
legal           process, in which event Parent and Subco shall promptly provide written
notice           to the Company to allow the Company to seek (at the Company’s
expense) a           protective order with respect to such information.  



        (b)              Notwithstanding
the foregoing, with respect to any and all personal information           (the “Personal
Information”) regarding the employees,           customers, directors, officers
and shareholders of the Company and its various           subsidiaries (collectively, the
“MDSI Companies”):           (i) Parent and Subco will hold all
Personal Information in the strictest           confidence and will make reasonable
security arrangements to prevent           unauthorized access, collection, use,  







27 
















disclosure, copying, modification and
disposal of the Personal Information; (ii) Parent and Subco will use or disclose the
Personal Information solely for purposes relating to the Transactions and for no other
purpose; (iii) if the Transactions proceed, Parent and Subco will: (A) only use
or disclose the Personal Information for the purposes for which it was collected, used or
disclosed by the MDSI Companies and (B) notify the employees, customers, directors,
officers and shareholder whose personal information was disclosed that the Transactions
have taken place and that personal information about them has been disclosed to Parent and
Subco; (iv) if the Transactions do not proceed, Parent and Subco will (as directed by
the Company) securely destroy all Personal Information in Parent or Subco’s custody
or control, or return all copies of all such information to the Company; and
(v) Parent and Subco will cause all of their employees, directors, officers,
professional advisors, agents and other representatives to comply with the above
obligations. 



        (c)              From
the date hereof to the Effective Time, the Company shall (and shall cause           each
of its Subsidiaries to) (i) provide to Parent and Subco and its
          Representatives full access during normal business hours upon prior notice to
          the officers, employees, agents, properties, offices and other facilities of
the           Company and its Subsidiaries and to the books and records thereof and
          (ii) furnish promptly such information concerning the business,
properties,           contracts, assets, liabilities, personnel and other aspects of the
Company and           its Subsidiaries as Parent and Subco or such Representatives may
reasonably           request.  



        (d)              No
investigation by any Party, whether prior to the execution of this Agreement           or
pursuant to this Section 5.03, shall affect any representation or warranty in
          this Agreement of any other Party hereto or any condition to the obligations of
          the other Parties hereto.  



        Section
5.04   No Solicitation.  



        (a)              The
Company shall not, and the Company shall cause each of its Subsidiaries not           to,
and the Company agrees that it shall neither authorize nor permit any of its           or
its Subsidiaries’ directors, officers, employees, agents or
          representatives to, directly or indirectly, solicit, initiate or encourage
          (including by way of furnishing or disclosing information) any inquiries,
          discussions or the making of any proposal (other than the Transactions) with
          respect to any arrangement, amalgamation, merger, consolidation, liquidation,
          dissolution, recapitalization, take-over bid or other business combination
          involving the Company or any of its Subsidiaries or acquisition or issuance of
          any kind of a material portion of the assets or capital stock of the Company or
          any of its Subsidiaries or any strategic alliance, lease, long-term supply
          arrangement or other arrangement having the economic effect as a sale or
similar           transaction or series of transactions (a “Competing
          Transaction”) or negotiate, explore or otherwise communicate in any
way           with any Person (other than Parent or Subco or their directors, officers,
          employees and representatives) with respect to a Competing Transaction or enter
          into or consummate any agreement, arrangement or understanding requiring it to
          abandon, terminate or fail to complete the Arrangement or consummate any of the
          other Transactions; provided, that prior to the vote of the Shareholders
          at the Meeting, the Company may, if and so long as the Company’s Board of
          Directors reasonably believes in good faith by a majority vote, based on the
          advice of its outside counsel as to legal matters, that failing to take such
          action would be inconsistent with the fiduciary duties of the Company’s
          Board of Directors under applicable Law, in response to a  







28 
















Competing Transaction from any Person
that was not solicited by the Company in contravention of this Agreement and that did not
otherwise result from the breach of this Section 5.04, and subject to compliance with
Section 5.04(c), (i) furnish information with respect to the Company to such Person
pursuant to a confidentiality and standstill agreement on terms no less favorable to the
Company and no more favorable to such Person than the confidentiality and standstill
provisions in the Letter Agreement and (ii) participate in discussions or
negotiations with such Person regarding any Competing Transaction; provided,
however, in each case, that such proposal for a Competing Transaction is not
subject to any financing contingency and not subject to other conditions that are more
onerous from those set forth in this Agreement and such proposal is, in the business
judgment of the Board of Directors of the Company, more favorable to the Shareholders from
a financial point of view than the Transactions (including any adjustments to the terms
and conditions of such transactions proposed by Subco in response to such Competing
Transaction pursuant to Section 5.04(b) below). 



        (b)              Neither
the Company (or any of its Subsidiaries) nor the Board of Directors of           the
Company nor any committee thereof shall (i) withdraw or modify, or           propose
to withdraw or modify, in a manner adverse to Parent or Subco, the           approval,
adoption or recommendation by the Board of Directors of the Company or           any such
committee of this Agreement, the Arrangement or the other Transactions,           (ii) approve
or recommend, or propose to approve or recommend, any           Competing Transaction,
(iii) approve or recommend, or propose to approve or           recommend, or execute
or enter into, any letter of intent, agreement in           principle, merger agreement,
acquisition agreement, option agreement or other           agreement relating to any
Competing Transaction or propose or agree to do any of           the foregoing, or (iv)
submit any Competing Transaction at the Meeting for           purposes of voting upon
approval and adoption of the Competing Transaction; provided, however, that
prior to the vote of the Shareholders at           the Meeting, the Company may, to the
extent required by the fiduciary           obligations of the Board of Directors (or
special committee thereof) of the           Company, as determined in good faith by a
majority vote of the Board of           Directors (or special committee thereof) of the
Company, based on the advice of           its outside counsel as to legal matters, and
after compliance with the following           sentence, terminate this Agreement pursuant
to Section 7.01(i) (provided,           that concurrently with such termination
the Company enters into a definitive           agreement containing the terms of a
Competing Transaction that is not subject to           any financing contingency and not
subject to other conditions that are more           onerous from those set forth in this
Agreement and such proposal is, in the           business judgment of the Board of
Directors of the Company, more favorable to           the Shareholders from a financial
point of view than the transactions           contemplated by this Agreement). If the
Company wishes to exercise its right to           terminate this Agreement pursuant to
this Section 5.04(b), the Company shall, as           a condition precedent to the
effectiveness of such termination, (A) pay to Vista           Equity Partners, LLC (or
its designees) the amounts described in Section 7.03(a)           by wire transfer of
immediately available funds, and (B) deliver to Subco and           Parent a written
acknowledgment from the Company and the other Person that is           party to the
Competing Transaction that the Company and such other Person have           irrevocably
waived any right to contest such payment. Notwithstanding anything           in this
Agreement to the contrary, the Company may only exercise its right to           terminate
this Agreement pursuant to this Section 5.04(b) at a time that is           after the
fifth (5th) Business Day following Parent’s and           Subco’s
receipt of written notice (the “Competing Notice”)           advising
Parent and Subco that the Board of Directors (or special committee           thereof) of
the Company is prepared, subject to any action taken by Parent and           Subco
pursuant to this sentence, to cause the Company to accept a Competing  







29 

















Transaction, specifying the material
terms and conditions of such Competing Transaction, identifying the Person making such
Competing Transaction and specifying the value in financial terms that the Board of
Directors (or special committee thereof) of the Company has, after consultation with
financial advisors, determined in good faith should be ascribed to any non-cash
consideration offered under such Competing Transaction (it being understood and agreed
that any amendment or modification of a Competing Transaction shall result in a new
Competing Transaction for which a new five (5) Business Day period following a new notice
referred to above shall be required under this sentence); provided, however,
that Parent and Subco shall have the right during such five (5) Business Day period after
receipt of the Competing Notice to offer to adjust the terms and conditions of the
Transactions by tendering to the Company a new proposal for such terms and conditions (the
“Revised Proposal”); provided, further, that if the Revised
Proposal, in the business judgment of the Board of Directors (or special committee
thereof) of the Company, after consultation with financial advisors, is substantially the
same as the Competing Transaction from a financial point of view, or is more favorable to
the Securityholders from a financial point of view than the Competing Transaction, then,
subject only to the amendment of this Agreement to incorporate the terms and conditions of
the Revised Proposal, the Company shall reject the Competing Transaction and recommend to
the Shareholders the approval and adoption of the Revised Proposal, subject again to the
terms of this Section 5.04. 



        (c)              The
Company immediately (and in any event within 12 hours of the relevant
          event) shall advise Parent and Subco orally and in writing of any Competing
          Transaction or any inquiry with respect to or that could reasonably be expected
          to lead to any Competing Transaction or any request for non-public information
          relating to the Company or any of its Subsidiaries and the identity of the
          Person making any such Competing Transaction, inquiry or request, and, in each
          case, the terms and conditions thereof, including any amendment or other
          modification to the terms of any such Competing Transaction, inquiry or
request.           The Company shall keep Parent and Subco fully apprised of the status
of any           proposal relating to a Competing Transaction on a current basis.  



        (d)              The
Company shall, and shall cause each of the Subsidiaries to, immediately           cease
and cause to be terminated any existing discussions or negotiations with           any
parties (other than the Parent and Subco) with respect to any Competing
          Transaction. Neither the Company nor any of its Subsidiaries shall cancel,
          terminate, amend, modify or waive any of the terms of any confidentiality or
          standstill agreement executed with respect to the Company or any Subsidiary by
          any other party prior to the date of this Agreement. The Company shall
          immediately request the return or destruction of all information provided to
any           third parties who have entered into confidentiality agreements with the
Company           or any of its Subsidiaries with respect to any Competing Transactions,
and shall           use all reasonable efforts to ensure that such requests are honored.  



        (e)              The
Company shall ensure that its and each of its Subsidiaries’ officers,
          directors, employees, agents, advisors and representatives retained by it are
          aware of the provisions of this Section 5.04, and the Company shall be
          responsible for any breach of this Section 5.04 by such officers, directors,
          employees, agents, advisors or other representatives.  







30 
















        Section
5.05   D&O Indemnification.  



        (a)              The
Company agrees that, except as may be limited by applicable Laws (including           the
Sarbanes-Oxley Act of 2002), for seven (7) years from and after the           Effective
Time, the indemnification obligations set forth in the Organizational           Documents
for the MDSI Companies as of the date of this Agreement shall survive           the
consummation of the Transactions and shall not be amended, repealed or
          otherwise modified after the Effective Time in any manner that would adversely
          affect the rights thereunder of the individuals who on or at any time prior to
          the Effective Time were entitled to indemnification thereunder with respect to
          matters occurring prior to the Effective Time.  



        (b)              The
Company shall maintain in effect, for a period of seven (7) years from the
          Effective Time, directors’ and officers’ liability insurance policies
          (“D&O Tail Insurance”) covering the Persons who are
present           and former directors and officers of the MDSI Companies (the “Covered
          Parties”) on terms not materially less favorable than the existing
          insurance coverage with respect to matters occurring prior to the Effective
          Time; provided, however, that in no event will the Company be
          required to pay more than $375,000 to acquire a seven (7)-year tail insurance
          policy as of the Effective Date to satisfy the requirement set forth in this
          Section 5.05(b).  



        (c)              In
the event that any action, suit, proceeding or investigation relating thereto
          or to the transactions contemplated by this Agreement is commenced, whether
          before or after the Effective Time, the Parties agree to cooperate and use
their           respective reasonable efforts to defend against and respond thereto.  



        Section
5.06  Notification of Certain Matters. From and after the date of
this Agreement until the Effective Time, each of the Parties hereto shall promptly notify
the other Parties hereto of:  



        (a)              the
occurrence, or non-occurrence, of any event the occurrence or non-occurrence           of
which would be reasonably likely to cause any (i) representation or
          warranty contained in this Agreement to be (x) in the case of any such
          representation or warranty qualified by any materiality qualifier (including
          Company Material Adverse Effect), untrue or inaccurate or (y) in the case of
any           other such representation of warranty, untrue or inaccurate in any material
          respect or (ii) any material covenant or any condition to the obligations
          of any of the Parties to consummate the Transactions not to be complied with or
          satisfied;  



        (b)              the
failure of any of the Parties hereto to comply with or satisfy any material
          covenant, condition or agreement to be complied with or satisfied by it
pursuant           to this Agreement;  



        (c)              the
receipt of any notice or other communication from any Person alleging that           the
consent of such Person is or may be required in connection with the
          Transactions;  



        (d)              the
receipt of any notice or other communication from any Governmental Authority           in
connection with the Transactions; and  







31 
















        (e)              any
actions, suits, claims, investigations or proceedings commenced or, to the
          knowledge of the Party, threatened against, relating to or involving or
          otherwise affecting the Company, Parent or Subco, which relates to the
          consummation of the Transactions,  



        in
each case, to the extent such event or circumstance is or becomes known to the Party
required to give such notice; provided, however, that the delivery of any
notice pursuant to this Section 5.06 shall not be deemed to be an amendment of this
Agreement or any Section in the Disclosure Schedule and shall not cure any breach of any
representation or warranty requiring disclosure of such matter prior to the date of this
Agreement.  



        Section
5.07  Public Announcements. Subject to the following sentences,
Parent, Subco and the Company shall consult with each other before issuing, or permitting
any of their respective agents to issue, any press release or otherwise making, or
permitting any such agent to make, any public statements with respect to this Agreement,
the Arrangement or any other Transaction. Prior to the Closing, Parent, Subco and the
Company shall not issue, or permit any of their respective agents to issue, any such
press release or make, or permit any such agent to make, any such public statement
without the prior consent of the other (which consent shall not be unreasonably withheld
or delayed), except as may be required by Law, Nasdaq or TSX and, in such case, shall
give prior written notice to, and consult with, all the Parties hereto (and provide the
other Parties with a reasonable opportunity to review and comment thereon) prior to such
release or statement being issued. The Parties shall agree on the text of joint press
releases by which Parent, Subco and the Company will announce, directly or through their
respective agents, the execution of this Agreement and the completion of the Arrangement.  



        Section
5.08  Shareholder Approval. Subject to Section 5.04, the Company
shall take all action necessary or advisable, subject to applicable Law and its
Organizational Documents, to obtain the requisite approval of the Arrangement by the
Shareholders.  



        Section
5.09  Securities Exchange Filings. Unless an exemption shall be
expressly applicable, or unless the other Parties agree otherwise in writing, the
Company, Parent and Subco will file with the Canadian Securities Authorities, the SEC,
the other Governmental Authorities, Nasdaq and TSX, all reports and notices required to
be filed by each of them pursuant to the rules and regulations thereunder (including,
without limitation, all required financial statements). Such reports, notices and other
information shall comply in all material respects with all of the requirements of such
rules and regulations, and when filed, will not include an untrue statement of a material
fact or omit 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.  



        Section
5.10  Stock Purchase Plans. The Company shall immediately suspend
and shall not accept any further payroll contributions under the Stock Purchase Plans
after the date hereof. The Company shall take all necessary actions to permit
participants under the Stock Purchase Plans to purchase Company Common Shares prior to
the Effective Time with contributions made under the Stock Purchase Plans on or prior to
the date hereof (or to obtain a refund of such amounts) and to cause the termination of
the Stock Purchase Plans and all rights thereunder as of the Effective Time.  








32 
















        Section
5.11  Company Stock Options. The Company shall provide each
Optionholder with a letter (together with the Information Circular) providing the notice
contemplated by section 11.3 of the Company Stock Option Plans stating, among other
things, that the Company Stock Options held by such Optionholder have been conditionally
accelerated pending completion of the Arrangement, and providing each Optionholder with
an election to (i) conditionally exercise its Company Stock Options (subject to the
completion of the Arrangement) for Company Common Shares on payment by such Optionholder
of the exercise price by check in accordance with section 8.2(a) of the Company Stock
Option Plans or (ii) transfer to the Company all (but not less than all) of its Company
Stock Options in exchange for a cash payment from the Company equal to the amount (if
any) per Company Stock Option by which the Purchase Price exceeds the exercise price of
such Company Stock Option. The Company shall not allow Optionholders to exercise Company
Stock Options pursuant to sections 8.2(b) or 8.2(c) of the Company Stock Option Plans.  



        Section
5.12  Further Assurances. Each of the Parties shall execute such
documents and other papers and take or cause to be taken such further action as may be
reasonably required to carry out the provisions hereof and to consummate and make
effective, as promptly as practicable, the Arrangement and the other Transactions.
Subject to the terms and conditions of this Agreement, each Party shall use reasonable
best efforts to satisfy each of its covenants and obligations under this Agreement and to
satisfy each condition to Closing it is required to satisfy hereunder.  



ARTICLE VI 

CONDITIONS TO THE ARRANGEMENT 



        Section
6.01  Conditions to the Obligations of Each Party. The obligations
of the Company, Parent and Subco to complete the Arrangement and to file the articles of
arrangement to give effect to the Arrangement are subject to the satisfaction of the
following conditions (or, if permitted by applicable Law, waiver by the Party for whose
benefit such conditions exist):  



        (a)              the
Arrangement Resolution shall have been approved by Shareholders at the           Meeting
in accordance with Section 2.05;  



        (b)              the
Interim Order and the Final Order shall have been obtained in form and
          substance reasonably satisfactory to each of Parent, Subco and the Company and
          shall not have been set aside or modified in a manner that is reasonably
          unacceptable to such Party on appeal or otherwise;  



        (c)              the
articles of arrangement relating to the Arrangement shall be in form and
          substance reasonably satisfactory to Parent, Subco and the Company;  



        (d)              no
order, statute, rule, regulation, executive order, stay, decree, judgment or
          injunction shall have been enacted, entered, issued, promulgated or enforced by
          any Governmental Authority or a court of competent jurisdiction which has the
          effect of prohibiting the completion of the Arrangement; and  







33 



















        (e)              all
necessary and material governmental and regulatory clearances, consents, or
          approvals shall have been received on terms reasonably satisfactory to each of
          Parent, Subco and the Company.  



        Section
6.02   Conditions to the Obligations of Parent and Subco. The
obligations of each of Parent and Subco to complete the Arrangement are subject to the
satisfaction or, if permitted by applicable Law, waiver by Parent and Subco of the
following further conditions:  



        (a)
              (i) the Company shall have performed in all material respects all of its
          covenants, agreements and obligations hereunder required to be performed by it
          at or prior to the Effective Time; (ii) each of the representations and
          warranties of the Company contained in this Agreement shall be true and correct
          in all material respects (except that each representation and warranty
qualified           by materiality or by Company Material Adverse Effect shall be true in
all           respects) as of the Closing Date as if made at and as of such time, except
to           the extent that a representation or warranty is made as of a specific date,
in           which case, such representation or warranty shall be true and correct in all
          material respects (except that each representation and warranty qualified by
          materiality or by Company Material Adverse Effect shall be true in all
respects)           as of such date; and (iii) Parent and Subco shall have received
a           certificate signed by an executive officer of the Company as to the
satisfaction           of the conditions set forth in this Section 6.02(a);  



        (b)
              since the date of this Agreement, no event shall have occurred which has or
          which would reasonably be expected to have a Company Material Adverse Effect;  



        (c)
              the number of Company Common Shares held by the Shareholders who have exercised
          their Dissent Rights shall not exceed 5% of the aggregate number of Company
          Common Shares outstanding on the date hereof;  



        (d)
              Parent and Subco shall have received a release from the Company Financial
          Advisor and Bear Stearns & Co. Inc. releasing the Company from all
          obligations under the engagement letters entered into between such parties and
          confirming that all amounts due to it by the Company have been paid in full and
          otherwise in form and substance reasonably satisfactory to Parent and Subco;  



        (e)
              the Company shall have obtained all consents, authorizations, approvals and
          waivers from third parties that are set forth on Section 2.06(a), Section
          2.06(b) and Section 2.15 of the Disclosure Schedule;  



        (f)
              no act, action, suit or proceeding shall have been threatened or taken before
or           by any Governmental Authority or Person, whether or not having the force of
Law,           and no Law shall have been proposed, enacted, promulgated or applied, in
either           case:  



	  	        (i)
               to cease trade, enjoin, prohibit or impose adverse limitations or conditions on
          the consummation of the Arrangement or on the right of Subco to own or exercise
          full rights of ownership of the Company Common Shares to be acquired by it
under           the Arrangement; or  










34 
















	  	        (ii)
               which, if the Arrangement was consummated, would impose limitations,
          restrictions or conditions on the business or operations of Parent, Subco, the
          Company or any of its Subsidiaries, or otherwise impose material fines or
          penalties on Parent, Subco, the Company or any of its Subsidiaries;  







        (g)
              Parent and Subco shall have received reasonably satisfactory evidence that the
          Company and its Subsidiaries, taken as a whole, (i) shall have at least
          $20,000,000 of freely available cash and cash equivalents immediately prior to
          the Effective Time (after giving effect to the payment of all Company
          Transaction Expenses incurred or expected to be incurred in connection with the
          consummation of the Transactions) and (ii) shall have at least $12,500,000 of
          cash that is available to Parent and Subco to satisfy, in part, their
          obligations pursuant to this Agreement and the Plan of Arrangement;  



        (h)
              the Company shall have delivered to Parent: (i) good standing certificates
          of the Company from its jurisdiction of incorporation and each jurisdiction
          where it is qualified to conduct business, dated within ten (10) days prior to
          the Effective Time; (ii) a certified copy of the resolutions of the Board
          of Directors of the Company approving the Transactions; (iii) a certified
          copy of the Company’s Organizational Documents; and (iv) such other
          documents relating to the transactions contemplated by this Agreement as Parent
          or Subco may reasonably request;  



        (i)
              the Company shall have (i) prepared and mailed corrective filings pursuant to
          the Employee Plans Compliance Resolution System with respect to any delinquent
          amendments required to be made by law, including, without limitation, EGTRRA,
to           the Mobile Data Solutions, Inc. 401(k) Savings Plan and the Alliance
Systems,           Inc. Employee Stock Ownership and Investment Plan during the period
between the           date of termination of such plans and the date of final
distribution of the           assets of such plans and (ii) paid all expenses, fees and
penalties associated           therewith; and  



        (j)
              at least thirty (30) of the employees set forth in Section 2.25(c) of the
          Disclosure Schedule shall have entered into a confidentiality and work product
          agreement with the Company and/or its Subsidiaries substantially in the form
          attached hereto as Exhibit C; provided, that any deviations from
          the form of the agreement attached hereto as Exhibit C shall be
          reasonably acceptable to Parent and Subco.  



        Section
6.03  Conditions to the Obligations of the Company. The
obligations of the Company to complete the Arrangement are subject to the satisfaction
or, if permitted by applicable Law, waiver by the Company, as the case may be, of the
following further conditions:  



        (a)              (i) Parent
and Subco shall have performed in all material respects all of           their respective
covenants, agreements and obligations hereunder required to be           performed by
them at or prior to the Effective Time; (ii) each of the           representations
and warranties of Parent and Subco contained in this Agreement           shall be true
and correct all material respects (except that each representation           and warranty
qualified by materiality shall be true in all respects) as of the           Closing Date
as if made at and as of such time, except to the extent that a           representation
or warranty is made as of a specific date, in which case, such           representation
or warranty shall be true and correct in all material respects           (except that
each representation and warranty qualified  







35 



















by materiality shall be true in all
respects) as of such date; and (iii) the Company shall have received a certificate
signed by an executive officer of Parent and Subco as to the satisfaction of the
conditions set forth in this Section 6.03(a). 



        (b)              Parent
and Subco have the funds necessary to consummate the Transactions.  



        Section
6.04   Merger of Conditions. The conditions set out in Section
6.01, Section 6.02 and Section 6.03 shall be conclusively deemed to have been satisfied,
waived or released upon issuance of a certificate of arrangement in respect of the
Arrangement under the CBCA. The Company acknowledges and agrees that it shall have no
right to file articles of arrangement unless such conditions have been satisfied,
fulfilled or waived.  



ARTICLE VII 

TERMINATION, AMENDMENT AND WAIVER 



        Section
7.01   Termination. This Agreement may be terminated and the Arrangement may be
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval by the Shareholders of the Arrangement:  



        (a)              by
written consent of Parent, Subco and the Company;  



        (b)              by
Parent, Subco or the Company if (i) any court of competent jurisdiction           in
the United States or Canada or any other Governmental Authority shall have
          issued an order (other than a temporary restraining order), decree or ruling,
or           taken any other action, restraining, enjoining or otherwise prohibiting the
          completion of the Arrangement (provided, however, that no Party
          may terminate this Agreement pursuant to this Section 7.01(b) prior to
          October 31, 2005 if the Party subject to such order, decree or ruling is using
          its commercially reasonable efforts to have such order, decree or ruling
          removed, unless such order, decree or ruling shall have become final and
          non-appealable), or (ii) the Effective Time shall not have occurred on or
          before October 31, 2005; provided, that the right to terminate this
          Agreement under this Section 7.01(b) shall not be available to any Party whose
          breach of any obligation under this Agreement has been the cause of or resulted
          in the failure of the Effective Time to occur on or before such date;  



        (c)              by
Parent, Subco or the Company if the Meeting shall have been held and the
          Shareholders shall have failed to approve the Arrangement at the Meeting; provided,
that the right to terminate this Agreement under this Section           7.01(c) shall not
be available to the Company if its breach of any obligation           under this
Agreement has been the cause of or resulted in the failure to obtain           such
approval by the Shareholders;  



        (d)              by
Parent or Subco if the Board of Directors of the Company or any committee
          thereof (i) shall withdraw, modify or change in a manner adverse to Parent
          or Subco, or refrain from giving its approval or recommendation of the
          Arrangement or any of the Transactions, (ii) recommends a Competing
          Transaction with respect to the Company to the Securityholders pursuant to
          Section 5.04 or (iii) fails to reaffirm its recommendation of the
          Arrangement by press release not later than the third (3rd) Business
          Day after the public announcement of a Competing Transaction (or, in the event
          that the Meeting will be scheduled to  








36 

















commence within such period, at least
one (1) Business Day prior to the scheduled date of the Meeting); provided,
however, that any such reaffirmation made by the Company shall not prevent or
preclude the Board of Directors from fulfilling its fiduciary duties pursuant to, and as
permitted under, Section 5.04 in respect of any Competing Transaction; it being
acknowledged that, in the event that a reaffirmation is made by the Board of Directors in
accordance with this Section 7.01 following the public announcement or commencement of any
Competing Transaction, neither Parent nor Subco shall have the right to terminate this
Agreement under this Section 7.01(d) (and no Fee or Reimbursable Expenses shall be payable
under Section 7.03) unless and until the Company exercises its right to terminate this
Agreement pursuant to Section 5.04(b); 



        (e)              by
the Company upon a breach of any representation, warranty, covenant or
          agreement set forth in this Agreement such that the condition set forth in
          Section 6.03(a) would not be satisfied; provided, however, that,
          if such breach is curable by Parent or Subco through the exercise of its
          commercially reasonable efforts and Parent or Subco continues to exercise such
          commercially reasonable efforts, the Company may not terminate this Agreement
          under this Section 7.01(e) unless such breach is not cured within 30 days from
          the date on which the Company delivers to Parent or Subco written notice
setting           forth in reasonable detail the circumstances giving rise to such
breach;  



        (f)              by
Parent or Subco upon a breach of any covenant or agreement set forth in this
          Agreement such that the condition set forth in Section 6.02(a)(i) would not be
          satisfied; provided, however, that, if such breach is curable by
          the Company through the exercise of its commercially reasonable efforts and the
          Company continues to exercise such commercially reasonable efforts, Parent or
          Subco may not terminate this Agreement under this Section 7.01(f) unless such
          breach is not cured within 30 days from the date on which Parent or Subco
          delivers to the Company written notice setting forth in reasonable detail the
          circumstances giving rise to such breach;  



        (g)              by
Parent or Subco upon a breach of any representation or warranty set forth in
          this Agreement such that the condition set forth in Section 6.02(a)(ii) would
          not be satisfied; provided, however, that, if such breach is
          curable by the Company through the exercise of its commercially reasonable
          efforts and the Company continues to exercise such commercially reasonable
          efforts, Parent or Subco may not terminate this Agreement under this Section
          7.01(g) unless such breach is not cured within 30 days from the date on which
          Parent or Subco delivers to the Company written notice setting forth in
          reasonable detail the circumstances giving rise to such breach;  



        (h)              by
Parent or Subco upon a breach of the Support Agreement by Dysthe; or  



        (i)              by
the Company in accordance with Section 5.04(b).  



        Section
7.02   Method of Termination; Effect of Termination.  



        (a)              Any
such right of termination hereunder shall be exercised by written notice of
          termination given by the terminating Party to the other Parties hereto in the
          manner hereinafter provided in Section 8.03.  







37 



















        (b)              Except
as provided in Section 8.01, in the event of the termination of this           Agreement
pursuant to Section 7.01, this Agreement shall forthwith become void,           there
shall be no liability under this Agreement on the part of any of the           Parties
hereto or any of their respective officers or directors and all rights           and
obligations of any Party hereto shall cease, except for (i) fraud or
          intentional misrepresentation and (ii) as set forth in Section 7.03; provided,
however, that nothing herein shall relieve any Party           from liability for,
or be deemed to waive any rights of specific performance of           this Agreement or
other equitable remedy available to a Party by reason of any           breach by the
other Party or Parties of this Agreement.  



        Section
7.03   Payments on Termination.  



        (a)              In
the event that this Agreement is terminated pursuant to Section 7.01(d),
          Section 7.01(f), Section 7.01(h) or Section 7.01(i), the Company shall, within
          five (5) Business Days of such termination, pay (or direct the payment to)
Subco           (or its designee) by wire transfer of immediately available funds to the
          account(s) specified by Subco, an amount in cash equal to $3,500,000 (the
          “Fee”); provided, however, that if the Company
          terminates this Agreement pursuant to Section 7.01(i), then notwithstanding the
          foregoing, the Company shall be required to pay (or direct the payment of) the
          foregoing amounts to Subco (or their designee) as a condition precedent to the
          effectiveness of such termination as provided in Section 5.04(b).  



        (b)              In
the event that this Agreement is terminated pursuant to Section 7.01(g), the
          Company shall, within five (5) Business Days of such termination, pay (or
direct           the payment of) the Fee to Subco (or its designee) by wire transfer of
          immediately available funds to the account(s) specified by Subco; provided,
however, that if (x) the termination of this Agreement           is attributable
to a breach by the Company of any Specific Representation that           was true and
correct in all respects as of the date hereof but ceases to be true           and correct
after the date hereof such that the condition set forth in Section           6.02(a)(ii)
would not be satisfied and (y) the Company has not otherwise           breached any other
representation, warranty, covenant or agreement set forth in           this Agreement,
then the Company shall, within five (5) Business Days of such           termination, pay
(or direct the payment to) Subco (or its designee) by wire           transfer of
immediately available funds to the account(s) specified by Subco, an           amount in
cash equal to $2,000,000.  



        (c)              In
the event that this Agreement is terminated pursuant to clause (ii) of           Section
7.01(b) as a result of the failure of the conditions set forth in           Section
6.02(d), Section 6.02(g) or Section 6.02(j) from being satisfied, then           the
Company shall, within five (5) Business Days after this Agreement is           terminated
(whether by Parent, Subco or the Company), pay (or direct the payment           to) Subco
(as its designee) by wire transfer of immediately available funds to           the
account(s) specified by Subco, an amount in cash equal to $2,000,000.  



        (d)              In
the event that this Agreement is terminated pursuant to Section 7.01(c), then
          the Company shall, within five (5) Business Days after this Agreement is
          terminated (whether by Parent, Subco or the Company), pay (or direct the
payment           to) Subco (or its designee) by wire transfer of immediately available
funds to           the account(s) specified by Subco, an amount in cash equal to
$2,000,000; provided, that in the event that the Company consummates a Competing
          Transaction or enters into a definitive agreement or letter of intent for a
          Competing Transaction within 12 months following the date that this Agreement
is           terminated,  








38 

















then the Company shall, on the date
such Competing Transaction is consummated or such definitive agreement or letter of intent
is entered into, as the case may be, pay (or direct the payment to) Subco (or its
designee) by wire transfer of immediately available funds to the account(s) specified by
Subco, an additional amount in cash equal to $1,500,000; provided, further,
that in the event that (x) a Competing Transaction shall have been made known to the
Shareholders generally or have been made directly to the Shareholders generally or any
Person shall have publicly announced an intention to make a proposal for a Competing
Transaction and such Competing Transaction or announced intention shall not have been
withdrawn prior to the Meeting, (y) the Arrangement is not approved by the Shareholders at
the Meeting and this Agreement is terminated pursuant to Section 7.01(c) and (z) within 18
months following such termination, the Company consummates a Competing Transaction or
enters into a definitive agreement or letter of intent for a Competing Transaction, then
the Company shall, on the date such Competing Transaction is consummated or such
definitive agreement or letter of intent is entered into, as the case may be, pay (or
direct the payment to) Subco (or its designee) by wire transfer of immediately available
funds to the account(s) specified by Subco, an additional amount in cash equal to
$1,500,000. 



        (e)              In
the event that this Agreement is terminated pursuant to Section 7.01(e), then
          Parent shall, within five (5) Business Days of such termination, pay (or direct
          the payment of) an amount in cash equal to the aggregate amount of the
          reasonable costs, fees and expenses incurred in connection with the
negotiation,           preparation and execution of this Agreement and the pursuit of the
Transactions           (including reasonable fees and expenses of legal, accounting and
financial           advisors), in each case, as such expenses may be estimated by the
Company in           good faith prior to the date of such payment, subject to an
adjustment payment           between the Parties upon the Company’s definitive
determination of such           expenses; provided, that such amounts shall not
exceed $750,000 in the           aggregate. Any such payment shall be by wire transfer of
immediately available           funds to account(s) specified by the Company.  



        (f)              In
the event that this Agreement is terminated pursuant to Section 7.01(a) or
          Section 7.01(b) (other than as described in Section 7.03(c)), all expenses
          incurred by the Parties shall be borne solely and entirely by the Party which
          has incurred the same.  



        Section
7.04  Amendment. This Agreement may be amended by written
agreement of the Parties hereto at any time before or after the holding of the Meeting
but not later than the Effective Date without, subject to applicable Law, further notice
to or authorization from the Securityholders. The Parties mutually agree that, subject to
any requirements imposed by the Interim Order or the Final Order, if a Party proposes any
amendment or amendments to this Agreement or to the Plan of Arrangement, the other
Parties will act reasonably in considering such amendment and, if the other Parties and
the Securityholders are not prejudiced by reason of any such amendment, the other Parties
will cooperate in a reasonable fashion with the Party proposing the amendment so that
such amendment can be effected subject to applicable Law and the rights of the
Securityholders.  



        Section
7.05  Waiver. At any time prior to the Effective Time, any Party
hereto may (i) extend the time for the performance of any obligation or other act of
any other Party hereto, (ii) waive any inaccuracy in the representations and
warranties of the other Party contained herein or in any document, certificate or writing
delivered by the other Party pursuant  








39 
















hereto and (iii) waive
compliance with any agreement or condition to its obligations (other than the conditions
set forth in paragraphs (a) and (d) of Section 6.01) contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by such
Party or Parties to be bound thereby or pursuant to Section 6.04. 



ARTICLE VIII 

GENERAL PROVISIONS 



        Section
8.01  Non-Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement and any certificate
delivered pursuant hereto by any Person shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 7.01, as the case may be, except that
the agreements set forth in Section 5.02, Section 5.05 and Section 5.12 shall survive the
Effective Time indefinitely (or until the earlier termination in accordance with the
terms thereof), and those set forth in Section 5.07, Section 7.03 and Section 7.05 and
this Article VIII shall survive termination indefinitely.  



        Section
8.02  Expenses. Except as provided in Section 7.03, all fees,
costs and expenses incurred by the Parties shall be borne solely and entirely by the
Party which has incurred the same. For the avoidance of doubt, all expenses related to
printing and mailing of the Information Circular and other regulatory filing fees
incurred by the Company or any of its Subsidiaries in connection with the Transactions
shall be deemed to have been incurred by the Company.  



        Section
8.03  Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by facsimile or by registered
or certified mail (postage prepaid, return receipt requested) or by a nationally
recognized overnight courier service to the respective parties at the addresses set forth
below (or at such other address for a Party as shall be specified in a notice given in
accordance with this Section 8.03). The date of receipt of any such notice or other
communication if delivered personally shall be deemed to be the date of delivery thereof,
or if sent by facsimile transmission, the date of such transmission if sent during normal
business hours on a Business Day, failing which it shall be deemed to have been received
on the next Business Day.  




	  	
if
to Parent or Subco:  






	  	
Fortezza Holdings S.a.r.l.                   

c/o Mercuria Services S.A.                   

8-10, rue Mathias Hardt                      

BP 3023                                      

L-1030 Luxembourg                            

Telecopy:  +352 48 06 31                     

Attention:  Alain Peigneux and Catherine Koch
 









	  	
and 










40 















	  	
Beech Investment Corp.             

c/o Farris Vaughan                 

700 West Georgia Street, 25th Floor

Vancouver, British Columbia        

V7Y 1B3                            

Telecopy: (604) 661-9349           

Attention:  Dean O'Leary
 







	  	
with
copies (that will not constitute notice to Parent or Subco) to:  







	  	
Vista Equity Partners            

150 California Street, 19th Floor

San Francisco, CA 94111          

Telecopy:  (415) 765-6666        

Attention:  Brian N. Sheth
 







	  	
and 






	  	
Kirkland & Ellis LLP         

Citicorp Center              

153 East 53rd Street         

New York, New York 10022-4611

Telecopy:  (212) 446-4900    

Attention:  Eunu Chun, Esq.
 







	  	
and 






	  	
Davies Ward Phillips & Vineberg LLP

1 First Canadian Place, 44th Floor 

Toronto, Ontario                   

Canada M5X 1B1                     

Telecopy:  (416) 863-0871          

Attention:  Patricia Olasker, Esq.
 







	  	
if
to the Company:  






	  	
MDSI Mobile Data Solutions Inc.

10271 Shellbridge Way          

Richmond BC                    

Canada V6X 2W8                 

Telecopy:  (604) 207-6062      

Attention:  Eric Dysthe
 












41 
















	  	
with
copies (that will not constitute notice to the Company) to:  






	  	
Dorsey & Whitney LLP             

U.S. Bank Centre                 

1420 Fifth Avenue                

Seattle, Washington 98101        

Telecopy:  (206) 903-8820        

Attention:  Randal R. Jones, Esq.
 







	  	
and 







	  	
Davis & Company LLP         

2800 Park Place             

666 Burrard Street          

Vancouver, B.C. V6C 2Z7     

Telecopy:  (604) 605-3797   

Attention:  Don Collie, Esq.
 







        Section
8.04   Certain Definitions. For purposes of this Agreement, the term:  



        “$” means
the lawful money of the United States, unless otherwise specified. 



        “Accounting
Changeover” has the meaning set forth in Section 2.07(b). 



        “Affiliate”
of a specified Person means a Person who directly or indirectly through one or more
intermediaries Controls, is controlled by, or is under common control with, such specified
Person. 



        “Agreement”
has the meaning as set forth in the first paragraph. 



        “Arrangement”
means the proposed arrangement involving Subco, the Company and the Securityholders under
the provisions of section 192 of the CBCA, on the terms and subject to conditions set
forth in the Plan of Arrangement and all amendments thereto made in accordance with
Section 7.04 hereof and Article 5 of the Plan of Arrangement or upon the direction of the
Court in the Final Order. 



        “Arrangement
Resolution” means the special resolution to be passed by the Shareholders at the
Meeting approving the Arrangement. 



        “Benefit
Plan” has the meaning as set forth in Section 2.24(a). 



        “Business
Day” means any day other than a Saturday, Sunday or a day on which banks in
Vancouver, British Columbia or San Francisco, California are authorized or required by Law
to be closed for business. 



        “Canadian
GAAP” has the meaning as set forth in Section 2.07(b). 








42 




















        “Canadian Securities
Authorities” means the securities commissions and similar regulatory authorities
in each of the provinces and territories of Canada. 



        “CBCA”
means the Canadian Business Corporations Act, R.S.C. 1985, c. C-44, as amended. 



        “COBRA”
has the meaning as set forth in Section 2.24(f). 



        “Code”
means the Internal Revenue Code of 1986, as amended. 



        “Company”
has the meaning as set forth in the recitals. 



        “Company
Common Shares” has the meaning set forth in the recitals. 



        “Company Documents”
has the meaning set forth in Section 2.07(a). 



        “Company
Financial Advisor” has the meaning set forth in Section 2.11. 



        “Company Financial
Statements” has the meaning set forth in Section 2.07(b). 



        “Company
Material Adverse Effect” has the meaning set forth in Section 2.01. 



        “Company Software”
has the meaning set forth in Section 2.25(e). 



        “Company
Stock Option Plans” means, collectively, the stock option plans of the Company,
including the 1995 Stock Option Plan, the 1996 Stock Option Plan, the 1997 Stock Option
Plan, the 1998 Stock Option Plan, the 1999 Stock Option Plan and the 2000 Stock Option
Plan, as such plans may be amended from time to time. 



        “Company
Stock Options” means options exercisable for Company Common Shares granted prior
to the Effective Date pursuant to the Company Stock Option Plans. 



        “Company
Transaction Expenses” means the sum of (i) all fees, commissions, costs and
expenses incurred or payable by the Company or any of its Subsidiaries (including amounts
payable to Bear Stearns & Co. Inc.) in connection with the negotiation, preparation
and execution of this Agreement and the consummation of the Transactions (excluding the
(A) fees and expenses of Company Financial Advisor in an amount not to exceed $320,000 in
the aggregate, (B) fees and expenses of Bear Stearns & Co. Inc. in an amount not to
exceed $1,600,000 in the aggregate, (C) fees and expenses of legal counsel retained by the
Company or its Board of Directors (or the special committee thereof) in an amount not to
exceed $500,000 in the aggregate, (D) the costs of providing the D&O Tail Insurance in
accordance with Section 5.05(b), (E) the amount of severance payable under the agreement
set forth as item 1 in Section 2.21 of the Disclosure Schedule as a result of the
consummation of the Transactions in an amount not to exceed CAD$220,000 and (F) to the
extent that all of the conditions set forth in Section 6.01 and Section 6.02 (other than
Section 6.02(g)) have been satisfied, the costs attributable to satisfying such conditions
in an amount not to exceed $50,000 in the aggregate), and (ii) all severance payments
required to be made to officers, employees or consultants of the Company or any of its
Subsidiaries that arise solely as a result of the consummation of the 







43 


















Transactions and without the
requirement of notice or satisfaction of any other conditions precedent. 



        “Competing
Notice” has the meaning as set forth in Section 5.04(b). 



        “Competing Transaction”
has the meaning as set forth in Section 5.04(a). 



        “Competition
Act” means the Competition Act (Canada), as amended. 



        “Confidentiality
Agreement” means the Mutual Non-Disclosure Agreement dated March 29, 2005
between Vista Equity Fund II, L.P. and the Company, as it may be amended from time to
time. 



        “Contracts”
has the meaning as set forth in Section 2.17. 



        “Control”
(including the terms “controlled by” and “under common control
with”) means the possession, directly or indirectly or as trustee or executor, of
the power to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise. 



        “Court”
means the Supreme Court of British Columbia. 



        “Covered
Parties” has the meaning as set forth in Section 5.05(b). 



        “D&O Tail
Insurance” has the meaning as set forth in Section 5.05(b). 



        “Director”
means the Director appointed pursuant to section 260 of the CBCA. 



        “Disclosure
Schedule” has the meaning set forth in the first paragraph of Article II. 



        “Dissent
Rights” means the right of a Shareholder to dissent in respect of the Arrangement
pursuant to the procedures set forth in section 190 of the CBCA, Section 3.1
of the Plan of Arrangement, the Interim Order and the Final Order. 



        “Dysthe”
has the meaning set forth in the recitals. 



        “Effective
Date” means the effective date of the Arrangement, being the date shown on the
certificate of arrangement to be issued by the Director under the CBCA giving effect to
the Arrangement. 



        “Effective
Time” means 12:01 a.m. (Vancouver time) on the Effective Date. 



        “Environmental
and Safety Laws” shall mean, whenever enacted or in effect, all United States
(federal, state or local), Canadian (federal, provincial or local) and foreign statutes,
regulations, ordinances and similar provisions having the force or effect of law, all
judicial and administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and pollution or
protection of the environment. 








44 

















        “ERISA”
has the meaning as set forth in Section 2.24(a). 



        “Exchange
Act” means the United States Securities Exchange Act of 1934, as amended. 



        “Fee”
has the meaning set forth in Section 7.03(a). 



        “Final
Order” means the final order of the Court approving the Arrangement, as such may
be amended or modified by the highest court to which appeal may be applied. 



        “Governmental
Authority” means any United States (federal, state or local), Canadian (federal,
provincial or local), foreign or supra-national government, or governmental, regulatory or
administrative authority, agency or commission. 



        “HSR
Act” means the United States Hart-Scott Rodino Antitrust Improvements Act of
1976, as amended. 



        “ICA”
means the Investment Canada Act (Canada), as amended, and the rules and regulations
thereunder. 



        “Indebtedness”
means at a particular time, without duplication, (i) any obligations under any
indebtedness for borrowed money (including, without limitation, all obligations for
principal, interest premiums, penalties, fees, expenses, breakage costs and bank
overdrafts thereunder), (ii) any indebtedness evidenced by any note, bond, debenture
or other debt security, (iii) any commitment by which a Person assures a creditor
against loss (including contingent reimbursement obligations with respect to letters of
credit), (iv) any indebtedness pursuant to a guarantee to a creditor, (v) any
obligations under capitalized leases or with respect to which a Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which
obligations a Person assures a creditor against loss, (vi) any indebtedness secured
by a Lien on a Person’s assets, (vii) any obligations under capitalized leases
or with respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person assures a creditor
against loss, and (viii) all obligations for the deferred and unpaid purchase price
of property or services (other than trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice). 



        “Information
Circular” means the management information circular of the Company (including the
letter of transmittal included therewith) in the English language seeking approval of the
Arrangement Resolution to be sent to Securityholders in connection with the Meeting. 



        “Intellectual
Property Rights” means, collectively, all patents, patent applications and patent
disclosures, together with all reissuances, continuations, continuations-in-part,
revisions, extensions and reexaminations thereof; all inventions (whether or not
patentable and whether or not reduced to practice) and improvements thereto; all
trademarks, service marks, trade dress, trade names, Internet domain names and corporate
names, together with all translations, adaptations, derivations and combinations thereof
and including all the goodwill associated therewith; all mask works; all copyrightable
works and all registered and unregistered statutory and common law copyrights; all
registrations, applications and renewals for any of the 







45 

















foregoing; all trade secrets,
confidential information, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research and development information, drawings,
specifications, designs, plans, improvements, proposals, technical and computer data,
databases, documentation and software (including source code and object code), financial
business and marketing plans, customer and supplier lists, pricing and cost information
and related information, marketing materials; all other proprietary and intellectual
property rights; and all copies and tangible embodiments thereof (in whatever form or
medium). 



        “Interim
Order” means the interim order of the Court to be issued pursuant to the
application referred to in Section 1.01. 



        “International
Plan” has the meaning as set forth in Section 2.24(b). 



        “IRS” has
the meaning as set forth in Section 2.24(b). 



        “Knowledge”
with respect to the Company, means the actual knowledge, after reasonable investigation,
of Erik Dysthe, Glenn Kumoi, Verne Pecho, Neil McDonnell, Ronald Toffolo, David Fischer
and Edward Yip. 



        “Laws”
has the meaning set forth in Section 2.06(a). 



        “Leased
Premises” means all leasehold or subleasehold estates and other rights to use or
occupy any land, buildings, structures, improvements, fixtures or other interest in real
property held by the Company or any of its Subsidiaries. 



        “Leases”
means all leases, subleases, licenses, concessions and other agreements (written or oral)
pursuant to which the Company or any Subsidiary holds an interest in the Leased Premises,
including the right to all security deposits and other amounts and instruments deposited
by or on behalf of the Company or any Subsidiary thereunder. 



        “Letter
Agreement” means the letter agreement, dated May 25, 2005, by and between the
Company and Vista Equity Fund II, L.P. 



        “Lien”
shall mean, with respect to any property or asset, any mortgage, pledge, security
interest, lien (statutory or other), charge, encumbrance or other similar restrictions or
limitations of any kind or nature whatsoever on or with respect to such property or asset. 



        “Mailing
Deadline” has the meaning set forth in Section 1.04(a). 



        “Material
Permit” has the meaning as set forth in Section 2.23. 



        “MDSI
Companies” has the meaning set forth in Section 5.03(b). 



        “Meeting”
means the special meeting of Shareholders to be called and held for the purpose of
considering the Arrangement Resolution and any adjournment(s) or postponement(s) thereof. 



        “Meeting
Deadline” has the meaning set forth in Section 1.04(b). 







46 

















        “Nasdaq”
means National Association of Securities Dealers Automated Quotation. 



        “Optionholder”
means a holder of Company Stock Options. 



        “Organizational
Documents” has the meaning as set forth in Section 2.02. 



        “Other
Filings” has the meaning as set forth in Section 2.13. 



        “Parent”
has the meaning as set forth in the recitals. 



        “Party
or Parties” has the meaning set forth in recitals. 



        “Permits”
shall mean all franchises, licenses, authorizations, approvals, permits, consents or other
rights granted by an Governmental Authority and all certificates of convenience or
necessity, immunities, privileges, licenses, concessions, consents, grants, ordinances and
other rights, of every character whatsoever required for the conduct of business and the
use of properties by the Company or any Subsidiary as currently conducted or used. 



        “Person”
means an individual, corporation, limited liability company, partnership, limited
partnership, syndicate, person (including, without limitation, a “Person” as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a government. 



        “Personal
Information” has the meaning set forth in Section 5.03(b). 



        “Plan
of Arrangement” means the plan of arrangement of the Company substantially as set
out in Exhibit A attached hereto and forming a part hereof and all amendments
thereto made in accordance with Section 7.04 hereof, Article 5 of the Plan of Arrangement,
or upon the direction of the Court in the Final Order. 



        “Purchase
Price” has the meaning set forth in the recitals. 



        “Representatives”
has the meaning set forth in Section 5.03(a). 



        “Revised
Proposal” has the meaning set forth in Section 5.04(b). 



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



        “Securities”
means, collectively, the Company Common Shares and the Company Stock Options. 



        “Securities
Act” means the United States Securities Act of 1933, as amended. 



        “Securities Laws”
means, collectively, the CBCA, the Securities Act (British Columbia), the
Securities Act (Ontario), and the equivalent legislation in the other provinces of
Canada, the Securities Act and the Exchange Act, all as now enacted or as the same may
from time to time be amended, re-enacted or replaced, and the applicable rules, national
and local instruments, regulations, rulings, orders, forms and written policies made or
promulgated under 







47 


















such statutes and the published
policies of regulatory authorities administering such statutes, as well as the rules,
regulations, by-laws and policies of the TSX and Nasdaq. 



        “Securityholders”
means, collectively, the Shareholders and the Optionholders. 



        “Shareholder”
means a holder of Company Common Shares. 



        “Specific
Representation” means a representation or warranty set forth in Section 2.08(a),
Section 2.08(b), Section 2.09(e), Section 2.09(f), Section 2.10, Section 2.17(d), Section
2.22(a), Section 2.25(b)(iv), Section 2.25(b)(vi), Section 2.25(b)(viii) or Section
2.26(a). 



        “Stock
Purchase Plans” means, collectively, all stock purchase plans of the Company,
including the 2002 Employee Stock Purchase Plan, as amended. 



        “Subco”
has the meaning as set forth in the recitals. 



        “Subsidiary”
or “Subsidiaries” of any Person means any corporation, partnership, joint
venture or other legal entity of which such Person (either alone or through or together
with any other Subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests, the holders of which are generally entitled to vote for the
election of the Board of Directors or other governing body of such corporation or other
legal entity. 



        “Support
Agreement” means, the agreement dated the date hereof and attached hereto as
Exhibit B, between Parent and Dysthe pursuant to which, among other things,
Dysthe has agreed on the terms and subject to the conditions therein, irrevocably to
support the Arrangement and to vote the Securities beneficially owned by Dysthe, or in
respect of which Dysthe controls or directs the voting rights attaching thereto, in favor
of the Arrangement Resolution. 



        “Tax”
or “Taxes” means federal, state, provincial, county, local, foreign or
other income, gross receipts, ad valorem, franchise, profits, sales or use, transfer,
registration, excise, utility, environmental, communications, real or personal property,
capital stock, license, payroll, wage or other withholding, employment, social security,
severance, stamp, occupation, alternative or add-on minimum, estimated and other taxes of
any kind whatsoever (including deficiencies, penalties, additions to tax, and interest
attributable thereto) whether disputed or not. 



        “Tax
Return” means any return, information report or filing with respect to Taxes,
including any schedules attached thereto and including any amendment thereof. 



        “Transactions”
means the transactions contemplated by this Agreement (including the Arrangement). 




      “TSX”
means the Toronto Stock Exchange.



        “US
GAAP” has the meaning as set forth in Section 2.07(b). 



        “WARN
Act” has the meaning as set forth in Section 2.22. 







48 

















        “Working
Capital” means the current assets (excluding cash) of the Company and its
Subsidiaries minus the current liabilities of the Company and its Subsidiaries, in
each case, determined in accordance with US GAAP applied on a consistent basis with the
Company Financial Statements. 



        Section
8.05  Interpretation. In this Agreement, unless a clear contrary
intention appears: (i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are not prohibited by this Agreement, and
reference to a Person in a particular capacity excludes such Person in any other capacity
or individually; (iii) reference to any agreement, document or instrument means such
agreement, document or instrument as amended or modified and in effect from time to time
in accordance with the terms thereof; (iv) reference to any Law means such Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder, and reference
to any section or other provision of any Law means that provision of such Law from time
to time in effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision; (v) “hereunder,”“hereof,” “hereto,” and
words of similar import shall be deemed references to this Agreement as a whole and not
to any particular Article, Section or other provision hereof; (vi) “including” (and
with correlative meaning “include”) means including without limiting the
generality of any description preceding such term; (vii) references to “$" will
be references to United States Dollars; and (viii) references to documents, instruments
or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto.  



        Section
8.06  Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law, or
public policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of the
Arrangement is not affected in any manner materially adverse to any Party. Upon such
determination that any term or other provision is invalid, illegal or incapable of being
enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the Parties as closely as possible in a mutually
acceptable manner in order that the Arrangement be completed as originally contemplated
to the fullest extent possible.  



        Section
8.07  Entire Agreement; Assignment. This Agreement (including the
exhibits hereto and the Disclosure Schedule, which are hereby incorporated herein and
made a part hereof for all purposes as if fully set forth herein) constitute the entire
agreement among the Parties with respect to the subject matter hereof and supersede all
prior agreements and undertakings, both written and oral, among the Parties, or any of
them, with respect to the subject matter hereof, including the Letter Agreement. This
Agreement shall not be assigned by operation of law or otherwise without the prior
written consent of the other Parties, except that Parent or Subco may assign all or any
of its rights and obligations hereunder to any Affiliate of Parent or Subco or as
security to any financing source; provided, that no such assignment shall relieve
the assigning Party of its obligations hereunder if such assignee does not perform such
obligations.  








49 



















        Section
8.08  Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each Party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement (other
than as intended under Section 5.05, which is intended to be for the benefit of the
Persons covered thereby and may be enforced by such Persons).  



        Section
8.09  Specific Performance. The Parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the Parties shall be entitled,
without the parting of a bond or other security, to an injunction or injunctions to
prevent breaches of this Agreement and to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.  



        Section
8.10  Governing Law; Jurisdiction; Waiver of Jury Trial. THE
PROVISIONS OF THIS AGREEMENT AND THE DOCUMENTS DELIVERED PURSUANT HERETO SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING
ANY CONFLICT OF LAW RULE OR PRINCIPLE THAT WOULD REFER TO THE LAWS OF ANOTHER
JURISDICTION). EACH PARTY HERETO IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE OF
NEW YORK, IN ANY ACTION OR PROCEEDING THAT IS OTHERWISE PERMITTED UNDER THIS AGREEMENT OR
ANY OTHER AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT, AND EACH PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MUST BE
BROUGHT AND/OR DEFENDED IN SUCH COURT. EACH PARTY HERETO CONSENTS TO SERVICE OF PROCESS
BY ANY MEANS AUTHORIZED BY THE APPLICABLE LAW OF THE FORUM IN ANY ACTION BROUGHT UNDER OR
ARISING OUT OF THIS AGREEMENT, AND EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
EACH MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL
BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING HEREUNDER.  



        Section
8.11  Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.  



        Section
8.12  Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the different
Parties hereto in separate counterparts, each of which when executed and delivered shall
be deemed to be an original but all of which taken together shall constitute one and the
same agreement.  



        Section
8.13  Construction. This Agreement and any documents or
instruments delivered pursuant hereto or in connection herewith shall be construed
without regard to the identity of the Person who drafted the various provisions of the
same. Each and every provision of this Agreement and such other documents and instruments
shall be construed as though all of  







50 

















the Parties participated equally in
the drafting of the same. Consequently, the Parties acknowledge and agree that any rule of
construction that a document is to be construed against the drafting Party shall not be
applicable either to this Agreement or such other documents and instruments. 



        Section
8.14  Disclosure Schedule. The Disclosure Schedule is qualified in
its entirety by reference to the specific provisions of this Agreement, and the matters
set forth therein are not intended to constitute, and shall not be construed to
constitute, representations or warranties of the Company, except and to the extent
provided in this Agreement.  



        Section
8.15  Confidentiality Agreement. Upon the consummation of the
Transactions, the Company acknowledges that the obligations of Vista Equity Fund II, L.P.
and its Affiliates under the Confidentiality Agreement shall be terminated in all
respects and shall be of no further force or effect.  



     * * * * *











51 

















        IN
WITNESS WHEREOF, Parent, Subco and the Company have caused this Arrangement Agreement
to be executed as of the date first written above by their respective officers thereunto
duly authorized. 



	  	
MDSI MOBILE DATA SOLUTIONS INC. 






By: /s/ Erik Dysthe         
           

Name:  Erik Dysthe

Title:  Chair, President & CEO 








Fortezza Holdings S.A.R.L. 






By: /s/ Robert F. Smith         
           

Name:     Robert F. Smith

Title: Managing Partner








BEECH INVESTMENT CORP. 






By: /s/ Robert F. Smith         
           

Name:     Robert F. Smith

Title: Managing Partner






























EXHIBIT A 

TO THE ARRANGEMENT AGREEMENT DATED JULY 29, 2005 

BETWEEN MDSI MOBILE DATA SOLUTIONS INC.,

FORTEZZA 
HOLDINGS S.ÀR.L. AND BEECH INVESTMENT CORP. 




PLAN OF ARRANGEMENT UNDER SECTION 192 

OF THE CANADA BUSINESS CORPORATIONS ACT  



ARTICLE 1 

INTERPRETATION  




	1.1  	   	Definitions  






        In
this Plan of Arrangement, unless something in the subject matter or context is
inconsistent therewith, the following terms shall have the respective meanings set out
below and grammatical variations of such terms shall have corresponding meanings: 



	  	
“Acquiror”
means Beech Investment Corp., a corporation existing under the Business
Corporations Act (British Columbia), S.B.C. 2002, c. 57;  






	  	
“Arrangement”means
the arrangement under the provisions of section 192 of the CBCA on the terms and
conditions set forth in this Plan of Arrangement, subject to any amendments or
modifications hereto made in accordance with section 7.04 of the Arrangement Agreement
and Article 5 hereof or the direction of the Court in the Final Order;  






	  	
“Arrangement
Agreement” means the arrangement agreement dated July 29, 2005 between Parent,
Acquiror and the Company providing for, among other things, the Arrangement, to which
this Plan of Arrangement is attached as Exhibit A, and all amendments, modifications and
supplements thereto;  






	  	
“ArrangementResolution” means
the special resolution passed by the Shareholders at the Meeting approving the
Arrangement;  






	  	
“Business Day” means any day other than a Saturday, Sunday or a day on which banks in
Vancouver, British Columbia or San Francisco, California are authorized or required by
law to be closed for business;  






	  	
“Cash-Out Election” means an election in respect of an Option pursuant to which the
Optionholder has duly elected (pursuant to the election form forwarded by the Company to
Optionholders or in such other manner as is reasonably acceptable to the Company and
Acquiror) to receive, in lieu of Common Shares, cash from the Company in accordance with
Subsection 2.2(c);  






	  	
“CBCA”means
the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended;  






	  	
“Common
Shares” means the common shares in the capital of the Company;  



















-2- 








	  	
“Company”means
MDSI Mobile Data Solutions Inc., a corporation existing under the CBCA;  







	  	
“Court”means
the Supreme Court of British Columbia;  






	  	
“Depositary”means
Computershare Trust Company of Canada at its principal office in Vancouver;  






	  	
“Dissent
Rights” means the right of a Shareholder to dissent in respect of the
Arrangement Resolution pursuant to the procedures set forth in section 190 of the
CBCA, Section 3.1, the Interim Order and the Final Order;  






	  	
“Dissenting
Shareholder” means a Shareholder who exercises such holder’s Dissent
Rights;  






	  	
“Effective
Date” means the date the Arrangement is effective under the CBCA;  






	  	
“Effective
Time”means 12:01 a.m. (Vancouver time) on the Effective Date;  






	  	
“Final
Order” means the final order of the Court approving the Arrangement, as such
order may be amended or modified by the highest court to which an appeal may be made;  






	  	
“Interim
Order” means the interim order of the Court providing for, among other things,
the calling and holding of the Meeting;  






	  	
“Letter
of Transmittal” means the letter of transmittal forwarded by the Company to
Shareholders, together with the management proxy circular in respect of the Meeting, or
such other equivalent form of letter of transmittal reasonably acceptable to the Company
and Acquiror;  






	  	
“Meeting”means
the special meeting of Shareholders to be held for the purpose of considering the
Arrangement Resolution, and any adjournment(s) or postponement(s) thereof;  






	  	
“Option”means
an option to acquire Common Shares duly granted prior to the Effective Date pursuant to
the Stock Option Plans;  






	  	
“Optionholder”means
a holder of Options;  






	  	
“Parent”
means Fortezza Holdings S.ar.l., a societe a responsabilite limitee existing under the
laws of       Luxembourg;  






	  	
“Plan
of Arrangement” means this plan of arrangement as the same may be amended,
modified or supplemented from time to time in accordance with section 7.04 of the
Arrangement Agreement and Article 5 hereof or the direction of the Court in the Final
Order;  






	  	
“Securityholders”means,
collectively, the Shareholders and the Optionholders;  





















-3- 








	  	
“Shareholder”means
a holder of Common Shares;  






	  	
“Stock
Option Plans” means, collectively, all stock option plans of the Company,
including the 1995 Stock Option Plan, the 1996 Stock Option Plan, the 1997 Stock Option
Plan, the 1998 Stock Option Plan, the 1999 Stock Option Plan and the 2000 Stock Option
Plan, as amended; and  






	  	
“Stock
Purchase Plans” means, collectively, all stock purchase plans of the Company,
including the 2002 Employee Stock Purchase Plan, as amended.  






	1.2  	   	Construction  






        
     In
this Plan of Arrangement, unless otherwise expressly stated or the context otherwise
requires: 



	  	(a)  	  	references
to “herein”, “hereby”, “hereunder”,
                    “hereof” and similar expressions are references to this
Plan of                     Arrangement and not to any particular Article, Section or
Subsection;  






	  	(b)  	  	references
to an “Article”, “Section” or                     “Subsection” are
references to an Article, Section or Subsection of                     this Plan of
Arrangement;  






	  	(c)  	  	words
importing the singular shall include the plural and viceversa,  words
importing gender shall include the masculine, feminine and neuter
                    genders, and references to a “person” or “persons” shall
                    include individuals, corporations, partnerships, associations, bodies
politic                     and other entities, all as may be applicable in the context;  






	  	(d)  	  	the
use of headings is for convenience of reference only and shall not affect
                    the construction or interpretation hereof;  






	  	(e)  	  	the
word “includes” or “including”, when following any
                    general term or statement, is not to be construed as limiting the
general term                     or statement to the specific items or matters set forth
or to similar items or                     matters, but rather as referring to all other
items or matters that could                     reasonably fall within the broadest
possible scope of the general term or                     statement; and  






	  	(f)  	  	a
reference to a statute or code includes every regulation made pursuant
                    thereto, all amendments to the statute or code or to any such
regulation in                     force from time to time, and any statute, code or
regulation which supplements                     or supersedes such statute, code or
regulation.  






	1.3  	   	Currency  







             All
references to currency herein are to United States dollars unless otherwise specified. 




















-4- 










ARTICLE 2 

THE ARRANGEMENT  



	2.1  	   	
Arrangement Agreement  






        This
Plan of Arrangement is made pursuant to the provisions of the Arrangement Agreement and
constitutes an arrangement as referred to in section 192 of the CBCA. 




	2.2  	   	
The Arrangement  







             Commencing
at the Effective Time, subject to the Dissent Rights referred to in Section 3.1, the
following shall occur and be deemed to occur in the following order without any further
act or formality, with each transaction or event being deemed to occur immediately after
the occurrence of the transaction or event immediately preceding it: 



	  	(a)  	  	Acquiror
(or one of its Affiliates (as defined in the CBCA)) shall provide a
                    loan to the Company in an amount equal to the aggregate amount
payable by the                     Company pursuant to Subsection 2.2(c), with such loan
to be evidenced by a                     demand promissory note issued by the Company to
the relevant lender.  






	  	(b)  	  	Each
Option that becomes exercisable as a result of the Arrangement,
                    notwithstanding any contingent vesting provisions to which it might
otherwise                     have been subject, shall be deemed to be conditionally
vested and exercisable                     only as part of the Arrangement.  






	  	(c)  	  	Each
Option in respect of which a valid Cash-Out Election has been made shall be
                    transferred by the Optionholder to the Company in exchange for a cash
payment                     from the Company equal to the amount (if any) by which $8.00
exceeds the                     exercise price thereof (provided that if such exercise
price is expressed in                     Canadian dollars, it shall be converted to
United States dollars on the basis of                     the noon rate of exchange of
the Bank of Canada on the Business Day immediately                     preceding the
Effective Date).  






	  	(d)  	  	Each
Option that has not been duly exercised by the Optionholder prior to the
                    Effective Time or in respect of which a valid Cash-Out Election has
not been                     made shall be transferred by the Optionholder to Acquiror in
exchange for a cash                     payment from Acquiror equal to the amount (if
any) by which $8.00 exceeds the                     exercise price thereof (provided that
if such exercise price is expressed in                     Canadian dollars, it shall be
converted to United States dollars on the basis of                     the noon rate of
exchange of the Bank of Canada on the Business Day immediately
                    preceding the Effective Date).  






	  	(e)  	  	All
Options (whether or not then vested) and the Stock Option Plans shall be
                    cancelled and terminated and the Company shall have no liabilities or
                    obligations with respect to any Options or the Stock Option Plans,
except                     pursuant to Subsections 2.2(c) and 2.2(d).  






	  	(f)  	  	The
Stock Purchase Plans and all subscription agreements thereunder shall be
                    cancelled and terminated and the Company shall have no liabilities or
                    obligations  























-5- 







	  	
with
 respect  to  the  Stock  Purchase  Plans  and  all  subscription           agreements
thereunder. 






	  	(g)  	  	Each
Common Share (other than those held by Dissenting Shareholders) shall be
                    transferred to and acquired by Acquiror in exchange for a cash
payment of $8.00                     per Common Share.  






	  	(h)  	  	In
respect of each Common Share transferred pursuant to Section 2.2(g), the
                    name of the Shareholder shall be removed from the register of
Shareholders and                     the name of Acquiror shall be added to the register
of Shareholders.  






ARTICLE 3

RIGHTS OF DISSENT  



	3.1  	   	
Rights of Dissent  







             Registered
holders of Common Shares may exercise Dissent Rights pursuant to and in the manner set
forth in section 190 of the CBCA and in this Section 3.1 in connection with the
Arrangement Resolution as the same may be modified by the Interim Order or the Final
Order; provided that, notwithstanding subsection 190(5) of the CBCA, the written objection
to the Arrangement Resolution referred to in subsection 190(5) of the CBCA must be
received by the Company before 5:00 p.m. (Vancouver time) on the second Business Day
preceding the Meeting. Registered holders of Common Shares who duly exercise such Dissent
Rights and who: 



	  	(a)  	  	are
ultimately entitled to be paid the fair value of their Common Shares shall
                    be deemed to have transferred such shares to Acquiror on the
Effective Date                     contemporaneously with the step of this Plan of
Arrangement set out in                     Subsection 2.2(g) being effective; or  






	  	(b)  	  	are
ultimately not entitled to be paid the fair value for their Common Shares
                    shall be deemed to have participated in the Arrangement on the same
basis as any                     non-dissenting Shareholder as at and from the Effective
Time,  






but in no case shall the Company,
Parent, Acquiror or any other person be required to recognize such holders as holders of
Common Shares after the Effective Time, and the names of such holders shall be deleted
from the register of Shareholders as of the Effective Time. In addition to any other
restrictions in section 190 of the CBCA, none of the following shall be entitled to
exercise Dissent Rights: (i) Optionholders; and (ii) Shareholders who vote in favour of
the Arrangement Resolution. 



ARTICLE 4

PAYMENT OF CONSIDERATION  



	4.1  	   	
Exchange of Certificates for Cash  






        On
the Effective Date, Acquiror shall deposit cash in immediately available funds (at
Vancouver) with the Depositary for the benefit of Shareholders, in an amount sufficient to
pay the aggregate consideration payable pursuant to Subsection 2.2(g). From and after the 






















-6- 











deposit of such cash, the Depositary
shall be considered to hold such funds for the sole benefit of the Shareholders. Upon
surrender to the Depositary for cancellation of a certificate which immediately prior to
the Effective Time represented outstanding Common Shares that were exchanged for cash
under this Plan of Arrangement, together with a duly completed Letter of Transmittal and
such additional documents and instruments as the Depositary may reasonably require, the
holder of such surrendered certificate or other instrument shall be entitled to receive in
exchange therefor, and the Depositary shall deliver to such holder, the cash which such
holder has the right to receive pursuant to Section 2.2(g). 



        The
cash deposited with the Depositary shall be held in an interest bearing account, and any
interest earned upon such funds shall be for the account of Acquiror. 



        Until
surrendered as contemplated by this Section 4.1, each certificate or other instrument
which immediately prior to the Effective Time represented Common Shares shall be deemed at
all times after the Effective Time to represent only the right to receive, upon surrender
of such certificates, the cash payment contemplated by this Section 4.1. 



	4.2  	   	Lost
Certificates  






        In
the event that any certificate which, immediately prior to the Effective Time, represented
one or more outstanding Common Shares transferred pursuant to Section 2.2 shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to have been lost, stolen or destroyed, the Depositary will
issue in exchange for such lost, stolen or destroyed certificate, cash deliverable in
accordance with such holder’s Letter of Transmittal. When authorizing such payment in
exchange for such lost, stolen or destroyed certificate, the person to whom such cash is
to be delivered shall, as a condition precedent to the delivery of such cash, give a bond
satisfactory to Acquiror and the Depositary in such sum as Acquiror may direct, or
otherwise indemnify Acquiror in a manner satisfactory to Acquiror, against any claim that
may be made against Acquiror in respect of the certificate alleged to have been lost,
stolen or destroyed. 



	4.3  	   	Payment
to Optionholders  






        On
the Effective Date, the Company shall deposit cash in immediately available funds (at
Vancouver) with the Depositary in an amount sufficient to pay the aggregate amount payable
pursuant to Subsection 2.2(c) and Acquiror shall deposit cash in immediately available
funds (at Vancouver) with the Depositary in an amount sufficient to pay the aggregate
amount payable pursuant to Subsection 2.2(d). From and after the transfer of the Options
to the Company pursuant to Subsection 2.2(c) and the transfer of the Options to Acquiror
pursuant to Subsection 2.2(d), the Depositary shall be considered to hold such funds for
the sole benefit of the Optionholders. Any interest earned upon such funds shall be for
the account of the Company. As soon as reasonably practicable but in any event within five
Business Days after the Effective Date, the Depositary shall forward or cause to be
forwarded by first class mail to each Optionholder who is entitled to be paid
consideration pursuant to Subsections 2.2(c) or 2.2(d) at the address set forth in the
records of the Company, a cheque representing the consideration to which such Optionholder
is entitled to pursuant to Subsections 2.2(c) or 2.2(d). 





















-7- 










	4.4  	   	Extinction
of Rights  






        If
any Shareholder fails for any reason to deliver to the Depositary for cancellation the
certificates formerly representing Common Shares (or an affidavit of loss and bond or
other indemnity pursuant to Section 4.2), together with such other documents or
instruments required to effect the transfer of Common Shares, on or before the third
anniversary of the Effective Date, such Shareholder shall be deemed to have donated and
forfeited to Acquiror any cash, net of any applicable withholding or other taxes, held by
the Depositary in trust for such Shareholder to which such Shareholder is entitled. 



        At
and after the Effective Time, any certificate formerly representing Shares shall represent
only the right to receive the consideration provided in Subsection 2.2(g) or Section 3.1
in accordance with the Plan of Arrangement; provided that such certificates shall, on the
sixth anniversary of the Effective Date, cease to represent a claim of any nature
whatsoever and shall be deemed to have been surrendered to Acquiror and shall be
cancelled. 




	4.5  	   	Withholding
Rights  






        The
Company, Acquiror and the Depositary shall be entitled to deduct and withhold from any
consideration otherwise payable to any holder of Common Shares or Options such amounts as
the Company, Acquiror or the Depositary is required or permitted to deduct and withhold
with respect to such payment under the Income Tax Act (Canada), the United States Internal
Revenue Code of 1986 or any provision of applicable federal, provincial, state, local or
foreign tax law. To the extent that amounts are so withheld, such withheld amounts shall
be treated for all purposes hereof as having been paid to the holder of the Common Shares
or Options in respect of which such deduction and withholding was made, provided that such
withheld amounts are actually remitted to the appropriate taxing authority. 



ARTICLE 5

AMENDMENTS  



	5.1  	   	Amendments
to Plan of Arrangement  






         
    (a)       
          Acquiror and the Company reserve the right to amend, modify and/or supplement
          this Plan of Arrangement at any time and from time to time prior to the
          Effective Date, provided that each such amendment, modification and/or
          supplement must be (i) set out in writing, (ii) approved by the other, (iii)
          filed with the Court and, if made following the Meeting, approved by the Court,
          and (iv) communicated to Securityholders if and as required by the Court. 



         
    (b)       
          Any amendment, modification or supplement to this Plan of Arrangement may be
          proposed by Acquiror or the Company at any time prior to or at the Meeting
          (provided that the other shall have consented thereto) with or without any other
          prior notice or communication, and if so proposed and accepted by the persons
          voting at the Meeting (other than as may be required under the Interim Order),
          shall become part of this Plan of Arrangement for all purposes. 



         
    (c)       
          Any amendment, modification or supplement to this Plan of Arrangement that is
          approved by the Court following the Meeting shall be effective only if it is
          consented to by each of Parent and the Company. 




















-9- 









     
        (d)       
          Any amendment, modification or supplement to the Plan of Arrangement may be made
          following the Effective Date unilaterally by the Company; provided that it
          concerns a matter which, in the reasonable opinion of the Company, is of an
          administrative nature required to better give effect to the implementation of
          this Plan of Arrangement and is not adverse to the financial or economic
          interests of Parent or any holder of Common Shares. 
























EXECUTION COPY  







EXHIBIT B  




SUPPORT AGREEMENT 



        This
SUPPORT AGREEMENT (this “Agreement”) is entered into as of July 29,
2005 by and among Fortezza Holdings S.à.r.l., a Luxembourg société
à responsabilité limitée (“Parent”), Beech
Investment Corp., a corporation incorporated under the laws of the Province of British
Columbia and a wholly-owned Subsidiary of Parent (“Subco”), Erik Dysthe
(“Dysthe”), Erik Dysthe Holdings, Inc., a British Columbia corporation
(“Dysthe Holdings” and, together with Dysthe, each a
“Shareholder” and, collectively, the “Shareholders”), and, for
the purposes of Section 9 hereof only, MDSI Mobile Data Solutions Inc., a
corporation incorporated under the federal laws of Canada (the
“Company”). Capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the Arrangement Agreement (as defined below). 



        WHEREAS,
Parent, Subco and the Company propose to enter into an Arrangement Agreement as of the
date hereof (as the same may be amended, restated or otherwise modified from time to time,
the “Arrangement Agreement”) providing for the acquisition by Subco of
all of the outstanding common shares in the capital of the Company (the “Common
Shares”) for the cash consideration set forth in the Arrangement Agreement (the
“Transaction”); 



        WHEREAS,
each Shareholder is the record and beneficial owner of the number of Common Shares set
forth opposite such Shareholder’s name on Schedule A attached hereto (such
Common Shares, as the same may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, amalgamation, consolidation,
reorganization or other change or transaction of or by the Company, together with Common
Shares that may be acquired after the date hereof by such Shareholder, including Common
Shares issuable upon the exercise of options or warrants to purchase Common Shares or
other securities exchangeable for or convertible into Common Shares (as the same may be
adjusted as aforesaid), being collectively referred to herein as the “Subject
Shares”); and 



        WHEREAS,
as a condition to their willingness to enter into the Arrangement Agreement, Parent and
Subco have requested that the Shareholders enter into this Agreement. 



        NOW,
THEREFORE, to induce Parent and Subco to enter into, and in consideration of their
entering into, the Arrangement Agreement, and in consideration of the promises and the
representations, warranties and agreements contained herein, the parties hereto agree as
follows: 



             
1.    Representations and Warranties of the
Shareholders. Dysthe and Dysthe Holdings hereby represent and warrant to
Parent and Subco jointly and severally as follows:  



     
              (a)   
          Authority. Dysthe has the requisite capacity to execute and deliver this
          Agreement and to consummate the transactions contemplated hereby. Dysthe
          Holdings has all requisite corporate power and authority to execute and deliver
          this Agreement and to consummate the transactions contemplated hereby. The
          execution, delivery and performance of this Agreement and the consummation of
          the transactions contemplated hereby have been duly authorized by Dysthe
          Holdings. This Agreement has been duly executed and delivered by each
          Shareholder and, assuming this Agreement constitutes a legal, valid and binding
          obligation of Parent and Subco, constitutes a legal, valid and binding
          obligation of the Shareholders enforceable against the Shareholders in
          accordance with its terms. Neither the execution, 

















delivery or performance of this
Agreement by the Shareholders nor the consummation by the Shareholders of the transactions
contemplated hereby will (i) require any filing with, or permit, authorization, consent or
approval of, any United States (federal, state or local), Canadian (federal, provincial or
local), foreign or supra-national government, or governmental, regulatory or
administrative authority, agency or commission (“Governmental Body”),
(ii) result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default under, or give rise to any right of termination,
amendment, cancellation or acceleration under, or result in the creation of any tax, lien,
claim, charge, encumbrance or other restriction (collectively, a “Lien”) upon
any of the properties or assets of the Shareholders under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, permit, concession,
franchise, contract, agreement or other instrument or obligation (a “Contract”)
to which either of the Shareholders is a party or by which either of the Shareholders or
any of their respective properties or assets (including their respective Subject Shares)
may be bound or (iii) violate any judgment, order, writ, preliminary or permanent
injunction or decree (an “Order”) or any statute, law, ordinance, rule or
regulation of any Governmental Body (a “Law”) applicable to such
Shareholder or any of such Shareholder’s properties or assets (including such
Shareholder’s Subject Shares), except any of the foregoing which would not impair
such Shareholder’s ability to perform his or its obligations under this Agreement. 



     
              (b)    
          Subject Shares. Each Shareholder is the beneficial owner (as
          defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
          (the “Exchange Act”)), of the Common Shares set forth opposite such
          Shareholder’s name on Schedule A attached hereto and the certificates
          representing such Subject Shares, if any, are now, and at all times during the
          term hereof will be, held by such Shareholder, or by a nominee or custodian for
          the benefit of such Shareholder, and such Shareholder has good and marketable
          title to such Subject Shares and at all times during the term hereof and on the
          Effective Date will have good and marketable title to such Subject Shares, in
          each case, free and clear of any Liens, proxies, voting trusts or agreements,
          understandings or arrangements, except for any such Liens or proxies arising
          hereunder. Each Shareholder owns of record or beneficially no other Common
          Shares and has no other rights to purchase or acquire any Common Shares other
          than such Shareholder’s Subject Shares. The Subject Shares set forth
          opposite each Shareholder’s name on Schedule A attached hereto
          constitute all of the securities (as defined in Section 3(a)(10) of the
          Exchange Act) of the Company beneficially owned, directly or indirectly by such
          Shareholder. Such Shareholder has (and will have as of the date of the Meeting
          and the Effective Time) sole voting power, sole power of disposition, sole power
          to issue instructions with respect to the matters set forth in Sections 3(b) and
          3(c) hereof, sole power to exercise dissent rights (to the extent such rights
          are available) and sole power to agree to all of the matters set forth in this
          Agreement, in each case with respect to all of such Shareholder’s Subject
          Shares, in each case with no limitations, qualifications or restrictions on such
          rights, subject to applicable federal securities laws and the terms of this
          Agreement. 



     
              (c)    
          Brokers. No broker, investment banker, financial advisor or other person
          is entitled to any broker’s, finder’s, financial advisor’s or
          other similar fee or commission in connection with the transactions contemplated
          by this Agreement based upon arrangements made by or on behalf of the
          Shareholders. 








2 


















     
              
(d)    
          Other Agreements. Other than this Agreement and the Arrangement
          Agreement, there are not as of the date hereof, and there will not be at the
          date of the Meeting and the Effective Time, any shareholder agreements, voting
          trusts or other agreements or understandings relating in any way to any of the
          Subject Shares or to a Frustrating Transaction (as defined below) or a Competing
          Transaction to which either Shareholder (or any of its or his affiliates,
          representatives, or agents) is a party or to which it or he is bound. 



     
              
(e)    
Arrangement Agreement. Each Shareholder understands and
acknowledges that Parent and Subco are entering into the Arrangement Agreement
in reliance upon such Shareholder’s execution and delivery of this
Agreement.  



             
2.    
Representations and Warranties of Parent
and Subco . Each of Parent and Subco hereby represents and warrants
to the Shareholders as follows: 



     
              
(a)    
          Authority. Each of Parent and Subco has the requisite power and authority
          to execute and deliver this Agreement and to consummate the transactions
          contemplated hereby. The execution, delivery and performance of this Agreement
          by each of Parent and Subco and the consummation of the transactions
          contemplated hereby have been duly authorized by all necessary action on the
          part of Parent and Subco. This Agreement has been duly executed and delivered by
          each of Parent and Subco and, assuming this Agreement constitutes a legal, valid
          and binding obligation of the Shareholders and the Company, constitutes a legal,
          valid and binding obligation of Parent and Subco, respectively, enforceable
          against Parent and Subco in accordance with its terms. 



     
              
(b)    
          Organization and Qualification. Parent is a
          société à responsabilité limitée duly
          organized, validly existing and in good standing under the laws of Luxembourg.
          Subco is a corporation duly organized, validly existing and in good standing
          under the laws of the Province of British Columbia. 



             
3.    
Covenants of the Shareholders. Until termination of
this Agreement pursuant to Section 12, the Shareholders, jointly
and severally, agree as follows: 



     
              
(a)    
          Neither Shareholder shall (i) tender into any take-over bid, tender or
          exchange offer or otherwise sell, transfer, pledge, assign or otherwise dispose
          of (collectively, “Transfer”), or enter into any Contract, option or
          other arrangement (including any profit sharing arrangement) or understanding
          with respect to the sale, transfer, pledge, assignment or other disposition of
          the Subject Shares to any person other than Parent or Subco or Parent’s
          designee, (ii) enter into any voting arrangement, whether by proxy, voting
          agreement, voting trust, power-of-attorney or otherwise, with respect to the
          Subject Shares or otherwise relinquish control of the voting power with respect
          to the Subject Shares, (iii) purchase or otherwise voluntarily acquire any
          Common Shares or other securities of the Company, except for such other
          securities as will constitute Subject Shares subject to the terms hereof,
          (iv) take any other action that would in any way restrict, limit or
          interfere with the performance of its or his obligations hereunder or the
          transactions contemplated hereby or (v) do indirectly that which it or he may
          not do directly in respect of the restrictions on its or his rights with respect
          to the Subject Shares pursuant to this Section 3(a), including, but not
          limited to, the sale of any direct or indirect holding company of the
          Shareholders or the granting of a proxy on the shares of any 







3 

















direct or indirect holding company of
the Shareholders which would have, indirectly, the effect prohibited by this
Section 3(a). Notwithstanding the foregoing, (x) Dysthe may Transfer his
Subject Shares pursuant to applicable laws of descent and distribution or to any member of
his Family Group (as defined below) for tax or estate planning purposes and (y) Dysthe
Holdings may Transfer its Subject Shares to its Affiliates for tax or estate planning
purposes; provided, that, in each case, the restrictions contained in this Agreement shall
continue to be applicable to such Subject Shares after any such Transfer; provided,
further, that the transferees of such Subject Shares shall have agreed in writing to be
bound by the provisions of this Agreement which affect the Subject Shares so transferred
by executing an undertaking in form and substance reasonably acceptable to Parent and
Subco. For purposes hereof, “Family Group” means, with respect to any natural
person, such person’s spouse, siblings and descendants (whether natural or adopted)
and any trust or other entity solely for the benefit of such person and/or such
person’s spouse, their respective ancestors and/or descendants. 



     
              
(b)    
          At the Meeting or in any other circumstances upon which a vote, consent or other
          approval (including by written consent) with respect to the Transaction, the
          Arrangement Agreement and/or the Arrangement Resolution is sought, each
          Shareholder shall as requested by Parent or Subco (including, without
          limitation, by cooperating with Parent and Subco with respect to the irrevocable
          proxy granted to Parent pursuant to Section 7 below), vote (or cause to be
          voted) such Shareholder’s Subject Shares in favor of the Arrangement
          Resolution, the Transaction, the adoption by the Company of the Arrangement
          Agreement and the approval of the other transactions contemplated by the
          Arrangement Agreement and any amendment thereto. 



     
              
(c)    
          Each Shareholder will exercise all voting rights attaching to such
          Shareholder’s Subject Shares to oppose any proposed action by the Company,
          its shareholders, any of its subsidiaries or any other person which reasonably
          could be regarded as being directed towards or would be reasonably likely to
          impede, frustrate, prevent, delay or nullify the Transaction, the Arrangement
          Agreement or any of the other transactions contemplated by the Arrangement
          Agreement (collectively, “Frustrating Transactions”). Without in any
          way limiting the foregoing, at any meeting of the shareholders of the Company or
          at any adjournment or postponement thereof or in any other circumstances upon
          which the Company’s shareholders’ vote, consent or other approval is
          sought, each Shareholder shall, as requested by Parent or Subco, vote (or cause
          to be voted) such Shareholder’s Shareholders Shares against (i) any merger
          agreement or merger, amalgamation agreement or amalgamation, arrangement
          agreement or arrangement (other than the Transaction and the Arrangement
          Agreement), consolidation, combination, take-over bid, tender or exchange offer,
          sale of substantial assets, reorganization, recapitalization, dissolution,
          liquidation or winding up of or by the Company or any other similar proposal
          (collectively, “Alternative Transactions”), (ii) any change in
          the management or the board of directors of the Company as of the date hereof,
          (iii) any change in the present capitalization or dividend policy of the
          Company as of the date hereof, (iv) any amendment of the Company’s
          constating documents or (v) any action or inaction which reasonably would be
          expected to result in any breach, violation or contravention of the Arrangement
          Agreement or that would result in any of the conditions set forth in the
          Arrangement Agreement not being satisfied. 








4 


















     
              
(d)    
          Each Shareholder hereby authorizes and requests the Company and its counsel to
          notify the Company’s transfer agent that there is a stop transfer order
          with respect to all of its Subject Shares (and that this Agreement places limits
          on the voting of the Subject Shares). Each Shareholder shall not request that
          the Company register the Transfer (book-entry or otherwise) of any certificate
          or uncertificated interest representing any of the Subject Shares, unless such
          Transfer is made in compliance with this Agreement. 



     
              
(e)    
          Each Shareholder shall furnish to Parent and Subco all information required for
          any application or other filing to be made pursuant to the rules and regulations
          of any applicable Law (including all information required to be included in the
          Information Circular) in connection with the Transaction and the transactions
          contemplated by the Arrangement Agreement. Each Shareholder hereby permits the
          Company, Parent and Subco to publish and disclose in the Information Circular
          its identity and ownership of the Subject Shares, and the nature of its
          commitments, arrangements and understandings under this Agreement. 



             
4.    
          Waiver and Releases. Each Shareholder hereby waives any
          rights to dissent from the Transaction or the Arrangement Resolution that such
          Shareholder may have under applicable Law. Effective as of the time at which the
          Transaction becomes effective (the “Effective Time”), each Shareholder
          on such Shareholder’s own behalf and, as applicable, on behalf of its or
          his heirs, successors, assigns, executors and personal representatives hereby
          releases and discharges the Company and its predecessors, successors, parents,
          subsidiaries, affiliated entities, divisions and assigns, together with each and
          every of their officers, directors, stockholders, general partners, limited
          partners, members, employees and agents and the heirs, personal representatives
          and executors of the same (herein collectively referred to as the “Company
          Releasees”), from any and all suits, causes of action, complaints,
          obligations, demands or claims of any kind, whether in law or in equity, direct
          or indirect, known or unknown, suspect or unsuspected (hereinafter
          “Claims”), which such Shareholder ever had, now has, or may have
          against the Company Releasees or any one of them in relation to the Company
          arising out of or relating to any matter, thing or event occurring up to and
          including the Effective Time; provided, however, that nothing herein shall be
          deemed to release any Claim which a Shareholder may have against the Company (i)
          arising out of the Arrangement Agreement, including, without limitation the
          right to receive the consideration contemplated thereunder and the rights to
          indemnification of directors and officers as set forth therein, (ii) arising
          under indemnification agreements or arrangements existing as of the date hereof
          between the Company and its subsidiaries, on the one hand, and their respective
          officers or directors, on the other hand, or (iii) in the case of Dysthe, under
          the Employment Agreement, dated September 4, 2003, between Dysthe and the
          Company, as amended, restated or otherwise modified from time to time. 



     
        5.    
          Notice of Acquisition of Additional  Subject Shares. Each Shareholder hereby agrees, while this
          Agreement is in effect, to promptly notify Parent and Subco of the number of any
          Subject Shares acquired by such Shareholder, if any, after the date hereof. 



             
6.    
          Non-Solicitation. Without limiting the provisions of Section
          15 hereof, the Shareholders, whether acting individually or as an agent
          of the Company, jointly and severally agree that the Shareholders shall not (and
          shall, subject to the provisions of Section 15 hereof, cause each affiliate,
          agent, trustee or other person acting on their behalves not to), directly or
          indirectly, other than with Parent, Subco and their respective representatives
          and agents, (a) 








5 




















initiate, solicit, encourage,
entertain, accept, discuss or negotiate any inquiries, proposals or offers (whether
initiated by either Shareholder or otherwise) with respect to any Competing Transaction,
(b) provide information to any party in connection with any Competing Transaction or (c)
enter into any contract, agreement or arrangement with any party, concerning or relating
to a Competing Transaction or requiring either Shareholder to abandon, terminate or fail
to consummate or vote against the Transaction. 



             
7.    
          Grant of Proxy. 



     
              
(a)    
          Each Shareholder irrevocably covenants and agrees in favor of Parent and Subco
          that following receipt of the Information Circular and no later than five
          Business Days prior to the date of the Meeting, it or he shall deliver or cause
          to be delivered (including by instructing the participant in the book based
          system operated by The Canadian Depository for Securities Limited through which
          the Shareholder holds Subject Shares to arrange for such delivery) to Subco a
          duly executed proxy (or other appropriate voting instrument) in favor of Subco
          (or its nominee designated to the Shareholder in writing) voting in favor of the
          Arrangement Resolution and such proxy (or other voting instrument) shall not be
          revoked unless this Agreement is terminated in accordance with its terms prior
          to the exercise of such proxy (or other voting instrument). 



     
              
(b)    
          Each Shareholder irrevocably covenants and agrees in favor of Parent and Subco
          that following receipt of any form of proxy in respect of any of the
          transactions, actions or matters referred to in Section 3(c) and no later than
          five Business Days prior to the date of the relevant meeting, it or he shall
          deliver or cause to be delivered (including by instructing the participant in
          the book based system operated by The Canadian Depository for Securities Limited
          through which the Shareholder holds Subject Shares to arrange for such delivery)
          to Subco a duly executed proxy (or other appropriate voting instrument) in favor
          of Subco (or its nominee designated to the Shareholder in writing) voting
          against such transaction, action or matter and such proxy (or other voting
          instrument) shall not be revoked unless this Agreement is terminated in
          accordance with its terms prior to the exercise of such proxy (or other voting
          instrument). 



             
8.    
          Further Assurances. Each Shareholder will, from time to time,
          execute and deliver, or cause to be executed and delivered, such additional or
          further proxies, transfers, assignments, endorsements, consents and other
          instruments as Parent or Subco may reasonably request for the purpose of
          effectively carrying out the transactions contemplated by this Agreement and to
          vest the power to vote such Shareholder’s Subject Shares as contemplated by
          Section 7. 



     
        
9.    
          Covenant of the Company. The Company covenants to
          Parent and Subco that it will not register any transfer of any certificate
          representing either Shareholder’s Subject Shares in contravention of this
          Agreement. 



     
        10.    
          Covenant of Parent and Subco. Each of Parent
          and Subco covenants to the Shareholders that it will perform all of its
          covenants, agreements and obligations under the Arrangement Agreement. 








6 


















     
        11.    
          Assignment; Binding Effect. Neither this Agreement nor any
          of the rights, interests or obligations hereunder shall be assigned by any of
          the parties hereto (whether by operation of law or otherwise) without the prior
          written consent of the other parties. Subject to the preceding sentence, this
          Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
          the parties hereto and their respective successors and assigns. Notwithstanding
          the foregoing, each of Parent and Subco shall have the right to assign its
          rights, interests and obligations hereunder to any of its affiliates without the
          prior written consent of the other parties hereto. 



     
        12.    
          Termination. This Agreement, and all rights and obligations of the
          parties hereunder (other than under Sections 4, 12,
          13 and 14), shall terminate upon the earliest to occur of
          (i) termination of the Arrangement Agreement, (ii) the mutual written
          agreement of the parties hereto to terminate this Agreement and (iii) the
          Effective Time. Nothing in this Section 12 shall relieve any party from any
          liability for breach of this Agreement. 



     
        13.    
          Capture. 



     
              
(a)    
          In the event that the transactions contemplated by the Arrangement Agreement are
          not consummated due to a breach of this Agreement by any Shareholder and any
          Subject Shares of a Shareholder are sold, transferred, exchanged, canceled or
          disposed of in connection with or as a result of any Alternative Transaction
          which is executed or consummated within twelve (12) months following the date
          that the Arrangement Agreement is terminated (an “Alternative
          Disposition”) then, in addition to the remedies at law or equity for breach
          of this Agreement, on the closing of such Alternative Disposition, such
          Shareholders shall tender and pay to, or shall cause to be tendered and paid to,
          Subco (or its designee), in immediately available funds, all of the Profit (as
          defined below) realized by such Shareholders from such Alternative Disposition.
          Subject to Section 13(b), “Profit” shall mean an amount equal to the
          excess, if any, of (i) the Alternative Transaction Consideration (as defined
          below) over (ii) the cash consideration set forth in the Arrangement Agreement.
          If the Alternative Transaction Consideration includes any consideration other
          than cash, such Shareholders may, if not prohibited from transferring any such
          consideration to Subco (or its designee), transfer, in lieu of cash, a pro rata
          portion (based on the proportion of the non-cash consideration to the aggregate
          consideration) of the Profit represented by such other forms of consideration.
          “Alternative Transaction Consideration” shall mean all cash,
          securities, settlement or termination amounts, notes or other debt instruments,
          and other consideration received or to be received, directly or indirectly, by
          such Shareholders and their affiliates in connection with or as a result of such
          Alternative Disposition or any agreements or arrangements (including, without
          limitation, any employment agreement (except a bona fide employment agreement
          pursuant to which a Shareholder is required to devote, and under which such
          Shareholder in good faith intends to devote, substantially all of his business
          time and effort to the performance of executive services for the Company in a
          manner substantially similar to such Shareholder’s current employment
          arrangements with the Company), consulting agreement, non-competition agreement,
          confidentiality agreement, settlement agreement or release agreement) entered
          into, directly or indirectly, by such Shareholders or any of their affiliates as
          a part of, or in connection with, the Alternative Disposition or the associated
          Alternative Transaction. 







7 

















     
              
(b)    
          For purposes of determining Profits under this Section 13: (i) all securities
          that are publicly traded shall be valued at the average of the closing prices
          for the five trading days ending on the date on which the Alternative
          Disposition closes; (ii) all other non-cash items shall be valued based upon the
          fair market value thereof as of the date of closing of the Alternative
          Disposition as determined by an independent expert selected by Parent and who is
          reasonably acceptable to such Shareholder; (iii) all deferred payments or
          consideration shall be discounted to reflect a market rate of net present value
          thereof as determined by the above-referenced independent expert; and (iv) if
          less than all of a Shareholder’s Subject Shares are subject to the
          Alternative Disposition, the cash consideration set forth in the Arrangement
          Agreement shall be multiplied by a fraction, the numerator of which is the
          number of such Shareholder’s Subject Shares sold, transferred, exchanged,
          canceled or disposed of in such Alternative Disposition and the denominator of
          which is the total number of such Shareholder’s Subject Shares. In the
          event any contingent payments are included in the consideration for the
          Alternative Disposition, upon receipt of any such contingent payment, such
          Shareholder will promptly transfer to Subco (or its designee) any additional
          amounts that would have been transferred to Subco (or its designee) upon the
          completion of the Alternative Disposition if such contingent payment had been
          received at such time. 



             
14.    
          General Provisions. 



     
              
(a)    
          Expenses. Subject to the terms of the Arrangement Agreement, all costs
          and expenses incurred in connection with this Agreement and the transactions
          contemplated hereby shall be paid by the party incurring such expense. 



     
              
(b)    
          Amendments. This Agreement may not be amended except by an instrument in
          writing signed by Parent, Subco and each Shareholder as to which such amendment
          is to be effective. 



     
              
(c)    
          Notice. All notices and other communications hereunder shall be in
          writing and shall be deemed given upon receipt to the parties at the addresses
          set forth below (or at such other address for a party as shall be specified by
          like notice). The date of receipt of any such notice or other communication if
          delivered personally shall be deemed to be the date of delivery thereof, or if
          sent by facsimile transmission, the date of such transmission if sent during
          normal business hours on a Business Day, failing which it shall be deemed to
          have been received on the next Business Day. 









8 















	  	(i)	
if
to Parent or Subco:  






	  	
Fortezza Holdings S.à.r.l.                   

c/o Mercuria Services S.A.                   

8-10, rue Mathias Hardt                      

BP 3023                                      

L-1030 Luxembourg                            

Telecopy:  +352 48 06 31                     

Attention:  Alain Peigneux and Catherine Koch
 









	  	
and 







	  	
Beech Investment Corp.             

c/o Farris Vaughan                 

700 West Georgia Street, 25th Floor

Vancouver, British Columbia        

V7Y 1B3                            

Telecopy: (604) 661-9349           

Attention:  Dean O'Leary
 







	  	
with
copies (that will not constitute notice to Parent or Subco) to:  







	  	
Vista Equity Partners            

150 California Street, 19th Floor

San Francisco, CA 94111          

Telecopy:  (415) 765-6666        

Attention:  Brian N. Sheth
 







and 



	  	
Kirkland & Ellis LLP         

Citicorp Center              

153 East 53rd Street         

New York, New York 10022-4611

Telecopy:  (212) 446-4900    

Attention:  Eunu Chun, Esq.
 







	  	
and 






	  	
Davies Ward Phillips & Vineberg LLP

1 First Canadian Place, 44th Floor 

Toronto, Ontario                   

Canada M5X 1B1                     

Telecopy:  (416) 863-0871          

Attention:  Patricia Olasker, Esq.
 










9 

















	  	
if
to the Company:  






	  	
MDSI Mobile Data Solutions Inc.

10271 Shellbridge Way          

Richmond BC                    

Canada V6X 2W8                 

Telecopy:  (604) 207-6062      

Attention:  Eric Dysthe
 







	  	
with
copies (that will not constitute notice to the Company) to:  






	  	
Dorsey & Whitney LLP             

U.S. Bank Centre                 

1420 Fifth Avenue                

Seattle, Washington 98101        

Telecopy:  (206) 903-8820        

Attention:  Randal R. Jones, Esq.
 






	  	
and 







	  	
Davis & Company LLP         

2800 Park Place             

666 Burrard Street          

Vancouver, B.C. V6C 2Z7     

Telecopy:  (604) 605-3797   

Attention:  Don Collie, Esq.
 






	  	(ii)	
if
to either Shareholder, to:  








	  	
Erik Dysthe

c/o MDSI Mobile Data Solutions Inc.

10271 Shellbridge Way

Richmond, B.C.

Canada  V6X 2W8    

Telecopy:  (604) 207-6062
 








	  	
with
a copy (that will not constitute notice to the Shareholders) to:  







	  	
Torys LLP                     

Suite 3000                    

Box 270, TD Centre            

79 Wellington Street West     

Toronto, Ontario              

M5K 1N2 Canada                

Telecopy:  (416) 865-7380     

Attention:  Peter Jewett, Esq.
 







     
              
(d)    
          Interpretation. When a reference is made in this Agreement to a Section,
          such reference shall be to a Section of this Agreement unless otherwise
          indicated. The headings contained in this Agreement are for reference purposes
          only and shall not affect in any way the 









10 



















meaning or interpretation of this
Agreement. Wherever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”. 



     
              
(e)    
          Counterparts. This Agreement may be executed in two or more counterparts,
          all of which shall be considered one and the same agreement and shall become
          effective when two or more counterparts have been signed by each of the parties
          and delivered to the other parties, it being understood that all parties need
          not sign the same counterpart. 



     
              
(f)    
          Entire Agreement; No Third-Party
          Beneficiaries. This Agreement (including the documents and instruments
          referred to herein) (i) constitutes the entire agreement and supersedes all
          prior agreements and understandings, both written and oral, among the parties
          with respect to the subject matter hereof and (ii) is not intended to confer
          upon any person other than the parties hereto (and, as provided in Section 4,
          the Company Releasees and the Shareholder Releasees, who shall be third party
          beneficiaries hereof) any rights or remedies hereunder. 



     
              
(g)    
          Governing Law. This Agreement shall be governed and construed in
          accordance with the laws of the State of New York without regard to any
          applicable conflicts of law. 



     
              
(h)    
          Publicity. Except as otherwise required by law, court process or the
          rules of the NASDAQ National Market, the Toronto Stock Exchange or as
          contemplated or provided in the Arrangement Agreement (any of the foregoing, a
          “Required Disclosure”), for so long as this Agreement is in effect,
          neither Shareholder shall issue or cause the publication of any press release or
          other public announcement with respect to the transactions contemplated by this
          Agreement or the Arrangement Agreement without the prior written consent of
          Parent; provided, that in any case, except for Required Disclosures, no
          Shareholder will use the name of Parent or Subco or any affiliate thereof
          without Parent’s written permission and will discuss the term and contents
          of any such release with Parent prior to dissemination. 



     
              
(i)    
          Enforcement. The parties agree that irreparable damage would occur in the
          event that any of the provisions of this Agreement were not performed in
          accordance with their specific terms or were otherwise breached. It is
          accordingly agreed that the parties shall be entitled to an injunction or
          injunctions to prevent breaches of this Agreement and to enforce specifically
          the terms and provisions of this Agreement in a court of the United States
          (without posting of bond or other security). This being in addition to any other
          remedy to which they are entitled at law or in equity. 



     
              
(j)    
          Severability. If any term or other provision of this Agreement is
          invalid, illegal or incapable of being enforced by any rule of law, or public
          policy, all other conditions and provisions of this Agreement shall nevertheless
          remain in full force and effect so long as the economic or legal substance of
          the Transaction is not affected in any manner materially adverse to any party
          hereto. Upon such determination that any term or other provision is invalid,
          illegal or incapable of being enforced, the parties hereto shall negotiate in
          good faith to modify this Agreement so as to effect the original intent of the
          parties as closely as possible in a mutually 









11 
















acceptable manner in order that the
Transaction be completed as originally contemplated to the fullest extent possible. 



     
              
(k)    
          Waiver of Jury Trial. Each party to this Agreement
          hereby waives, to the extent permitted by applicable law, trial by jury in any
          litigation in any court with respect to, in connection with, or arising out of
          this Agreement or any ancillary agreement or the validity, protection,
          interpretation, collection or enforcement thereof. 



             
15.    
          Shareholder Capacity. No person executing this Agreement who is or
          becomes during the term hereof a director or officer of the Company (or who has
          designated a director or officer of the Company) makes any agreement or
          understanding herein in his or her capacity as such director or officer (or with
          respect to any such designated director or officer, in his capacity as such).
          Each Shareholder signs solely in his or her capacity as the record holder and
          beneficial owner of, or the trustee of a trust whose beneficiaries are the
          beneficial owners of, such Shareholder’s Subject Shares and nothing herein
          shall limit or affect any actions taken by a Shareholder (or such
          Shareholder’s designee(s)) in its capacity as an officer or director of the
          Company to the extent not prohibited by the Arrangement Agreement. 









     * * * * *










12 




















        IN
WITNESS WHEREOF, Parent, Subco, the Company and each Shareholder have signed, or caused
this Support Agreement to be signed by its officer duly authorized, all as of the date
first written above. 



	  	
MDSI MOBILE DATA SOLUTIONS INC. 






By: ______________________

Name: 

Title:  








	  	

Fortezza Holdings S.A.R.L. 





By:          
         
         
           

Name:     

Title:       










	  	

BEECH INVESTMENT CORP.  







By:          
         
         
           

Name:     

Title:       










	  	

ERIK DYSTHE HOLDINGS CO.





By: _______________________

Name: 

Title:  








	  	

_______________________________________

Erik Dysthe 























SCHEDULE A  





	
Shareholder	
Number of

Common Shares	
Number of Common Shares

issuable upon exercise of

outstanding options
	
	
	

	Erik Dysthe	 	36,044	 	243,500	 
	Erik Dysthe Holdings Co.	 	327,598	 	--	 
	
	
	

	TOTAL	 	363,642	 	243,500