Unassociated Document


    SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT
      dated as
      of August 13, 2008, by and among Coreworx Inc., an Ontario corporation (the
      “Company”), the Company’s debenture holders set forth on Exhibit
      A
      hereto
      (the “Debenture Holders”), the Company’s shareholders set forth on Exhibit
      B
      hereto
      (the “Shareholders” and collectively with the Debenture Holders, the “Sellers”)
      and Acorn Energy, Inc., a Delaware corporation (“Buyer”).

    


    WHEREAS,
      the
      Debenture Holders own all of the outstanding 12% secured debentures (the
“Debentures”) of the Company;

    


    WHEREAS,
      the
      Shareholders own all of the Company’s issued and outstanding Class A common
      shares (the “Class A Common Shares”); 

    


    WHEREAS,
      Buyer
      desires to subscribe for certain additional Class A Common Shares from the
      Company in consideration for the Cash Payment (as hereinafter
      defined);

    


    WHEREAS,
      upon
      completion of the subscription, Buyer desires to make a contribution to the
      Company’s surplus in the form of the Original Note (as hereinafter defined);


    


    WHEREAS,
      the
      Debenture Holders are willing to accept repayment of the Debentures through
      a
      combination of cash and Repayment Notes (as hereinafter defined); 

    


    WHEREAS,
      the
      Sellers desire to sell to Buyer, and Buyer desires to purchase from the Sellers,
      all of their issued and outstanding Class A Common Shares upon the terms and
      subject to the conditions herein set forth.

    


    NOW,
      THEREFORE,
      in
      consideration of the premises and the mutual promises herein made, and in
      consideration of the representations, warranties, and covenants herein
      contained, the parties agree as follows:

    


    SECTION
      1. Subscription;
      Contribution to Surplus; Repayment of the Debentures; Sale and Purchase of
      Class
      A Common Shares.
      Upon the
      terms and subject to the conditions herein set forth:

    


    (a) prior
      to
      the Closing (as hereinafter defined), the Company shall issue and deliver and
      Buyer agrees to purchase from the Company 100 Class A Common Shares (the
“Subscription Shares”).

     

    (b) upon
      acquisition of the Subscription Shares and prior to the Closing, Buyer shall
      contribute the Original Note to the surplus of the Company.

     

    (c) prior
      to
      the Closing, the Company shall repay the Debentures and the Debenture Holders
      shall accept repayment of the Debentures as described in Section 2 (d)
      below.

     

    (d) on
      the
      Closing Date, each Shareholder agrees to sell and deliver to Buyer, and Buyer
      agrees to purchase from each Seller, the respective number of Class A Common
      Shares set forth in Column I opposite the name of such Seller in Exhibit
      C
      attached
      hereto, free and clear of all the following (herein collectively called
“Claims”): liens, security interests, claims, pledges and encumbrances of every
      kind, interests arising in connection with so-called community property laws
      or
      other laws relating to the rights of spouses, charges, escrows, options, rights
      of first refusal, mortgages, indentures, security agreements or other
      agreements, arrangements, contracts, commitments, understandings or obligations,
      whether written or oral and whether or not relating in any way to credit or
      the
      borrowing of money.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      2. Consideration
      and Payment.
      Upon the
      terms and subject to the conditions herein set forth:

    


    (a) prior
      to
      the Closing, Buyer shall deliver to the Company the sum of US$2,500,000 by
      wire
      transfer (the “Cash Payment”) in consideration for the Subscription
      Shares;

     

    (b) prior
      to
      the Closing, in consideration for the Cash Payment, the Company shall issue
      and
      deliver the Subscription Shares to Buyer which shall be fully paid,
      non-assessable and free of all Claims;

    


    (c) upon
      issuance of the Subscription Shares and prior to the Closing, Buyer shall make
      a
      contribution to capital which shall result in an increase in the Company’s
      contributed surplus by executing and delivering to the Company an 8% promissory
      note in the principal amount of US$3,400,000 in the form annexed hereto as
      Exhibit
      D
      (the
“Original Note”) payable to the order of the Company and the Company shall
      allocate, transfer and assign the Original Note to the Debenture Holders in
      accordance with the Company’s instructions and in the denominations set forth on
Exhibit
      C
      which
      allocation, transfer and assignment shall be evidenced by Buyer’s 8% promissory
      notes in the aggregate principal amount of US$3,400,000 in the form annexed
      hereto as Exhibit
      E
      (the “
Repayment Notes”); 

    


    (d) prior
      to
      the Closing, the Company shall deliver the Cash Payment and the Repayment Notes
      to the Debenture Holders which the Debenture Holders shall accept as payment
      in
      full for all amounts of principal and interest due and owing under the
      Debentures and each Debenture Holder shall deliver to the Company the respective
      Debentures set forth in Column I opposite the name of such Debenture Holder
      in
Exhibit
      C
      for
      cancellation; 

    


    (e) on
      the
      Closing Date, each Shareholder shall deliver to Buyer a certificate or
      certificates for the respective number of Class A Common Shares set forth in
      Column I opposite the name of such Shareholder in Exhibit
      C
      attached
      hereto (collectively, the “Purchased Shares”), duly endorsed to Buyer or with
      stock powers attached duly executed to Buyer, in proper form for transfer and
      with stamps for all applicable federal, provincial or local stock transfer
      taxes, if any, affixed thereto;

    


    (f) in
      consideration for the acquisition of the Purchased Shares, on the Closing Date,
      Buyer shall issue an aggregate of 287,500 shares (the “Closing Shares”) of
      Buyer’s common stock, par value $.01 per share (“Buyer Stock”), to the
      Shareholders in accordance with the denominations set forth in Exhibit
      C
      and
      Buyer shall deliver 50,000 of such Closing Shares (the “Escrow Shares”) to a
      mutually acceptable escrow agent, as escrow agent (“Escrow Agent”) for the
      holders of the Closing Shares in accordance with the Escrow Agreement, in the
      form attached hereto as Exhibit
      F,
      by and
      among Buyer, the Shareholders and the Escrow Agent (the “Escrow Agreement”),
      pursuant to which the Escrow Shares and the Shareholders’ SRED Portion (as
      hereinafter defined), if any, shall serve as the source of recovery, absent
      fraud, with respect to Buyer’s right to indemnification in accordance with the
      provisions of Section 11 hereof; and


    
      
        
        

      

      
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    (g) upon
      receipt by the Company of any monies from the Canada Revenue Agency (“CRA”) or
      the Ontario Ministry of Revenue (“OMR”) in connection with the Company’s 2007
      scientific research and experimental development tax credit refund claim or
      the
      Company’s 2007 Ontario innovation tax credit refund claim (collectively, the
“SRED Claim”) during the six (6) months immediately following the Closing Date,
      Buyer shall deliver or cause the Company to deliver wire transfers representing
      fifty percent (50%) of the net amount (after payment by the Company to KPMG
      LLP
      of applicable fees) of any such refunds (the “Shareholders’ SRED Portion”) to
      the Escrow Agent to be held by the Escrow Agent in accordance with the
      allocations set forth in Exhibit
      C
      and
      pursuant to the provisions of the Escrow Agreement. Any monies received by
      the
      Company in connection with the SRED Claim more than six (6) months after the
      Closing Date shall be retained by the Company. 

    


    SECTION
      3. The
      Closing.
      The
      closing under this Agreement for the sale hereunder of the Class A Common Shares
      (the “Closing”) shall take place at 10:00 a.m., New York City time, on the date
      hereof at the offices of Messrs. Eilenberg Krause & Paul LLP, 11 East
      44th
      Street,
      19th
      Floor,
      New York, New York. The date and time of the closing are herein referred to
      as
      the “Closing Date”.

    


    SECTION
      4. Representations,
      Warranties and Certain Agreements of Sellers.
      Each
      Seller, severally and not jointly, hereby represents and warrants to, and agrees
      with, Buyer as follows (such representations and warranties on the date of
      this
      Agreement being, and on the Closing Date to be, true and correct in all
      respects):

    


    (a) Title
      to Debentures and Class A Common Shares.
      Such
      Seller is the lawful owner of, with good and marketable title to, the respective
      number of Debentures and shares of Class A Common Shares set forth in Column
      I
      opposite the name of such Seller in Exhibit
      C
      attached
      hereto. The delivery of the certificate(s) representing the Class A Common
      Shares of the Seller together with related stock transfer powers therefor to
      Buyer pursuant to the provisions of this Agreement and the Escrow Agreement
      will
      transfer to Buyer good and marketable title thereto, free and clear of all
      Claims.

    


    (b) Authority
      of Seller.
      Each
      Shareholder has full right, power and authority to sell, transfer and deliver
      to
      Buyer the Class A Common Shares to be sold by such Shareholder pursuant to
      this
      Agreement and the Escrow Agreement. This Agreement and the Escrow Agreement
      have
      been duly executed and delivered by such Seller and this Agreement and the
      Escrow Agreement constitute the legal, valid and binding obligation of such
      Seller enforceable in accordance with its terms, except that (i) such
      enforcement may be subject to applicable bankruptcy, insolvency, reorganization,
      moratorium or other similar laws affecting creditors' rights generally and
      (ii)
      the remedy of specific performance and injunctive and other forms of equitable
      relief may be subject to equitable defenses and to the discretion of the court
      before which a proceeding therefor may be brought (collectively, the
“Enforcement Exceptions”). The execution, delivery and performance of this
      Agreement and the Escrow Agreement by such Seller will not violate any material
      provision of law or any judgment, decree or order of any court or other
      governmental agency to which such Seller is subject.

     

    
      
        
          
          

        

        
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    (c) No
      Bankruptcy, etc.
      There
      has not been filed any petition or application, or any proceedings commenced,
      by
      or against, or with respect to any assets of, such Seller under Title 11 of
      the
      United States Code, the Bankruptcy
      and Insolvency Act (Canada) or
      any
      other law, domestic or foreign, relating to bankruptcy, reorganization,
      compromise, arrangement, insolvency, readjustment of debt or creditors' rights,
      and such Seller has not made any assignment for the benefit of
      creditors.

     

    (d) Accredited
      Investor; Non-U.S. Person.
      Such
      Seller is either (i) an “accredited investor” as defined by Rule 501 under the
      Securities Act of 1933, as amended (the “Act”), and is capable of evaluating the
      merits and risks of its investment in shares of Buyer’s Stock and the Notes and
      has the capacity to protect its own interests or (ii) not a US Person within
      the
      meaning of Rule 902(o) of Regulation S promulgated under the Act.

    


    (e) Absence
      of Offering Memorandum or Similar Document.
      Such
      Seller has not received, nor has it requested, nor does it have any need to
      receive, any offering memorandum or any other document describing the business
      and affairs of the Buyer, nor has any document been prepared for delivery to,
      or
      review by, such Seller in order to assist it in making the decision to acquire
      Buyer Stock.

    


    (f) Restricted
      Securities.
      Such
      Seller acknowledges that the Buyer Stock and the Notes when issued will not
      be
      registered under the Act and will be “restricted securities” as that term is
      defined in Regulation S and Rule 144 under the Act and that the Buyer Stock
      and
      Repayment Notes must be held indefinitely unless subsequently registered under
      the Act or unless an exemption from such registration is available. Such Seller
      acknowledges that the provisions of Rule 144 promulgated under the Act which
      permit limited resale of common stock purchased in a private placement subject
      to the satisfaction of certain conditions, including, among other things, the
      existence of a public market for the common stock, the availability of certain
      current public information about Buyer, the resale occurring not less than
      six
      months after a party has purchased and paid for the security to be sold, the
      sale being effected through a “broker’s transaction” or in transactions directly
      with a “market maker” and the number of shares of common stock being sold during
      any three-month period not exceeding specified limitations.

    


    (g) Investment.
      Such
      Seller is acquiring the Buyer Stock and/or the Repayment Notes for investment
      purposes for its own account and not, in whole or in part, for the account
      of
      any other person and not with a view to distribution or resale, nor with the
      intention of selling, transferring or otherwise disposing of all or any part
      thereof for any particular price, or at any particular time, or upon the
      happening of any particular event or circumstances, except selling,
      transferring, or disposing the Buyer Stock and the Repayment Notes in full
      compliance with the applicable provisions of the Act, the rules and regulations
      promulgated thereunder, and applicable state securities laws. Such Seller has
      not formed any entity for the purpose of acquiring the Repayment Notes or Buyer
      Stock.


    
      
        
        

      

      
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    (h) Information.
      Such
      Seller has had the opportunity to ask questions of, and receive answers from
      Buyer or any person acting on its behalf concerning Buyer and its business
      and
      to obtain any additional information, to the extent possessed by Buyer (or
      to
      the extent it could have been acquired by Buyer without unreasonable effort
      or
      expense) necessary to verify the accuracy of the information received by such
      Seller. In connection therewith, such Seller acknowledges that such Seller
      has
      had the opportunity to discuss Buyer’s business, management and financial
      affairs with Buyer’s management or any person acting on its behalf. Such Seller
      has received and reviewed all the information concerning Buyer that it desires.
      Without limiting the generality of the foregoing, such Seller has been furnished
      with or has had the opportunity to acquire, and to review: (i) copies of all
      of
      Buyer’s publicly available documents, and (ii) all information that it desires
      with respect to Buyer’s business, management, financial affairs and prospects.
      In determining whether to accept the Repayment Notes and Buyer Stock in
      connection with the transactions hereunder, such Seller has relied solely on
      such Seller’s own knowledge and understanding of Buyer and its business based
      upon any information furnished to such Seller in writing. Such Seller
      understands that no person has been authorized to give any information or to
      make any representations which were not furnished pursuant to this Section
      and
      such Seller has not relied on any other representations or information.


     

    (i) Advisors.
      Such
      Seller has carefully considered and has discussed with such Seller’s
      professional legal, tax, accounting and financial advisors, to the extent that
      such Seller has deemed necessary, the suitability of this investment and the
      transaction agreements contemplated by this Agreement and for such Seller’s
      particular federal, provincial, local and foreign tax and financial situation
      and has determined that the acquisition of the Buyer Stock and the Repayment
      Notes and the transactions contemplated by this Agreement are suitable for
      such
      Seller. Such Seller relies solely on such advisors and not on any statements
      or
      representations of Buyer or any of its agents. Such Seller understands that
      such
      Seller (and not Buyer) shall be responsible for such Seller’s own tax liability
      that may arise as a result of this investment or the transactions contemplated
      by this Agreement. 

    


    (j) No
      Litigation.
      There
      are no actions, suits, proceedings or investigations pending against such Seller
      or Seller’s properties before any court or governmental agency (nor, to such
      Seller’s knowledge, is there any threat thereof) which would impair in any way
      such Seller’s ability to enter into and fully perform such Seller’s commitments
      and obligations under this Agreement, the Escrow Agreement or the transactions
      contemplated hereby.

    


    (k) No
      Violations.
      The
      execution, delivery and performance of and compliance with this Agreement and
      the issuance of the Buyer Stock and the Repayment Notes will not result in
      any
      material violation of, or conflict with, or constitute a material default under,
      any of Seller’s articles of incorporation, bylaws or other organizational
      documents, if applicable, or any of such Seller’s material agreements nor result
      in the creation of any mortgage, pledge, lien, encumbrance or charge against
      any
      of the assets or properties of Seller or the Buyer Stock or the Repayment Notes.
      

    


    (l) Risk
      of Ownership of Repayment Notes and Buyer Stock.
      Such
      Seller acknowledges that ownership of the Repayment Notes and Buyer Stock is
      speculative and involves a high degree of risk and that such Seller can bear
      the
      economic risk of ownership of the Repayment Notes and Buyer Stock, including
      a
      total loss of its investment.


    
      
        
        

      

      
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    (m) No
      Governmental Recommendation.
      Such
      Seller acknowledges that no federal, provincial or foreign agency has
      recommended or endorsed such Seller’s acquisition of Buyer Stock and the
      Repayment Notes.

     

    (n) Legends.
      Such
      Seller acknowledges that the Repayment Notes and any and all certificates
      representing Buyer Stock and any and all securities issued in replacement
      thereof or in exchange therefor shall bear the following legend or one
      substantially similar thereto, which such Seller has read and
      understands:

    


    “THE
      SECURITIES REPRESENTED HEREBY WERE ORIGINALLY ISSUED WITHOUT REGISTRATION UNDER
      THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND MAY BE
      OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
      REGISTRATION ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN
      ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE 1933 ACT OR (C)
      PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS, PROVIDED
      IN SUCH LATTER CASE THAT THE HOLDER UPON REQUEST PRIOR TO SUCH SALE FURNISHES
      TO
      ACORN ENERGY, INC. AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT
      REASONABLY SATISFACTORY TO ACORN ENERGY, INC. HEDGING TRANSACTIONS INVOLVING
      THE
      SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
      THE
      1933 ACT.

    


    UNTIL
      AUGUST 13, 2009, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
      TO
      CERTAIN RESTRICTIONS ON TRANSFER.”

    


    (o) Stop-Transfer.
      Because
      of the restrictions imposed on resale, such Seller acknowledges that Buyer
      shall
      have the right to note stop-transfer instructions in its stock transfer records,
      and that Buyer intends to do so. Any sales, transfers, or any other dispositions
      of the Repayment Notes of Buyer Stock by such Seller, if any, will be in
      compliance with the Act.

    


    (p) Investment
      Experience.
      Such
      Seller acknowledges that such Seller has such knowledge and experience in
      financial and business matters that such Seller is capable of evaluating the
      merits and risks of an investment in the Repayment Notes and Buyer Stock and
      of
      making an informed investment decision.

    


    (q) No
      Advertisement or General Solicitation.
      Such
      Seller represents that such Seller is not acquiring the Repayment Notes or
      Buyer
      Stock as a result of any advertisement, article, notice or other communication
      published in any newspaper, magazine or similar media or broadcast over the
      Internet, television or radio or presented at any seminar or
      meeting.


    
      
        
        

      

      
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    (r) Read
      and Understood this Agreement.
      Such
      Seller has carefully read and understands this Agreement.

     

    (s) Representations
      and Warranties.
      No
      representations or warranties have been made to such Seller by Buyer, or any
      officer, employee, agent, affiliate or subsidiary of Buyer, other than the
      representations of Buyer contained herein, and in acquiring for the Repayment
      Notes and Buyer Stock such Seller is not relying upon any representations other
      than those contained in this Agreement.

    


    (t) No
      Brokers.
      Such
      Seller represents and warrants no finder, broker, agent, financial advisor
      or
      other intermediary, nor any purchaser representative or any broker-dealer acting
      as a broker, is entitled to any compensation in connection with the transactions
      contemplated by this Agreement.

    


    (u) No
      Reliance upon Buyer’s or Company’s Counsel. 
      Such
      Seller is not being represented by counsel to Buyer or the Company and has
      been
      advised to obtain independent legal advice regarding an investment in the
      Repayment Notes and/or Buyer Stock, as the case may be.

    


    (v) No
      Non-Resident Sellers.
      Except
      for Software Innovation ASA, no Seller is a Non-Resident Seller (as hereinafter
      defined).

    


    (w) CRA
      Section 116. Such
      Seller acknowledges that if a certificate issued by the CRA under section 116
      (“Section 116 Certificate”) of the Income Tax Act (Canada) (the “Tax Act”) in
      respect of the disposition of any Class A Common Shares owned by a Non-Resident
      Seller, specifying a certificate limit in an amount which is not less than
      the
      portion of the Closing Shares otherwise to be issued and delivered to that
      Non-Resident Seller in respect of such Class A Common Shares, is not delivered
      to Buyer at or before the Closing Date, Buyer will be entitled to and shall
      withhold from the portion of the Closing Shares otherwise issuable to that
      Non-Resident Seller, an amount equal to 25% of the amount, if any, by which
      the
      portion of the Closing Shares to be issued and delivered to that Non-Resident
      Seller exceeds the certificate limit in respect of any Section 116 Certificate
      issued in connection with the disposition of the Class A Common Shares by that
      Non-Resident Seller under section 116 of the Tax Act, which amount shall be
      held
      by Buyer in escrow (the “Section 116 Escrow Amount”) and shall be released upon
      receipt by Buyer of written evidence (commonly known as a “Comfort Letter” which
      is reasonably satisfactory to Buyer) that the CRA or OMR, as applicable, permits
      an extension of the time for remittance by Buyer of the Section 116 Escrow
      Amount.

    


    (x) Seller
      Agreements Concerning Section 116. Such
      Seller acknowledges that any amount withheld by Buyer pursuant to Section 4(w)
      and either subsequently paid to a Non-Resident Seller or remitted to the CRA
      or
      OMR in accordance with the terms of this Section 4 shall be deemed to have
      been
      paid by Buyer to the Non-Resident Seller on account of the portion of the
      Closing Shares to be issued and delivered to such Seller. Such Non-Resident
      Seller hereby covenants and agrees with Buyer to indemnify and save harmless
      Buyer from and against all Taxes (as hereinafter defined), including interest
      and penalties, which Buyer may suffer or incur as a result of the certificate
      limit, as defined in the Tax Act and in the Section 116 Certificate being less
      than the value of the Closing Shares to be issued and delivered to such
      Seller.


    
      
        
        

      

      
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    (y) Termination
      of Unanimous Shareholders Agreement. Such
      Seller acknowledges that the Unanimous Shareholders Agreement, dated June 11,
      2007, among the Company and certain of the Sellers (the “Unanimous Shareholders
      Agreement”) shall, by the provisions of Section 9.10 thereof, terminate, among
      other events, upon the Buyer acquiring all of the Purchased Shares, and hereby
      agrees and acknowledges that for purposes of the transactions contemplated
      by
      this Agreement and in accordance with Section 9.10 of the Unanimous Shareholders
      Agreement, the Unanimous Shareholders Agreement shall terminate immediately
      prior to the completion of the acquisition of the Purchased Shares by the Buyer.
      

    


    (z) Termination
      of Voting Trust Agreement. If
      such
      Seller is a party to the Voting Trust Agreement of the Company, dated December
      19, 2005 (the “Voting Trust Agreement”), it acknowledges that the Voting Trust
      Agreement shall, by the provisions of Section 7.5 thereof, terminate upon the
      termination of the Unanimous Shareholders Agreement, and hereby agrees and
      acknowledges that for purposes of the transactions contemplated by this
      Agreement, the Voting Trust Agreement shall terminate immediately prior to
      the
      completion of the acquisition of the Purchased Shares by the Buyer. Such Seller
      further acknowledges and agrees that upon the termination of the Voting Trust
      Agreement, the Depositary thereunder (as defined in the Voting Trust Agreement)
      shall distribute the Deposited Shares (as defined in the Voting Trust Agreement)
      of such Seller to the Buyer as purchaser of such Deposited Shares pursuant
      to
      the provisions of this Agreement.

    


    (aa) One
      Year Restriction on Transfers of Closing Shares. For
      a
      period of one year from the Closing Date, each Seller hereby agrees that the
      Closing Shares issued to such Seller pursuant to this Agreement may not be
      sold,
      transferred, pledged or otherwise be otherwise disposed of without the prior
      written consent of Buyer.

     

    SECTION
      5. Representations,
      Warranties and Certain Agreements with Respect to the
      Company.
      The
      Company hereby represents and warrants to, and agrees with, Buyer as follows
      (such representations and warranties on the date of this Agreement being, and
      on
      the Closing Date to be, true and correct in all respects):

    


    (a) Organization,
      Qualification and Corporate Power.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the Province of Ontario. The Company has the corporate power
      and authority to carry on its business as now being conducted and to own and
      lease its properties, and is duly registered, licensed or qualified as an
      extra-provincial or foreign corporation, and is in good standing in, all the
      jurisdictions wherein the Company is required to so qualify by reason of the
      nature of its business or its ownership or leasing of property. The Company
      has
      supplied Buyer complete and correct copies of the Company’s Certificate and
      Articles of Continuance and By-Laws and all amendments thereto. Attached hereto
      as Schedule
      5 (a)
      is a
      correct and complete list of each Subsidiary (as defined below) of the Company,
      showing, as to each Subsidiary, its name, the jurisdiction and date of its
      incorporation, the jurisdictions in which it is qualified to do business, the
      number of shares of its stock of each class authorized and the number thereof
      outstanding, and the number of such outstanding shares owned by the Company.
      Each Subsidiary is a corporation duly organized, validly existing and in good
      standing under the laws of its jurisdiction of incorporation. Each Subsidiary
      has the corporate power and authority to carry on its business as now being
      conducted and to own and lease its properties and is duly qualified to do
      business as a foreign corporation and is in good standing in every jurisdiction
      where it is required to so qualify by reason of the nature of its business
      or
      its ownership or leasing of property. There do not exist any warrants, options
      or other rights outstanding for the issue or purchase of shares of capital
      stock
      or other securities of any Subsidiary, or any securities convertible into or
      exchangeable for shares of capital stock or other securities of any Subsidiary.
      The capital stock of each Subsidiary is owned by the Company free and clear
      of
      all Claims. For purposes of this Agreement, “Subsidiary” shall mean any
      corporation or entity a majority of whose outstanding shares of capital stock
      (other than directors' or other qualifying shares) or other ownership interests,
      at the time as of which any determination is being made, shall be owned by
      the
      Company either directly or indirectly.


    
      
        
        

      

      
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    (b) Binding
      Effect.
      This
      Agreement has been duly authorized by the Company’s Board of Directors, the
      Debenture Holders and the Shareholders, has been duly executed and delivered
      by
      the Company and constitutes the legal, valid and binding obligation of the
      Company, enforceable against the Company in accordance with its terms, subject
      to the Enforcement Exceptions. The execution, delivery and performance by the
      Company of this Agreement in accordance with its terms will not result in any
      violation of or default or creation of any lien under, or the acceleration
      or
      vesting or modification of any right or obligation under, or in any conflict
      with, the Company’s Certificate and Articles of Continuance or By-Laws or of any
      agreement, instrument, judgment, decree, order, statute, rule or regulation
      binding on or applicable to the Company, except where any of the foregoing
      would
      not have a material adverse effect on the business, assets or financial
      condition of the Company.

    


    (c) Authorized
      Capital Stock.
      Excluding the Subscription Shares, the authorized capital of the Company
      consists of: (i) an unlimited number of Class A Common Shares, of which
      43,183,917 Class A Common Shares, and no more, are currently issued and
      outstanding and all of which are owned of record and beneficially by the
      Shareholders as set forth on Exhibit
      C
      attached
      hereto; and (ii) an unlimited number of Class A preference shares, of which
      none
      are currently issued and outstanding. In addition, immediately prior to the
      Closing the Company had 4,608,150 issued and outstanding stock options to
      acquire the same number of Class A Common Shares (the “Stock Options”) as set
      forth on Schedule
      5(c)
      and
      C$5,254,316 aggregate principal amount of Debentures issued and outstanding,
      all
      of which are held by the Debenture Holders as set forth on Exhibit
      C.
      The
      Class A Common Shares, the Stock Options and the Debentures are all of the
      issued and outstanding securities of the Company. All of the outstanding Class
      A
      Common Shares have been validly issued, are outstanding, fully paid and
      non-assessable, and registered in the respective names of the Sellers as set
      forth in Exhibit
      C
      attached
      hereto. Except as set out on Schedule
      5(c),
      there
      are no shareholder agreements, voting trusts, pooling arrangements or other
      contracts, arrangements or understandings in respect of the voting of any of
      the
      shares of the Company. Except as set forth on Schedule
      5(c),
      the
      Company is neither a party to, nor is bound by, any outstanding subscriptions,
      options, warrants, calls, commitments or agreements of any character calling
      for
      the Company to issue, deliver or sell, or cause to be issued, delivered or
      sold
      any Class A Common Shares or any other equity or voting security of the Company
      or any securities convertible into, exchangeable for or representing the right
      to subscribe for, purchase or otherwise receive any Class A Common Shares or
      any
      other equity or voting security of the Company or obligating the Company to
      grant, extend or enter into any such subscriptions, options, warrants, calls,
      commitments or agreements. The Debentures have been validly issued, are
      outstanding, and represent current and valid claims against the Company in
      accordance with their terms.


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (d) Financial
      Statements.
      Attached
      as Schedule
      5 (d)
      hereto
      are copies of (i) the audited balance sheet of the Company as of December 31,
      2007 (the “2007 Balance Sheet”) and the related audited statements of operations
      and deficit, and statements of cash flows of the Company for the fiscal years
      ended December 31, 2007 and 2006 (collectively the “Audited Financial
      Statements”), accompanied by a report thereon of Deloitte & Touche LLP and
      (ii) the unaudited balance sheet of the Company for the six month period ended
      June 30, 2008, and related unaudited statements of operations and cash flows
      for
      such period (the “Interim Financial Statements”, and together with the Audited
      Financial Statements, the “Financial Statements”). The Company will deliver to
      Buyer promptly, but no later than ten days after the end of each month, any
      additional monthly reports after May 31, 2008 up to and including the Closing
      Date which shall also be deemed Financial Statements. Each balance sheet
      included in the Financial Statements (A) is in accordance with the books of
      account and records of the Company, and (B) fairly presents the financial
      condition of the Company in all material respects as of its date, and each
      statement of operations and deficit and cash flows fairly presents the results
      of operations and deficit and cash flows of the Company for the fiscal year
      or
      other period covered thereby, all in conformity with Canadian generally accepted
      accounting principles (“GAAP”) applied on a consistent basis, except as stated
      therein. All receivables of the Company reflected in the Financial Statements
      were or will be, as the case may be, collectible in full when due in the
      ordinary course of business in amounts equal to not less than the aggre-gate
      face amounts thereof, after giving effect to any applicable provision for
      doubtful accounts reflected on such Financial Statements.

     

    (e) Tax
      Matters and Tax Returns.

     

    (i) All
      Taxes
      (as hereinafter defined) of any nature whatsoever due and payable by the Company
      prior to the execution hereof and all Tax Returns (as hereinafter defined)
      required to be filed prior to such date have been properly computed in all
      material respects, duly and timely filed (taking into consideration extensions
      of time to file) and fully paid and discharged. There are no outstanding
      agreements or waivers extending the statutory period of limitations applicable
      to any Tax or Tax Return for any period. The Company has paid all Taxes which
      have become due and has paid all installments of estimated Taxes due. All Taxes
      and other assessments and levies which it is required by law to withhold or
      to
      collect have been duly withheld and collected, and have been paid over to the
      proper governmental authorities to the extent due and payable. All Taxes not
      yet
      due and payable have been properly accrued on the Financial Statements.
      Subsequent to the date hereof and prior to the Closing Date hereunder, all
      Tax
      Returns shall be timely and accurately filed, and any Tax payable as shown
      thereby shall be paid, as required by applicable law. The Company has not
      requested nor been granted an extension of the time for filing any Tax Return
      to
      a date later than the Closing Date. Except as disclosed in the Financial
      Statements, there are no determined material tax deficiencies or proposed tax
      assessments against the Company. The Company has not incurred any liability
      for
      penalties, assessments or interest under any federal, provincial, local or
      foreign tax laws. The Company has withheld and paid all Taxes required to have
      been withheld and paid by it in connection with amounts paid or owing to any
      employee, creditor, independent contractor or other third party.

     


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (ii) There
      are
      no liens for Taxes (other than current Taxes not yet due and payable) on the
      Company's assets. There is no audit, action, suit, or taxing authority
      proceeding now in progress, pending or threatened against the Company or with
      respect to any Tax of the Company, and no claim has ever been made by a taxing
      authority in a jurisdiction where the Company does not pay Tax or file Tax
      Returns that the Company is or may be subject to Taxes assessed by that
      jurisdiction.

     

    (iii) The
      Company has not been a member of any affiliated group or filed or been included
      in a combined, consolidated, aggregate, or unitary income Tax Return. The
      Company has never been and is not now a party to or bound by any Tax
      indemnification, Tax allocation, or Tax sharing agreement or other contractual
      obligation pursuant to which it is or may at any time in the future be obligated
      to indemnify any other person or entity with respect to Taxes.

     

    (iv) The
      Company has provided Buyer with true and complete copies of all Tax Returns
      filed with respect to it for taxable periods ending after 2003 and all
      examination reports and statements of deficiencies assessed against or agreed
      to
      be paid by it with respect to such taxable periods.

     

    (v) For
      purposes of this Agreement, “Tax” or “Taxes” shall mean any federal, provincial,
      local, or foreign income, goods and services, gross receipts, franchise,
      estimated, alternative minimum, add-on minimum, sales, use, transfer,
      registration, value added, excise, natural resources, severance, stamp,
      occupation, premium, windfall profit, environmental, customs, duties, real
      property, Personal Property (as hereinafter defined), capital stock,
      intangibles, social security, unemployment, disability, payroll, license,
      employee, or other tax or levy, of any kind whatsoever, including any interest,
      penalties, or additions to tax in respect of the foregoing.

     

    (vi) For
      purposes of this Agreement, “Tax Return” shall mean any return, declaration,
      report, claim for refund, information return, or other document (including
      any
      related or supporting estimates, elections, schedules, statements, or
      information) filed or required to be filed in connection with the determination,
      assessment, or collection of any Tax or the administration of any laws,
      regulations, or administrative requirements relating to any Tax.

     

    (vii) For
      the
      purposes of this Agreement, “Non-Resident Seller” shall mean: (a) a Seller that
      is not a resident of Canada for the purposes of the Tax Act; (b) in the case
      of
      a Seller that is a partnership (other than a partnership that is a Canadian
      partnership within the meaning of the Tax Act), such partnership and every
      member of such partnership other than: (i) a member that is a Canadian
      partnership or (ii) a member that is a resident of Canada for the purposes
      of
      the Tax Act or (c) in the case of a partnership that is deemed by clause (b)
      or
      this clause (c) to be a Non-Resident Seller, every member of such partnership
      other than: (i) a member that is a Canadian partnership or (ii) a member that
      is
      a resident of Canada for the purposes of the Tax Act.

     

    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

     

    (viii) The
      Company is, and has at all relevant times been, duly registered with the CRA
      under the Excise
      Tax Act
      (Canada). The Company has complied in all material respects with all
      registration, reporting, payment, collection and remittance requirements in
      respect of income tax, goods and services tax and provincial sales tax
      legislation.

     

    (f) Absence
      of Undisclosed Liabilities.
      Except
      to the extent reflected or reserved against in the 2007 Balance Sheet included
      in the Audited Financial Statements or incurred in the ordinary course of
      business since December 31, 2007 or described in any Schedule hereto, the
      Company has no liabilities or obligations of any nature, whether known or
      unknown, whether asserted or unasserted or whether accrued, absolute, contingent
      or otherwise (including, without limitation, liabilities as guarantor or
      otherwise with respect to obligations of others) and whether due or to become
      due (including, without limitation, any liabilities for Taxes due or to become
      due) which would be required by GAAP to be reflected on a balance sheet of
      the
      Company.

    


    (g) Personal
      Property. Schedule
      5(g)
      is a
      true, accurate and complete list of all material computer hardware, computer
      software, furniture and fixtures and leasehold improvements owned or leased
      by
      the Company (including those in possession of third parties) as recorded on
      the
      books and records of the Company (the “Personal Property”). 

     

    (h) Title
      to Properties.
      Except
      as specifically set forth in Schedule
      5 (h)
      attached
      hereto, the Company and each Subsidiary own outright all the assets and
      properties shown on the 2007 Balance Sheet or acquired by them after December
      31, 2007 (other than inventory sold or otherwise disposed of in the ordinary
      course of business subsequent to said date), in each case free and clear of
      all
      Claims (other than immaterial easements), or any conditional sale agreement
      or
      other title retention agreement, except for (i) liens for taxes and assessments
      not yet payable, (ii) liens of employees and laborers for current wages not
      yet
      due and (iii) liens described in the notes to the Financial Statements. All
      Personal Property used by the Company or any Subsidiary is in good operating
      condition and repair, ordinary wear and tear excepted.

     

    (i) Bank
      Accounts.
      Schedule
      5(i)
      contains
      a true and complete list (including address and account number) of each bank,
      trust company or similar institution in which the Company and any Subsidiary
      has
      an account or a safety deposit box and the names of all persons, including
      any
      person or firm holding a power of attorney, authorized to draw thereon or to
      have access thereto and a description of all credit facilities, lines of credit,
      loan agreements and the like which the Company has with any financial
      institution. All of the bank accounts operated in connection with the business
      are maintained and operated solely in the name of the Company. Except as set
      forth on Schedule
      5 (i),
      there
      are no bank accounts operated in the name of any division or business or trade
      name or style of the Company.

     

    (j) Indebtedness.
      Except
      as set forth on Schedule
      5 (j)
      and
      except for the Debentures, loans from Buyer to the Company, Indebtedness (as
      hereinafter defined) reflected or reserved against in the 2007 Balance Sheet
      included in the 2007 Financial Statements and Indebtedness incurred in the
      ordinary course of business after the date of the 2007 Financial Statements,
      the
      Company has no material Indebtedness outstanding at the date hereof. The Company
      is not in default with respect to any outstanding Indebtedness or any instrument
      relating thereto and no such Indebtedness or any instrument or agreement
      relating thereto purports to limit the issuance of any securities by the Company
      or the operation of the business of the Company. Complete and correct copies
      of
      all instruments (including all amendments, supplements, waivers and consents)
      relating to any Indebtedness of the Company have been made available to Buyer.
      For purposes of this Agreement, “Indebtedness” shall mean (a) all indebtedness
      for borrowed money or other obligations, commitments or liabilities, whether
      current or long-term, contingent or matured, secured or unsecured, (b) all
      indebtedness of the deferred purchase price of property or services represented
      by a note or security agreement, (c) all indebtedness created or arising under
      any conditional sale or other title retention agreement (even though the rights
      and remedies of the seller or lender under such agreement in the event of
      default may be limited to repossession or sale of such property), (d) all
      indebtedness secured by a purchase money mortgage or other lien to secure all
      or
      part to the purchase price of property subject to such mortgage or lien, (e)
      all
      obligations under leases that have been or must be, in accordance with GAAP,
      recorded as capital leases in respect of which the Company is liable as lessee,
      (f) any liability in respect of banker’s acceptances or letters of credit, and
      (g) all indebtedness of the Company, the stockholders of the Company or any
      other person that is guaranteed by the Company or that the Company has agreed
      (contingently or otherwise) to purchase or otherwise acquire or in respect
      of
      which the Company has otherwise assured a creditor against loss.

     

    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

     

    (k) Intellectual
      Property Rights.

     

    (i) Schedule
      5 (k) (i)
      contains
      an accurate and complete list (by name, owner and, where applicable,
      registration number and jurisdiction of registration, application, certification
      or filing) of all Intellectual Property (as hereinafter defined) of the Company
      (“Company Owned Intellectual Property”).

     

    (ii) Schedule
      5 (k) (ii)
      lists
      all consents, permissions, licenses, sublicenses and any other agreements or
      arrangements, including a summary of all royalties and milestones payable
      thereunder (“In-Bound Licenses”), pursuant to which a third party authorizes
      Company to use, practice any rights under, or grant sublicenses with respect
      to,
      any Intellectual Property owned by a third party (other than generally
      commercially available, non-custom, off the shelf software application programs
      having a retail acquisition price of less than C$5,000 per license), including
      the incorporation of any such Intellectual Property into products of the
      Company, including such products Related to the Company Software (as defined
      in
      (k) (iii)), and, with respect to each In-Bound License, whether the In-Bound
      License is exclusive or non-exclusive. Except as described in Schedule
      5 (k) (ii),
      all
      In-Bound Licenses are valid and binding obligations of the Company and the
      other
      parties thereto, enforceable in accordance with their terms subject to the
      Enforcement Exceptions and there exists no event or condition which will result
      in a material violation or breach of or constitute (with or without due notice
      or lapse of time or both) a default by the Company under any such In-Bound
      Licenses.

     

    (iii) The
      Company Owned Intellectual Property, together with Company’s rights under the
      In-Bound Licenses listed in Schedule
      5 (i) (ii)
      (collectively, the “Company Intellectual Property”), constitute all the
      Intellectual Property used, held for use or acquired or developed for use in
      the
      Company Software (as defined in (k)(xviii)) or otherwise relating to, or arising
      out of, the operation or conduct of the Company Software as it is currently
      conducted or as proposed to be conducted (collectively “Related to the Company
      Owned Software”).

     

    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

     

    (iv) Schedule
      5 (k) (iv)
      lists
      all consents, permissions, licenses, sublicenses and any other agreements or
      arrangements (“Out-Bound Licenses”) pursuant to which Company authorizes a third
      party to use, practice any rights under, or grant sublicenses with respect
      to,
      any Company Owned Intellectual Property or any In-Bound Licenses and whether
      the
      Out-Bound License is exclusive or non-exclusive.

     

    (v) Except
      with respect to those rights in Intellectual Property owned by third persons
      granted to the Company pursuant to In-Bound Licenses as disclosed in
Schedule
      5 (k) (ii),
      the
      Company is the sole legal and beneficial owner of the Company Intellectual
      Property, including as set out in Schedule
      5 (k) (i),
      including as required to carry on its business as currently conducted and for
      the ownership, maintenance and operation of its properties and assets, free
      and
      clear of all mortgages, liens, pledges, charges, security interests, adverse
      claims or other encumbrances.

     

    (vi) All
      applications, registrations and grants for any of the Company Owned Intellectual
      Property (“Company Registered Items”), and, to Company’s knowledge, for any
      Intellectual Property that is the subject of In-Bound Licenses, including as
      identified in the Schedule
      5(k)(ii),
      are
      valid and subsisting, and are in good standing, and all required filings with
      any relevant governmental intellectual property office have been made and all
      required filing, registration, maintenance, renewal and other fees have been
      paid and all documents and certificates related to such Company Registered
      Items
      have been filed with the relevant governmental entity or other authorities
      in
      Canada or foreign jurisdictions, as the case may be, for the purposes of
      maintaining such Company Registered Items. There are no actions that must be
      taken by Buyer within 180 days after the date hereof, including the payment
      of
      any registration, maintenance or renewal fees or the filing of any documents,
      applications or certificates for the purposes of maintaining, perfecting or
      preserving or renewing any Company Registered Items. All Company Registered
      Items are in good standing, held in compliance with all applicable legal
      requirements and enforceable by Company. All Patents Related to the Company
      Software that have been issued to the Company are valid.

     

    (vii) The
      Company has used and uses the Company Owned Intellectual Property in such manner
      as to preserve its rights therein including the use of proper notices indicating
      ownership of and/or rights to use the Company Owned Intellectual Property,
      to
      the extent reasonably necessary for the protection of the Company Owned
      Intellectual Property, and the prevention of any disclosure to the public of
      the
      Proprietary Information which would impair Company’s rights
      therein.

     

    (viii) Waivers
      of moral rights have been obtained in writing with respect to all Copyrights
      owned by or licensed to the Company.

     

    (ix) The
      Seller has granted:

     

    
      	 	
              (1)

            	
              only
                those Out-Bound Licenses permitting third persons to use any Company
                Owned
                Intellectual Property as set out in the Schedule
                5 (k) (iv)
                and there are no other Out-Bound Licenses to any person other than
                those
                Out-Bound Licenses disclosed in Schedule
                5 (k) (iv);

            



      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

     

    
      	 	
              (2)

            	
              only
                those perpetual, irrevocable Out-Bound Licenses (or rights to acquire
                a
                perpetual Out-Bound License) as set out in the Schedule
                5 (k) (iv);
                and

            


    

     

    
      	 	
              (3)

            	
              no
                ownership-like rights or exclusive rights in the Company Owned
                Intellectual Property that exclude Company, in any manner whatsoever,
                from
                the rights granted.

            


    

     

    (x) The
      Company is not aware of any challenges (or any basis therefor) with respect
      to
      the ownership, validity or enforceability of any Company Owned Intellectual
      Property. Schedule
      5 (k) (i)
      lists
      the status of any proceedings or actions before the Canadian Intellectual
      Property Office and any other governmental entity anywhere in the world related
      to any of the Company Owned Intellectual Property, including the due date for
      any outstanding response by Seller in such proceedings. Company has not taken
      any action or failed to take any action that could reasonably be expected to
      result in the abandonment, cancellation, forfeiture, relinquishment,
      invalidation, waiver or unenforceability of any Company Owned Intellectual
      Property. Schedule
      5 (k) (i)
      lists
      all previously held Company Registered Items that Company has abandoned,
      cancelled, forfeited or relinquished during the 12 months prior to the date
      of
      this Agreement.

     

    (xi) None
      of
      the products or services currently or formerly developed manufactured, sold,
      distributed, provided, shipped or licensed by the Company, or which are
      currently under development has infringed or infringes upon, or otherwise
      unlawfully used or uses, the Intellectual Property of any third party. The
      Company, by conducting its business as currently conducted or as proposed to
      be
      conducted, has not infringed nor infringes upon, or otherwise unlawfully used
      or
      uses, any Intellectual Property of a third party. The Company has not received
      any communication alleging that the Company has violated or, by conducting
      its
      business as currently conducted or as proposed to be conducted, would violate,
      any Intellectual Property of a third party nor, to the Company’s knowledge, is
      there any basis therefor. No action, suit or proceeding, claim, arbitration,
      litigation or investigation has been instituted, or, to the Company’s knowledge,
      threatened, relating to any Company Intellectual Property formerly or currently
      used by the Company and none of the Company Intellectual Property is subject
      to
      any outstanding Order (as defined below). To the Company’s knowledge, no person
      has infringed or is infringing any Company Intellectual Property or has
      otherwise misappropriated or is otherwise misappropriating any Company
      Intellectual Property.

     

    (xii) With
      respect to the Proprietary Information of the Company, the documentation
      relating thereto is current, accurate and sufficient in detail and content
      to
      identify and explain it and to allow its full and proper use without reliance
      on
      the special knowledge or memory of others. The Company has taken all
      commercially reasonable steps to protect and preserve the confidentiality of
      all
      Proprietary Information owned by the Company. Any receipt or use by, or
      disclosure to, a third party of Proprietary Information owned by the Company
      has
      been pursuant to the terms of binding written confidentiality and non-use
      agreement between the Company and such third party (“Nondisclosure Agreements”).
      True and complete copies of the Nondisclosure Agreements and any amendments
      thereto, have been provided to Buyer. The Company is, and to Company’s
      knowledge, all other parties thereto are, in compliance with the provisions
      of
      the Nondisclosure Agreements. The Company is in compliance with the terms of
      all
      agreements, contracts, licenses, leases, commitments, arrangements or
      understanding, written or oral, including any sales order or purchase order
      pursuant to which a third party has disclosed to, or authorized the Company
      to
      use, Proprietary Information owned by such third party.

     

    
      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

    

     

    (xiii) All
      current and former employees, consultants and contractors of the Company have
      executed and delivered, and are in compliance with, enforceable agreements
      regarding the protection of Proprietary Information and providing valid written
      assignments and waivers of moral rights of all Intellectual Property Related
      to
      the Company Software conceived or developed by such employees, consultants
      or
      contractors in connection with their services for Company (“Work Product
      Agreements”). True and complete copies of the Work Product Agreements have been
      provided to Buyer. No current or former employee, consultant or contractor
      or
      any other person has any right, claim or interest to any of the Company Owned
      Intellectual Property.

     

    (xiv) No
      officer, employee, consultant or contractor of the Company has been, is or
      will
      be, by performing services, including services Related to the Company Owned
      Software, for or on behalf of Company, in violation of any term of any
      employment, invention disclosure or assignment, confidentiality or
      noncompetition agreement or any other contract or agreement or any other
      restrictive covenant such officer, employee, consultant or contractor has with
      any person, or arising under any award, injunction, judgment, decree, order,
      ruling, subpoena or verdict or other decision issued, promulgated or entered
      by
      or with any governmental entity of competent jurisdiction (an “Order”),
      including relating to the right of any such officer, employee, consultant or
      contractor to be employed by the Company or to use the Proprietary Information
      of others or that could subject the Company or Buyer to any liability to third
      parties as a result of the existence or terms of any such contracts or
      agreements.

     

    (xv) All
      Intellectual Property that has been distributed, sold or licensed to a third
      party by the Company that is covered by warranty conformed and conforms to,
      and
      performed and performs in accordance with, the representations and warranties
      provided with respect to such Intellectual Property by or on behalf of the
      Company for the time period during which such representations and warranties
      apply.

     

    (xvi) The
      execution and delivery of this Agreement by the Company does not, and the
      consummation of the transactions contemplated hereby (in each case, with or
      without the giving of notice or lapse of time, or both), will not, directly
      or
      indirectly, result in the loss or impairment of, or give rise to any right
      of
      any third party to terminate or re-price or otherwise renegotiate any of the
      Company’s rights to own any of its Intellectual Property or its respective
      rights under any Out-Bound License or In-Bound License, nor require the consent
      of any governmental entity or other third party in respect of any such
      Intellectual Property.

     

    (xvii) For
      purposes of this Agreement, “Intellectual Property” shall mean (i) inventions
      (whether or not patentable), invention disclosures, trade secrets, technical
      data, databases, customer and supplier lists, designs, tools, methods,
      processes, technology, ideas, know-how, source code, product road maps,
      formulae, compositions, processes, procedures and techniques, research and
      development information, performance specifications, support documentation,
      drawings, specifications, designs, business and marketing plans and other
      proprietary information and materials (“Proprietary Information”); (ii)
      trade-marks, service marks, brands, designs, logos, indicia, trade dress, trade
      names, taglines, logos, business names, trading styles, trade dress, domain
      names, business identifiers, whether registered or not, applications to register
      and registrations of the same and like protection, and the entire goodwill
      of
      business connected with and symbolized by such rights (“Marks”); (iii)
      documentation, advertising copy, marketing materials, web-site content and
      design(s), product specifications, mask works, drawings, graphics, manuals,
      databases, recordings and any and all other works of authorship and derivative
      work thereof, whether published or unpublished (“Copyright”); (iv) all patents,
      patent applications, provisional patents, design patents, and any foreign
      applications and PCT filings corresponding thereto, and any and all letters
      patent which may issue for the same and patentable inventions and/or
      improvements thereto and from said applications, including any reissues,
      extensions, continuations, continuations-in-part, renewals, divisions or
      re-examinations thereof, and any and all other rights to inventions and designs
      (“Patents”); and (v) computer programs, including any and all software
      implementations of algorithms, models and methodologies, whether in source
      code
      or object code, design documents, flow-charts, user manuals and training
      materials relating thereto and any translations thereof (collectively,
“Software”).

     

    
      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

    

     

    (xviii) The
      Software owned, or purported to be owned by Company (collectively, the “Company
      Software”), was either (i) developed by employees of Company within the scope of
      their employment, (ii) developed by independent contractors who have assigned
      all of their right, title and interest and waived all moral rights therein
      to
      Company pursuant to written agreements or (iii) otherwise acquired by Company
      from a third party pursuant to a written agreement in which such third party
      assigns all of its right, title and interest therein. None of the Company
      Software contains any programming code, documentation or other materials or
      development environments that embody Intellectual Property of any person other
      than Company, except for such materials obtained by Company from other persons
      who make such materials generally available to all interested purchasers or
      end-users on standard commercial terms.

     

    (xix) Each
      existing and currently supported and marketed Software product performs, in
      all
      material respects, the functions described in any agreed specifications or
      end
      user documentation or other information provided to customers on which such
      customers relied when licensing or otherwise acquiring such products, subject
      only to routine bugs and errors that can be corrected promptly by the Company
      in
      the course of providing customer support without further liability to the
      Company, and all of the code of such products has been developed in a manner
      that meets common industry practice, including the use of regression test and
      release procedures.

     

    (xx) The
      Company has taken all actions customary in the software industry to document
      the
      Company Software and its operation, such that the materials comprising the
      Software, including the source code and documentation, have been written in
      a
      clear and professional manner so that they may be understood, modified and
      maintained in an efficient manner by reasonably competent
      programmers.

     

    (xxi) The
      Company has not exported or transmitted Software, including Company Software,
      or
      other material in connection therewith to any country to which such export
      or
      transmission is restricted by any applicable law, without first having obtained
      all necessary and appropriate governmental authorizations.

     

    
      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

     

    (xxii) The
      Company Owned Software is free of any and all disabling codes or instructions
      (a
“Disabling Code”), and any viruses, worms, trojan horses or other intentionally
      created, undocumented or material known contaminant (a “Contaminant”), that may,
      or may be used to, access, modify, delete, damage or disable any Systems or
      that
      may result in damage thereto and does not contain any bugs, errors, or problems
      that would substantially disrupt its operation or have a substantial adverse
      impact on the operation of the Company Software. The Company has taken
      reasonable steps and implemented reasonable procedures to ensure that its
      internal computer systems used in connection with its business are free from
      Disabling Codes and Contaminants. The Software licensed by the Company is free
      of any Disabling Codes or Contaminants that may, or may be used to, access,
      modify, delete, damage or disable any of the databases or embedded control
      systems of the software or that might result in damage thereto. The Company
      has
      taken all reasonable steps to safeguard its software and restrict unauthorized
      access thereto.

     

    (l) Insurance
      Policies. Schedule
      5
      (l)
      lists
      the policies of theft, fire, liability (including products liability), worker’s
      compensation, life, property and casualty, directors’ and officers’, and other
      insurance owned or held by the Company. Such policies of insurance are
      maintained with financially sound and reputable insurance companies, funds,
      or
      underwriters, are of the kinds and cover such risks, and are in such amounts
      and
      with such deductibles and exclusions, as are consistent with prudent business
      practice. All such policies are in full force and effect, are sufficient for
      compliance in all material respects by it with all requirements of law and
      of
      all agreements to which the Company is a party, and provide that they will
      remain in full force and effect through the respective dates set forth in
Schedule
      5
      (l)
      and will
      not terminate or lapse or otherwise be affected in any way by reason of the
      transactions contemplated hereby.

     

    (m) Leases
      and Related Agreements.
      The
      Company and each Subsidiary enjoy the undisturbed quiet possession of each
      of
      the premises purported to be leased by them. Each such lease is listed on
Schedule
      5 (m)
      attached
      hereto, is valid as between the parties thereto and the Company or such
      Subsidiary, as the case may be, is a tenant or possessor in good standing
      thereunder, free of any material default or breach by it. Neither the Company
      nor any Subsidiary has knowledge of any material default or breach by any
      landlord or of any other event which would materially affect the right of
      possession under any such lease. All rental and other payments due under each
      such lease have been duly paid.

     

    (n) Certain
      Contracts.
      Except
      as specifically set forth in Schedule
      5 (n)
      attached
      hereto, neither the Company nor any Subsidiary is a party to or bound by any
      of
      the following written or oral contracts, leases, licenses, agreements, permits,
      plans, commitments or binding arrangements, relating to or affecting the Company
      or any Subsidiary: (i) distributor, dealer, sales agency, manufacturer's
      representative, consignment or similar contract or commitment, or any
      advertising or public relations contract or commitment; (ii) contract with
      or
      commitment to any labor union or employees' association; (iii) continuing
      contract commitment for the future purchase of materials, supplies, merchandise,
      equipment or services in excess of six months; (iv) continuing contract or
      commitment for the future sale or furnishing of products or merchandise or
      services in excess of one year (in each case other than any such contract or
      commitment terminable on not more than 30 days' notice without cost or other
      liability to the Company and the Subsidiaries); (v) contract or commitment
      for
      the employment or retention of any director, officer, employee, agent,
      shareholder, consultant or advisor or any other type of contract or
      understanding with any director, officer, employee, agent, shareholder,
      consultant or advisor which is not immediately terminable without cost or other
      liability to the Company or any Subsidiary at or at any time after the Closing
      Date; (vi) profit sharing, bonus, stock option, stock purchase, pension,
      deferred compensation, retirement, severance, hospitalization, insurance or
      other plan or arrangement, providing benefits to any present or former director,
      officer, employee, agent, shareholder, consultant or advisor, or such person's
      dependents, beneficiaries or heirs; (vii) indenture, mortgage, promissory note,
      loan or credit agreement or other contract or commitment relating to the
      borrowing of money or a line of credit by the Company or any Subsidiary or
      to
      the direct or indirect guarantee or assumption by the Company or any Subsidiary
      of obligations of others (other than as specifically set forth in the notes
      to
      the Financial Statements); (viii) contract or commitment for charitable
      contributions in excess of C$5,000 in the aggregate for the Company and each
      Subsidiary for all such contracts and commitments; (ix) contract or commitment
      for capital expenditures or the acquisition or construction of fixed assets
      in
      excess of C$25,000 in the aggregate for the Company and each Subsidiary for
      all
      such contracts or commitments; or (x) other contracts or commitments, in excess
      of C$10,000 in the aggregate for the Company and each Subsidiary, not made
      in
      the ordinary course of the business of the Company or a Subsidiary. True,
      accurate and complete copies of all contracts set forth on Schedule 6(n), or
      where those contracts are oral, true, accurate and complete summaries of their
      terms, have been provided to the Buyer.

     

    
      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

    

     

    (o) Transfer
      of Class A Common Shares by Sellers.
      The
      transfer by Sellers to Buyer of the Class A Common Shares pursuant to this
      Agreement, and the execution and delivery of the Escrow Agreement will not
      diminish, limit or otherwise impair the right, title or interest of the Company,
      or Buyer as the successor of Sellers as owner of the Class A Common Shares,
      under or in respect of any properties of the Company or any Subsidiary,
      including the capital stock, securities, assets, leases, licenses, Company
      Intellectual Property, insurance policies, contracts and other instruments
      and
      properties referred to herein or in the exhibits or schedules hereto. The
      execution, delivery and performance of this Agreement and the Escrow Agreement
      by Sellers will not conflict with, or result in any breach of, any of the terms,
      conditions or provisions of, or constitute a default (or an event which with
      the
      giving of notice or lapse of time, or both, would become a default) under,
      or
      result in the creation of any Claim upon any of the properties or assets of
      the
      Company or any Subsidiary pursuant to, the certificate of incorporation or
      by-laws of the Company or such Subsidiary, as the case may be, or any indenture,
      mortgage, lease, loan agreement, credit agreement or any other agreement or
      instrument to which the Company or such Subsidiary, as the case may be, is
      a
      party or by which it or any of its properties is or may be bound or
      affected.

     

    (p) True
      Copies of Documents.
      True
      copies of all leases, insurance policies, agreements, contracts and other
      instruments listed in the exhibits and schedules hereto have been delivered
      to,
      or made available for inspection by, Buyer, or, to the extent not heretofore
      delivered, will be delivered to, or made available for inspection by, Buyer
      as
      promptly as possible after the date of this Agreement.

     

    (q) Legal
      Proceedings.
      There is
      no action, suit, proceeding or investigation pending (or, to the knowledge
      of
      the Company, after reasonable investigation with respect thereto, threatened)
      against, by or affecting the Company or any Subsidiary in any court, at law
      or
      in equity, or before or by any federal, provincial, local or other governmental
      department, commission, board, bureau, agency or instrumentality, domestic
      or
      foreign, or before any arbitrator of any kind.

     

    
      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

    

     

    (r) Compliance
      with Law.
      The
      Company and each Subsidiary have complied in all material respects with all
      laws, rules, decrees, regulations, ordinances and orders (“Laws and
      Regulations”) applicable to their respective businesses and operations
      (including, without limitation, laws and regulations relating to wages and
      hours, record keeping, customs, exportation, environmental matters, pollution
      control or zoning) and have filed with the proper authorities any statements
      and
      reports required by all applicable Laws and Regulations. No officer of the
      Company or any Subsidiary has received notice of any material violation of
      any
      Laws and Regulations applicable to the business or operations of the Company
      or
      any Subsidiary. The Company does not have or need any licenses, permits or
      other
      authorizations from governmental authorities for the conduct of its business
      or
      in connection with the ownership or use of its properties, except where the
      failure to have any such license, permit or other authorization would not have
      a
      material adverse effect on the business, assets or financial condition of the
      Company.

     

    (s) Agreements
      in Full Force and Effect.
      The
      Company and each Subsidiary have in all material respects performed all
      obligations required to be performed by them to date under all indentures,
      mortgages, leases, loan agreements, credit agreements and other agreements
      and
      instruments, permits, plans and binding arrangements to which any of them is
      a
      party and are not in default in any material respect under any thereof and
      each
      of the other parties thereto or bound thereby has in all material respects
      performed all the obligations required to be performed by it to date and is
      not
      in default in any material respect thereunder.

     

    (t) Absence
      of Subsequent Actions.
      Except
      as set forth in Schedule
      5 (t)
      attached
      hereto, since December 31, 2007, neither the Company nor any Subsidiary has:
      (i)
      issued or sold, or agreed to issue or sell, any shares of capital stock or
      any
      warrants, options or other rights for the issue or purchase of shares of capital
      stock or other securities of, or any securities convertible into or exchangeable
      for shares of capital stock or other securities of, the Company or any
      Subsidiary; (ii) guaranteed any debt, obligation or dividend of any person
      other
      than a Subsidiary or incurred any liability (fixed or contingent) in excess
      of
      C$25,000 in the aggregate, except current liabilities incurred, and liabilities
      under contracts entered into, in the ordinary course of business; (iii)
      discharged or satisfied any lien, pledge, security interest, claim or
      encumbrance, except for the discharge of liabilities provided for herein to
      be
      discharged, or paid any obligation or liability (fixed or contingent) other
      than
      current liabilities shown on the 2007 Balance Sheet and current liabilities
      incurred since December 31, 2007, in the ordinary course of business; (iv)
      declared or paid any dividend or made any other distribution to its shareholders
      or purchased any shares of its capital stock or other securities; (v)
      reclassified its shares of capital stock; (vi) mortgaged, pledged or subjected
      to any Claim, any of its assets, tangible or intangible; (vii) sold, assigned,
      transferred or otherwise disposed of any of its tangible assets, or canceled
      any
      debts or claims, except in each case in the ordinary course of business; (viii)
      sold, assigned, licensed, sublicensed or transferred any Company Intellectual
      Property; (ix) suffered any extraordinary losses or waived any rights of
      substantial value; or (x) entered into any other material transaction other
      than
      in the ordinary course of business. 

     

    
      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

    

     

    
      (u) No
        Adverse Change.
        Since
        December 31, 2007, (i) the business and properties of the Company and each
        Subsidiary, taken as a whole, have not been adversely affected in any material
        way as the result of any fire, explosion, accident, riot, civil disturbance,
        strike, boycott, lockout, flood, drought, storm, earthquake, embargo or other
        casualty or act of God or the public enemy; and (ii) there has been no material
        adverse change in the assets, business, prospects, properties or condition,
        financial or other, of the Company or any Subsidiary.

    

     

    (v) No
      Default Under Contracts. 
      The
      Company has performed all of the obligations required to be performed by it
      and
      is entitled to all benefits under, and is not in default or alleged to be in
      default in respect of, any contract relating to the its business, to which
      it is
      a party or by which it is bound or affected. All such contracts are in good
      standing and in full force and effect, and no event, condition or occurrence
      exists that, after notice or lapse of time or both, would constitute a default
      under any such contract. There is no dispute between the Company and any other
      party under any such contract. Except as disclosed in the Schedules to this
      Agreement, none of such contracts contain terms under which the execution or
      performance of this Agreement would give any other contracting party the right
      to terminate or adversely change the terms of that contract or otherwise require
      the consent of any other person. None of those contracts have been assigned,
      or
      if applicable subleased, in whole or in part.

     

    (w) Contracts
      with Sellers, etc.
      Except
      as set forth in Schedule
      5 (w)
      attached
      hereto and expressly so indicated, neither (i) any Seller, nor (ii) any
      beneficiary of any trust, a trustee, grantor or beneficiary of which is a Seller
      or any member of the family of a Seller, nor (iii) any member of the family
      of
      any Seller, nor (iv) any corporation, partnership, trust or other entity in
      which any Seller or other such person has a substantial interest or is a
      director, officer, trustee or partner, nor (v) any affiliate of any Seller,
      is a
      party to any transaction with the Company or any Subsidiary, including, without
      limitation, any contract, agreement or other arrange-ment providing for the
      furnishing of services by, or rental of real or Personal Property from, or
      otherwise requiring payments to, any such person, except for such contracts,
      agreements and arrangements terminable on not more than 30 days' notice without
      cost or other liability to the Company or any Subsidiary.

     

    (x) Relationships
      with Customers, Suppliers, Distributors and Sales
      Representatives.
      The
      Company has not received any written (or to the knowledge of the Company other)
      notice that any customer, supplier, distributor or sales representative intends
      to cancel, terminate or otherwise modify or not renew its relationship with
      the
      Company or any Subsidiary, and, to the knowledge of the Company, no such action
      has been threatened, which individually or in the aggregate, would reasonably
      be
      expected to have a material adverse effect on the Company.

     

    (y) Environmental
      Matters.
      The
      Company: (A) is in material compliance with any and all Environmental
      Laws and Regulations (as hereinafter defined);
      (B) has received all permits, licenses or other approvals required of it
      under applicable Environmental Laws and Regulations to conduct its businesses;
      and (C) is in material compliance with all terms and conditions of any such
      permit, license or approval. There have been no past unresolved, and there
      are
      no pending or threatened, claims, complaints, notices or requests for
      information received by the Company with respect to any alleged material
      violation of any Environmental Laws and Regulations, and no conditions exist
      at,
      on or under any property now or previously owned, operated or leased by the
      Company which, with, the passage of time, or the giving of notice) or both,
      would give rise to liability under any Environmental Laws and Regulations that,
      individually or in the aggregate, has or may reasonably be expected to have,
      a
      material adverse effect with respect to the Company, following the
      Closing.

     

    
      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

    

     

    (i) For
      purposes of this Agreement, “Environmental Laws and Regulations” means any Law
      or Regulation with respect to any Hazardous Materials, groundwater, wetlands,
      landfills, open dumps, storage tanks, underground storage tanks, solid waste,
      waste water, storm water run-off, waste emissions, wells or otherwise concerning
      pollution or the protection of the environment.

     

    (ii) For
      purposes of this Agreement, “Hazardous Materials” means each and every element,
      compound, chemical mixture, contaminant, pollutant, material, waste or other
      substance which is defined, determined or identified as hazardous or toxic
      under
      any Environmental Law or Regulation or the Release of which is prohibited under
      any Environmental Law or Regulation,

     

    (iii) For
      purposes of this Agreement, “Release” means
      any
      spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
      storing, escaping, leaching, dumping, discarding, burying, abandoning or
      disposing into the environment.

     

    (z) Labor
      Relations.
      The
      Company is in compliance with all federal, provincial and state laws respecting
      employment and employment practices, terms and conditions of employment, wages
      and hours and nondiscrimination in employment, and is not engaged in any unfair
      labor practice. There is no charge pending or threatened against the Company
      alleging unlawful discrimination in employment practices before any court or
      agency and there is no charge of or proceeding with regard to any unfair labor
      practice against the Company pending before any governmental agency. There
      is no
      labor strike, dispute, slow-down or work stoppage actually pending or threatened
      against or involving the Company. No grievance or arbitration proceeding arising
      out of or under any collective bargaining agreement is pending against the
      Company and no claim therefor has been asserted. None of the employees of the
      Company is covered by any collective bargaining agreement, and no collective
      bargaining agreement is currently being negotiated by the Company. The Company
      has not experienced any work stoppage or other material labor difficulty during
      the last five years. All required levies under the Workplace
      Safety and Insurance Act, 1997
      (Ontario), or under the workers’ compensation legislation of any other
      jurisdiction where the Company carries on business, have been paid by the
      Company. The Company has paid to the date of this Agreement all amounts payable
      on account of salary, bonus payments and commission to or on behalf of any
      and
      all employees.

     

    (aa) Governmental
      Consent; Non-Contravention, etc.
      Except
      as described in Schedule
      5 (aa),
      the
      Company holds no licenses, permits or other authorizations issued by any
      governmental agency to the Company related to its properties, Intellectual
      Property, research program or business. No consent, approval or authorization
      of
      or registration, designation, declaration or filing with any governmental
      authority, federal or other, on the part of the Company, is required in
      connection with the consummation of the transactions contemplated hereby. The
      execution and delivery of this Agreement and the consummation of the
      transactions contemplated hereby will not violate (i) any provision of the
      Company’s Certificate of Incorporation or its By-Laws, or (ii) any order,
      judgment, injunction, award or decree of any court or provincial, state or
      federal governmental or regulatory body applicable to the Company.

     

    
      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

    

     

    (bb) Minute
      Books.
      The
      minute books of the Company made available to Buyer for inspection accurately
      record therein all actions by the Company’s Board of Directors and
      stockholders.

     

    (cc) Brokers.
      The
      Company has not retained, utilized or been represented by any broker or finder
      in connection with the negotiation or consummation of this Agreement or the
      transactions contemplated hereby.

     

    (dd) Customers.
      Attached
      as Schedule
      5 (dd) is
      the
      Company's customer list with name, address, and associated revenue for each
      customer for 2005, 2006, and 2007 and for the five months ended May 31, 2008.
      Such list shows as to each customer what was purchased during each period and
      the number of users for the Company’s products. The customer list is true and
      correct in all material respects. The Company has received no indication from
      any current customer that the transactions contemplated by this Agreement will
      materially and adversely affect such customer’s relationship with the
      Company.

     

    (ee) Product
      Warranty.
      All
      products manufactured, processed, distributed, shipped or sold by the Company
      and any services rendered by Seller have been in conformity with all applicable
      contractual commitments and all expressed or implied warranties. No liability
      exists or will arise for repair, replacement or damage in connection with such
      sales or deliveries, in excess of the reserve therefor on the Interim Balance
      Sheet. Schedule
      5 (ee)
      sets
      forth an accurate, correct and complete statement of all written warranties,
      warranty policies, service and maintenance agreements of the Company. No
      products heretofore sold by the Company are now subject to any guarantee,
      written warranty, claim for product liability, or patent or other indemnity.
      Schedule
      5 (ee)
      sets
      forth an accurate, correct and complete list and summary description of all
      service or maintenance agreements under which the Company is currently
      obligated, indicating the terms of such agreement and any amounts paid or
      payable thereunder.

     

    (ff) Termination
      of Stock Option Plan.
      The
      Company has taken all actions necessary under the Software Innovation Inc.
      2004
      Employee Stock Option Plan (the “Plan”) to cause the Plan and all options
      outstanding thereunder to be terminated as of the Closing Date.

     

    SECTION
      6. Representations,
      Warranties and Certain Agreements of Buyer.
      Buyer
      represents and warrants to, and agrees with, Sellers as follows (such
      representations and warranties on the date of this Agreement being, and on
      the
      Closing Date to be, true and correct in all respects):

     

    (a) Organization
      and Corporate Power.
      Buyer is
      a corporation duly organized, validly existing and in good standing under the
      laws of the State of Delaware. Buyer has the corporate power and authority
      to
      execute, deliver and perform each of this Agreement and the Escrow Agreement.
      This Agreement has been, and on the Closing Date the Escrow Agreement will
      have
      been, duly authorized, executed and delivered by Buyer, and this Agreement
      constitutes, and on the Closing Date the Escrow Agreement will constitute,
      the
      legal, valid and binding obligation of Buyer, enforceable in accordance with
      its
      terms, subject to the Enforcement Exceptions. The execution, delivery and
      performance of this Agreement and the Escrow Agreement by Buyer will not violate
      any material provision of law (except that no representation or warranty is
      made
      with respect to compliance with any Federal or state antitrust laws) or any
      judgment, decree or order of any court or other governmental agency to which
      Buyer is subject, or conflict with, or result in any breach of, any of the
      terms, conditions or provisions of, or constitute a default (or an event which
      with the giving of notice or lapse of time, or both, would become a default)
      under, or result in the creation of any Claim upon any of the properties or
      assets of Buyer pursuant to, the certificate of incorporation or by-laws of
      Buyer or any indenture, mortgage, lease, loan agreement, credit agreement or
      any
      other agreement or instrument to which Buyer is a party or by which it or any
      of
      its properties is or may be bound or affected.


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (b) Capitalization.
      The
      authorized capital stock of Buyer consists of 20,000,000 shares of Common Stock,
      par value $.01 per share, of which 11,222,481
      shares
      are issued and outstanding. All of the outstanding shares of capital stock
      of
      Buyer are validly issued and outstanding, fully paid and non-assessable. All
      shares of Buyer Stock to be issued to the Sellers under this Agreement will,
      when issued, be duly authorized, validly issued, fully paid and non-assessable
      and will not be subject to the pre-emptive rights of others.

     

    (c) Legal
      Proceedings.
      No
      action, suit, proceeding or investigation (whether conducted by any judicial
      or
      regulatory body or other person) is pending or, to the knowledge of Buyer,
      threatened against Buyer (nor is there any basis therefor to the knowledge
      of
      Buyer) which questions the validity of this Agreement or any action taken or
      to
      be taken pursuant hereto or which might reasonably be expected, either in any
      case or in the aggregate, to adversely affect the business, assets, or financial
      condition of Buyer or impair the right or the ability of Buyer to carry on
      its
      business substantially as now conducted.

     

    (d) Government
      Consents, etc.
      No
      consent, approval or authorization of or registration, designation, declaration
      or filing with any governmental authority, federal or other, on the part of
      Buyer is required in connection with the transactions contemplated hereby.
      The
      execution and delivery of this Agreement and the consummation of the
      transactions contemplated hereby will not violate (i) any provision of Buyer’s
      Articles of Incorporation and By-Laws, or (ii) any order, judgment, injunction,
      award or decree of any court or state or federal governmental or regulatory
      body
      applicable to Buyer.

     

    (e) Brokers.
      Buyer
      has not retained, utilized or been represented by any broker or finder in
      connection with the negotiation or consummation of this Agreement or the
      transactions contemplated hereby.

     

    SECTION
      7. Covenants
      of the Parties.
      

    


    (a) Further
      Assurances.
      Subject
      to the terms and conditions set forth in this Agreement, each of the parties
      to
      this Agreement shall use its best efforts, as promptly as practicable, to take
      or cause to be taken all actions, and to do or cause to be done all other
      things, as are necessary, proper, or advisable under applicable laws and
      regulations to consummate and make effective the transactions contemplated
      by
      this Agreement.

     

    
      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

    

     

    
      (b) Confidentiality.
        Buyer,
        the Company and each Seller will treat in confidence all documents, materials
        and other information obtained regarding the other during the course of the
        negotiations leading to the transactions contemplated pursuant to this
        Agreement, the investigation of the other parties hereto and the preparation
        of
        agreements and other documents relating to such transactions, and, if such
        transactions are not consummated, shall return all copies of nonpublic documents
        and materials which have been furnished in connection
        therewith.

    

     

    (c) Public
      Statements or Releases.
      The
      parties hereto each agree that no party to this Agreement shall make, issue
      or
      release any public announcement, statement or acknowledgment of the existence
      of, or reveal the status of, the transactions provided for herein, without
      first
      obtaining the consent of the other party hereto. Nothing contained in this
      Section 7 (c) shall prevent Buyer from making such public announcements as
      it
      may consider necessary in order to satisfy the requirements of United States
      securities Laws and Regulations applicable to Buyer.

    


    (d) Adoption
      of Stock Option Plan.
      Within
      sixty (60) days of the Closing Date, Buyer shall cause the Company to adopt
      a
      new stock option plan under which a class of Common Shares with the same rights,
      privileges, restrictions and conditions as the Class A Common Shares,
      representing twenty percent (20%) of the Company’s fully diluted capitalization
      as the Closing Date, shall be reserved for issuance.

    


    SECTION
      8. Conditions
      Precedent to Obligations of Buyer.
      All
      obligations of Buyer under this Agreement are, at the option of Buyer, subject
      to the conditions that, at the Closing Date:

     

    (a) Accuracy
      of Representations and Warranties by the Sellers and the
      Company.
      The
      representations and warranties of the Sellers and the Company set forth in
      Sections 4 and 5 of this Agreement (including any schedules thereto) shall
      be
      true and correct in all material respects as of the Closing Date with the same
      force and effect as though made again at and as of the Closing Date, except
      for
      changes permitted or required by this Agreement. 

     

    (b) Compliance
      by the Company.
      The
      Company shall have performed and complied in all material respects with all
      covenants and agreements contained in this Agreement required to be performed
      or
      complied with by it on or before the Closing Date.

     

    (c) No
      Restraining Order.
      No
      restraining order or injunction or other order issued by any court of competent
      jurisdiction, or other legal restraint or prohibition shall prevent the
      consummation of the transactions contemplated by this Agreement, and no petition
      or request for any such injunction or other order shall be pending.


     

    (d) No
      Material Adverse Change.
      There
      shall not have been any material adverse change in the business or assets of
      the
      Company.

     

    (e)  Officers'
      Certificates.
      The
      Company shall have delivered to Buyer at and as of the Closing a certificate
      attaching the Company’s articles of incorporation, by-laws, certificate of
      incumbency and resolutions authorizing execution and delivery of this Agreement
      and the transactions contemplated hereby, duly executed by the Company’s Chief
      Executive Officer or Chief Financial Officer, in form and substance satisfactory
      to Buyer and Buyer’s counsel.

     

    
      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

    

     

    (f) Opinion
      of the Company's Counsel.
      The
      Company shall have delivered to Buyer an opinion of Wildeboer
      Dellelce LLP, counsel to the Company, dated the Closing Date, in form and
      substance reasonably satisfactory to Buyer and its counsel.

     

    (g) Exercise/Conversion
      of Stock Options, Warrants and Other Rights.
      Each
      outstanding Stock Option, warrant, and other right to acquire the capital stock
      of the Company shall have been exercised, waived, released and/or terminated,
      and the Company’s stock option plan shall have been terminated as of the Closing
      Date and shall be of no further force or effect.

     

    (h) Consents.
      All
      consents, in form and substance satisfactory to Buyer and Buyer’s counsel, to
      the consummation of the transactions contemplated by this Agreement, by each
      party to any material contract, commitment or obligation of the Company required
      to be secured by the Company shall have been secured on or prior to the Closing
      Date. 

     

    (i) Private
      Placement.
      The
      issuance of the Buyer Stock and the Repayment Notes to the Sellers shall qualify
      as a private placement under Section 4(2) of the Act and/or Regulation D
      promulgated thereunder and/or in reliance upon Regulation S promulgated under
      the Act shall be exempt from registration under the federal securities laws
      of
      the United States and from local registration, prospectus or similar
      requirements. Further, the issuance of Buyer Stock and the Repayment Notes
      to
      the Sellers shall qualify as an exempt distribution under National Instrument
      45-106 - Prospectus
      and Registration Exemptions.

     

    (j)  Execution
      and Delivery of the Escrow Agreement.
      The
      Sellers shall have executed and delivered the Escrow Agreement.

     

    (k) Termination
      of Unanimous Shareholders Agreement and Voting Trust.
      The
      Company and the Sellers shall have terminated the Unanimous Shareholders
      Agreement and the Voting Trust Agreement to which they are parties.

     

    (l) Resignations
      of Certain Directors.
      Will
      Jin, John Kemp-Welch, Andrew Abouchar, Randall Howard and Stephen Harapiak
      shall
      have resigned as directors of the Company.

     

    (m) Repayment
      of Debentures. The
      Company shall have used to the Cash Consideration and the Repayment Notes to
      repay the Debentures which shall have been canceled.

     

    (n) All
      Actions To Be Satisfactory.
      All
      actions, proceedings, instruments, opinions and documents required to carry
      out
      the purposes of this Agreement or incidental thereto, and all other related
      legal matters, shall be reasonably satisfactory in form and substance to Buyer
      and its counsel.

    


    (o) All
      Conditions To Be Satisfied.
      All the
      terms, agreements and conditions of this Agreement to be complied with and
      performed by any Seller at or before the Closing Date shall have been complied
      with and performed in all material respects.

    


    
      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

    

     

    
      SECTION
        9. Conditions
        Precedent to Obligations of Sellers.
        All
        obligations of the Sellers under this Agreement are, at the option of the
        Sellers, subject to the conditions that, at the Closing Date:

    

     

    (a) Accuracy
      of Representations and Warranties by Buyer.
      The
      representations and warranties of Buyer set forth in Section 6 of this Agreement
      and in any Schedules to this Agreement shall be true and correct in all material
      respects as of the Closing Date with the same force and effect as though made
      again at and as of the Closing Date, except for changes permitted or required
      by
      this Agreement.

     

    (b) Compliance
      by Buyer.
      Buyer
      shall have performed and complied in all material respects with all of the
      covenants and agreements required to be performed or complied with by it by
      the
      Closing Date.

     

    (c) No
      Restraining Order.
      No
      restraining order or injunction or other order issued by any court of competent
      jurisdiction, or other legal restraint or prohibition shall prevent the
      transactions contemplated by this Agreement, and no petition or request for
      any
      such injunction or other order shall be pending.

     

    (d)  Buyer
      Certificate.
      Buyer
      shall have delivered to the Sellers at and as of the Closing a certificate
      attaching Buyer’s certificate of incorporation, by-laws, certificate of
      incumbency and resolutions authorizing execution and delivery of this Agreement
      and the transactions contemplated hereby, duly executed by Buyer’s Chief
      Executive Officer or Chief Financial Officer, in form and substance satisfactory
      to Sellers, the Company and their counsel.

     

    (e) Opinion
      of Buyer’s Counsel.
      Buyer
      shall have delivered to Sellers an opinion of Eilenberg Krause & Paul LLP,
      counsel for Buyer, dated the Closing Date, in form and substance reasonably
      satisfactory to Sellers, the Company and their counsel.

     

    (f)  No
      Material Adverse Change.
      There
      shall not have been any material adverse change in the business or assets of
      Buyer, it being agreed that a material adverse change shall not include the
      incurrence of cash losses from operations in accordance with the conduct of
      Buyer’s business in the ordinary course.

     

    (g)  Private Placement.
      The
      issuance of the Buyer Stock to the Sellers shall qualify as a private placement
      under Regulation D or Regulation of the Securities Act and shall be exempt
      from
      registration under United States federal securities laws and all state and
      foreign securities laws.

     

    (h) Delivery
      of Escrow Shares.
      Buyer
      shall have delivered certificates to the Escrow Agent evidencing the Escrow
      Shares as provided in Section 2 (f).

     

    (i) Execution
      and Delivery of Escrow Agreement.
      Buyer
      shall have executed and delivered the Escrow Agreement.

     

    (j) Resignations
      of Certain Directors.
      Will
      Jin, John Kemp-Welch, Andrew Abouchar, Randall Howard and Stephen Harapiak
      shall
      have resigned as directors of the Company.

     

    (k) All
      Actions To Be Satisfactory.
      All
      actions, proceedings, instruments, opinions and documents required to carry
      out
      this Agreement or incident thereto, and all other related legal matters, shall
      be reasonably satisfactory in form and substance to Sellers and their
      counsel.

    

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

    

     

    
      (l) All
        Conditions To Be Satisfied.
        All the
        terms, agreements and conditions of this Agreement to be complied with and
        performed by Buyer at or before the Closing Date shall have been complied
        with
        and performed in all material respects. 

       

    

    SECTION
      10. Expenses.
      Buyer
      agrees to pay its own expenses, including all fees and disbursements of counsel
      for Buyer, incidental to this Agreement and the transaction contemplated hereby.
      Each of the Sellers jointly and severally agrees to pay the expenses of Sellers,
      including all fees and disbursements of counsel for Sellers, incidental to
      this
      Agreement and the transaction contemplated hereby.

    


    SECTION
      11. Indemnification.
      

    


    (a) Sellers’
      Indemnity.
      

    


    (i) From
      and
      after the Closing, each Seller shall, severally and not jointly, and in
      proportion to their relative ownership of Purchased Shares, indemnify and defend
      Buyer, and each of its successors and assigns, officers, directors, employees,
      advisors, and affiliates (as applicable, the “Buyer Indemnified Party”), and
      hold each of them harmless from and against any and all claims, judgments,
      proceedings, actions, suits, investigations, liabilities, losses, reasonable
      costs (including the reasonable fees and disbursements of attorneys), expenses
      and damages, including without limitation under federal or provincial or state
      securities laws, but excluding any incidental, consequential or punitive
      damages, (collectively, “Damages”) directly or indirectly based on, arising out
      of or relating to: (A) any breach of or inaccuracy in any representation or
      warranty of the Company set forth in this Agreement; (B) any breach of any
      covenant or agreement of the Company set forth in this Agreement or any of
      the
      other agreements, certificates and instruments delivered or required to be
      delivered hereunder or in connection with the transactions contemplated by
      this
      Agreement to be performed at or prior to the Closing; (C) any liability of
      the
      Company that accrues after the Closing Date for Taxes for all periods ending
      on
      or before the Closing Date (the “Pre-Closing Periods”), including, but not
      limited to Taxes for a Pre-Closing Period arising as a result of any federal
      or
      provincial governmental action, including any audit, assessment or reassessment
      of the Company before or after the Closing Date; and (D) any liability of the
      Company as a result of any federal or provincial governmental action, including
      any audit, assessment or reassessment in respect of the SRED Claim (as such
      term
      is defined in Section 2(g)) (collectively, “Buyer Indemnity Claims”). In
      addition, each of the Sellers individually agrees to indemnify and defend the
      Buyer Indemnified Parties, and hold each of them harmless from and against
      any
      and all Damages directly or indirectly based on, arising out of or relating
      to
      any breach or inaccuracy in any representation or warranty of that Seller set
      forth in Section 4 of this Agreement or with respect to any breach of covenant
      of and by that Seller under this Agreement.

     

    (ii) A
      Buyer
      Indemnified Party shall not be entitled to assert a claim for indemnification
      from a Seller under the provisions of Section 11 (a) (i) until such time as,
      and
      only to the extent that, the total of all Damages of a Buyer Indemnified Party
      subject to indemnification exceed, in the aggregate, the sum of Fifteen Thousand
      Dollars (C$15,000) (the “Basket”). Further, any and all indemnification
      obligations of Sellers under the provisions of Section 11 (a) (i) shall not
      exceed the aggregate value of the Shareholder’ SRED Portion and the Escrow
      Shares (the “Cap”), other than claims for fraud or intentional
      misrepresentation.


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (b) Buyer’s
      Indemnity.

    


    (i)  From
      and
      after the Closing, Buyer shall indemnify and defend Sellers and their respective
      successors and assigns, and hold each of them harmless from and against any
      and
      all Damages (including in each case reasonable attorneys’ fees) directly or
      indirectly based on, arising out of or relating to (i) any breach of or
      inaccuracy in any representation or warranty of Buyer set forth in this
      Agreement; (ii) any breach of any covenant or agreement of Buyer set forth
      in
      this Agreement or any of the other agreements, certificates and instruments
      delivered or required to be delivered hereunder or in connection with the
      transactions contemplated by this Agreement to be performed at or prior to
      the
      Closing (collectively, “Seller Indemnity Claims”, and together with Buyer
      Indemnity Claims, the “Indemnity Claims”).

     

    (ii) Sellers
      shall not be entitled to assert a claim for indemnification from Buyer under
      the
      provisions of Section 11 (b) (i) until such time as, and only to the extent
      that, the total of all Damages of Sellers subject to indemnification exceed,
      in
      the aggregate, the sum of the Basket. Further, any and all indemnification
      obligations of Buyer under the provisions of Section 11 (b) (i) shall not exceed
      the Cap, other than claims for fraud or intentional
      misrepresentation.

    


    (c) Notice
      and Defense of Indemnity Claims.
      

     

    (i) A
      party
      hereto agreeing to be responsible for or to indemnify against any matter
      pursuant to this Agreement is referred to herein as the “Indemnifying Party” and
      a Party entitled to indemnification hereunder is referred to herein as the
      “Indemnified Party.” An Indemnified Party under this Agreement shall give
      written notice to the Indemnifying Party hereunder with respect to any assertion
      by the Indemnified Party or by a third-party of any Damages that the Indemnified
      Party has reason to believe might give rise to an Indemnity Claim under this
      Agreement, within thirty (30) days of the Indemnified Party having actual
      knowledge of the Indemnity Claim. Such notice shall set forth in reasonable
      detail the nature of such Damages and include copies of any written complaint,
      summons, correspondence or other communication from the Party asserting the
      claim or initiating the proceeding. If the Indemnifying Party disagrees with
      or
      contests the Indemnity Claim, the Indemnifying Party must, within thirty (30)
      days of the Indemnifying Party’s receipt of such notice, deliver written notice
      to the Indemnified Party that it contests such Indemnity Claim. Such notice
      shall set forth in reasonable detail the factual and legal basis for disputing
      the Indemnity Claim. The Parties shall meet to negotiate a resolution to any
      contested Indemnity Claim. If no negotiated resolution can be reached, the
      Parties shall have recourse to all legal remedies available to them. If the
      Indemnifying Party does not deliver written notice of its intent to contest
      an
      Indemnity Claim within the thirty (30) day period, the Indemnifying Party shall
      be deemed to have accepted and agreed to the Indemnity Claim.
      If the
      Indemnifying Party elects not to defend the Indemnified Party against an
      Indemnity Claim, whether by failure of such Party to give the Indemnified Party
      timely notice as provided herein or otherwise, then the Indemnified Party,
      without waiving any rights against the Indemnifying Party, may settle or defend
      against such Indemnity Claim and the Indemnified Party shall be entitled to
      recover from the Indemnifying Party the amount of any settlement or judgment
      (subject to any rights of appeal) and, on an ongoing basis, all indemnifiable
      costs and reasonable expenses of the Indemnified Party with respect thereto,
      including interest from the date such costs and reasonable expenses were
      incurred.

     

    
      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

    

     

    (ii) As
      to any
      such Indemnity Claim which involves a third-party, the Indemnifying Party shall
      control the defense, compromise or settlement thereof, and the Indemnified
      Party
      shall be entitled to participate in the defense, compromise or settlement of
      any
      such matter through the Indemnified Party’s own attorneys and at its own
      expense; provided,
      however,
      that the
      fees and expenses of the Indemnified Party’s counsel shall be at the expense of
      the Indemnified Party unless (A) the Indemnifying Party has agreed in writing
      to
      pay such fees and expenses, (B) the Indemnifying Party has failed to assume
      the
      defense and employ counsel as provided herein or (C) a claim shall have been
      brought or asserted against the Indemnifying Party as well as the Indemnified
      Party, and such Indemnified Party shall have been advised in writing by counsel
      that there may be one or more factual or legal defenses available to it that
      are
      in conflict with those available to the Indemnifying Party, in which case such
      co-counsel shall be at the expense of the Indemnifying Party. The Indemnified
      Party shall provide such cooperation and such access to its books, records
      and
      properties as the Indemnifying Party shall reasonably request with respect
      to
      such matters and the Parties hereto agree to render each other such assistance
      as they may reasonably require of each other in order to ensure the proper
      and
      adequate defense thereof. An Indemnifying Party shall not make any settlement
      of
      any Indemnity Claims without the written consent of the Indemnified Party,
      which
      consent shall not be unreasonably withheld, other than (i) Indemnity Claims
      strictly for monetary damages as to which the Indemnifying Party agrees to
      be
      responsible or (ii) a settlement which includes as an unconditional term thereof
      the giving by the claimant or plaintiff to such Indemnified Party of a release
      from all liability with respect to such Indemnity Claim. Without limiting the
      generality of the foregoing, it shall not be deemed unreasonable to withhold
      consent to a settlement involving injunctive or other equitable relief against
      the Indemnified Party or its assets, employees or business.

     

    (d) Survival.
      All
      representations and warranties in this Agreement and their related schedules
      shall terminate upon the 12-month anniversary of the Closing Date; provided,
      however,
      that (a)
      the representations and warranties in Section 5 (e) (Tax Matters and Tax
      Returns), Section 5 (r) (Compliance with Law), Section 5(y) (Environmental
      Matters) and their related schedules shall survive until sixty (60) days after
      the date as of which the applicable statutes of limitations with respect to
      such
      matters expire and (b) the representations and warranties in Section 5 (a)
      (Organization; Qualification and Corporate Power), Section 5(b) (Binding
      Effect), Section 5 (c) (Authorized Capital Stock), Section 5 (g) (Title to
      Properties) and Section 5 (z) (Brokers) and their related schedules shall
      survive indefinitely and not terminate.

     

    (e) Payment
      and Satisfaction. 

    


    (i) Any
      Damages for which the Sellers shall be liable to the Buyer Indemnified Parties
      (other than for fraud) shall be paid and satisfied from either (A) the Escrow
      Shares with the value of such shares to be determined as the average of the
      closing price of Buyer Stock for the fifteen consecutive
      trading days ending one business day prior to the date of assertion of a claim
      for Damages or (B) the Shareholders’ SRED Portion, at the Sellers’ discretion,
      provided, however, that to the extent that either the Escrow Shares or the
      Shareholders’ SRED Portion shall be exhausted, any Damages shall be satisfied
      from whichever component still remains. Where indemnification for Damages is
      claimed from more than one Seller, such election shall be determined on behalf
      of all Sellers by any two of Covington Capital Corporation, BDC Capital Inc.
      and
      Tech Capital II L.P. in accordance with the provisions of the Escrow
      Agreement.

     

    
      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

    

     

    (ii) 
      The
      parties hereto agree and acknowledge that the Escrow Shares and the
      Shareholders’ SRED Portion shall be the sole and exclusive source of recovery by
      the Buyer Indemnified Parties and shall limit any other remedies available
      to
      the Buyer Indemnified Parties hereunder or under any applicable law for the
      payment of or in respect of any claims arising hereunder, except that no such
      limitation shall apply in the event of fraud by any Sellers or the
      Company.

     

    SECTION
      12. Miscellaneous.
      

    


    (a) Successors
      and Assigns.
      The
      rights and obligations of a Seller under this Agreement shall not be assignable
      by such Seller without the prior written consent of Buyer. Nothing herein
      expressed or implied is intended to confer upon any person, other than the
      parties hereto or their respective successors, heirs and legal representatives,
      any rights, remedies, obligations or liabilities under or by reason of this
      Agreement.

    


    (b) Extensions,
      Waivers and Amendments.
      The
      Sellers (on their own behalf or by any agent) and Buyer, may, by written
      agreement, (i) extend the time for the performance of any of the obligations
      or
      other acts of the parties hereto, (ii) waive any inaccuracies in the
      representations and warranties contained in this Agreement or in any docu-ments
      delivered pursuant to this Agreement, (iii) waive compliance with or modify
      any
      of the agreements contained in this Agreement and (iv) waive or modify
      performance of any of the obligations of any of the parties to this
      Agreement.

    


    (c) Notices.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given as hereinafter
      described (i) if given by personal delivery, then such notice shall be deemed
      given upon such delivery, (ii) if given by telecopier, then such notice shall
      be
      deemed given upon receipt of confirmation of complete transmittal, (iii) if
      given by mail, then such notice shall be deemed given upon the earlier of (A)
      receipt of such notice by the recipient or (B) three days after such notice
      is
      deposited in first class mail, postage prepaid, and (iv) if given by an
      internationally recognized overnight air courier, then such notice shall be
      deemed given one business day after delivery to such carrier. Any party and
      any
      representative designated below may, by notice to the others, change its address
      for receiving such notices. 


    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      Address
        for notices to Buyer:

      


      Acorn
        Energy, Inc.

      4
        West
        Rockland Road

      Montchanin,
        DE 19710

      Attn:
        Chief Executive Officer

      
        	
              	Fax:	
                (302)
                  994-3086

              


      

      
        	
              	Phone:	
                (302)
                  656-1708

              


      

       

    

    with
      a
      copy (which shall not constitute notice) to:

    


    Sheldon
      Krause, Esq.

    Eilenberg
      Krause & Paul LLP

    11
      East
      44th
      Street

    New
      York,
      New York 10017

    
      	
            	Fax:	
              (212)
                986-2399

            


    

    
      	
            	Phone:	
              (212)
                986-9700

            


    

    


    Address
      for notices to the Company:

    


    Coreworx
      Inc.

    22
      Frederick Street, Suite 800

    Kitchener,
      OntarioN4H 6M6

    Attn:
      Chief Executive Officer

    
      	
            	Fax:	
              (519)
                772-3306

            


    

    
      	
            	Phone:	
              (519)
                772-3187

            


    

     

    with
      a
      copy (which shall not constitute notice) to:

    


    Vaughn
      MacLellan

    Wildeboer
      Dellelce LLP

    Suite
      800, Wildeboer Dellelce Place

    365
      Bay
      Street

    Toronto,
      Ontario M5H 2VI

    
      	
            	Fax:	
              (416)
                361-1790

            


    

    
      	
            	Phone:	
              (416)
                361-2932

            


    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    
Addresses
      for notices to the Sellers:

    


    To
      the
      address set forth in Exhibit A and Exhibit B

     

    with
      a
      copy (which shall not constitute notice) to:

    


    Vaughn
      MacLellan

    Wildeboer
      Dellelce LLP

    Suite
      800, Wildeboer Dellelce Place

    365
      Bay
      Street

    Toronto,
      Ontario M5H 2VI

    
      	
            	Fax:	
              (416)
                361-1790

            


    

    
      	
            	Phone:	
              (416)
                361-2932

            


    

     

    (d) Governing
      Law.
      This
      Agreement, including the exhibits hereto, contains the entire agreement between
      the parties hereto with respect to the transaction contemplated hereby and
      supersedes all prior oral and written agreements (including, without limitation,
      the Letter of Intent dated February 22, 2008 and amended on March 7, 2008,
      March
      11, 2008 and June 3, 2008, between the Company and Buyer), memoranda,
      understandings and undertakings between the parties hereto relating to the
      subject matter hereof. This Agreement shall be governed by, and construed in
      accordance with, the laws of the State of New York without regard to principles
      of conflicts of law.

    


    (e) Severability
      Clause.
      In case
      any provision in this Agreement shall be invalid, illegal or unenforceable,
      the
      validity, legality and enforceability of the remaining provisions hereof shall
      not in any way be affected or impaired thereby.

    


    (f) Headings.
      The
      section and subsection headings used herein are for convenience of reference
      only, are not a part of this Agreement and are not to affect the construction
      of, or be taken into consideration in interpreting, any provision of this
      Agreement.

    


    (g) Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original, but all of which together shall consti-tute one and
      the same instrument.

     

    [Remainder
      of this page left intentionally blank]


    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed and delivered, as of the day and year first written above.

    
       

      
        	
                ACORN
                  ENERGY, INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
                /s/

              	
                 

              
	 	
                John
                  A. Moore 

              	
                 

              
	
                 

              	
                President
                  and Chief Executive Officer 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                COREWORX
                  INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
                /s/

              	
                 

              
	 	
                John
                  Gillberry 

              	
                 

              
	
                 

              	
                Chief
                  Financial and Operating Officer

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                COVINGTON
                  VENTURE FUND INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
                /s/

              	
                 

              
	 	
                Name:
                  

              	
                 

              
	
                 

              	
                Title:
                  

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                IVEY-ROBARTS
                  CSBIF I INC., IVEY-ROBARTS CSBIF II INC. and COVINGTON STRATEGIC
                  CAPITAL
                  FUND INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
                /s/

              	
                 

              
	 	
                Name:

              	
                 

              
	
                 

              	
                Title:
                  

              	
                 

              


      

    

     

    
      
        	
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                JOHN
                  GILLBERRY

              
	
                Name:

              	
                 

              	
                 

              


      

       

      
        	
                /s/

              	
                 

              	
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                RAY
                  SIMONSON

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        
          
          

        

        
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                BDC
                  CAPITAL INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
                /s/

              	
                 

              
	
                 

              	
                Name:
                  

              	
                 

              
	
                 

              	
                Title:

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
                /s/

              	
                 

              
	
                 

              	
                Name:
                  

              	
                 

              
	
                 

              	
                Title:

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                TECH
                  CAPITAL II L.P. BY ITS GENERAL PARTNER TECH CAPITAL II
                  INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
                /s/

              	
                 

              
	
                 

              	
                Name:

              	
                 

              
	
                 

              	
                Title:
                  

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                ROYNAT
                  CAPITAL INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
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                /s/

              	
                 

              
	
                 

              	
                Name:

              	
                 

              
	
                 

              	
                Title:
                  

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                BEST
                  TOTAL RETURN FUND INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
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                Name:

              	
                 

              
	
                 

              	
                Title:

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                VERDEXUS
                  HOLDINGS I INC.

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
                Per:

              	
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                Name:

              	
                 

              
	
                 

              	
                Title:
                  

              	
                 

              


      

       

      
        
          	
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                  SIGNATURE
                    OF WITNESS

                	
                   

                	
                  RANDALL
                    HOWARD 

                
	
                  Name:

                	
                   

                	
                   

                


        

         

      

      
        
          
          

        

        
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                PAUL
                  SUNDERLAND

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                LESLIE
                  SLATER

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                SCOTT
                  O’NEILL

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
                /s/

              
	
                SIGNATURE
                  OF WITNESS

              	
                 

              	
                JACKIE
                  MOORCROFT

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
                /s/

              
	
                SIGNATURE
                  OF WITNESS

              	
                 

              	
                SUSAN
                  BROWN

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                STEPHEN
                  GRINYER

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        
          
          

        

        
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                /s/

              
	
                SIGNATURE
                  OF WITNESS

              	
                 

              	
                SEAN
                  GOODMAN

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
                /s/

              
	
                SIGNATURE
                  OF WITNESS

              	
                 

              	
                SAMIR
                  IDRIS

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                VAN
                  GARABET

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                JEFFREY
                  ZHANG

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                /s/

              	
                 

              	
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                SIGNATURE
                  OF WITNESS

              	
                 

              	
                CESAR
                  ACOSTA 

              
	
                Name:

              	
                 

              	
                 

              


      

      


      
        	
                SOFTWARE
                  INNOVATION ASA

              
	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 

              
	
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                Name:

              	
                 

              
	
                 

              	
                Title:

              	
                 

              


      

       

      
        
          
          

        

        
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