----

----

**ASSET      PURCHASE AGREEMENT**

----

----

----

**TABLE      OF CONTENTS**

| **ARTICLE                  I**    | **INTERPRETATION**                                                                             |
|-----------------------------------|------------------------------------------------------------------------------------------------|
| **ARTICLE                  II**   | **PURCHASE                  AND SALE OF PURCHASED                  ASSETS**                    |
| **ARTICLE                  III**  | **PURCHASE                  PRICE**                                                            |
| **ARTICLE                  IV**   | **ASSUMPTION                  OF LIABILITIES**                                                 |
| **ARTICLE                  V**    | **REPRESENTATIONS                  AND WARRANTIES OF THE                  VENDOR**             |
| **ARTICLE                  VI**   | **REPRESENTATIONS                  AND WARRANTIES OF THE                  PURCHASER**          |
| **ARTICLE                  VII**  | **SURVIVAL                  OF DECLARATIONS, REPRESENTATIONS AND                  WARRANTIES** |
| **ARTICLE                  VIII** | **COVENANTS**                                                                                  |
| **ARTICLE                  IX**   | **CONDITIONS                  OF CLOSING**                                                     |
| **ARTICLE                  X**    | **CLOSING                  DATE AND TRANSFER OF                  POSSESSION**                  |
| **ARTICLE                  XI**   | **INDEMNIFICATION**                                                                            |
| **ARTICLE                  XII**  | **DISPUTE                  RESOLUTION**                                                        |
| **ARTICLE                  XIII** | **MISCELLANEOUS**                                                                              |

----

**THIS      AGREEMENT**

**BETWEEN:**

**CONSULTRONICS      LIMITED**

**EXFO      ELECTRO-OPTICAL ENGINEERING INC. **

**WITH      THE INTERVENTION OF :**

**ANDRE      REKAI**

**CONSULTRONICS      EUROPE LIMITED**

**CONSULTRONICS      DEVELOPMENT KFT**

**CONSULTRONICS      INC**
**.**

----

Table          of Contents

**THIS      AGREEMENT WITNESSES THAT**

**ARTICLE      I**

**INTERPRETATION**

*1.1*
*Defined      Terms*

| (a)   | "Act"                means the *Business                Corporations Act*                (Ontario) as in effect on the date                hereof; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | "Affiliate"                has the meaning given to that term in the                Act; |
|-----------------|------------------------------------------------------------------------------------------|

| (c)   | "Agreement"                means this Asset Purchase Agreement and all amendments made in writing                by                the parties hereto, "herein" and similar expressions mean and refer                to                this Agreement and not to any particular Article, section, subsection                or                Schedule; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | "Associate"                has the meaning given to that term in the                Act; |
|-----------------|------------------------------------------------------------------------------------------|

| (e)   | "Assumed                Liabilities" has the meaning set out in section 4.1; |
|-----------------|------------------------------------------------------------------------------|

| (f)   | "Audited                Financial Statements" means the audited consolidated financial statements                of the Vendor as at and for the financial year ended May 31, 2005,                including the notes thereto and the report of the Vendor's auditors                thereon, copies of which are annexed hereto as Schedule                1; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | "Business                Day" means any day, other than a Saturday or a Sunday, on which the                main                branch of HSBC Bank Canada in Toronto, Ontario is open for                business; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | "Claim"                has the meaning set out in section 11.3; |
|-----------------|-----------------------------------------------------------------|

| (i)   | "Closing"                has the meaning set out in section 10.2; |
|-----------------|-------------------------------------------------------------------|

| (j)   | "Closing                Audited Financial Statements" has the meaning set out in subsection                3.3(a); |
|-----------------|--------------------------------------------------------------------------------------------------------------------|

| (k)   | "Closing                Date" means January 24th,                2006, or such other date as the Vendor and the Purchaser may mutually                determine; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (l)   | "Closing                Statements" has the meaning set out in subsection 3.3(a); |
|-----------------|-----------------------------------------------------------------------------------|

----

Table          of Contents

| (m)   | "Contract"                means any agreement, indenture, contract, lease, including, without                limitation, the Leases, deed of trust, licence, option, instrument                or                other commitment, whether written or                oral; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (n)   | "Employee                Plans" has the meaning set out in section 5.29; |
|-----------------|--------------------------------------------------------------------------|

| (o)   | "Employees"                means those salaried and hourly paid employees of the Vendor and                the                Subsidiaries who are employed in the Purchased Business immediately                prior                to the Time of Closing; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (p)   | "Encumbrance"                means any encumbrance, lien, charge, hypothec, pledge, mortgage,                title                retention agreement, security interest of any nature, adverse claim,                exception, reservation, easement, right of occupation, any matter                capable                of registration against title, option, right of pre-emption, privilege                or                any Contract to create any of the                foregoing; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (q)   | "ETA"                means Part IX of the *Excise                Tax Act*                (Canada), as amended from time to                time; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| (r)   | "Excluded                Assets" has the meaning set out in section 2.2; |
|-----------------|--------------------------------------------------------------------------|

| (s)   | "Excluded                Liabilities" has the meaning set out in section 4.1; |
|-----------------|-------------------------------------------------------------------------------|

| (t)   | "Existing                Mortgage" means the Charge/Mortgage registered in the Land Registry                Office                for the Land Titles Division of York Region (No. 65), as instrument                No.YR355014; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (u)   | "Financial                Statements" means the Audited Financial Statements and the Interim                Financial Statements; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| (v)   | “Former                Employees” has the meaning set out in subsection 8.9(b) |
|-----------------|--------------------------------------------------------------------------------------------|

| (w)   | "Governmental                Authority" means any governmental or regulatory authority, body,                agency or                department, whether foreign or domestic federal, provincial or                municipal; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (x)   | "GST"                means all taxes payable under the ETA or under any provincial legislation                similar to the ETA, and any reference to a specific provision of                the ETA                or any such provincial legislation shall refer to any successor provision                thereto of like or similar effect; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (y)   | "Indemnified                Party" has the meaning set out in section 11.3; |
|-----------------|-----------------------------------------------------------------------------|

| (z)   | "Indemnifying                Party" has the meaning set out in section 11.3; |
|-----------------|------------------------------------------------------------------------------|

| (aa)   | "Intellectual                Property" has the meaning set out in subsection 2.1(j); |
|------------------|--------------------------------------------------------------------------------------|

----

Table          of Contents

| (bb)   | "Independent                Auditor" has the meaning given to such term in subsection 3.3(b); |
|------------------|-----------------------------------------------------------------------------------------------|

| (cc)   | "Interim                Financial Statements" means the unaudited consolidated financial                statements of the Vendor and the unaudited non-consolidated financial                statements of the Vendor, Consultronics Europe and Consultronics                Hungary                as at and for the period from June 1st,                2005 to November 30th,                2005, copies of which are annexed hereto as Schedule                2;                in the event the Closing is delayed, such financial statements will                be for                the period from June 1st,                2005 to the last day of the month preceding the                Closing; |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (dd)   | "Laws"                means all applicable laws, by-laws, rules, regulations, orders,                ordinances, protocols, codes, guidelines, policies, notices, directions                and judgments or other requirements of any Governmental                Authority; |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ee)   | "Leased                Property" has the meaning set out in section 5.7; |
|------------------|--------------------------------------------------------------------------|

| (ff)   | "Leases"                has the meaning set out in section 5.10; |
|------------------|------------------------------------------------------------------|

| (gg)   | "Licences"                has the meaning set out in section 5.16; |
|------------------|--------------------------------------------------------------------|

| (hh)   | "Losses"                means, in respect of any matter, all claims, demands, proceedings,                losses,                damages, liabilities, deficiencies, costs and expenses (including,                without                limitation, all legal and other professional fees and disbursements,                interest, penalties and amounts paid in settlement) arising directly                or                indirectly as a consequence of such                matter; |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | "Objection                Notice" has the meaning given to such term in subsection 3.3(b); |
|------------------|--------------------------------------------------------------------------------------------|

| (jj)   | "Permitted                Encumbrances" means all the Encumbrances described and disclosed                in                Schedule                12; |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (kk)   | "Purchase                Price" has the meaning set out in section 3.1; |
|------------------|-------------------------------------------------------------------------|

| (ll)   | "Purchased                Assets" has the meaning set out in section 2.1; |
|------------------|---------------------------------------------------------------------------|

| (mm)   | "Purchased                Business" means the business carried on by the Vendor and each of                the                Subsidiaries consisting primarily of the design, manufacture and                marketing                of telecommunications and data communications test equipment, and                turnkey                network monitoring solutions for telecommunications access                testing; |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (nn)   | "Real                Property" has the meaning set out in section 5.7; |
|------------------|------------------------------------------------------------------------|

| (oo)   | "Remaining                Employees" has the meaning set out in subsection 8.9(a); |
|------------------|------------------------------------------------------------------------------------|

| (pp)   | "Replacement                Plans" has the meaning set out in section 8.10; |
|------------------|-----------------------------------------------------------------------------|

----

Table          of Contents

| (qq)   | "Smart                Grant" means the grant granted by the UK Secretary of State for Trade                and                Industry to Consultronics Europe dated August 15th,                2003 and accepted on August 20th,                2003. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (rr)   | "Subsidiaries"                means Consultronics Europe and Consultronics                Hungary; |
|------------------|----------------------------------------------------------------------------------------------------|

| (ss)   | "Tax"                or "Taxes" means any federal, provincial, state, local, foreign or                other                income, gross receipts, profits, franchise, transfer, sales, use,                customs,                payroll, occupation, health, property, excise, GST or other taxes,                fees,                duties, assessments, withholdings or governmental charges of any                nature,                including employment insurance (including interest, penalties and                additions to such taxes or                charges); |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (tt)   | "Tax                Act" means the *Income                Tax Act*                (Canada), as amended from time to                time; |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| (uu)   | "Time                of Closing" means 10:00 a.m. Toronto time on the Closing Date, or                such                other time on the Closing Date as the Vendor and the Purchaser may                mutually determine; |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (vv)   | "Transaction                Documents" has the meaning set out in section 1.6; |
|------------------|--------------------------------------------------------------------------------|

| (ww)   | "Transferred                Employees" has the meaning set out in section 8.10; |
|------------------|---------------------------------------------------------------------------------|

| (xx)   | "Unaudited                Financial Statements" means                the unaudited non-consolidated financial statements of the Vendor,                Consultronic Europe and Consultronics Hungary as at and for the financial                year ended May 31, 2005, including the notes thereto,                a                copy of which is annexed hereto as Schedule                27;                and |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (yy)   | "Working                Capital" means the aggregate of consolidated accounts receivable,                consolidated prepaids, consolidated inventory, consolidated deferred                costs, consolidated current liabilities (including any income tax                payable                by the Subsidiaries but excluding any income tax liabilities of the                Vendor), consolidated deferred revenue and all cash and cash equivalents                as per the Subsidiaries’ audited financial statements as of the Closing                Date. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*1.2*
*Currency*

*1.3*
*Sections      and Headings*

----

Table          of Contents

*1.4*
*Number,      Gender and Persons*

*1.5*
*Accounting      Principles*

*1.6*
*Entire      Agreement*

*1.7*
*Time      of Essence*

*1.8*
*Construction*

*1.9*
*Applicable      Law*

*1.10*
*Successors      and Assigns*

----

Table          of Contents

*1.11*
*Amendments      and Waivers*

*1.12*
*Knowledge*

*1.13*
*Schedules*

| Schedule                  1     |   | Audited                  Financial Statements    |
|------------------------------------------------|--------|-------------------------------------------------------|
| Schedule                  2     |   | Interim                  Financial Statements    |
| Schedule                  3     |   | Owned                  and Leased Real Property  |
| Schedule                  4     |   | Machinery                  and Equipment         |
| Schedule                  5     |   | Vehicles                                         |
| Schedule                  6     |   | Material                  Contracts              |
| Schedule                  7     |   | Employee                  Matters                |
| Schedule                  8     |   | Licences                  and Permits            |
| Schedule                  9     |   | Intellectual                  Property           |
| Schedule                  10    |   | Allocation                  of Purchase Price    |
| Schedule                  11    |   | Location                  of Assets              |
| Schedule                  12    |   | Permitted                  Encumbrances          |

| Schedule                  13    |   | Insurance                  Policies |
|------------------------------------------------|--------|-------------------------------------|

----

Table            of Contents

|                                           |   |                                                                                        |
|------------------------------------------------|--------|---------------------------------------------------------------------------------------------|
| Schedule                  14    |   | Legal                  and Regulatory Proceedings                                      |
| Schedule                  15    |   | Regulatory                  Consents                                                   |
| Schedule                  16    |   | Third                  Party Consents                                                  |
| Schedule                  17    |   | Major                  Customers                                                       |
| Schedule                  18    |   | Product                  Warranties                                                    |
| Schedule                  19    |   | Affiliates                                                                             |
| Schedule                  20    |   | Prepaid                  Expenses                                                      |
| Schedule                  21    |   | Purchase                  Orders Issued for Goods or Services Not Received at Closing  |
| Schedule                  22    |   | Backlog                  of Purchase Orders Received and Not Fulfilled at Closing      |
| Schedule                  23    |   | Lease                  of Equipments, Machinery, Cars and Other Fixed Assets           |
| Schedule                  24    |   | Environment                                                                            |
| Schedule                  25    |   | Bank                  accounts of the Subsidiaries                                     |
| Schedule                  26    |   | Software                  Licences                                                     |
| Schedule                  27    |   | Unaudited                  Financial Statements                                        |
| Schedule                  28    |   | Purchased                  Assets Related to US Activities                             |
| Schedule                  29    |   | Purchase                  Orders - Embedded Planets                                    |
| Schedule                  30    |   | Post-closing                  Assistance to the Vendor                                 |
|                                           |   |                                                                                        |

**ARTICLE      II**

**PURCHASE      AND SALE OF PURCHASED ASSETS**

*2.1*
*Purchased      Assets*

----

Table          of Contents

| *(a)  * | *Real                Property*.                All real property, together with the buildings, structures, improvements                and appurtenances situated thereon, including, without limitation,                the                real property described in Schedule                3; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(b)  * | *Leases                of Real Property*.                All rights (whether as lessee or lessor) under leases of real property,                together with all leasehold improvements relating thereto, including,                without limitation, all rights under the leases described in Schedule                3; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(c)  * | *Machinery                and Equipment*.                All machinery, equipment, fixtures, furniture, furnishings, parts,                tooling                melds, dies, jigs or patterns and other fixed assets associated with                the                ongoing operation of the Purchased Business, whether or not located                in or                on the premises of the Vendor or elsewhere, including, without limitation,                the machinery and equipment described in Schedule                4; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(d)  * | *Vehicles*.                All trucks, cars and other vehicles, including, without limitation,                the                vehicles described in Schedule                5; |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(e)  * | *Inventories*.                All inventories, including, without limitation, raw materials,                work-in-process, finished goods and replacement                parts; |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(f)  * | *Accounts                Receivable*.                All accounts receivable, trade accounts, notes receivable, book debts                and                other debts due or accruing due to the Vendor and the benefit of                all                security for such accounts, notes and                debts; |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(g)  * | *Prepaid                Expenses*.                All prepaid expenses, deferred costs and expenses relating to the                Purchased Business and all other items relating to the Purchased                Business                of the type classified as current assets in accordance with generally                accepted accounting principles, including those expenses and costs                listed                in Schedule                20; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(h)  * | *Agreements*.                All rights under leases of personal property, orders or contracts                for the                provision of goods or services (whether as buyer or seller), distribution                and agency agreements, employment and collective agreements, agreements                and instruments relating to employee pension or benefit plans and                other                Contracts not otherwise referred to in this section 2.1,                including, without limitation, the Contracts described in Schedule                6                and Schedule                7; |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(i)  * | *Licences                and Permits*.                All licences, permits, approvals, consents, registrations, certificates                and other authorizations of any kind required to conduct the Purchased                Business, including, without limitation, those described in Schedule                8; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| *(j)  * | *Intellectual                Property*.                All trade or brand names, business names, domain names, trade marks,                trade                mark registrations and applications, service marks, service mark                registrations and applications, copyrights, copyright registrations                and                applications, patents, patent registrations and applications and                other                patent rights (including any patents issued on such applications                or                rights), trade secrets, proprietary manufacturing information, custom                software, software not generally available to the public used in                connection with the Purchased Business, source codes, fully annotated,                for                all custom software (including all software not generally available                to the                public used in connection with the Purchased Business) and know-how,                equipment and parts lists and descriptions, instruction manuals,                inventions, inventors' notes, research data, unpatented blue prints,                drawings, logos and designs, formulae, processes, technology and                other                intellectual property, together with all rights under licences, technology                transfer agreements and other agreements or instruments relating                to any of                the foregoing (collectively, "Intellectual Property"), including,                without                limitation, the trade marks, copyrights, patents, licences and agreements                described in Schedule                9; |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(k)  * | *Computer                Hardware and Software*.                All computer hardware and software associated with the ongoing operation                of the Purchased Business, including all rights under licences and                other                agreements or instruments relating                thereto; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(l)  * | *Books                and Records*.                All books and records (other than those required by Laws to be retained                by                the Vendor, copies of which will be provided to the Purchaser no                later                than on Closing Date), including without limitation, customer lists,                sales                records, price lists and catalogues, sales literature, advertising                material, manufacturing data, production records, employee manuals,                personnel records, supply records, inventory records and correspondence                files (together with, in the case of any such information that is                stored                electronically, the media on which the same is                stored); |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(m)  * | *Securities.*All                shares and other securities held by the Vendor in Affiliates listed                in                Schedule                19; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(n)  * | *Goodwill*.                All goodwill, (including all rights in every telephone number used                by the                Vendor) together with the exclusive right for the Purchaser to represent                itself as carrying on the Purchased Business in succession to the                Vendor                and the right to use any words indicating that the Purchased Business                is                so carried on, including the exclusive right to use the name                "Consultronics", or any variation thereof, as part of the name or                style                under which the Purchased Business or any part thereof is carried                on by                the Purchaser; and |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(o)  * | *Other                Assets*.                Unless expressly excluded in this Agreement, all other or additional                privileges, rights, interests and assets of the Vendor that are used                in                the Purchased Business. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

*2.2*
*Excluded      Assets*

| *(a)  * | *Cash*.                All cash and cash equivalents of the Vendor (except for cash and cash                equivalents of the Subsidiaries); |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| *(b)  * | *Income                Taxes*.                All income tax instalments paid by the Vendor and the right to receive                any                refund of income taxes paid by the Vendor, however any income tax                liability will be assumed by the Vendor and excluded from the Working                Capital; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(c)  * | *Investment                Tax Credits*.                All federal and provincial tax credits of the                Vendor; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------|

| *(d)  * | *Shares                of Consultronics USA.*All                issued and outstanding shares of Consultronics USA provided that                on the                Closing Date, all Contracts to which Consultronics USA is a party                are                assigned to the Purchaser; and |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(e)  * | *Insurance.*All                rights, titles and interests of the Vendor into the Key Man Insurance                -                Andre Rekai, the Accounts Receivable Insurance - Consultronics Limited                and                the directors and officers liability insurance                policy. |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE      III** 

**PURCHASE      PRICE**

*3.1*
*Purchase      Price*

| (a)   | an                amount equal to the Working Capital of the Vendor estimated by the                parties                to be an aggregate amount of $3,000,000, such amount to be adjusted                on the                basis of the Closing Audited Financial                Statements; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | an                amount of $16,500,000; and |
|-----------------|----------------------------------------------|

| (c)   | an                amount equal to the principal amount outstanding under the Existing                Mortgage together with all accrued interest up to and including the                Closing Date, plus an amount equal to two (2) months interest payable                as a                penalty on the prepayment of the Existing Mortgage; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (d)   | any                amount due by Consultronics Hungary, as the case may be, to the Vendor,                as                of the Closing Date, plus interest thereon, as the case may                be. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*3.2*
*Closing      Date Payment*

| (a)   | An                amount of two                million dollars ($2,000,000) shall                be deposited at Closing with the Purchaser’s legal counsel, in escrow, in                order to ensure that all representations and warranties of the Vendor                are                true and correct and the agreements with the Purchaser are or will                be                performed. Seventy-five percent (75%) of the said sum shall be released                twelve (12) months following the Closing Date and the balance shall                be                released eighteen (18) months following the Closing Date unless,                in the                meantime, the Purchaser has presented to the Vendor a Claim, in which                case, the Purchaser shall be entitled to retain an amount equivalent                to                the amount of the Claim until such Claim is settled in accordance                with                Article XI hereof; and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the                balance of the Purchase Price shall be paid by certified cheque or                bank                draft payable to or to the order of the Vendor or, if the Vendor                so                directs at least two Business Days prior to the Closing Date, by                way of                electronic transfer of immediately available funds to such bank account                in                Toronto, Ontario as the Vendor may specify in such direction, subject                to                registration of the deed of sale for the Real Property and entering                of                such transfer, in the Land Titles Office, without any adverse entry                other                than Permitted Encumbrances. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*3.3*
*Closing      Audited Financial Statements*

| *(a)  * | *Closing                Statements.*                As                soon as possible, but not later than 90 days following the Closing                Date,                the Vendor's auditors shall deliver to the Purchaser, at Vendor’s expense,                audited consolidated financial statements (the "Closing Audited Financial                Statements") of the Vendor as of the close of business on the day                immediately prior to the Closing Date, prepared in accordance with                generally accepted accounting principles and Vendor’s accounting                practices, applied on a basis consistent with the Audited Financial                Statements together with a schedule setting out the adjustment amount,                if                any, calculated in accordance with section 3.4                (that schedule and the Closing Audited Financial Statements, collectively,                the "Closing Statements"). For the purpose of preparing the Closing                Statements, the Purchaser shall grant to the Vendor’s authorized                representatives reasonable access to relevant records, facilities                and                personnel of the Purchased Business. The Vendor and the Purchaser                shall                co-operate fully with each other in the preparation of the Closing                Statements. |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| *(b)  * | *Approval                of Closing Statements*.                The                Purchaser shall have 30 days from receipt of the Closing Statements                within                which to review the Closing Statements. For the purposes of this                review,                the Vendor shall permit the Purchaser and the Purchaser's authorized                representatives to examine the working papers, schedules and other                documents and information used or prepared by the Vendor or the Vendor's                auditors in connection with the preparation of the Closing Statements.                The                Purchaser may dispute any of the items in the Closing Statements                by                written notice (an "Objection Notice") to the Vendor within the same                30                days. If the Purchaser has not delivered an Objection Notice to the                Vendor                within this 30 day period, the Purchaser shall be deemed to have                accepted                the Closing Statements. If the Purchaser delivers an Objection Notice,                the                Vendor and the Purchaser shall attempt to resolve all of the items                in                dispute within 15** **days                of receipt of the Objection Notice. If all items in dispute are not                resolved within this 15** **day                period, such unresolved items will be submitted to an independent                third                party arbitrator, which shall be a national audit firm (the "Independent                Auditor"), appointed together by the Vendor and the Purchaser to                resolve                the remaining items in dispute.                In                case the parties fail to select the Independent Auditor within 15                days,                the Independent Auditor shall be appointed by a judge of the Superior                Court of Justice of Ontario in the Toronto Region, upon application                of                either party. |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Each                party shall furnish to the Independent Auditor those working papers,                schedules and other documents, and information relating to the items                in                dispute, that are available to that party or its auditors as the                Independent Auditor may require. The Independent Auditor shall be                instructed that time is of the essence in proceeding with its                determination of any dispute, and the decision of the Independent                Auditor                with respect to any item in dispute shall be in writing and shall                be final                and binding on the Vendor and the Purchaser with no rights of challenge,                review or appeal to the courts in any manner. The Independent Auditor,                in                making its determination of any dispute, does not act as an arbitrator                and                is not required to engage in a judicial inquiry worked out in a judicial                manner. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | On                agreement or decision, as the case may be, with respect to all items                in                dispute, the Closing Statements shall be deemed to be amended as                may be                necessary to reflect the agreement or the decision, as the case may                be. In                this event, references in this Agreement to the Closing Statements                shall                be references to the Closing Statements, as so                amended. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | The                fees and expenses of the Independent Auditor shall be borne equally                by the                Vendor, on the one hand, and the Purchaser, on the other hand, but                each                party shall be responsible for its own costs and                expenses. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*3.4*
*Adjustment      of Closing Date Payment*

| (a)   | If                the Working Capital of the Vendor, as set out in the Closing Audited                Financial Statements (as accepted or amended under section 3.3 above)                ,                is: |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (i)   | less                than $3,000,000, the Purchase Price shall be reduced;                or |
|-----------------|---------------------------------------------------------------------------------------------|

| (ii)   | more                than $3,000,000, the Purchase Price shall be                increased; |
|------------------|--------------------------------------------------------------------------------------------|

| (b)   | if                any Purchased Asset(s) (including the Prepaid Expenses) cannot be                transferred to the Purchaser, the Purchase Price shall be reduced                by the                book value assigned to such Purchased Assets in the preparation of                the                Closing Audited Financial Statements, which book values shall be                set out                in the Schedule forming part of the Closing                Statements; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | in                determining the adjustment to the Purchase Price for purposes of                the                schedule forming part of the Closing Statements, any reduction under                subsection (b) shall be set off against any increase under clause                (a)(ii);                and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | the                total (or net, as the case may be) amount of the increase or reduction                in                the Purchase Price shall be paid by the Purchaser to the Vendor,                or by the                Vendor to the Purchaser, as the case may be, within two (2) Business                Days                after the Closing Statements are finalized by deemed acceptance,                agreement                or arbitration under section 3.3, by way of electronic transfer of                immediately available funds to such bank account in Canada as the                payee                specifies. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*3.5*
*Allocation      of Purchase Price*

*3.6*
*ETA      Election*

*3.7*
*Transfer      Taxes*

----

Table          of Contents

*3.8*
*Income      Tax Election*

*3.9*
*Tax      Amounts Payable by Customers*

*3.10*
*Inter-company      Accounts*

| (a)   | The                Purchaser will ensure that any amount referred to in section 3.1(d)                due by Consultronics Hungary to the Vendor as of the Closing Date                will be                repaid by Consultronics Hungary to the Vendor within ten (10) business                days following the Closing Date. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | If,                as a result of the repayment or forgiveness of intercorporate loans                between the Vendor and Consultronics Europe, the amount of the tax                losses                available to Consultronics Europe is reduced, then the Purchase Price                shall be reduced by an amount equal                to: |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | the                amount of such reduction of tax                losses; |
|-----------------|---------------------------------------------------------------------------|

----

Table          of Contents

| (ii)   | the                effective UK tax rate which would apply to taxable income of Consultronics                Europe; |
|------------------|----------------------------------------------------------------------------------------------------------------------|

| (iii)   | two-thirds                (66.67%). |
|-------------------|-------------------------------------|

**ARTICLE      IV**

**ASSUMPTION      OF LIABILITIES**

*4.1*
*Assumption      of Certain Liabilities by the Purchaser*

| (a)   | the                Contracts described in Schedule                3,                Schedule                6,                Schedule                7                and Schedule                9; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the                licences, permits, approvals, consents, registrations, certificates                and                other authorizations described in Schedule                8; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the                agreements entered into by the Vendor for the provision of services                or                goods to the Vendor which are detailed in Schedule                21; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | the                agreements entered into by the Vendor for the sale of inventories                by the                Vendor or the provision of services by the Vendor after the Closing                Date                which are detailed in Schedule                22; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | the                outstanding balance due on the capital leases (current and long term)                as                reflected in the Closing Audited Financial                Statements; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | the                current liabilities as reflected in the Closing Audited Financial                Statements, excluding any income tax liabilities;                and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | warranty                claims in respect of products sold prior to the Closing Date, but                only to                the maximum number of units in respect of which a warranty reserve                is                included in the Closing Audited Financial                Statements. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (h)   | for                Taxes payable, collectible or remittable by the Vendor in respect                of the                Purchased Business and the Purchased Assets, provided that real property                and other Taxes levied with respect to the Purchased Assets for a                taxable                period that includes but does not end on the Closing Date shall be                apportioned between the Vendor and the Purchaser such that the Vendor                shall be liable for the amount determined by multiplying the Taxes                to be                apportioned by a fraction, the numerator of which is the number of                days in                the taxable period up to the Closing Date and the denominator of                which is                the total number of days in the period, and the Purchaser shall be                liable                for the balance; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | pursuant                to any default of the Vendor under any of the                Contracts; |
|-----------------|-------------------------------------------------------------------------------------------------|

| (j)   | pursuant                to any warranty claim for any manufactured products prior to the                Closing                Date, in excess of the number of units recorded as warranty reserve                in the                Closing Audited Financial Statements and in Schedule                18;                such warranty claims will be tracked based on the number of products                returned and the calculation of the claim will be based on the calculation                of the reserve as set of in Schedule                18;                and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | pursuant                to any other liabilities payable on or prior to the Closing Date                and not                included in the liabilities reflected in the Closing Audited Financial                Statements. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE      V**

**REPRESENTATIONS      AND WARRANTIES OF THE VENDOR**

*5.1*
*Organization*

----

Table          of Contents

*5.2*
*Authorization*

*5.3*
*No      Other Agreements to Purchase*

*5.4*
*No      Violation*

| (a)   | the                breach or violation of any of the provisions of, or constitute a                default                under, or conflict with or cause the acceleration of any obligation                of the                Vendor or any of the Subsidiaries                under: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | any                Contract to which the Vendor, the Vendor’s Party or any of the                Subsidiaries is a party or by which it is or its properties are bound;                nor |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | any                provision of the constating documents or by-laws or resolutions of                the                board of directors (or any committee thereof) or shareholders of                the                Vendor or any of the Subsidiaries;                nor |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (iii)   | any                judgment, decree, order or award of any court, governmental body                or                arbitrator having jurisdiction over the Vendor, the Subsidiaries                or                Vendor’s Party; nor |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | a                violation of any Laws to which the Vendor, the Vendor’s Party, the                Subsidiaries, the Purchased Assets or the Purchased Business are                subject,                other than the *Bulk                Sales Act*                (Ontario). |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*5.5*
*Sufficiency      and Condition of Purchased Assets*

*5.6*
*Title      to Personal Property*

*5.7*
*Location      of Real Property*

*5.8*
*Title      to Real and Leased Property*

| (a)   | the                Permitted Encumbrances constitute all of the Encumbrances, agreements,                indentures and other matters, including, without limitation, all                unregistered Encumbrances, that affect the Real Property or the Leased                Property, and the Vendor has not received any notice of default under,                or                termination of, any of the Permitted                Encumbrances; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (b)   | each                of the Real Property and the Leased Property (including all buildings,                improvements and fixtures) is in good state of repair and is fit                for its                present use, and with the exception that it may be advisable to replace                the heating and air conditioning units at the Concord facility in                the                Spring of 2006 (the costs of which shall not exceed $80,000), there                are no                faults in design, material or structural repairs, defects or replacements                that are necessary or advisable and, without limiting the foregoing,                there                are no repairs to, or replacements of, the roof or the mechanical,                electrical, heating, ventilating, air-conditioning, plumbing or drainage                equipment or systems that are necessary or advisable; and none of                the Real                Property or the Leased Property is currently undergoing any alteration                or                renovation nor is any such alteration or renovation                contemplated; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the                Real Property and the Leased Property, with regard to the location,                construction, occupancy and use thereof, are in compliance with all                of the                applicable Laws and regulations, municipal or otherwise; no buildings                or                other structures located on the Real Property encroaches upon any                land not                owned by the Vendor; no buildings or other structures located on                adjacent                property encroaches upon the Real Property; and there are no restrictive                covenants, municipal by-laws or other laws or regulations which in                any way                restrict or prohibit the use of the Real Property or Leased Property                or                the buildings or structures located thereon for the purposes for                which                they are presently being used, other than Permitted Encumbrances;                and |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | there                are no expropriation or similar proceedings, actual or threatened,                of                which the Vendor has received notice against the Real Property or                the                Leased Property. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*5.9*
*Environmental      Matters*

| 5.9.1   | In                this section, |
|-------------------|---------------------------------|

| (a)   | "**Environment**"                means the                ambient air, all layers of the atmosphere, surface water, underground                water, all land, all living                organisms and the                interacting natural systems that include components of air, land,                water,                organic and inorganic matter and living organisms, and includes indoor                spaces; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | "**Environmental                Law**"                means all federal, provincial, municipal or local statutes, regulations,                by-laws, Environmental Permits, orders or rules,                and any policies or guidelines of any Governmental Authority or regulatory                body or agency, and any requirements or obligations arising under                the                common law, relating to the Environment, the transportation of dangerous                goods and occupational health and                safety; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (c)   | "**Environmental                Permits**"                means all permits, licences, approvals, consents, authorizations,                registrations and certificates issued by or provided                to, as the case may be, any government or Governmental Authority                pursuant                to an Environmental Law; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | "**Premises**"                means all real property, buildings and facilities, including any                part of                any such property, building or facility owned, leased,                or                operated by the Vendor or any of the Subsidiaries in connection with                the                Purchased Business; and |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | "**Substance**"                means any substance or material which under any Environmental Law                is                defined to be "hazardous", "toxic", "deleterious", "caustic",                "dangerous", a "contaminant", a "pollutant", a "dangerous good",                a                "waste", a "source of contamination" or a source of a                "pollutant". |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.9.2   | Except                as disclosed in Schedule                24, |
|-------------------|-------------------------------------------------------------------|

| (a)   | neither                the Vendor nor any other Person has emitted, discharged,                deposited                or released or caused or permitted to be emitted, discharged,                deposited                or released, any Substances on or to the Premises, or in connection                with                the operation of the Purchased Business, except in compliance with                Environmental Law; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | the                soil and subsoil, and the surface and ground water in, on or under                the                Premises do not contain any Substances, nor do the Premises                contain                any underground storage tanks; all Substances which have been or                are being                treated or stored on the Premises have been generated, treated and                stored                in compliance with Environmental                Law; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | no                polychlorinated biphenyls, asbestos containing materials, lead or                urea-formaldehyde is or has ever been on, at, in or under the                Premises;                and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | neither                the Vendor nor any of the Subsidiaries has permitted the Premises                to be                used for the disposal of any                Substance. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.9.3   | All                Environmental Permits obtained by the Vendor in                connection with the Purchased Business (including any applicable                expiry                dates) are listed in Schedule                24                and are valid and in full force and                effect. |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.9.4   | There                are no proceedings against or involving the                Vendor or any of the Subsidiaries either in progress, pending, or                threatened which allege the violation of, or non-compliance with,                any                Environmental Law. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.9.5   | For                greater certainty, the representations and warranties contained in                section                5.2,                5.4,                5.16                and 5.17                apply to Environmental Permits. |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

*5.10*
*Leased      Property*

*5.11*
*Inventories*

*5.12*
*Accounts      Receivable*

*5.13*
*Intellectual      Property*

*Acterna      Settlement Agreement*

----

Table          of Contents

*5.14*
*Insurance*

*5.15*
*Agreements      and Commitments*

*5.16*
*Compliance      With Laws; Governmental Authorization*

----

Table          of Contents

*5.17*
*Consents      and Approvals*

*5.18*
*Financial      Statements*

*5.19*
*Books      and Records*

*5.20*
*Closing      Audited Financial Statement*

*5.21*
*Absence      of Changes*

| (a)   | any                material adverse change in the financial condition of the Purchased                Business; |
|-----------------|-----------------------------------------------------------------------------------------------------------------|

| (b)   | any                material obligation or liability incurred by the Vendor or any of                the                Subsidiaries in connection with the Purchased Business, other than                those                incurred in the ordinary and normal course of the Purchased Business                and                consistent with past practice and with the exception of a 5 year                lease                commitment in the amount of approximately $635,000 for certain production                machinery; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (c)   | any                payment, discharge or satisfaction of any Encumbrance, liability                or                obligation of the Vendor or any of the Subsidiaries in relation to                the                Purchased Business or the Purchased Assets other than payment of                accounts                payable and tax liabilities incurred in the ordinary and normal course                of                business consistent with past                practice; |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | any                licence, sale, assignment, transfer, disposition, pledge, mortgage                or                granting of a security interest or other Encumbrance on or over any                Purchased Assets, other than sales of inventory to customers in the                ordinary and normal course of the Purchased                Business; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | any                general increase in the compensation of employees of the Vendor or                any of                the Subsidiaries, involved in the Purchased Business (including,                without                limitation, any increase pursuant to any Employee Plan or commitment),                or                any increase in any such compensation or bonus payable to any officer,                employee, consultant or agent thereof, with the exception of a general                salary review in September 2005 resulting in increases in salaries                averaging approximately 5%; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | any                change in the employment conditions, benefit, bonus and severance                packages                for management personnel of the Purchased                Business; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | any                forward purchase commitments in excess of the requirements of the                Purchased Business for normal operating inventories or at prices                higher                than the current market prices; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | any                forward sales commitments other than in the ordinary and normal course                of                the Purchased Business; |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | any                change in the accounting or tax practices followed by the Vendor                or any of                the Subsidiaries; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | any                change adopted in the depreciation or amortization policies or rates;                or |
|-----------------|------------------------------------------------------------------------------------------------------------|

| (k)   | any                change in the credit terms offered to customers of, or by suppliers                to,                the Purchased Business. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

*5.22*
*Non-Arm's      Length Transactions*

----

Table          of Contents

*5.23*
*Taxes*

*5.24*
*Litigation*

*5.25*
*Residency*

*Tax      Act*

*5.26*
*GST      Registration*

----

Table          of Contents

*5.27*
*Customers      and Suppliers*

*5.28*
*Product      Warranties*

*5.29*
*Employee      Plans*

----

Table          of Contents

*5.30*
*Collective      Agreements*

----

Table          of Contents

*5.31*
*Employees*

*5.32*
*Employee      Accruals*

*5.33*
*Ownership      of Subsidiaries’ Shares*

*5.34*
*Absence      of Undisclosed Liabilities*

----

Table          of Contents

*5.35*
*No      Joint Venture Interests, etc.*

*5.36*
*Articles      and By-Laws*

*5.37*
*Bank      Accounts, etc.*
* *

*5.38*
*No      Bankruptcy/Insolvency*

*5.39*
*Distributions*

----

Table          of Contents

*5.40*
*Computer      Systems*

*5.41*
*Full      Disclosure*

**ARTICLE      VI**

**REPRESENTATIONS      AND WARRANTIES OF THE PURCHASER**

*6.1*
*Organization*

*6.2*
*Authorization*

----

Table          of Contents

*6.3*
*No      Violation*

| (a)   | any                Contract to which the Purchaser is a party or by which it is                bound; |
|-----------------|-------------------------------------------------------------------------------------------------------|

| (b)   | any                provision of the constating documents or by-laws or resolutions of                the                board of directors (or any committee thereof) or shareholders of                the                Purchaser; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | any                judgment, decree, order or award of any court, governmental body                or                arbitrator having jurisdiction over the Purchaser;                or |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | any                applicable law, statute, ordinance, regulation or                rule. |
|-----------------|-------------------------------------------------------------------------------------------|

*6.4*
*Consents      and Approvals*

*6.5*
*Investment      Canada*

*Investment      Canada Act*

*6.6*
*GST      Registration*

**ARTICLE      VII**

**SURVIVAL      OF DECLARATIONS, REPRESENTATIONS AND WARRANTIES**

*7.1*
*Survival      of Declarations, Representations and Warranties*

|   | All                of the declarations, representations and warranties made or given                herein,                and in any document or certificate ancillary hereto, will continue                to have                full force and effect from the Closing Date for the period indicated                hereinbelow, notwithstanding any investigation which the Purchaser                may                have made prior to the Closing, the whole subject to the following                terms                and conditions: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | the                representations and warranties set out in paragraphs 5.1                to                5.4,                5.6,                5.8,                5.9,                5.13                and 5.17                will continue to have full force and effect from the Closing Date,                without                any time limitation; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (b)   | all                of the declarations, representations and warranties set out in Article                V,                excluding those referred to in sub-paragraphs 7.1 (a) and 7.1 (c)                or and                in Article VI, will continue to have full force and effect for a                period of                two years from the Closing Date; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | all                of the Vendor and the Vendor’s Party’s declarations, representations and                warranties herein that are related directly or indirectly to taxation                will                continue to have full force and effect for the prescribed fiscal                prescription period and, without any time limitation in the event                of any                re-assessment of prior years, notice of assessment, or misrepresentation                of facts, through negligence, carelessness or voluntary omission,                or where                a return has been filed or information has been furnished fraudulently                for                the purposes of any Tax law. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE      VIII**

**COVENANTS**

*8.1*
*Access      to Purchased Business and Purchased Assets*

| (a)   | employees                employed in the Purchased Business; |
|-----------------|--------------------------------------------------------------|

| (b)   | customers,                suppliers, distributors or others who have or have had a business                relationship with the Vendor in respect of the Purchased Business;                and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the                auditors, solicitors or any other persons engaged or previously engaged                to                provide services to the Vendor who have knowledge of matters relating                to                the Purchased Business or Purchased                Assets. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*8.2*
*Delivery      of Books and Records*

----

Table          of Contents

*8.3*
*Change      and Use of Name*

*8.4*
*Conduct      of Purchased Business Prior to Closing*

| *(a)  * | *Conduct                Business in the Ordinary Course*.                Each of the Vendor and the Subsidiaries shall conduct the Purchased                Business only in the ordinary and normal course consistent with past                practice and each of the Vendor and the Subsidiaries shall not, without                the prior written consent of the Purchaser, enter into any transaction                or                refrain from doing any action that, if effected before the date of                this                Agreement, would constitute a breach of any representation, warranty,                covenant or other obligation of the Vendor contained herein, and                each of                the Vendor and the Subsidiaries shall not enter into any material                supply                arrangements relating to the Purchased Business or make any material                decisions or enter into any material Contracts with respect to the                Purchased Business without the consent of the                Purchaser; |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(b)  * | *Continue                Insurance*.                Until the Time of Closing each of the Vendor and the Subsidiaries                shall                continue to maintain in full force and effect all policies of insurance                or                renewals thereof now in effect; |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(c)  * | *Regulatory                Consents.*The                Vendor shall obtain, at or prior to the Time of Closing, from all                appropriate federal, provincial, municipal or other governmental                or                regulatory bodies, licences, permits, consents, approvals, certificates,                registrations, and authorizations described in Schedule                15. |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(d)  * | *Contractual                Consents*.                The Vendor shall give or obtain, at or prior to the Time of Closing,                the                notices, consents and approvals described in Schedule                16; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(e)  * | *Preserve                Goodwill*.                The Vendor shall use its best efforts to preserve intact the Purchased                Business and Purchased Assets and to carry on the Purchased Business                as                currently conducted, and the Vendor shall use its best efforts to                promote                and preserve for the Purchaser the goodwill of suppliers, customers                and                others having business relations with the                Vendor; |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| *(f)  * | *Discharge                Liabilities*.                The Vendor shall pay and discharge the liabilities of the Vendor                relating                to the Purchased Business in the ordinary course in accordance and                consistent with the previous practice of the Vendor, except those                contested in good faith by the                Vendor; |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(g)  * | *Corporate                Action*.                The Vendor shall take or cause to be taken all necessary corporate                action,                steps and proceedings to approve or authorize, validly and effectively,                the transfer of the Purchased Assets to the Purchaser and the execution                and delivery of this Agreement and the other agreements and documents                contemplated hereby and to cause all necessary meetings of directors                and                shareholders of the Vendor to be held for such purpose;                and |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(h)  * | *Best                Efforts*.                The Vendor shall use its best efforts to satisfy the conditions of                Closing                in favour of the Purchaser mentioned in section 9.1                hereof, excluding however the condition contained in subsection                9.1(b). |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*8.5*
*Delivery      of Conveyancing Documents*

*8.6*
*Retail      Sales Tax Certificate*

*Retail      Sales Tax Act*

*8.7*
*Delivery      of Vendor's Closing Documentation*

*8.8*
*Delivery      of Purchaser's Closing Documentation*

----

Table          of Contents

*8.9*
*Employees*

| (a)   | The                Vendor and the Subsidiaries agree to provide the Purchaser with an                up-to-date list of the names of the Employees at least two Business                Days                and not more than four Business Days prior to the Closing Date. The                Purchaser agrees that it shall offer employment to all Employees,                effective as at the Time of Closing and conditional on the Closing                of this                Agreement and the transactions contemplated in the Agreement (the                "Remaining Employees"), on substantially the same terms and conditions                of                employment in aggregate as are then applicable to the                Employees.                However, nothing herein shall reduce the Purchaser’s management rights in                the pursuit of the Purchased Business, including, without limitation,                the                right to terminate or dismiss any of the Remaining                Employees. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The                Vendor and the Subsidiaries shall employ all of the employees set                out in                Schedule                7                until the Time of Closing, except for any employees who prior to                the Time                of Closing (the "Former                Employees"): |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | are                terminated for cause; |
|-----------------|------------------------------------------|

| (ii)   | are                terminated with the Purchaser's consent, which consent shall not                be                unreasonably withheld; |
|------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | voluntarily                resign; |
|-------------------|------------------------------------|

| (iv)   | retire;                or |
|------------------|---------------------------|

| (v)   | do                not accept the Purchaser’s offer of                employment. |
|-----------------|----------------------------------------------------------------------------------------|

** **

----

Table          of Contents

*8.10*
*Employee      Plans*

| (a)   | their                period of employment shall include employment with both the Vendor                and the                Purchaser and shall be deemed not to have been interrupted at the                Time of                Closing; and |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | their                period of membership shall include membership in both the Employee                Plans                and the Replacement Plans and shall be deemed not to have been interrupted                at the Time of Closing. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*8.11*
*Post-closing      *
*A*
*ssistance      to the Vendor*

----

Table          of Contents

**ARTICLE      IX**

**CONDITIONS      OF CLOSING**

*9.1*
*Conditions      of Closing in Favour of the Purchaser*

| *(a)  * | *Due                Diligence Process*.                The Purchaser shall have completed and shall, acting reasonably,                be fully                satisfied with its Due Diligence                Process; |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(b)  * | *Representations                and Warranties*.                The representations and warranties of the Vendor contained in this                Agreement shall be true and correct at the Time of Closing with the                same                force and effect as if such representations and warranties were made                at                and as of such time, and a certificate of the President of the Vendor,                dated the Closing Date, to that effect shall have been delivered                to the                Purchaser, such certificate to be in form and substance satisfactory                to                the Purchaser, acting reasonably; |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(c)  * | *Covenants*.                All of the terms, covenants and conditions of this Agreement to be                complied with or performed by the Vendor at or before the Time of                Closing                shall have been complied with or performed, and a certificate of                the                President of the Vendor, dated the Closing Date, to that effect shall                have                been delivered to the Purchaser, such certificate to be in form and                substance satisfactory to the Purchaser, acting                reasonably; |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(d)  * | *Regulatory                Consents*.                There shall have been obtained from all appropriate federal, provincial,                municipal or other governmental or administrative bodies such licences,                permits, consents, approvals, certificates, registrations and                authorizations as are required to be obtained by the Vendor or any                of the                Subsidiaries to permit the change of ownership of the Purchased Assets                contemplated hereby, including, without limitation, those described                in                Schedule                15,                in each case in form and substance satisfactory to the Purchaser,                acting                reasonably; |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(e)  * | *Contractual                Consents*.                The Vendor shall have given or obtained all the notices, consents                and                approvals described in Schedule                16,                including consents to assignment of Leases, shareholders' consent                to                proceed with the transactions contemplated herein and renunciation                by each                outside investor, including every shareholder being a party to any                shareholders agreements or similar agreement, to any right thereunder,                in                each case in form and substance satisfactory to the Purchaser, acting                reasonably; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| *(f)  * | *Non-Competition                Agreement*.                The Vendor, the Vendor’s Party and the current senior management team                shall have executed and delivered to the Purchaser a non-competition                agreement upon such terms and conditions to be negotiated between                the                parties, acting reasonably; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(g)  * | *No                Action or Proceeding*.                No legal or regulatory action or proceeding shall be pending or threatened                by any person to enjoin, restrict or prohibit the purchase and sale                of the                Purchased Assets contemplated                hereby; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(h)  * | *No                Material Damage*.                No material damage by fire or other hazard to the whole or any material                part of the Purchased Assets shall have occurred from the date of                the                preliminary offer with respect to the transactions contemplated herein                presented by the Purchaser to the Vendor on October 27, 2005, to                the time                of Closing; |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(i)  * | *No                Material Adverse Change*.                There shall have been no material adverse change in the Purchased                Business                since May 31, 2005; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(j)  * | *Instruments                of Transfer*.                The Vendor shall have received from its Affiliates such instruments                of                transfer necessary (including the share certificates) to transfer                the                securities of such Affiliates held by the Vendor from the Vendor                to the                Purchaser; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(k)  * | *Legal                Opinion from Vendor’s Legal Counsel*.                The Purchaser will have received, at Closing, a legal opinion from                the                Vendor’s legal counsel, the form and content of which are satisfactory to                the Purchaser and its counsel; such opinion will deal, among other                things,                but without restricting the generality of the foregoing, with questions                of                law relating to the corporate and legal status of each of the Vendor                and                the Subsidiaries, the authority of each of the Vendor and the Subsidiaries                in respect of the transactions contemplated by this Agreement, and                its                power and capacity, and will attest to the validity of the Vendor’s                registered title of ownership to the Real Property, the Subsidiaries’                Shares and any patents part of the Intellectual                Property; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(l)  * | *Title                to Real Property*.                On Closing, the Purchaser shall acquire good and marketable title                to the                Real Property, free and clear of all Encumbrances, including the                Existing                Mortgage and any interest and penalty thereon which shall have been                paid                by Vendor, other than Permitted                Encumbrances; |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(m)  * | *Employment                Agreements.*                Employment Agreements will be signed by the key employees, as determined                by the Purchaser; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(n)  * | *Environment.*                A                phase 1 environment study with respect to the Real Property, without                any                reserve or any potential liability mentioned therein, will be delivered                by                the Vendor to the Purchaser no later than on the Closing                Date; |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| *(o)  * | *Customer                Purchase Orders.*The                Purchaser will have received from the Vendor evidence of sufficient                and                normal backlog (customer purchase orders) and work in progress in                accordance with current practices of the Vendor on the Closing                Date; |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(p)  * | *Good                Standing.*                The Vendor will deliver to the Purchaser certificates of good standing                with respect to the Vendor and each of the                Subsidiaries; |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(q)  * | *Retail                Sales Tax*.                *Delivery                of Evidence Relating to Retail Sales Tax.*The                Vendor shall have delivered to the Purchaser the certificate contemplated                by section 8.6                representing evidence that all governmental charges required to be                withheld and remitted by the Vendor in respect of the Purchased Business                under the *Retail                Sales Tax Act*(Ontario)                have been paid; |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(r)  * | *Health                and Safety.* *Delivery                of Evidence Relating to Workplace Safety and Insurance                Compliance*.                The Vendor shall have delivered to the Purchaser a Clearance Certificate                from the Ontario Workplace Safety and Insurance Board and any similar                certificate from other provincial workers’ compensation boards where there                are Employees in such province confirming that the Vendor has made                all                payments in respect of workers’ compensation up to the Closing Date and                there are no outstanding amounts owing; |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(s)  * | *Inter-company                accounts.*                Consultronics Europe must have paid or transferred as share capital                all                its inter-company balances due to the Vendor on or prior to the Closing                Date; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(t)  * | *Cash*-                *Subsidiaries*.                All cash and cash equivalents of the Subsidiaries, as of the Closing                Date                as per the Subsidiaries’ audited financial statements, will remain with                the Subsidiaries; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(u)  * | *Termination.*                Save and except for any confidentiality undertakings in favour of                the                Purchaser, all agreements between the Vendor and the Purchaser executed                before the date of this Agreement will be terminated as of the Closing                Date, and each of the Vendor and the Purchaser will grant in favour                of the                other a release and discharge with respect to such                agreements; |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(v)  * | *Additional                Agreements.*                The execution by the Vendors of all required documents and agreements                to                register the assignment of the Purchased Assets, including, without                limitation, a Deed of transfer with respect to the Real Property                and the                required documentation with respect to the Intellectual                Property; |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(w)  * | *Schedules.*                The Purchaser shall have received and approved updated Schedules                to this                Agreement; and |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| *(x)  * | *Authorizations                and Other Documentation.*                All of the documents relating to the authorization and execution                of the                transactions provided for herein and all of the actions and measures                taken                on or prior to the Closing Date in respect of the fulfilment by the                Vendor                of its obligations pursuant hereto will be satisfactory to the Purchaser                and its counsel, and the Purchaser will have received copies of all                such                documents in a form which is satisfactory to the Purchaser and its                counsel. |
|-------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

*9.2*
*Conditions      of Closing in Favour of the Vendor*
* *

| *(a)  * | *Representations                and Warranties*.                The representations and warranties of the Purchaser contained in                this                Agreement shall be true and correct in all material respects at the                Time                of Closing with the same force and effect as if such representations                and                warranties were made at and as of such time, and a certificate of                the                President of the Purchaser, dated the Closing Date, to that effect                shall                have been delivered to the Vendor, such certificate to be in form                and                substance satisfactory to the Vendor, acting                reasonably; |
|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(b)  * | *Covenants*.                All of the terms, covenants and conditions of this Agreement to be                complied with or performed by the Purchaser at or before the Time                of                Closing shall have been complied with or performed in all material                respects, and a certificate of the President of the Purchaser, dated                the                Closing Date, to that effect shall have been delivered to the Vendor,                such                certificate to be in form and substance satisfactory to the Vendor,                acting                reasonably; |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(c)  * | *Regulatory                Consents*.                There shall have been obtained from all appropriate federal, provincial,                municipal or other governmental or administrative bodies such licences,                permits, consents, approvals, certificates, registrations and                authorizations as are required to be obtained by the Purchaser to                permit                the change of ownership of the Purchased Assets contemplated hereby,                including those described in Schedule                15; |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| *(d)  * | *Bulk                Sales Compliance.* It                is agreed that the Purchaser shall not require the Vendor to comply,                or to                assist the Purchaser to comply, with the requirements of the *Bulk                Sales Act*(Ontario),                provided that, at the Closing Date, the Vendor will apply (or direct                the                Purchaser to apply) any payment made pursuant to section 3.2(b)                to                satisfy amounts owing by the Vendor to creditors of the Vendor not                accounted for in the Closing Audited Financial Statements. Notwithstanding                the foregoing, the Vendor agrees to indemnify and save harmless the                Purchaser from and against any Claims (including Third Party Claims)                the                Purchaser may suffer or be exposed to by virtue of non-compliance                with the                *Bulk                Sales Act*(Ontario);                and |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(e)  * | *No                Action or Proceeding*.                No legal or regulatory action or proceeding shall be pending or threatened                by any person to enjoin, restrict or prohibit the purchase and sale                of the                Purchased Assets contemplated                hereby. |
|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE      X**

**CLOSING      DATE AND TRANSFER OF POSSESSION**

*10.1*
*Transfer*

*10.2*
*Place      of Closing*

*10.3*
*Further      Assurances*

----

Table          of Contents

*10.4*
*Risk      of Loss*

**ARTICLE      XI**

**INDEMNIFICATION**

*11.1*
*Indemnification      by the Vendor*
*      and      the Vendor’s Party*

| (a)   | any                breach by the Vendor of or any inaccuracy of any representation or                warranty of the Vendor contained in this Agreement or in any agreement,                certificate or other document delivered pursuant hereto (provided                that the                Vendor shall not be required to indemnify or save harmless the Purchaser                in respect of any breach or inaccuracy of any representation or warranty                unless the Purchaser shall have provided notice to the Vendor in                accordance with section 11.3                on                or prior to the expiration of the applicable time period related                to such                representation and warranty as set out in section 7.1); |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | any                breach or non-performance by the Vendor of any covenant to be performed                by                it that is contained in this Agreement or in any agreement, certificate                or                other document delivered pursuant                hereto; |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the                operations of the Purchased Business before the Time of Closing including,                without limitation, any failure by the Vendor to pay, satisfy, discharge,                perform or fulfil any of the Excluded                Liabilities; |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | all                losses, costs and damages suffered by the Purchaser as a result of                the                failure of the Vendor to perform any of its obligations relating                to or in                respect of the Purchased Business not assumed by the Purchaser pursuant                to                this Agreement, or arising under contracts or other agreements assumed                by                the Purchaser pursuant to this Agreement but relating to or arising                out of                action or inaction of the Vendor and relating to events which occurred                prior to the Closing Date; and |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (e)   | all                losses, costs and damages suffered by the Purchaser arising from                any claim                by or on behalf of any Former                Employees. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*11.2*
*Indemnification      by the Purchaser*

| (a)   | any                breach by the Purchaser of or any inaccuracy of any representation                or                warranty contained in this Agreement or in any agreement, instrument,                certificate or other document delivered pursuant hereto (provided                that the                Purchaser shall not be required to indemnify or save harmless the                Vendor                in respect of any breach or inaccuracy of any representation or warranty                unless the Vendor shall have provided notice to the Purchaser in                accordance with section 11.3                on                or prior to the expiration of the applicable time period related                to such                representation and warranty as set out in section 7.1); |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | any                breach or non-performance by the Purchaser of any covenant to be                performed                by it that is contained in this Agreement or in any agreement, certificate                or other document delivered pursuant hereto;                and |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | the                operations of the Purchased Business after the Time of Closing including,                without limitation, any failure by the Purchaser to pay, satisfy,                discharge, perform or fulfil any of the Assumed                Liabilities. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*11.3*
*Notice      of Claim*

| (a)   | the                factual basis for the Claim; and |
|-----------------|-----------------------------------------------------|

| (b)   | the                amount of the Claim, if known. |
|-----------------|---------------------------------------------------|

----

Table          of Contents

*11.4*
*Direct      Claims*

*11.5*
*Third      Party Claims*

*11.6*
*Settlement      of Third Party Claims*

*11.7*
*Co-Operation*

----

Table          of Contents

*11.8*
*Inventories*

*Amount      A*
*Amount      B*

*11.9*
*Accounts      receivable*

*11.10*
*Threshold*

| (a)   | Notwithstanding                any other provision of this Article                XI,                but subject to subsection (b)                below, no claim for Losses may be made unless the amount thereof                exceeds                cumulatively and in aggregate $20,000, in which event the Indemnifying                Party shall become liable for the full amount of all Losses on a                dollar                for dollar basis, as from the first dollar                claimed. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | For                greater certainty, subsection (a) above shall not apply                to: |
|-----------------|-----------------------------------------------------------------------------------------------|

| (i)   | the                Purchaser’s rights to sell Uncollected Accounts under section 11.9; |
|-----------------|----------------------------------------------------------------------------------------------|

----

Table          of Contents

| (ii)   | claims                in respect of warranty obligations or inventories for which no reserve                has                been included in the Closing Audited Financial Statements, pursuant                respectively to sections 4.1(j)                and 11.8; |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | any                amount payable as Purchase Price and any adjustment                thereof; |
|-------------------|------------------------------------------------------------------------------------------------|

| (iv)   | any                Tax Amounts or other Taxes; and |
|------------------|----------------------------------------------------|

| (v)   | any                amount claimed by the Purchaser for Excluded                Liabilities. |
|-----------------|---------------------------------------------------------------------------------------------|

| (c)   | The                Vendor and the Vendor’s Party shall be entitled to set off, against any                amount otherwise payable to or for the account of the Purchaser pursuant                to section 11.1,                the amount by which any accrual or reserve included in the Closing                Audited                Financial Statements is conclusively determined to have exceeded                the                actual loss or liability in respect of which it was so included,                with the                exclusion of the warranty reserve referred to in section 4.1(j)                and the inventory reserve referred to in section 11.8. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*11.11*
*Smart      Grant*

**ARTICLE      XII**

**DISPUTE      RESOLUTION**

*12.1*
*Arbitration*

*Arbitration      Act, 1991*

| (a)   | any                hearing in the course of the arbitration shall be held in Toronto,                Ontario; |
|-----------------|---------------------------------------------------------------------------------------------------------------|

| (b)   | the                application of section 7(2) of the Arbitration Act is expressly                excluded; |
|-----------------|------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (c)   | subject                to section 44 of the Arbitration Act, any award or determination of                an arbitrator shall be final and binding on the parties and there                shall be                no appeal on any ground, including, for greater certainty, any appeal                on a                question of law, a question of fact, or a question of mixed fact                and                law; |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | despite                section 28(1) of the Arbitration Act, an arbitrator shall not,                without the written consent of all parties to the arbitration, retain                any                expert; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | an                arbitrator may apportion the costs of the arbitration, including                the                reasonable fees and disbursements of the parties, between or among                the                parties in such manner as the arbitrator considers reasonable, provided                that an arbitrator shall not award costs on a distributive                basis; |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | all                awards for the payment of money shall include prejudgment and postjudgment                interest in accordance with sections 127 to 130 of the *Courts                of Justice Act*                (Ontario) with necessary modifications;                and |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | all                matters relating to the arbitration shall be kept confidential to                the full                extent permitted by law and no individual shall be appointed as an                arbitrator unless he or she agrees in writing to be bound by this                dispute                resolution provision. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ARTICLE      XIII**

**MISCELLANEOUS**

*13.1*
*Notices*

| (a)   | Any                notice or other communication required or permitted to be given hereunder                shall be in writing and shall be delivered in person, transmitted                by                telecopy [or similar means of recorded electronic communication]                or sent                by registered mail, charges prepaid, addressed as                follows: |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (i)   | if                to the Vendor: |
|-----------------|----------------------------------|

| (ii)   | if                to the Purchaser: |
|------------------|-------------------------------------|

| (b)   | Any                such notice or other communication shall be deemed to have been given                and                received on the day on which it was delivered or transmitted (or,                if such                day is not a Business Day, on the next following Business Day) or,                if                mailed, on the third Business Day following the date of mailing;                provided,                however, that if at the time of mailing or within three Business                Days                thereafter there is or occurs a labour dispute or other event that                might                reasonably be expected to disrupt the delivery of documents by mail,                any                notice or other communication hereunder shall be delivered or transmitted                by means of recorded electronic communication as                aforesaid. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (c)   | Either                party may at any time change its address for service from time to                time by                giving notice to the other party in accordance with this section                13.1. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*13.2*
*Non-Transferability*

| (a)   | Subject                to subsections 13.2(b)                and 13.2(c),                to the extent that any Purchased Asset is not capable of being sold,                assigned, transferred, delivered or subleased without the consent                or                waiver of any person, or if such sale, assignment, transfer, delivery                or                sublease, or attempted sale, assignment, delivery or sublease would                constitute a breach thereof or a violation of any law, statute, ordinance,                regulation, rule, judgment or order, this Agreement shall not constitute                a                sale, assignment, transfer, delivery or sublease thereof, or an attempted                sale, assignment, transfer, delivery or sublease thereof until such                consent or waiver of the applicable person is                received. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Each                of the Vendor and the Vendor’s Party shall use its best efforts (and the                Purchaser shall reasonably cooperate with the Vendor) on or before                the                Closing Date and thereafter as required, to obtain the consents and                waivers referred to in subsection 13.2(a)                and to resolve the impediments to the sale, assignment, transfer,                delivery                or sublease referred to in subsection 13.2(a)                and to obtain any other consents and waivers necessary to convey                to the                Purchaser any of the Purchased                Assets. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | To                the extent that the consents and waivers referred to in subsection                13.2(a)                are not obtained by the Vendor, or until the impediments to the sale,                assignment, transfer, delivery or sublease referred to therein are                resolved, the Vendor shall, after the Closing                Date: |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | hold                the benefits of any Purchased Asset referred to in subsection 13.2(a)                in                trust for the Purchaser in accordance with the provisions of this                subsection 13.2(c); |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | cooperate                in any reasonable and lawful arrangement, approved by the Purchaser,                designed to provide such benefits to the Purchaser;                and |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | enforce                and perform for the account of the Purchaser, any rights or obligations                of                the Vendor arising from any Purchased Asset referred to in subsection                13.2(a)                against or in respect of any person, including the right to elect                to                terminate in accordance with the terms thereof upon the advice of                the                Purchaser; |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table          of Contents

| (d)   | If                the Vendor provides the Purchaser with the use of any Purchased Asset                referred to in subsection 13.2(a)                without having obtained the necessary consents and waivers referred                to in                that subsection, and if the use by the Purchaser constitutes a breach                or                violation of any Contract, permit, authorization or approval to which                the                Vendor is a party or by which the Vendor or such Purchased Asset                is bound,                the Vendor shall be responsible for any losses arising as a direct                consequence of such breach or violation under any such Contract,                permit,                authorization or approval. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*13.3*
*Consultation*

*13.4*
*Disclosure*

*13.5*
*Confidentiality*

*13.6*
*Best      Efforts*

----

Table          of Contents

*13.7*
*Counterparts*

*[THE      NEXT PAGE IS THE SIGNATURE PAGE]*

----

Table            of Contents

**IN      WITNESS WHEREOF**

|                                                                | **CONSULTRONICS                  LIMITED**                 |                                                                                                       |
|---------------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|
|                                                                | **By:**                                                    | **/s/Andre                  Rekai**                                                                        |
|                                                                |                                                       | **Andre                  Rekai****President**                                                    |
|                                                                | **By:**                                                    | **/s/Brenda                  McLennan**                                                                    |
|                                                                |                                                       | **Brenda                  McLennan****Chief                  Financial Officer**                 |
|                                                                | **EXFO                  ELECTRO-OPTICAL ENGINEERING INC.** |
|                                                                | **By:**                                                    | **/s/Germain                  Lamonde**                                                                    |
|                                                                |                                                       | **Germain                  Lamonde****President                  and Chief Executive Officer**   |
| **WITH                  THE INTERVENTION OF/**                      | **CONSULTRONICS                  EUROPE LIMITED**          |
| **/s/Andre                  Rekai****Andre                  Rekai** | **By:**                                                    | **/s/Andre                  Rekai**                                                              |
|                                                                | **CONSULTRONICS                  DEVELOPMENT KFT**         |
|                                                                | **By:**                                                    | **/s/Andre                  Rekai**                                                              |
|                                                                | **CONSULTRONICS                  INC.**                    |                                                                                                       |
|                                                                | **By:**                                                    | **/s/Andre                  Rekai**                                                                        |

----