Exhibit 10.13

 

                                               **SHAREPURCHASE AGREEMENT**

** **

**THISAGREEMENT**made this 26th day of November, 2002.

**B E T W E E N:**

**                        RICHARDMacARTHUR and JOHN WHITTAKER,**

hereinaftercalled the "Purchasers",

                                                                                                                       OFTHE FIRST PART;

- and -

**ARSNETWORKS, INCORPORATED,**a corporation incorporated under the laws of theState of New Hampshire,

hereinaftercalled the "Vendor",

                                                                                                                  OFTHE SECOND PART;

- and -

**T & TDIESEL POWER LIMITED,**a corporation incorporated under the laws of theProvince of Ontario,

hereinaftercalled the "Corporation",

                                                                                                                      OFTHE THIRD PART;

- and -

**SYDNEYHARLAND**, of the Town of Oakville, in the Regional Municipality of Halton,

hereinaftercalled "Sydney",

                                                                                                                  OFTHE FOURTH PART.

**THISAGREEMENT WITNESSETH**as follows:

**WHEREAS**theVendor is the registered and beneficial owner of all of the issued andoutstanding shares in the capital stock of the Corporation as follows:

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CLASS A COMMON                         CLASSB COMMON

ARS Networks, Incorporated               100                                                      100

**AND WHEREAS**the Vendor wishes to sell to the Purchasers and the Purchasers wishes topurchase from the Vendor certain of the aforesaid shares in the capital of theCorporation which are owned by the Vendor, upon and subject to the terms andconditions hereinafter set forth.

**NOW THEREFORE**in consideration of the premises and the mutual agreements and covenantsherein contained (the adequacy of which consideration for each of the partieshereto is mutually admitted), the parties hereto covenant and agree as follows:

                                                                 **ARTICLE1.00**                                                **DEFINITIONSAND SCHEDULES**

** 1.01                 Definitions-**Whenever used in this Agreement, unless there is something in the subjectmatter or context inconsistent therewith, the following words and terms shallhave the respective meanings ascribed to them as follows:

(a)    **"Agreement"**means this Share Purchase Agreement and instrumentssupplemental hereto or in amendment or confirmation hereof; **"hereof","hereto" **and **"hereunder"**and similarexpressions mean and refer to this Agreement and not to any particular articleor section; **"Article"**or **"Section"**means andrefers to the specified article or section of this Agreement.

(b)    **"Closing"** means the completion of the sale and purchaseof the Purchased Shares hereinafter referred to by the transfer and delivery ofthe certificates therefor and the payment of the Purchase Price as contemplatedherein at the offices of the Purchasers' solicitors, McBride, Wallace, Laurent& Cord, Barristers & Solicitors, 5464 Dundas Street West, 2ndFloor, Toronto, Ontario M9B 1B4.

(c)     **"Closing Date"** means the 8th day ofJanuary, 2003 or such other date as the parties may agree as the date uponwhich the Closing shall take place;

(d)      **"Effective Date"**means the 31st day of October, 2002;

(e)       **"Purchase Price"** shall have the meaning ascribedthereto in Article 2.01 hereof.

(f)       **"Purchased Shares"** means the 100 Class A Common Sharesand the 100 Class B Common Shares owned by the Vendor.

(g)      **"Time of Closing" **means 2:00 p.m. on the Closing Date or suchother time on the Closing Date as the parties may agree upon.      

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**1.02                 Schedules-**The schedules to this Agreement as listed below are an integral part ofthis Agreement.

**SCHEDULE "A"**       -           Promissory Note

**SCHEDULE "B"**       -           Escrow Agreement 

**SCHEDULE "C"       -          **Non-Competition/Non-Solicitationand Confidentiality Agreement

                                                                 **ARTICLE2.00                     PURCHASEAND SALE AND PAYMENT OF PURCHASE PRICE**

**2.01                 Purchaseand Sale -**Subject  to the terms and conditions hereof, the Vendoragrees to sell, assign and transfer to the Purchasers and the Purchasers agreeto purchase from the Vendor as of the Effective Date the Purchased Shares,being all but not less than all of the issued and outstanding shares in thecapital stock of the Corporation, for the Purchase Price of One HundredThousand ($100,000.00) Dollars Canadian.

**2.02                 Paymentof Purchase Price -**The  Purchase Price for the Purchased Shares shallbe allocated and  payable as follows:

(a)   The sum of Fifty-Three Thousand ($53,000.00) Dollars, by way of cash orcertified cheque upon Closing, to the Vendor, or as the Vendor may otherwisedirect; 

(b)   The balance of the Purchase Price of Forty-Seven Thousand ($47,000.00)shall be payable six (6) months following the Closing Date by certified chequeand shall be secured by a non-interest bearing Promissory Note delivered to theVendor in the form as set out in Schedule "A" attached hereto.

**2.03**                 ThePurchased Shares shall be held in escrow until the Promissory Note referred toabove has been paid in full, such escrow to be in accordance with the terms andprovisions of the Escrow Agreement attached hereto as Schedule "B".

                                                                 **ARTICLE3.00                       REPRESENTATIONSAND WARRANTIES OF THE VENDOR**

**3.01                **TheVendor represents and warrants to the Purchasers and acknowledges that thePurchasers are relying on such representations and warranties in entering intothis Agreement as follows:

(a)     theVendor is now and will at the Time of Closing be the sole legal and beneficialowner of the Purchased Shares registered in its name with good and marketabletitle thereto, free and clear of all mortgages, liens, charges, securityinterests, adverse claims, pledges, encumbrances, options or rights of othersor demands whatsoever;

 

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(b)     theVendor now has and will at the Time of Closing have the exclusive right todispose of the Purchased Shares registered in its name hereunder and thedisposition of such Purchased Shares will not violate, contravene, breach oroffend against or result in any default under any indenture, agreement or otherinstrument, or any statute, regulation, order, judgment, decree or law to whichthe Vendor is a party or subject or by which the Vendor is bound;

(c)     theVendor is a  non-resident of Canada for the purposes of Section 116 of theIncome Tax Act (Canada);

(d)     tothe best of the knowledge and belief of the Vendor, the books and records,financial and otherwise, of the Corporation fairly and correctly set out anddisclose in all material respects the financial position of the Corporation asof the date hereof and all financial transactions between the Vendor and theCorporation have to the best of the knowledge of the Vendor, been accuratelyrecorded in such books and records;

(e)     thisAgreement constitutes a valid and binding agreement enforceable against theVendor  in accordance with the terms hereof;

(f)     the Vendor is not aware of any suit, litigation, arbitration proceeding,application for review, in progress, pending or, threatened against or relatingto the Corporation or its respective properties and assets which has not beenfully disclosed to the Corporation.  The Vendor is not aware of any grounds onwhich any such action, suit or proceeding might be commenced with anyreasonable likelihood of success; 

(g)     thereare no undisclosed facts of a materially adverse nature known to the Vendorwith respect to the Corporation which would, if known to the Purchasers, have amaterial effect on the Purchase Price or cause the Purchasers, actingreasonably, not to complete the within purchase transaction;

(h)      thecorporate records and minute book of the Corporation contain complete andaccurate minutes of all meetings of the directors and shareholders of theCorporation held since the incorporation of the Corporation, all such meetingswere duly called and held, the share certificates, registers of shareholders,registers of transfers, and register of directors of the Corporation arecomplete and accurate and all exigible security transfer tax payable inconnection with the transfer of any securities of the Corporation has been dulypaid;

(i)      the Corporation has duly and timely filed all tax returns required to befiled by it from and after August 1, 2000 to the fiscal year ended January 31,2002,  and has paid all taxes which are due and payable, and has paid allassessments and reassessments, and all other taxes, governmental charges,penalties, interest, and fines due and payable by it with respect to all taxreturns which have been filed by it between August 1, 2000 and the fiscal yearended January 31, 2002; the Canadian federal income tax liability of theCorporation has been reviewed and determined by Canada Customs and RevenueAgency ("CCRA")  for all fiscal years, including the fiscal year ended January31, 2002.

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                                                                 **ARTICLE4.00                         COVENANTSOF THE VENDOR AND SYDNEY HARLAND**

The Vendorcovenants and agrees with the Purchasers that on or before the Closing Date, itwill do or cause to be done the following:

**4.01    **Permit thePurchasers through their representatives,/ to make such investigations of theproperties and assets of the Corporation and of its financial and legalcondition as the Purchasers deem necessary or advisable; such investigationshall not however affect or mitigate the Vendor's covenants, representationsand warranties hereunder, which shall continue in full force and effect asprovided in Article 3.00.  The Vendor agrees to provide any and all of thefollowing documentation, as may be required, and to permit the Purchasers fullaccess to the premises of the Corporation where the business is carried on forsuch purpose:

(a)    fulldisclosure of all contracts, agreements or arrangements into which theCorporation has entered;

(b)   fulland complete information relating to the ownership and/or leasehold use ofchattels, machinery and equipment used in connection with the business,including any warranties and/or guarantees relating thereto and the opportunityto physical inspect all of the foregoing;

(c)   allother licences, contracts, insurance policies, books, records, accounts,financial  statements, income tax returns and CCRA and Ministry of Financeassessment notices and all other data which in the opinion of the Purchasersand their representative are required to make an examination of the business ofthe Corporation;

(d)   fulland complete access to all premises upon which the business is carried on bythe Corporation for the purpose of inspecting the state, extent and repair ofthe Corporation's assets and inventory;

**4.02    **Deliverto the Purchasers at the Time of Closing, a Statutory Declaration of SydneyHarland as Chief Executive Officer of the Corporation, that:

(a)   theauthorized capital of the Corporation consists of an unlimited number of ClassA Common Shares and an unlimited number of Class B Common Shares of which 100Class A Shares and 100 Class B Shares have been duly issued and are outstandingas fully paid and non-assessable.  The Purchased Shares represent all of theissued and outstanding shares in the capital of the Corporation;

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(b)   allnecessary corporate action and proceedings have been taken to permit the dueand valid transfer of the Purchased Shares at the Time of Closing from theVendor to the Purchasers;

(c)   tothe best of his knowledge and belief, completion of the transaction of purchaseand sale contemplated by this Agreement will not result in a breach of any termor provision of or constitute a default under the constating documents, by-lawsor resolutions of the Corporation, or to the best of his knowledge and belief,any indenture, agreement, instrument, licence, permit or understanding to whichthe Corporation is a party, or by which it is bound, or to the best of hisknowledge and belief will the completion of such transaction accelerate anycommitment or obligation of the Corporation or result in the creation of anylien or encumbrance upon any of the assets or property of the Corporation;

(d)  theCorporation does not have outstanding any option, convertible securities,warrants or other convertible obligations, agreements or other commitments toallot, reserve, set aside, create, issue or sell any securities or any of theunissued share capital of the Corporation, except as set out in this Agreement;

(e)   theCorporation is not engaged in and to the best of counsel's knowledge has notbeen threatened with any legal action or other proceedings and has not beencharged with or to the best of the knowledge of such counsel incurred anyviolation of any federal, provincial or local law or administrative regulationwhich could materially adversely affect or impair its financial position,business operation, prospects, properties or assets;

(f)    no consent, authorization, licence, franchise, permit, approval or orderof any court or governmental agency or regulatory bodies required for theacquisition of the Purchased Shares by the Corporation.

(g)   Tothe best of his knowledge and belief there are no liens or encumbrances orother security interest against any of the assets, chattels, fixtures,equipment or inventory of the Corporation other than has been disclosed in thefinancial statements of the Corporation for the period ending January 31, 2002and without limiting the generality of the foregoing, including the securityinterest of BODKIN CAPITAL CORPORATION registered as instrument 20011219 10371616 4209 under the Personal Property Security Registration System securinginter alia the photocopy machine

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**4.03    **Causethe directors and officers of the Corporation to resign at the Time of Closingin favour of nominees of the Purchasers and providing to the Purchasers and theCorporation at the Time of Closing full and complete releases and discharges byeach officer, director and shareholder of any and all claims that each of themmay have up to and including the Closing Date, excepting any claims arising outof this Agreement.

**4.04    **Causethe Corporation to duly and timely file all tax returns required to be filed byit up to but not including the Effective Date and to promptly pay all taxes,assessments and government charges which are claimed by any governmentalauthority to be due and owing; cause the Corporation not to enter into anyagreements, waivers or other arrangements providing for an extension of timewith respect to the filing of any income tax return or the payment or assessmentof any tax, governmental charge or deficiency;

**4.05**    Causethe Corporation not to make any changes in its banking arrangements without theprior written consent of the Purchasers;

**4.06    **Todo such other things and execute such other documents as may be reasonablyrequired by the Purchasers in connection with the completion of thistransaction of purchase and sale.

**4.07**    Complyin all respects with any and all of its further covenants and obligationscontained in this Agreement or arising out of the Agreement after Closing.

**4.08    **Tobe responsible for its own legal and other professional fees associated withthe transaction, except for the cost of negotiating, drafting and preparing theAgreement of Purchase and Sale, which costs shall be shared equally by thePurchasers and the Vendor.  The parties acknowledge that the costs to be sharedequally shall include the fees of both the Vendor's solicitor and thePurchaser's solicitor as they relate to the negotiation, drafting andpreparation of the Agreement of Purchase and Sale.

**4.09    **TheVendor shall execute on behalf of the Corporation, a demand promissory note inthe amount of any funds advanced by the Purchasers to the Corporation for thepurpose of providing interim financing to ensure continued operation of theCorporation prior to the Closing Date, which Promissory Note shall be forgivenby the Purchasers upon successful completion of the transaction.

**4.10    **TheVendors shall not remove, transfer or otherwise deal with any equipment,machinery, fixtures or chattels of any type or form belonging to theCorporation and found on the premises of the Corporation prior to the ClosingDate, except for the following items:-

four (4) deskswood veneer with returns (Syd's, Mark's, Ron's, Spare)            four (4) chairs            photocopymachine            computerequipment            two (2) filecabinets (black)

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All located atthe office premises of the Vendor, being Unit 21

**4.11    **Tocause the Corporation to execute and to deliver to the Purchasers at the Timeof Closing, a Non-Competition/Non-Solicitation Confidentiality Agreement in theform of the unexecuted agreement annexed hereto as Schedule "C".

**4.12    **TheVendor covenants to obtain and produce upon Closing a full and final releasefrom Mr. R. Husczo relating to any and all monies owed to him by theCorporation to the Closing Date.

**4.13    **TheVendor shall produce upon Closing a full and final release relating to any andall monies owing to it by the Corporation for management fees or otherwise.

**4.14    **Todischarge all liens and encumbrances and other security interests, if any,against the assets of the Corporation and without limiting the generality ofthe foregoing including the Security Interest of BODKIN CAPITAL CORPORATIONregistered under the Personal Property Security Registration System as Registration20011219 1037 1616 4209; Provided that should the Vendor be unable to obtainany such discharge on or before the due date of the Promissory Note given bythe Purchasers to the Vendor on Closing then the Purchasers shall have theright of set off against the Promissory Note for the full amount of anyliability of the Corporation for which any such lien, encumbrance or securityinterest has been given.

**4.15    **Toobtain and produce upon Closing a Clearance Certificate from the CCRA withrespect to any tax liability or potential tax liability of the Vendor arisingout of its status as a non-resident and the sale of the Purchased Shares;Provided that if such Clearance Certificate is not produced on or before thedue date of the Promissory Note given by the Purchasers at Closing thenPurchasers shall be entitled to withhold payment under the Promissory Noteuntil the Clearance Certificate is produced.

**                                                                 ARTICLE5.00                   REPRESENTATIONSAND WARRANTIES OF THE PURCHASERS**

**5.01    **The Purchasersare not non-Canadian persons as defined in the Investment Canada Act.

**5.02    **ThisAgreement has been duly executed and delivered by the Purchasers and is a validand binding obligation to the Purchasers enforceable in accordance with itsterms.

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                                                                 **ARTICLE6.00                                             COVENANTSOF THE PURCHASERS**

** **

The Purchaserscovenant and agree with the Vendor that they will do or cause to be done thefollowing:

**6.01    **Deliverthe Purchase Price to the Vendor at the Time of Closing in accordance with theprovisions of Article 2.02, subject to adjustments and holdbacks as the partiesmay agree upon;

**6.02    **Complyin all respects with any and all of its further covenants and obligationscontained in this Agreement or arising out of the Agreement after Closing andwithout limiting the generality of the foregoing including compliance with theterms, provisions and procedures set out in Article 2.02.

**6.03    **Tocause the Corporation, subsequent to Closing, to prepare and file in a timelymanner, the income tax returns for the fiscal period ending on the EffectiveDate of October 31, 2002 and to cause the Corporation to pay the income tax dueupon such filing.

**6.04    **Tobe responsible for its own legal and other professional fees associated withthe transaction, except for the cost of negotiating, drafting and preparing theAgreement of Purchase and Sale, which costs shall be shared equally by thePurchasers and the Vendor.  The parties acknowledge that the costs to be sharedequally shall include the fees of both the Vendor's solicitor and thePurchaser's solicitor as they relate to the negotiation, drafting andpreparation of the Agreement of Purchase and Sale.

**6.05    **Topay for and on behalf of the Corporation at the Time of Closing by certifiedcheque or bank draft the sum of Fifteen Thousand ($15,000.00) Dollars to R.Husczo as full and final satisfaction of monies loaned to the Corporation by R.Husczo and to further pay at the time of Closing the sum or Seven Thousand($7,000.00) to the Vendor in full and final satisfaction of outstandingmanagement fees owing by the Corporation to the Vendor to the Closing Date.

**6.06     **To execute and deliver to the Corporation, its directors andofficers at the Time of Closing a full release of any claims which thePurchasers or either of them may have against the Corporation, such directorsand officers for unpaid bonuses, wages or damages as a result of thetermination of their employment with the Corporation.

**6.07    **Toexecute and deliver to the Vendor at the Time of Closing a Promissory Note inthe form attached hereto as Schedule "A".

 

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**                                                                 ARTICLE7.00             SURVIVALOF COVENANTS, REPRESENTATIONS AND WARRANTIES**

**7.01    **The covenants, representationsand warranties of the Vendor contained in this Agreement or  in any document orcertificate given pursuant hereto relating to the tax liability of theCorporation shall survive the Closing and, notwithstanding the Closing, nor anyinvestigation made by or on behalf of the Purchasers, shall continue in fullforce and effect for the benefit of the Purchasers indefinitely.

**7.02**    The covenants, representationsand warranties of the Vendor contained in this Agreement or  in any document orcertificate given pursuant hereto relating to any matters other than the taxliabilities of the Corporation shall survive the Closing and, notwithstandingthe Closing, nor any investigation made by or on behalf of the Purchasers,shall continue in full force and effect for the benefit of the Purchasers for aperiod of two (2) years immediately following the Closing Date.

**7.03**     The covenants, representationsand warranties of the Purchasers contained in this Agreement and contained inany document or certificate given pursuant hereto shall survive the Closing ofthe purchase and sale of the Purchased Shares herein provided for and,notwithstanding such Closing, nor any investigation made by or on behalf of theVendor, shall continue in full force and effect for the benefit of the Vendorfor a period of****two (2) years immediately following the Closing Date.

**ARTICLE8.00PURCHASERS'CONDITIONS OF CLOSING**

**8.01**    The purchase by the Purchasers of the Purchased Sharesherein provided for is subject to the following terms and conditions for theexclusive benefit of the Purchasers to be fulfilled and/or performed at orprior to the Time of Closing;

(a)    Therepresentation and warranties of the Vendor contained in Article 3.00 hereofshall be true and correct as of the date hereof and each and every one of suchrepresentations and warranties is deemed to be a condition;

(b)   TheVendor shall have complied with all covenants and agreements herein agreed tobe performed or caused to be performed by it;

(c)   Thecovenants, representations and warranties of the Vendor contained in thisAgreement, or in any Schedule hereto, or in any certificate or other documentdelivered to the Purchasers pursuant hereto shall be true and correct on and asof the Closing Date with the same force and effect as though such covenants,representations and warranties had been made on and as of such date (andsubject only to such changes as are contemplated in this Agreement), and thePurchasers shall have received at the Time of Closing on the Closing Date acertificate dated the Closing Date, in form satisfactory to counsel for thePurchasers acting reasonably, signed under seal by the Vendor, to the effectthat such covenants, representations and warranties referred to above are trueand correct on and as of the Closing Date with the same force and effect asthough  made on and as of such date; provided that the acceptance of suchcertificate and the Closing of the transaction herein provided for shall not bea waiver of the covenants, representations and warranties contained in Article3.00****or Article 4.00 or in any Schedule hereto or in any certificate ordocument given pursuant to this Agreement or in the certificate under thisclause 8.01 (c)  which covenants, representations and warranties shall continuein full force and effect as provided in Article 7.00 hereof;

 

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(d)   Atthe Closing Date the Purchasers shall be satisfied in its sole discretion thatany objection, issue or matter raised as a result of the due diligenceperformed by it and on its behalf by its professional advisors pursuant toArticle 4.01 have been adequately dealt with;

(e)   Nosubstantial damage by fire or other hazard to the physical assets of the  Corporationshall have occurred prior to the Time of Closing;

(f)   All required consents, approvals, orders and authorizations of anyperson including lenders and governmental and regulatory authorities and bodiesand licensors, if necessary, shall have been obtained;

(g)  Execution and delivery by the Vendor and by any director, officer or keyemployee of the Corporation of a full and final release of claims against theCorporation up to and including the Closing Date except for claims arising outof this Agreement;

(h)  Execution and delivery by the Vendor and Sydney to the Purchasers at theTime of Closing of a Non-Competition/Non-Solicitation Confidentiality Agreementin the form of the unexecuted agreement annexed hereto as Schedule "C".

**8.02**     Incase any one or more of the foregoing conditions shall not have been fulfilledand/or performed to the satisfaction of the Purchasers on or before the ClosingDate,  the Purchasers may rescind this Agreement by delivering written noticeto the Vendor and in such event the Purchasers shall be released from allobligations hereunder and unless the Purchasers can show that the condition orconditions for the non-performance of which the Purchasers have rescinded suchAgreement are reasonably capable of being performed or caused to be performedby the Vendor, then the Vendor shall also be released from all obligationshereunder; provided that any of the said conditions  may be waived in whole orin part by the Purchasers without prejudice to its rights of rescission in theevent of the non-fulfilment of any other condition or conditions, any suchwaiver to be binding upon the Purchasers only if it is in writing.

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**ARTICLE 9.00VENDORS CONDITIONSOF CLOSING**

**9.01    **The sale by the Vendors of the Purchased Shares herein provided foris subject to the following terms and conditions for the exclusive benefit ofthe Vendors to be fulfilled and/or performed at or prior to the Time ofClosing;

(a) The representation and warranties of thePurchaser contained in Article 5.00 hereof shall be true and correct as of thedate hereof and each and every one of such representations and warranties isdeemed to be a condition;

(b)The Purchasers shall have complied with allcovenants and agreements herein agreed to be performed or caused to beperformed by it;

(c)  Thecovenants, representations and warranties of the Purchasers contained in thisAgreement, or in any Schedule hereto, or in any certificate or other documentdelivered to the Vendor pursuant hereto shall be true and correct on and as ofthe Closing Date with the same force and effect as though such covenants,representations and warranties had been made on and as of such date (andsubject only to such changes as are contemplated in this Agreement), and theVendor shall have received at the Time of Closing on the Closing Date acertificate dated the Closing Date, in form satisfactory to counsel for theVendor acting reasonably, signed under seal by the Purchasers, to the effectthat such covenants, representations and warranties referred to above are true andcorrect on and as of the Closing Date with the same force and effect as though made on and as of such date; provided that the acceptance of such certificateand the Closing of the transaction herein provided for shall not be a waiver ofthe covenants, representations and warranties contained in Article 5.00****orArticle 6.00 or in any Schedule hereto or in any certificate or document givenpursuant to this Agreement or in the certificate under this clause 9.01 (3) which covenants, representations and warranties shall continue in full forceand effect as provided in Article 7.00 hereof;

**9.02**     In case any one or more of the foregoing conditions shall not befulfilled and/or performed to the full satisfaction of the Vendor on or beforethe Closing Date, the Vendor may rescind this Agreement by delivering writtennotice to the Purchasers and in such event the Vendor shall be released fromall obligations hereunder and unless the Vendor can show that the condition forthe non-performance of which the Vendor has rescinded such agreement isreasonably capable of being performed or caused to be performed by thePurchasers, then the Purchasers shall also be released from all obligationshereunder; provided that the said conditions may be waived in whole or in part bythe Vendor without prejudice to its rights of recision in the event of thenon-fulfillment of any other condition or conditions  any such waiver to bebinding upon the Vendor only if it is in writing.

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**ARTICLE 10.00INDEMNIFICATION**

**10.01**   TheVendor covenants and agrees to indemnify and save harmless the Purchasers andthe Corporation of and from any loss whatsoever arising out of, under orpursuant to:

(a)   all debts, liabilities, contracts or engagements whatsoever, existing atthe Closing Date save and except only those liabilities existing and disclosedon the books of the Corporation as at the Effective Date or subsequentlyincurred in the ordinary course of business;

(b)   all contingent liabilities which the Corporation  becomes obligated topay, and which existed as at the Closing Date and were not disclosed to thePurchaser;

(c)    any reassessment for income or corporate tax, interest and/or penaltiesfor any period between August 1, 2000 and the fiscal year ending January 31,2002, inclusive, for which no adequate reserve has been provided for anddisclosed in the Financial Statements of the Corporation for such period**,**other than a reassessment disallowing an expense or a deduction claimed by theCorporation in respect of which the Corporation subsequently will be entitledto claim capital cost allowances pursuant to the regulations to the Income TaxAct (Canada);

(d)   any loss suffered by the Purchasers or the Corporation as a result ofany breach of representation, warranty or non-performance or non-fulfilment ofany covenant contained in this Agreement;

(e)    all claims, demands, costs and expenses in respect of the foregoing.

**10.02  **Itis understood that the Vendor shall not be responsible to indemnify and saveharmless the Purchasers and the Corporation for any loss arising out of andmatter predating August 1, 2000 when the Vendor originally purchased thePurchased Shares from the Purchaser.

**10.03  **ThePurchasers shall forthwith notify the Vendor of any debts, liabilities,contracts, engagements or reassessments for which the Vendor may be liableunder Section 10.01 and the Vendor shall have the right to participate in anynegotiations with respect thereto.  If the Corporation receives an assessmentor reassessment in respect of which the indemnity of the Vendor hereunder mayextend or relate, the Purchasers shall cause the Corporation forthwith afterreceipt thereof to deliver to the Vendor a copy of such assessment orreassessment and the Purchasers shall notify the Vendors of its claim, if any,against the Vendor under the within indemnity within fifteen (15) days afterreceipt of such assessment or reassessment and shall take all action necessaryto preserve the Corporation's rights to object to the assessment orreassessment.  Unless the Purchasers shall have complied with the provisions ofthe immediately preceding sentence, the liability of the Vendor to indemnify itor the Corporation with respect to such assessment or reassessment shall cease.

 

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**10.04**   TheVendor shall at all times have the right at their sole and only expense todispute and contest in the name of the Corporation any debts, liabilities,contracts, engagements or reassessments for which the Vendor may be liableunder Section 10.01 provided, however, that with respect to any reassessmentfor income, corporate, sales, excise or other tax, the Vendor's right to socontest shall only apply after the payment of any such reassessment.  Thepayment of any such reassessment by the Vendor on behalf of the Corporationshall be repaid to the Vendor if repaid by the taxing authority.  ThePurchasers will fully cooperate and will cause the Corporation to fullycooperate with the Vendor and their counsel in any proceedings with respect toany such debts, liabilities, contracts, engagements or reassessments.

**ARTICLE 11.00CLOSINGARRANGEMENTS**

**11.01  **TheClosing shall take place at the Time of Closing on the Closing Date at theoffices of McBride, Wallace, Laurent & Cord and subject to all other termsand conditions hereof being complied with, including the payment of thePurchase Price. 

**11.02**   Atthe Time of Closing on the Closing Date and upon fulfillment of all theconditions set out in Article 8.00 which have not been waived in writing by thePurchasers, and further upon of all the conditions set out in Article 9.00which have not been waived in writing by the Vendor, the Vendor shall deliverto the Purchasers certificates representing all the Purchased Shares dulyendorsed in blank for transfer and will cause the transfer of such shares to beduly and regularly recorded in the name of the Purchasers and will cause all ofthe directors and officer of the Corporation to resign in favour of thePurchasers and its nominees whereupon, subject  to all other terms andconditions hereof being complied with, payment of the Purchase Price shall bepaid and satisfied in the manner provided in Article 2.00.

**ARTICLE 12.00COMMISSIONS, ETC.**

**12.01**   TheVendor covenants and agree with the Purchasers to indemnify and save harmlessthe Purchasers from and against any claims whatsoever for any commission orother remuneration payable or alleged to be payable to any broker, agent orother intermediary who has acted for the Vendor in connection with the sale ofthe Purchased Shares.

 

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**ARTICLE 13.00NOTICES**

**13.01**   Anynotice, direction or other instrument required or permitted to be given to theparties hereto shall be in writing and addressed to the party or parties andmay be given either by mailing the same postage prepaid; or by personaldelivery; or by facsimile transmission to the following numbers:

To the Vendor as follows:

c/o Mark Miziolek            1384 Clearwater Crescent            Oakville, Ontario            L6H 7J7

Fax: (905) 339-1981

copy to:                                    **BorgesBanasinski Rolle LLP**704-10 Kingsbridge Garden CircleMississauga, OntarioL5R 3K6

Fax: (905) 502-3478 

to the Purchasers at:                  23 ArmstrongAvenueGeorgetown, OntarioL7G 4S1

Fax: (905) 877-3995

copy to :                                   Paul R.Laurent**McBride, Wallace, Laurent & Cord**5464 Dundas Street West, 2nd Floor,Toronto, Ontario M9B 1B4

Fax: (416) 231-6630

Any notice, direction or other instrument required aforesaid ifdelivered shall be deemed to have been given or made on the date on which itwas delivered if delivered personally or sent by facsimile transmission duringnormal business hours or on the next business day if sent by facsimiletransmission on Saturday, Sunday or Statutory Holiday or if mailed shall bedeemed to have been given or made on the fourth (4th ) business dayfollowing the day on which it was mailed.  If notice is sent by facsimiletransmission, a copy shall also be mailed forthwith.

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The Purchasers or the Vendor may change its or their address forservice from time to time by notice given in accordance with the foregoing.

**ARTICLE14.00TIMEOF THE ESSENCE**

**14.01**   Time shall be of the essence of this Agreement.

**ARTICLE15.00EXECUTIONIN COUNTERPARTS**

**15.01  **This Agreement may be executedin one or more counterparts, each of which so executed shall constitute anoriginal and all of which together shall constitute one and the same agreement.Facsimile signatures will be accepted by all parties if they were originalsignatures.

**ARTICLE16.00ENTIREAGREEMENT**

**16.01**   This Agreement, including theSchedules hereto, constitutes the entire agreement between the parties hereto. There are not and shall not be any verbal statements, representations,warranties, undertakings or agreements between the parties and this agreementmay not be amended or modified in any respect except by written instrumentsigned by the parties hereto.

**ARTICLE17.00PROPERLAW OF CONTRACT**

**17.01  **This Agreement shall beconstrued and enforced in accordance with, and the rights of the parties shallbe governed by, the laws of the Province of Ontario.  Each of the partieshereto hereby irrevocably attorns to the jurisdiction of the courts of theProvince of Ontario.

**ARTICLE18.00BENEFITAND BINDING NATURE OF THE AGREEMENT**

**18.01**   This Agreement shall enure tothe benefit of and be binding upon the parties hereto and their respectiveheirs, legal personal representatives, successors and assigns but shall not beassignable by either of the parties hereto prior to the Time of Closing withoutthe written consent of the other party hereto.

 

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**18.02**   The Corporation has executedthis Agreement by its duly authorized officer in that regard to signify itsintentions to be bound by the terms, provisions and conditions of thisAgreement and to do all things as may be reasonably required to carry out theintention of the parties hereto.

**18.03  **Sydney is executing thisAgreement to acknowledge and confirm his intention and covenant to execute theNon Competition/Non Solicitation Agreement in the form of the unexecutedagreement annexed hereto as Schedule "C" and to execute the StatutoryDeclaration referred to in Paragraph 4.02 in his capacity as Chief ExecutiveOfficer of the Corporation

**IN WITNESS WHEREOF THIS AGREEMENT** has been executed by the parties hereto.

in the presence of                                  )           

)                                                                      

)           Richard MacArthur

)

)           ______________________________

)           John Whittaker

)           

)           **ARS NETWORKS, INCORPORATED**

)           

)           

)           Per: ___________________________

)                       Name:Title: 

)           I have authority to bind the Corporation

)           

)           **T & T DIESEL POWER LIMITED**

)           

)           Per: __________________________

)                       Name: Title:

)                  I have authority to bind theCorporation

)           

)

)           _______________________________

)                       Sydney Harland

** **

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**SCHEDULE "A"**

**PROMISSORY NOTE**

FOR VALUERECEIVED, the undersigned, RICHARD MacARTHUR and JOHN WHITTAKER, jointly andseverally, promise to pay to ARS NETWORKS INCORPORATED, six (6) monthsfollowing the Closing Date as set out in anAgreement of Purchase and Sale dated the 26th day of November, 2002(the "Share Purchase Agreement"), entered into between the undersigned, asPurchasers, and ARS Networks Incorporated, as Vendor, the sum of FORTY-SEVENTHOUSAND ($47,000.00) DOLLARS without interest. 

Failure to payin accordance with this Promissory Note shall constitute an Event of Defaultfor the purposes of the Escrow Agreement between the parties and dated the 26thday of November, 2002.

Presentment,protest, notice of protest and notice of dishonour are hereby waived.

Provided thatduring the term of this Promissory Note, and the undersigned, not being indefault, the undersigned may pay from time to time the whole or any portion ofthe principal sum then outstanding without notice or bonus.

DATED atEtobicoke  this  10th day of  January,  2003

WITNESS:

____________________________________                                                                        RichardMacArthur

____________________________________                                                                        John Whittaker

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**SCHEDULE"B"**

**ESCROW AGREEMENT**

**MEMORANDUM OF AGREEMENT**made as of the10h day of January, 2003.

**B E T W E EN:**

**RICHARD MacARTHUR and JOHN WHITTAKER**,

(hereinafter called the "Pledgor")

OF THE FIRST PART

- and -

**ARS NETWORKS INCORPORATED**, a corporationincorporated under the laws of the State of New Hampshire,

(hereinafter called the "Pledgee")

OF THE SECOND PART

- and -

**MCBRIDE WALLACE LAURENT & CORD LLP**,Solicitors, of the City of Etobicoke, in the Province of Ontario

(hereinafter called the "Escrow Agent")

OF THE THIRD PART

- and - 

**T & T DIESEL POWER LIMITED**, acorporation incorporated under the laws of the Province of Ontario,

(hereinafter called or the "Corporation");

OF THE FOURTH PART

**WHEREAS** pursuant to a share purchaseagreement dated November 26, 2002 (the "Agreement"), the Pledgeeagreed to sell and the Pledgor agreed to purchase 100 Class A common and 100Class B common shares  in the capital of the Corporation (the "PledgedShares"). 

**AND WHEREAS** the purchase price for thePledged Shares was satisfied in part by the Pledgor issuing a promissory note(the "Note") in favour of the Pledgee;

 

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**AND WHEREAS** as additional security forthe fulfilment of its obligations under the promissory note the Pledgor hasagreed to pledge the Pledged Shares to the Pledgee pursuant to the Agreementand to deliver the share certificates for the Pledged Shares to the EscrowAgent as escrow agent subject to the terms and conditions hereof and of thePledge Agreement;

**NOW THEREFORE THIS AGREEMENT WITNESSETH**that in consideration of the premises and of the respective covenants andagreements hereinafter contained and other good and valuable consideration (thereceipt and sufficiency of which is hereby acknowledged by the parties hereto),the parties hereto covenant and agree with each other as follows:

1.                     ThePledgor and the Pledgee hereby appoint the Escrow Agent, and the Escrow Agenthereby agrees to act, as escrow agent in accordance with the terms andconditions of this agreement.

2.                     Thecertificates representing the Pledged Shares, duly endorsed in blank fortransfer, is hereby delivered to the Escrow Agent and shall be held andretained by the Escrow Agent as agent for the Pledgee subject to the terms andconditions hereof and the terms and conditions of this Agreement.

3.                     Inthe event that an Event of Default (as defined in the Note) occurs, then upondelivery by the Pledgee of written notice of such default to the Escrow Agent,together with an affidavit setting forth particulars of the Pledgor's default(a copy of which shall be sent concurrently to the Pledgor), the Escrow Agentshall deliver the certificates representing the Pledged Shares to the Pledgee.

4.                     Theacceptance by the Escrow Agent of its duties and obligations under thisagreement is subject to the following terms and conditions, which the partiesto this agreement hereby agree shall govern and control with respect to itsrights, duties, liabilities and immunities:

(a)        the Escrow Agent shall not be responsible orliable in any manner whatever for the sufficiency, correctness, genuineness orvalidity of any security deposited with it;

(b)        the Escrow Agent shall be protected inacting upon any written notice, request, waiver, consent, receipt, statutorydeclaration or other paper or document furnished to it, and signed by thePledgee, not only as to its due execution and the validity and effectiveness ofits provisions but also as to the truth and acceptability of any informationtherein contained, which it in good faith believes to be genuine and what itpurports to be.  The Pledgee agrees to indemnify and save harmless the EscrowAgent from and against any and all liabilities and claims made against it inrespect of any action or thing it may take or do or omit to take or do inconnection herewith except as a result of its wilful neglect or defaulthereunder.  This indemnity shall survive the termination of this agreement;

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(c)        except for acts of gross negligence ormisconduct, the Escrow Agent shall not be liable for any act done or step takenor omitted by it in good faith, or for any mistake of act or law;

(d)        the Escrow Agent may consult with and obtainadvice from legal counsel in the event of any question as to any of theprovisions hereof or its duties hereunder, and it shall incur no liability andshall be fully protected in acting in good faith in accordance with the opinionand instructions of such counsel.  The cost of such services shall be added toand be a part of the Escrow Agent's fee hereunder.  The Pledgor shall pay allfees and expenses of the Escrow Agent hereunder forthwith upon demand therefor;

(e)        the Escrow Agent shall have no duties exceptthose which are expressly set forth herein, and it shall not be bound by anynotice of claim or demand with respect thereto, or any waiver, modification,amendment, termination or rescission of this agreement, unless received inwriting, and signed by the Pledgee and, if its duties herein are affected,unless it shall have given its prior written consent thereto;  and

(f)         in the event of a dispute between theparties with respect to the matters herein, the Escrow Agent may, at itsoption, deposit all documents and certificates held by it hereunder with acourt of competent jurisdiction and seek direction from such court.

5.                     Uponpayment in full by the Pledgor of its obligations, liabilities, andindebtedness under the Purchase Agreement, the Pledgee shall forthwith deliveran acknowledgement to that effect to the Escrow Agent and thereafter the EscrowAgent shall deliver to the Pledgor the certificate or certificates representingthe Pledged Shares or, in the case of a partial payment of the purchase price,the pro rata amount of the Pledged Shares released from the pledge of thePledge Agreement in accordance with the terms thereof, duly endorsed in blankfor transfer and upon delivery of the last of the Pledged Shares the EscrowAgent shall be released of all its obligations hereunder.  If the Pledgee failsto deliver such acknowledgement as aforesaid, the Escrow Agent may deliver thesaid certificates to the Pledgor upon receipt by it of evidence satisfactory toit as to payment in full by the Pledgor of its obligations, liabilities andindebtedness under Purchase Agreement.

6.                     Thisagreement may be amended or cancelled by and upon written notice to the EscrowAgent at any time given jointly by the Pledgee and the Pledgor, but the dutiesor responsibilities of the Escrow Agent may not be released without itsconsent.

7.                    Any notices or other communications required or permitted hereunder shall besufficiently given if sent by registered mail, postage prepaid, if to thePledgee at 1384 Clearwater Crescent, Oakville, Ontario, L6H 7J7; if to thePledgor at 23 Armstrong Avenue, Georgetown, Ontario, L7G 4S1;  if to theEscrow Agent at 5464 Dundas Street West, Toronto, Ontario M9B 1B4; or in any caseto such other address as shall be furnished in writing by any such party to allof the other parties hereto.  Such notices or other communications so givenshall be deemed to have been given on the third business day after the date somailed or the day of delivery if delivered.

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8.                     Thisagreement shall enure to the benefit of and shall be binding upon the partieshereto, their respective heirs, legal personal representatives, successors andassigns.

9.                     Thisagreement shall be governed by and construed in accordance with the laws of theProvince of Ontario and the laws of Canada applicable therein.  The partiesirrevocably attorn to the jurisdiction of the courts of the Province ofOntario.

**IN WITNESS WHEREOF THIS AGREEMENT** hasbeen executed by the parties hereto on the date first above written.

**SIGNED,SEALED AND DELIVERED**     )           

   in the presence of                                           )   

)        ______________________

)        Richard MacArthur

)    

)        ______________________

)         John Whittaker

)               

)

)           **ARS NETWORKS INCORPORATED**

)           Per:

)                       _____________________

)                       Name:

)                       Title:

)           I have authority to bind the Corporation

)

)           **McBRIDE WALLACE LAURENT &CORD LLP**

)           Per:

)                       _____________________

)

)           **T & T DIESEL POWER LIMITED**

)           Per:

)                       ______________________

)                       Name:

)                       Title:

)           I have authority to bind the Corporation

 

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**                                                                SCHEDULE"C"**

**                                        NON-COMPETITION/NON-SOLICITATION                                           AND CONFIDENTIALITY AGREEMENT**

**WHEREAS:**

A.        Pursuant to an Agreement of Purchase and Sale dated the 26thday of November, 2002 (the "Share Purchase Agreement") entered into between the Covenantor hereto, as Vendor and Richard MacArthur and John Whittaker, asPurchasers and T & T Diesel Power Limited (the "Corporation"), thePurchasers purchased from the Vendor, the Purchased Shares relating to theBusiness.

2.                 Defined terms used in this Agreement shall have the same meanings hereinas are attributed thereto in the Share Purchase Agreement or as otherwise setout herein.

**INCONSIDERATION** of the completion of the transaction contemplated by theShare Purchase Agreement and in order to induce the Purchaser to do so, and themutual agreements and covenants hereinafter contained, the sufficiency of whichis hereby expressly acknowledged by the Covenantor, the Covenantor herebycovenants and agrees as follows:

(1)              For a period of three (3)  year(s) following the Closing Date, it shallnot for whatever reason and with or without cause, either individually or inpartnership or jointly or in conjunction with any affiliate, person or persons,firm, association, syndicate, company, corporation or entity as principal,agent, employee, shareholder, owner, investor, partner or in any other mannerwhatsoever:

a)      directlyor indirectly, carry on or be engaged in or be concerned with or interested inor advise, lend money to, guarantee the debts or obligations of or permit itsname  to be used or employed by any person, persons, firm, association,syndicate, company, corporation or entity engaged in or concerned with orinterested in a Competitive Business within the Province of Ontario;

b)      knowinglysolicit, interfere with or endeavour to entice away from the Purchasers or theCorporation any supplier, customer, client, agent, sub-agent or employee or anyother person, firm, corporation or entity in the habit of dealing with theCorporation or the Business of the Corporation;

c)      interferewith or knowingly entice away or otherwise attempt to obtain the withdrawal ofany franchisor, licensor, independent contractor, agent or sub-agent oremployee from any contractual relationship, either written or oral with theCorporation or the Purchaser in existence at the Closing Date;

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PROVIDED thateach of clauses (a), (b) and (c) of this paragraph shall reflect separatecovenants on the part of the Covenantor and shall be severable one from theother.

4       For a period of three (3) year(s) following the Closing Date, it shall noteither alone or in conjunction with any individual, firm, corporation,association or other entity, whether as principal, agent, shareholder or in anyother capacity whatsoever:

a)      divulgeto any person, firm or corporation, any name, address or requirement of anyfranchisor, licensor, supplier, customer, client, agent, sub-agent, employee orindependent contractor of the Business existing at the Closing Date;

b)      divulgeto any person, firm or corporation, any process, method or device of theBusiness and without limiting the generality of the foregoing, includingpurchasing, sales, advertising, training, recruiting, supply and/ordistribution process, method or device, or any other information in respect ofthe Business, other than such information that is in the public domain;

c)      divulgeto any person, firm or corporation any of the financial affairs of theBusiness;

PROVIDED thateach of clauses (a), (b) and (c) of this paragraph shall reflect separatecovenants and shall be severable one from the other.

5    All of the restrictions contained herein are reasonable and valid, andall defences to the strict enforcement of all or any portion thereof by thePurchasers and/or the Corporation are hereby waived by the Covenantor.  If anyof the covenants contained herein shall be held unreasonable by reason of thearea, duration or type or scope of service covered by such covenant, then suchcovenant shall be given effect to in such reduced form as may be determined byany court of competent jurisdiction.  In the event that any clause or portionhereof should be unenforceable or declared invalid for any reason whatsoever,such unenforceability or invalidity shall not affect the enforceability orvalidity of the remaining portions hereof and such unenforceable or invalid portionshall be severable from the remainder hereof.

6    Any remedy at law for any breach of the provisions hereof by theCovenantor may be inadequate and that in the event of such breach, thePurchasers and/or the Corporation shall be entitled to make an application tothe appropriate court granting the Purchasers and the Corporation  temporaryand/or permanent injunctive relief against the offending Covenantor, withoutthe necessity of proving actual damage to the Purchasers or the Corporation orthe Business of the Corporation.

7    A waiver of any breach of a covenant or provision contained herein bythe Purchasers or the Corporation shall only be a waiver in respect of theparticular breach thereof giving rise to such waiver.

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8    If the Covenantor is in breach of any of such covenants herein setforth, the running of the period of proscription shall be stayed and shallrecommence upon the date that it ceased to be in breach thereof, whethervoluntarily or by injunction.

9    This Non-Competition/Non-Solicitation and Confidentiality Agreementshall be governed by and interpreted in accordance with the laws of theProvince of Ontario, and the parties hereby submit to the non-exclusivejurisdiction of the courts of the Province of Ontario; provided, however, thatneither party shall be constrained from taking legal action in any otherjurisdiction for the purpose of enforcing its rights hereunder.

10  For the purposehereof, the following terms shall have the following meanings:

a)      **"Business"**means the business being carried on by the Corporation as at the day followingthe Closing Date and without limiting the generality of the foregoing,including the manufacture, assembly and sale of electric generator sets, genset enclosures, equipment trailers, service and maintenance contracts forowners and users of products built and distributed by T & T Diesel PowerLimited;

b)      **"CompetitiveBusiness"**means a Business that is substantially similar to the Business.

(8)   This Agreement and everything contained herein shall extend to and enureto the benefit of and be binding upon the parties hereto and their respectiveheirs, executors, administrators, successors, assigns and legalrepresentatives.

**IN WITNESSWHEREOF** the undersigned has duly executed this Agreement this 10th day ofJanuary, 2003.

 

**SIGNED, SEALED AND DELIVERED**     )           **ARS NETWORKSINCORPORATED**

in the presence of                                  )           

)           Per:                                                              

)                       Name:  Sydney Harland

)                       Title:

)           I have authority to bind the Corporation