Document:

exv10w01

 

Exhibit 10.1

THIRD ADDITIONAL CLOSING AGREEMENT

     THIS THIRD ADDITIONAL CLOSING AGREEMENT (this “Agreement”) is made as of March 17, 2006, among
(i) Infinity Energy Resources, Inc., a Delaware corporation (“Infinity”), (ii) HFTP Investment
L.L.C. (“HFTP”) and AG Offshore Convertibles, Ltd. (“AG Offshore”), (iii) Gaia Offshore Master
Fund, Ltd. (“Gaia”) and Leonardo, L.P. (“Leonardo”) and (iv) Consolidated Oil Well Services, Inc.,
a Kansas corporation (“Consolidated”), CIS-Oklahoma, Inc., a Kansas corporation (“CIS”), Infinity
Oil & Gas of Wyoming, Inc., a Wyoming corporation (“Infinity-Wyoming”), Infinity Oil & Gas of
Kansas, a Kansas corporation (“Infinity-Kansas”) and Infinity Oil and Gas of Texas, Inc., a
Delaware corporation (“Infinity-Texas,” and together with Consolidated, CIS, Infinity-Wyoming,
Infinity-Kansas and Infinity-Delaware, the “Subsidiaries”). Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in the Securities Purchase
Agreement (as defined below).

W I T N E S S E T H:

     WHEREAS, Infinity (successor by merger to Infinity, Inc.), HFTP, AG Offshore and AG Domestic
Convertibles, L.P. (“AG Domestic”) entered into that certain Securities Purchase Agreement (as
further amended, restated, supplemented or otherwise modified from time to time, the “Securities
Purchase Agreement”) dated as of January 13, 2005;

     WHEREAS, pursuant to Section 1(b) of the Securities Purchase Agreement, Infinity has the
right, subject to the satisfaction of certain conditions, to sell Additional Notes and Additional
Warrants to the Buyers thereunder;

     WHEREAS, pursuant to the First Additional Closing Agreement, dated as of September 7, 2005,
among HFTP, Gaia, AG Offshore, the Subsidiaries and the other parties named therein (the “First
Additional Closing Agreement”), AG Offshore acquired the right and obligations of AG Domestic
existing under the Transaction Documents with respect to any and all future sales of Additional
Notes and Additional Warrants by Infinity pursuant to the Securities Purchase Agreement;

     WHEREAS, on March 14, 2006, Infinity delivered an Additional Sale Election Notice with respect
to the sale of Additional Notes and Additional Warrants to HFTP and AG Offshore under the
Securities Purchase Agreement (the “Additional Sale Election Notice”);

     WHEREAS, pursuant to the Additional Sale Election Notice, Infinity has separately requested
from HFTP, Gaia, AG Offshore and Leonardo certain waivers of conditions in connection with the
Additional Note Issuance (as defined below);

     WHEREAS, each of HFTP and AG Offshore separately desires to assign its rights to purchase the
Additional Notes and Additional Warrants referenced in the Additional Sale
Election Notice to Gaia and Leonardo, respectively, and each of Gaia and Leonardo, severally
and not jointly, desires to assume such rights; and

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     WHEREAS, Infinity desires to sell, and Gaia and Leonardo, severally and not jointly, desire to
purchase, Additional Notes in an original aggregate principal amount of $8,000,000 and related
Additional Warrants upon the terms and conditions set forth herein and in the Securities Purchase
Agreement (the “Additional Note Issuance”), in accordance with the Schedule of Buyers set forth on
Exhibit A hereto (the “Additional Schedule of Buyers”).

     NOW, THEREFORE, in consideration of the premises set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the
undersigned agrees as follows:

     1. Additional Issuance.

          (a) The Additional Closing Date with respect to the Additional Note Issuance shall be the date
hereof. On such Additional Closing Date, subject to the satisfaction (or waiver) of all of the
conditions set forth herein and in Sections 1(b), 1(d), 6(b) and 7(b) of the Securities Purchase
Agreement, Infinity shall issue and sell to each of Gaia and Leonardo, and each of Gaia and
Leonardo severally agrees to purchase from Infinity, (I) Additional Notes in the principal amount
set forth opposite its name on the Additional Schedule of Buyers, along with (II) the related
Additional 115% Warrants with respect to the number of Additional Warrant Shares equal to the
quotient (rounded to the nearest whole number, with 0.5 rounded up) of (A) 28% of the original
principal amount of the Additional Notes purchased thereby at the Additional Closing, divided by
(B) the Warrant Exercise Price (as defined in the Additional 115% Warrants) on the Additional
Closing Date, and (III) the related Additional 140% Warrants with respect to the number of
Additional Warrant Shares equal to the quotient (rounded to the nearest whole number, with 0.5
rounded up) of (X) 27% of the original principal amount of the Additional Notes purchased thereby
at the Additional Closing, divided by (Y) the Warrant Exercise Price (as defined in the Additional
140% Warrants) on the Additional Closing Date (the “Third Additional Closing”). Infinity hereby
acknowledges and agrees that such purchase by each of Gaia and Leonardo of such Additional Notes
and related Additional Warrants shall satisfy in full any obligations of any of Gaia, Leonardo,
HFTP and AG Offshore under the Securities Purchase Agreement and the other Transaction Documents
with respect to the Additional Sale Election Notice.

          (b) For purposes of Section 4(h) of the Securities Purchase Agreement in connection with the
Third Additional Closing, each Buyer’s Reimbursement Allocation Percentage shall be as set forth on
the Additional Schedule of Buyers, rather than the Schedule of Buyers attached to the Securities
Purchase Agreement.

     2. Assignment of Additional Note Issuance Rights and Obligations.

          (a) AG Offshore hereby transfers and assigns to Leonardo, and Leonardo hereby accepts and
assumes, and agrees to be bound by, all of the rights and obligations of AG Offshore now or
hereafter existing under the Transaction Documents, with respect to the Additional Note Issuance
and any and all future sales of Additional Notes and Additional Warrants by Infinity pursuant to the Securities Purchase Agreement, as if Leonardo had originally
been party to the Transaction Documents in place of AG Offshore (as such rights and obligations
were assigned to and assumed by AG Offshore pursuant to the First Additional

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Closing Agreement). Infinity and the Subsidiaries hereby acknowledge and consent to the assignment by AG Offshore to
Leonardo set forth and described in this Section 2(a), and agree that, accordingly, AG Offshore
shall have no rights or obligations with respect to the Additional Note Issuance or any future
sales of Additional Notes and Additional Warrants by Infinity pursuant to the Securities Purchase
Agreement. The parties hereto agree that Leonardo shall be deemed a “Buyer” under the Securities
Purchase Agreement, an “Investor” under the Registration Rights Agreement, and a “Lender” under
each of the Security Agreement, the Guaranty and the Pledge Agreement and shall be entitled to all
of the rights, and subject to all of the obligations, thereof thereunder with respect to the
Additional Note Issuance and any future sales of Additional Notes and Additional Warrants by
Infinity pursuant to the Securities Purchase Agreement. In connection with being deemed a Lender
for purposes of the Security Agreement, Leonardo consents and agrees to be bound by the provisions
of Section 5.12 of the Security Agreement applicable to each Lender thereunder and affirms the
appointment of Promethean Asset Management L.L.C. as collateral agent for the Buyers on its behalf
pursuant to the terms thereof.

          (b) HFTP hereby transfers and assigns to Gaia, and Gaia hereby accepts and assumes, and agrees
to be bound by, each of the Transaction Documents to which HFTP is a party and all of the rights
and obligations of HFTP now or hereafter existing under the Transaction Documents with respect to
the Additional Notes and related Additional Warrants to be purchased by Gaia as provided in Section
1(a) hereof, as if Gaia had originally been party to the Transaction Documents in place of HFTP.
Infinity and the Subsidiaries hereby acknowledge and consent to the assignment by HFTP to Gaia set
forth and described in this Section 2(b), and agree that, accordingly, HFTP shall have no rights or
obligations with respect to the Additional Note Issuance. The parties hereto agree that Gaia shall
be deemed a “Buyer” under the Securities Purchase Agreement, an “Investor” under the Registration
Rights Agreement, and a “Lender” under each of the Security Agreement, the Guaranty and the Pledge
Agreement and shall be entitled to all of the rights, and subject to all of the obligations,
thereof thereunder with respect to the Additional Note Issuance.

     3. Limited Waiver of Conditions. For purposes of the Additional Note Issuance and
Third Additional Closing described in Section 1(a) only, each of Gaia and Leonardo hereby
separately and not jointly waive (i) the conditions to the Additional Closing set forth in Section
1(b)(A) of the Securities Purchase Agreement; provided, however, that in no event
shall such waiver serve to except the aggregate principal amount of the Additional Note Issuance
described in Section 1(a) hereof from the conditions set forth in Section 1(b)(A) of the Securities
Purchase Agreement with respect to any proposed sale of Additional Notes by Infinity following the
date hereof, and (ii) the requirement in Section 1(d) of the Securities Purchase Agreement that the
Additional Closing Date occur on the tenth Business Day following delivery of the Additional Sale
Election Notice. The limited waiver set forth in this Section 3(a) is not, and shall not be deemed
to be, a waiver of such conditions with respect to any other Additional Closing or under any other
circumstance or a waiver of any other condition, requirement, provision or breach of the Securities
Purchase Agreement or any other Transaction Document.

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     4. Revisions to Series of Additional Notes.

          (a) Each of Infinity, Gaia and Leonardo agree that, for purposes of the Additional Note
Issuance and Third Additional Closing described in Section 1(a) only, certain definitions of each
of the Notes comprising the Series of Notes to be issued at the Third Additional Closing (the
“Third Additional Closing Notes”) shall be revised from that contained in the form of Additional
Note attached to the Securities Purchase Agreement as Exhibit B thereto, as amended by the First
Additional Closing Agreement (the “Form Additional Note”). Accordingly:

               (1) the definition of Fixed Maturity Date set forth in Section 2(a)(xiii) of the Third
Additional Closing Notes shall be revised by substituting the following definition for the
definition therefor set forth in the Form Additional Note:

““Fixed Maturity Date” means September 17, 2007; provided, however,
in the event that the principal amount of Notes of this or any other Series is, in
one or a series of transactions, reduced by at least $5,000,000 during the period
beginning on March 18, 2006 and ending on September 17, 2006, pursuant to (A)
redemption by the Company pursuant to a Company Alternative Redemption (as defined
in Section 7(a)) (other than pursuant to a Mandatory Compliance Redemption (as
defined in Section 13)) with a Company Alternative Redemption Date (as defined in
Section 7(a)) on or prior to September 17, 2006, or (B) conversion by the holders of
the Notes pursuant to a Company Alternative Conversion (as defined in Section 8(a))
(other than pursuant to a Mandatory Compliance Conversion (as defined in Section
13)) for which the Company Alternative Conversion Period (as defined in Section
8(a)) ends on or prior to September 17, 2006 (such reduction described in clauses
(A) and (B) immediately above being referred to as a “Six-Month
Redemption/Conversion”), then the “Fixed Maturity Date” shall mean September 17,
2009; provided, further, that if a Six-Month Redemption/Conversion
occurs and there has been a Maturity Date Extension, then the “Fixed Maturity Date”
shall mean September 17, 2010.”; and

               (2) the definition of Maturity Date Extension set forth in Section 2(a)(xxiv) of the Third
Additional Closing Notes shall be revised by substituting the following definition for the
definition therefor set forth in the Form Additional Note:

““Maturity Date Extension” means the holders of Notes representing at least
two-thirds (2/3) of the aggregate principal amount of the then outstanding Notes
that are of the same Series as this Note, have (A) received a notice from the
Company no earlier than sixty (60) days, and no later than thirty (30) days prior to
September 17, 2008 (which notice the Company may deliver on only one occasion with
respect to such Series of Notes), requesting the holders of such Series of Notes to
extend the Fixed Maturity Date by twelve (12) months and (B) within ten (10)
Business Days of receipt of the notice described in clause (A) (such 10-Business-Day Period, the “Response Period”), agreed in writing to

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extend the Maturity Date of all the Notes of such Series by twelve (12) months, (provided
that, for the avoidance of doubt, if the Company does not receive such written
agreement within the Response Period from the requisite holders of the Notes of such
Series, such requested extension shall be deemed denied and the Fixed Maturity Date
shall not be extended); provided, however, that the Company shall
not have the right to request a Maturity Date Extension, and the holders of Notes
shall not grant or be deemed to have granted a Maturity Date Extension, and the
Fixed Maturity Date shall not be or be deemed to be extended unless and until a Six
Month Redemption/Conversion shall have occurred.”

               (b) Other than as set forth in this Section 4, the Third Additional Closing Notes shall remain
identical to the Form Additional Note. In the event of any conflict between the terms and
provisions of the Form Additional Note and the terms and provisions of this Section 4, the terms
and provisions of this Section 4 shall prevail.

     5. Independent Nature of Gaia and Leonardo. The obligations of each of Gaia and
Leonardo hereunder are several and not joint with the obligations of the other, and neither of Gaia
nor Leonardo shall be responsible in any way for the performance of the obligations of the other
hereunder. Each of Gaia and Leonardo shall be responsible only for its own agreements and
covenants hereunder. The decision of each of Gaia and Leonardo to purchase the Third Additional
Closing Notes and the Additional Warrants to be issued at the Third Additional Closing (the “Third
Additional Closing Warrants”) pursuant to this Agreement has been made by such party independently
of the other and independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of Infinity or any of the Subsidiaries which may have been
made or given by the other or by any agent or employee of the other, and neither of Gaia or
Leonardo nor any of its respective agents or employees shall have any liability to the other (or
any other person or entity) relating to or arising from any such information, materials, statements
or opinions. Nothing contained herein, and no action taken by Gaia or Leonardo pursuant hereto or
thereto, shall be deemed to constitute Gaia and Leonardo as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that Gaia and Leonardo are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated
hereby. Each of Gaia and Leonardo shall be entitled to independently protect and enforce its
rights, including the rights arising out of this Agreement, Third Additional Closing Notes or the
Third Additional Closing Warrants, and it shall not be necessary for the other to be joined as an
additional party in any proceeding for such purpose.

     6. Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns. The successors and
assigns of such entities shall include, without limitation, their respective receivers, trustees or
debtors-in-possession.

     7. Further Assurances. Infinity hereby agrees from time to time, as and when
requested by HFTP, Gaia, AG Offshore or Leonardo, to execute and deliver or cause to be executed
and delivered, all such documents, instruments and agreements, including financing
statements, secretary’s certificates, stock powers and irrevocable transfer agent
instructions, and

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to take or cause to be taken such further or other action as HFTP, Gaia, AG
Offshore or Leonardo may reasonably deem necessary or desirable in order to carry out the intent
and purposes of this Agreement and the Transaction Documents.

     8. Definitions. All words in the singular or plural include the singular and plural
and pronouns stated in either the masculine, the feminine or neuter gender shall include the
masculine, feminine and neuter, and the use of the word “including” in this Agreement shall be by
way of example rather than limitation.

     9. Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.

     10. Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

     11. Merger. This Agreement and the Transaction Documents represent the final
agreement of each of the parties hereto with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or prior or subsequent oral
agreements, among any of the parties hereto.

     12. Execution in Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered to each other
party; provided that a facsimile signature shall be considered due execution and shall be binding
upon the signatory thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

     13. Section Headings. The section headings herein are for convenience of reference
only, and shall not affect in any way the interpretation of any of the provisions hereof.

[Remainder of page intentionally left blank; Signature page follows]

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     IN WITNESS WHEREOF, this Agreement has been duly executed by each of the undersigned as of the
day and year first set forth above.

	 	 	 	 	 
	INFINITY ENERGY RESOURCES, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	President and CEO
	 

	 	 
	 
	 	 
	CONSOLIDATED OIL WELL SERVICES, INC.
	 	 

	 
	 	 
	By:

	 	/s/ Timothy A. Ficker
	 

	 	 
	Name:

	 	Timothy A. Ficker
	 

	 	 
	Title:

	 	VP, CFO, and Secretary
	 

	 	 
	 
	 	 
	CIS-OKLAHOMA, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	CEO and President
	 

	 	 
	 
	 	 
	INFINITY OIL & GAS OF WYOMING, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	President
	 

	 	 
	 
	 	 
	INFINITY OIL & GAS OF KANSAS, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	President
	 

	 	 
	 
	 	 
	INFINITY OIL AND GAS OF TEXAS, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	President
	 

	 	 

 

 

	 	 	 	 	 
	HFTP INVESTMENT L.L.C.
	 	 

	 
	 	 
	By: Promethean Asset Management L.L.C.
Its: Investment Manager
	 	 

	 
	 	 
	By:

	 	/s/ Robert J. Brantman
	 

	 	 
	Name:

Title:

	 	Robert J. Brantman

Partner and Authorized Signatory
	 
	 	 
	GAIA OFFSHORE MASTER FUND, LTD.
	 	 

	 
	 	 
	By: Promethean Asset Management L.L.C.
Its: Investment Manager
	 	 

	 
	 	 
	By:

	 	/s/Robert J. Brantman
	 

	 	 
	Name:

	 	Robert J. Brantman
	Title:

	 	Partner and Authorized Signatory

 

 

	 	 	 	 	 
	AG OFFSHORE CONVERTIBLES, LTD.
	 	 

	 
	 	 
	By: Angelo, Gordon & Co., L.P.
Its: Director
	 	 

	 
	 	 
	By:
	 	/s/ Michael L. Gordon
	 

	 	 
	Name:
	 	Michael L. Gordon 
	 

	 	 
	Title:
	 	Authorized signatory 
	 

	 	 
	 
	 	 
	LEONARDO,

	 	L.P.
	 
	 	 
	By: Leonardo
Capital Management, Inc.
Its: General Partner

	 
	 	 
	 
	 	By:     Angelo, Gordon & Co., L.P.
Its:     Director
	 
	 	 
	By:
	 	/s/ Michael L. Gordon
	 

	 	 
	Name:
	 	Michael L. Gordon
	 

	 	 
	Title:
	 	Authorized Signature
	 

	 	 

 

 

EXHIBIT A

ADDITIONAL SCHEDULE OF BUYERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Principal	 	 	 	 	 	 	 	 	 	Investor’s Legal
	 	 	 	 	Amount of	 	 	 	 	 	Reimbursement	 	Representative’s
	 	 	Buyer Address	 	Additional	 	Allocation	 	Allocation	 	Address and Facsimile
	Buyer’s Name	 	and Facsimile Number	 	Notes	 	Percentage	 	Percentage	 	Number
	 
	Gaia Offshore
Master Fund, Ltd.

	 	Promethean Asset
Management
L.L.C.
17th
Floor

55 Fifth Avenue

New York, New York 10003

Attention: Robert J. Brantman

Telephone: (212) 702-5200

Facsimile: (212) 758-9620

Residence: Cayman Islands
	 	$	4,000,000	 	 	 	50	%	 	 	1.17	%	 	Katten Muchin Rosenman LLP

525 W. Monroe Street

Chicago, Illinois 60661-3693

Attention: Mark D. Wood

Telephone: (312) 902-5200

Facsimile: (312) 902-1061
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leonardo, L.P.

	 	c/o Angelo, Gordon & Co.

245 Park Avenue

New York, New York 10167

Attention: Gary I. Wolf

Telephone: (212) 692-2058

Facsimile: (212) 867-6449

Residence:
	 	$	4,000,000	 	 	 	50	%	 	 	0.33	%	 	Paul, Weiss, Rifkind, Wharton
 & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attention: Douglas A. Cifu

Telephone: (212) 373-3000

Facsimile: (212) 759-3990EARTH SOURCE ENERGY INC.
                                      -and-
                            PACIFIC GEO EXCHANGE INC.
                                      -and-
                              MUELLER FAMILY TRUST
                                      -and-
                                JADE EAGLE TRUST
                                      -and-
                             ARIES DEVELOPMENTS LTD.
                                      -and-
                                  LYNN MUELLER
                                      -and
                                  MARK MCCOOEY
                                      -and-
                                   PAUL CALLON
                                      -and-
                     ESSENTIAL INNOVATIONS TECHNOLOGY CORP.

                            SHARE PURCHASE AGREEMENT

<PAGE>
                                       -2-

                            SHARE PURCHASE AGREEMENT

THIS SHARE PURCHASE AGREEMENT made as of the 3rd day of February, 2005, BETWEEN:

                  Earth Source Energy Inc., a corporation existing under the
                  laws of the Province of British Columbia (hereinafter called
                  "ESE")
                                      -and-
                  Pacific Geo Exchange Inc., a corporation existing under the
                  laws of the Province of British Columbia (hereinafter called
                  "PacGeo")
                                      -and-
                  Lynn Mueller of the Province of British Columbia (hereinafter
                  called "Lynn")
                                      -and-
                  Lynn Mueller, sole trustee of the Mueller Family Trust, a
                  trust settled and constituted under the laws of the Province
                  of British Columbia (hereinafter called the "Mueller Trust")
                                      -and-
                  Mark McCooey of the Province of British Columbia (hereinafter
                  called "Mark")
                                      -and-
                  Mark McCooey, sole trustee of the Jade Eagle Trust, a trust
                  settled and constituted under the laws of the Province of
                  British Columbia (hereinafter called the "Jade Eagle Trust")
                                      -and-
                  Aries Developments Ltd., a corporation existing under the laws
                  of the Province of British Columbia (hereinafter called
                  "Aries")
                                      -and-
                  Paul Callon of the Province of British Columbia (hereinafter
                  called "Callon")
                                      -and-
                  (Mueller Trust, Jade Eagle Trust, and Aries hereinafter
                  individually referred to as a or the "Vendor" and collectively
                  referred to as the "Vendors")
                                      -and-
                  Lynn, and Mark (hereinafter individually referred to as the
                  "Principal" and collectively referred to as the "Principals")
                                      -and-
                  Essential Innovations Technology Corp., a corporation existing
                  under the laws of the State of Nevada (hereinafter called the
                  "Purchaser")

WHEREAS:

1.       PacGeo is the owner, of record and beneficially, of 100 Class A shares
         without par value and 100 Class C shares without par value of ESE;

2.       In aggregate the Vendors and Principals are the owners, of record and
         beneficially, of 1,000,001 Common shares without par value and 1,000
         Class B Preferred shares without par value in the capital of PacGeo and
         as a consequence of the foregoing, the Vendors and Principals are the
         direct owners, of record and beneficially, of all of the issued and
         outstanding shares of all classes in the capital of PacGeo;
<PAGE>
                                      -3-

3.       The Vendors, the Principals and Callon have agreed to sell and the
         Purchaser has agreed to purchase all of the issued and outstanding
         shares of PacGeo and the Shareholder's Loan (as hereinafter described)
         upon the terms and conditions hereinafter set out; and

4.       The Mueller Family Trust, Jade Eagle Trust and Principals have agreed
         to jointly and severally guarantee the obligations of the Vendors.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the respective
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which is acknowledged, the parties hereto agree as
follows:

                                    ARTICLE 1
                            DEFINITIONS AND SCHEDULES

1.1      Definitions
         In addition to the words and phrases defined in the recitals or
         elsewhere in this Agreement, as used in this Agreement, in any schedule
         hereto, in any amendment hereof, in any documents to be executed and
         delivered pursuant to this Agreement and in any documents executed and
         delivered in connection with the completion of the transactions
         contemplated herein, the following words and phrases shall have the
         following meanings, respectively:
         (a)      "Accounts Receivable" means all accounts receivable, trade
                  accounts, notes receivable and other book debts due or
                  accruing due shown on the books of ESE as at the Closing Date,
                  which, for greater certainty, include accounts receivable
                  which are included as part of certain statutory holdbacks held
                  pursuant to the Builder's Lien Act (British Columbia);
         (b)      "Acquired Corporation" means individually Earth Source Energy
                  Inc. and Pacific Geo Exchange Inc.;
         (c)      "Acquired Corporations" means collectively Earth Source Energy
                  Inc. and Pacific Geo Exchange Inc.;
         (d)      "Affiliate" has the meaning given to such terms in the
                  Business Corporations Act (British Columbia);
         (d-1)    "Agent" has the meaning given such term in section 7.16
                  herein;
         (e)      "Agreement" means this agreement, including the exhibits and
                  the schedules to this agreement, as it or they may be amended
                  or supplemented from time to time, and the expressions
                  "hereof", "herein", "hereto", "hereunder", "hereby" and
                  similar expressions refer to this Agreement and not to any
                  particular section or other portion of this Agreement;
         (f)      "Aries" has the meaning given such term in the initial recital
                  of the parties to this Agreement;
         (f-1)    "Audited Financial Statements" means, the comparative and
                  consolidated audited financial statements of the Acquired
                  Corporations for the periods ended December 31, 2004 and 2005,
                  with the audit opinion qualified only by the qualification
                  described in Schedule 2.4;
         (g)      "Auditors" means MacKay LLP, Chartered Accountants;
         (h)      "Balance Sheet Date" means December
                  31, 2005;
         (i)      "Bank Debt" means the aggregate amounts owing to the Royal
                  Bank of Canada and the Business Development Bank of Canada by
                  the Acquired Corporations at the close of business of each
                  Acquired Corporations as at the Closing Date (which includes,
                  without limitation, unpaid principal; accrued and unpaid
                  interest; fees and other costs of any nature and kind payable
<PAGE>
                                      -4-

                  by the Acquired Corporations to Royal Bank of Canada or the
                  Business Development Bank of Canada; any prepayment fees,
                  costs, bonuses, penalties or other charges; and any and all
                  costs to discharge and release any security held by Royal Bank
                  of Canada and the Business Development Bank of Canada);
         (j)      "Base Net Assets" has the meaning given such term in Section
                  2.4;
         (k)      "BCABC" means the Business Corporations Act (British
                  Columbia);
         (l)      "Benefit Program or Agreement" means each personnel policy,
                  plan, program, arrangement or understanding (whether funded or
                  not) which provides benefits to any present or former employee
                  of an ESE, including any stock option plan, stock purchase
                  plan, stock appreciation rights plan, phantom stock plan,
                  collective bargaining agreement, bonus plan or arrangement,
                  profit sharing plan, incentive award plan or arrangement,
                  vacation policy, severance pay plan, policy or agreement,
                  deferred compensation agreement or arrangement, executive
                  compensation or supplemental income arrangement, consulting
                  agreement, employment agreement, disability, medical, dental,
                  hospitalization and death benefit insurance plan, and the
                  terms "Benefit Programs or Agreements" means more than one of
                  the foregoing;
         (m)      "Business" means the business heretofore and currently carried
                  on by ESE, which includes, without limitation, the business of
                  designing and installing conventional geo-exchange heating
                  systems in residential and commercial properties where heat is
                  extracted from the earth through a ground based fluid loop
                  system with the fluid circulated though the loop by a pump to
                  a heat pump or exchanger, which in turn circulates the heat
                  through the building;
         (n)      "Business Day" means a day other than a Saturday, Sunday or
                  day on which the chartered banks are closed in the City of
                  Vancouver;
         (o)      "Canadian Securities Legislation" means the securities
                  legislation and the regulations thereto applicable in each of
                  the provinces and territories of Canada and the rules, blanket
                  decisions, orders and published policy statements of the
                  securities commissions in such provinces and territories;
         (p)      "Callon" has the meaning given such term in the initial
                  recital of the parties to this Agreement;
         (q)      "Certificate" has the meaning ascribed to it in subsection
                  2.4(f) herein;
         (r)      "Charter Documents" means charter documents of a corporate
                  entity, including without limitation the Articles (as that
                  term is defined in the legislation pursuant to which a
                  particular provincial or Canadian federally corporation was
                  incorporated or equivalent organizational documents), Notice
                  of Articles, Articles and by-laws;
         (s)      "Closing Date" means a date which is the later of
                  (a)      ten (10) Business Days after the date the Vendors and
                           Principals deliver to the Purchaser the Audited
                           Financial Statements; or
                  (b)      such other date as may be agreed to in writing by the
                           Purchaser, the Vendors and the Principals, provided
                           that the Closing Date must be a date no later than
                           July 1, 2006;
         (t)      "Competing Proposal" has the meaning given such term in
                  Section 10.1;
         (u)      "Contract" means any agreement, contract, undertaking, letter
                  of intent, understanding, license, instrument, arrangement or
                  other binding commitment or arrangement, written or oral
                  (including any amendments and other modifications thereto);
         (v)      "CRA" means the Canada Revenue Agency;
         (v-1)    "Deposit" means the portion of the Purchase Price paid to the
                  Agent, in trust pursuant to the provisions of sub-sections
                  2.3(a) and (b) herein;
<PAGE>
                                      -5-

         (v-2)    "Disability" means the inability of a Person to provide
                  services pursuant to an employment contract for a period of
                  sixty (60) consecutive days, as required to be provided
                  pursuant to the terms of such contract, or for an aggregate of
                  ninety (90) working days over one hundred (180) working days;
         (w)      "Employee Benefit Plan" means all Pension Plans and all
                  Benefit Programs or Agreements providing benefits to any
                  current or former employee of the Acquired Corporations
                  maintained, sponsored or contributed to by any such entity
                  within six (6) years prior to the Closing Date or as to which
                  any of the Vendors and/or Principals or the Acquired
                  Corporations have any liability or obligation;
         (x)      "Environmental Costs or Liabilities" means with respect to the
                  Acquired Corporations any losses, liabilities, obligations,
                  damages, fines, penalties, judgments, settlements, actions,
                  claims, costs or expenses (including, without limitation,
                  reasonable fees, disbursements and expenses of legal counsel,
                  experts, engineers and consultants, and the costs of
                  investigation or feasibility studies and performance of
                  remedial or removal actions and cleanup activities) arising
                  from, under or in connection with (i) any Environmental Laws;
                  (ii) any order of, or contract of the Acquired Corporations
                  with, any Governmental Entity or any private or public
                  Persons; or (iii) any exposure of any Person or property to
                  Hazardous Substances;
         (y)      "Environmental Laws" means all common, civil, federal,
                  provincial, state, territorial, regional, municipal or local
                  laws which relate to protection of the environment, health and
                  safety, or Hazardous Substances contained in statutes or
                  regulations or in written policies, guidelines, orders,
                  directives or notices which have the force of law or Permits,
                  approvals or court or other tribunal orders having
                  jurisdiction over the Acquired Corporations, their respective
                  assets and the Business;
         (z)      "Escrow Agent" has the meaning given such term in Section
                  2.3(e);
         (aa)     "Escrow Agreement" has the meaning given such term in Section
                  2.3(a);
         (bb)     "ESE" is a party to this Agreement. ESE carries on the
                  Business and is a 100% owned subsidiary of PacGeo, as
                  described in Section 3.1(a);
         (cc)     "ETA" means the Excise Tax Act;
         (dd)     "Final Balance Sheet" has the meaning given such term in
                  Section 2.4(f);
         (ee)     "Final Net Asset Amount" has the meaning given such term in
                  Section 2.4(f);
         (ff)     "Financial Statements" means, collectively, the consolidated
                  unaudited financial statements of the Acquired Corporations
                  for the periods ended December 31, 2003, 2004 and 2005, copies
                  of which are attached hereto as Schedule 2.4;
         (gg)     "GAAP" means generally accepted accounting principles in
                  Canada;
         (hh)     "Governmental Authorization" means any (i) Permit, license,
                  certificate, franchise, permission, easement variance,
                  clearance, registration, qualification, exemption, order,
                  approval or authorization issued, granted, given or otherwise
                  made available by or under the authority of any Governmental
                  Entity or pursuant to any Legal Requirement; or (ii) right
                  under any Contract with any Governmental Entity;
         (ii)     "Governmental Entity" means any federal, provincial, state,
                  regional or municipal government or other political
                  subdivision thereof and any entity or person of competent
                  jurisdiction exercising executive, legislative, judicial,
                  regulatory or administrative functions of, or pertaining to
                  government;
         (jj)     "GST" means goods and services tax;
         (kk)     "Hazardous Substances" means (i) any hazardous materials,
                  hazardous wastes, hazardous substances, toxic wastes and toxic
                  substances as those or similar terms are defined under any
                  Environmental Laws; (ii) any asbestos or any material which
                  contains any hydrated mineral silicate, including chrysolite,
<PAGE>
                                      -6-

                  amosite, crocidolite, tremolite, anthophylite and/or
                  actinolite, whether friable or non-friable; (iii) PCBs, or
                  PCB-containing materials, or fluids; (iv) radon; (v) any other
                  hazardous, radioactive, toxic or noxious substance, material,
                  pollutant, contaminant, constituent, or solid, liquid or
                  gaseous waste; (vi) any petroleum, petroleum hydrocarbons,
                  petroleum products, crude oil and any fractions or derivatives
                  thereof, any oil or gas exploration or production waste, and
                  any natural gas, synthetic gas and any mixtures thereof; (vii)
                  any substance that, whether by its nature or its use, is
                  subject to regulation under any Environmental Laws or with
                  respect to which any Environmental Laws or Governmental Entity
                  requires environmental investigation, monitoring or
                  remediation; and (viii) any underground storage tanks, dikes
                  or impoundments as defined under any Environmental Laws;
         (ll)     "Holdback 1" has the meaning set forth in Section 2.3(e);
         (ll-1)   "Holdback 2" has the meaning set forth in Section 2.3(f);
         (mm)     "Indebtedness" means, any liability contingent or otherwise
                  relating to: (a) indebtedness, including interest and any
                  prepayment penalties thereon, created, issued or incurred by
                  the Acquired Corporations for borrowed money (whether by loan
                  or the issuance or sale of debt securities or the sale of
                  property to another person subject to an understanding or
                  agreement, contingent or otherwise, to repurchase such
                  property from such person); (b) obligations of the Acquired
                  Corporations to pay the deferred purchase or acquisition price
                  of property or services, other than trade accounts payable
                  arising, and accrued expenses incurred in the ordinary course
                  of business and consistent with the Acquired Corporations'
                  customer trade practices; (c) indebtedness of another person
                  secured by a lien on the property of the Acquired
                  Corporations, whether or not the respective indebtedness so
                  secured has been assumed by the Acquired Corporations; (d)
                  payment obligations of the Acquired Corporations in respect of
                  letters of credit, bankers' acceptances or similar instruments
                  issued, or accepted by banks and other financial institutions
                  for account of the Acquired Corporations; (e) capital lease
                  obligations of the Acquired Corporations; (f) indebtedness of
                  other persons guaranteed by the Acquired Corporations; and (g)
                  payables more than thirty (30) days past due.
         (nn)     "Indemnifying Party" has the meaning given such term in
                  Section 9.3;
         (oo)     "Intellectual Property" means collectively all rights to and
                  interest in: (A) all trade-marks including the goodwill
                  attaching to such trade-marks related to the Business; (B) all
                  trade names, brand names, brands and slogans related to the
                  Business; (C) all inventions, patents, patent rights and
                  patent applications (including all reissues, divisions,
                  continuations and extensions of any patent or patent
                  application) related to the Business; (D) all copyright,
                  registrations and applications for copyright (and all future
                  income from such copyright) related to the Business, including
                  computer software programs; (E) all rights and interests in
                  and to designs, know-how, trade secrets, manufacturing,
                  engineering and other drawings and manuals, technology,
                  blueprints, patterns, dies, research and development reports,
                  technical information, technical assistance, engineering data,
                  design and engineering specifications, and similar materials
                  recording or evidencing expertise related to the Business; (F)
                  all other intellectual and industrial property rights
                  throughout the world related to the Business; and (G) all
                  rights to damages and profits by reason of the infringement of
                  any of the intellectual property listed in items (A) to (F);
         (pp)     "Interim Period" means the period between the date of
                  execution of this Agreement and the Time of Closing;
         (qq)     "Jade Eagle Trust" has the meaning given such term in the
                  initial recital of the parties to this Agreement;
<PAGE>
                                      -7-

         (rr)     "Knowledge" means a statement of the declarant's knowledge of
                  the facts or circumstances to which such phrase relates having
                  undertaken reasonable enquiry or investigation in connection
                  with such facts and circumstances and, if a corporate entity,
                  includes the knowledge of any of the directors and officers of
                  such declarant;
         (ss)     "Leases" means each personal property lease described in
                  Section 3.1(cc) hereto, to which ESE is a party as lessee or
                  sub-lessee, as amended to the date hereof;
         (tt)     "Leased Premises" means the premises that are the subject of
                  the Real Property Leases;
         (uu)     "Legal Requirements" means any federal, provincial, state,
                  regional, local, municipal, or other law, statute,
                  constitution, principle of common law, resolution, ordinance,
                  code, edict, decree, rule, regulation, ruling or requirement
                  issued, enacted, adopted, promulgated, implemented or
                  otherwise put into effect by or under the authority of any
                  Governmental Entity and all requirements set forth in
                  applicable Contracts, and includes, without limitation, all
                  North American (and the provinces', states' and any other
                  divisions thereof) laws, regulations, policies and guidelines
                  relating to labelling, packaging and advertising;
         (vv)     "Liens" means liens, pledges, claims charges, infringements,
                  interferences, security interests, restrictions, mortgages,
                  deeds of trust, tenancies and other possessory interests,
                  conditional sale or other title retention agreements,
                  assessments, easements, rights of way, covenants,
                  restrictions, rights of first refusal pre-emptive rights,
                  defects in title, encroachments and other burdens, options or
                  encumbrances or restrictions of any kind;
         (ww)     "Lynn" has the meaning given such term in the initial recital
                  of the parties to this Agreement;
         (xx)     "Material Adverse Effect" means any change, event, violation,
                  inaccuracy, circumstance or effect, individually or when
                  aggregated with other changes, events, violations,
                  inaccuracies, circumstances or effects (considered together
                  with all other matters that would constitute exceptions to the
                  representations and warranties set forth in the Agreement but
                  for the presence of "Material Adverse Effect" or other
                  materiality qualifications, or any similar qualifications, in
                  such representations and warranties), that is or would
                  reasonably be expected to be materially adverse to or have a
                  material adverse effect on the Business, assets (including
                  intangible assets), capitalization, condition, liabilities,
                  financial performance, results of operations or prospects of
                  either of the Acquired Corporations;
         (yy)     "Material Contracts" has the meaning given such term in
                  Section 3.1(n);
         (zz)     "Mark" has the meaning given such term in the initial recital
                  of the parties to this Agreement;
         (aaa)    "Mueller Trust" has the meaning given such term in the initial
                  recital of the parties to this Agreement;
         (bbb)    "Negative Amount" has the meaning given such term in Section
                  2.4(h);
         (ccc)    "Net Assets" has the meaning given such term in Section
                  2.4(b);
         (ddd)    "Neutral Auditor" has the meaning given such term in Section
                  2.4(g);
         (eee)    "Ordinary Course of Business" means the ordinary course of
                  normal day-to-day business consistent with past practices and
                  customs (including with respect to both quantity and
                  frequency);
         (fff)    "PacGeo" is a party to this Agreement. PacGeo is an owner of
                  100% of the issued and outstanding share capital of ESE, as
                  described in Section 3.1(a);
         (ggg)    "Pension Plans" means all pension plans which have been
                  registered under the Tax Act and under applicable pension
                  Legal Requirements;
         (hhh)    "Permits" means all permits, licenses, certificates,
                  approvals, authorizations, registrations or the like
<PAGE>
                                      -8-

                  attainable from or required by any Governmental Entity which
                  are material and are, under applicable law, necessary for the
                  conduct of the Business or the utilization by ESE of its
                  assets;
         (iii)    "Permitted Liabilities" means, with respect to the Acquired
                  Corporations, the aggregate of liabilities incurred in the
                  Ordinary Course of Business, whether current or long-term
                  shown on the Financial Statements and the Final Balance Sheet;
         (jjj)    "Person" means and includes any individual, entity,
                  partnership, limited partnership, corporation, joint venture,
                  association, joint stock company, trust, unincorporated
                  organization or a government or an agency thereof;
         (kkk)    "Positive Amount" has the meaning given such term in Section
                  2.4(h);
         (lll)    "Prepaid Expenses" means all prepayments, prepaid charges,
                  deposits, sums and fees related to the Business;
         (mmm)    "Purchase Price" means the amounts payable to the Vendors, the
                  Principals and Callon for the Purchased Shares and
                  Shareholder's Loan;
         (nnn)    "Purchased Shares" means all of the issued and outstanding
                  shares in the capital of the PacGeo, being the aggregate of
                  1,000,001 Common shares without par value and 1,000 Class B
                  Preferred shares without par value, owned beneficially and of
                  record as follows:

                  Number and                         Beneficial and
                  Class of Shares                    Registered Owner
                  ---------------                    ----------------
                  450,000 Common                     Jade Eagle Trust
                  450,000 Common                     Mueller Family Trust
                  100,001 Common                     Aries Developments Ltd.
                  431 Class B Preferred              Mark McCooey
                  569 Class B Preferred              Lynn Mueller

         (ooo)    "Purchaser" has the meaning given such term in the initial
                  recital of the parties to this Agreement;
         (ppp)    "Purchaser Indemnified Costs" means (i) any and all damages,
                  losses, claims, liabilities, demands, charges, suits,
                  penalties, costs and expenses (including court costs and
                  reasonable legal fees and expenses incurred in investigating
                  and preparing for any litigation or proceeding) that any of
                  the Purchaser Indemnified Parties incurs and that arise out of
                  any breach or default by the Vendors, the Principals or Callon
                  of any of their respective representations, warranties or
                  covenants under this Agreement or any agreement or document
                  executed in connection herewith; (ii) any and all damages,
                  losses, claims, liabilities, demands, charges, suits,
                  penalties, costs, and expenses (including court costs and
                  reasonable legal fees and expenses incurred in investigating
                  and preparing for any litigation or proceeding) that any of
                  the Purchaser Indemnified Parties incurs and that arise out of
                  the operation or control of the Acquired Corporations or the
                  Business on or prior to the Closing Date not disclosed herein;
                  (iii) any and all actions, suits, proceedings, claims,
                  demands, assessments, judgments, costs, and expenses,
                  including reasonable legal fees and expenses, relating to or
                  incurred in connection with the indemnity provided in Section
                  4.3(a)(iii) any and all actions, suits, proceedings, claims,
                  demands, assessments, judgments, costs, and expenses,
                  including reasonable legal fees and expenses, incidental to
                  any of the foregoing;
         (qqq)    "Purchaser Indemnified Parties" means the Purchaser, and each
                  officer, director, employee and consultant of the Purchaser;
         (rrr)    "Purchaser's Shares" means those shares of the Purchaser
                  issued to the Vendors as described in paragraphs 2.3(d) and
                  (e) of this Agreement;
         (sss)    "Purchaser's Solicitors" means Stephen Holmes of Holmes &
                  Company;
         (ttt)    "Real Property" means, collectively the Leased Premises;
<PAGE>
                                      -9-

         (uuu)    "Real Property Leases" means, the lease for real property to
                  which the ESE is a party, being the property municipally known
                  as Unit 150, 4620 Viking Way, Richmond, British Columbia;
         (vvv)    "Shareholder's Loan" means the amount of the loans owed to the
                  Principals and Callon by either of the Acquired Corporations;
         (vvv1)   "Sublease" means the Sublease between ESE as sub-landlord and
                  Free Energy Solutions Ltd. as sub-tenant dated June 1, 2005
                  for the lease of a portion of the Real Property;
         (www)    "Subsidiary" means an entity which shall be deemed to be a
                  "Subsidiary" of another Person if such Person directly or
                  indirectly owns, beneficially or of record, (i) an amount of
                  voting securities or other interests in such entity that is
                  sufficient to enable such Person to elect at least a majority
                  of the members of such entity's board of directors or other
                  governing body; or (ii) at least fifty percent (50%) of the
                  outstanding equity or financial interests of such entity;
         (xxx)    "Tax" or "Taxes" refers to any and all federal, provincial,
                  regional, state, municipal, local and foreign taxes,
                  assessments and other governmental charges, tariffs, duties
                  (including customs duties), levies, assessments, deficiencies,
                  fees, impositions and liabilities including interest penalties
                  and additional taxes thereon, relating to taxes, including
                  taxes based upon or measured by gross receipts, income,
                  capital stock, capital gains, profits, sales, use and
                  occupation, premiums, and value added, ad valorem, transfer,
                  surtax, stamp, franchise, license, production, withholding,
                  payroll, recapture, employment, excise, goods and services,
                  health insurance, use, business, workers' compensation and
                  personal real property taxes, special assessments, transfer
                  and any related charge or amount (including any fine, penalty
                  or interest), and any obligations under any agreements or
                  arrangements with any other Person with respect to such
                  amounts and including any liability for Taxes of a predecessor
                  entity;
         (yyy)    "Tax Act" means the Income Tax Act (Canada), as amended from
                  time to time;
         (zzz)    "Tax Return" means any return (including any information
                  return), report, statement, declaration, estimate, schedule,
                  notice, notification, form, election, certificate or other
                  document or information filed with or submitted to, or
                  required to be filed with or submitted in connection with the
                  determination, assessment, collection or payment of any Tax or
                  in connection with the administration, implementation or
                  enforcement of or compliance with any Legal Requirement
                  relating to any Tax;
         (aaaa)   "Third Party Action" has the meaning given such term in
                  Section 9.3;
         (bbbb)   "Time of Closing" means 10:00 o'clock a.m. (Vancouver City
                  time) on the Closing Date, or such other time on the Closing
                  Date as may be agreed to by the Vendors and the Purchaser;
         (cccc)   "Uncollected Accounts Receivable" means Accounts Receivable
                  which are:
                  (i)      outstanding for more than ninety (90) days but which
                           do not form part of any statutory holdback;
                  (ii)     amounts due from employees or other Persons not
                           dealing at arm's length with the Acquired
                           Corporations;
                  (iii)    amounts due from the Vendors, Principals, officers or
                           directors of the Acquired Corporations or any
                           Affiliates of any of such Persons or the Acquired
                           Corporations; or
                  (iv)     amounts in respect of income taxes recoverable,

                  and which have not been collected in full within 90 days
                  following the Closing Date;

         (dddd)   "Vendor" and "Vendors" have the meanings given such terms in
                  the initial recital of the parties to this Agreement;
         (eeee)   "Vendor Group" has the meaning given such term in Section
                  10.1;
<PAGE>
                                      -10-

         (ffff)   "Vendor Indemnified Costs" means (i) any and all damages,
                  losses, claims, liabilities, demands, charges, suits,
                  penalties, costs and expenses (including court costs and
                  reasonable legal fees and expenses incurred in investigating
                  and preparing for any litigation or proceeding) that any of
                  the Vendor Indemnified Parties incurs and that arise out of
                  any breach or default by the Purchaser of any of its
                  representations or warranties under this Agreement or any
                  agreement or document executed in connection herewith; (ii)
                  any and all damages losses, claims, liabilities, demands,
                  charges, suits, penalties, costs and expenses (including court
                  costs and reasonable legal fees and expenses incurred in
                  investigating and preparing for any litigation or proceeding)
                  that any of the Vendor Indemnified Parties incurs and that
                  arise out of the Purchaser's operation or control of the
                  Acquired Corporations or the Business after the Closing Date;
                  (iii) any and all actions, suits, proceedings, claims,
                  demands, assessments, judgments, costs, and expenses,
                  including reasonable legal fees and expenses, relating to or
                  incurred in connection with the indemnity provided in Section
                  4.3(a)(iii) any and all actions, suits, proceedings, claims,
                  demands, assessments, judgments, costs and expenses, including
                  reasonable legal fees and expenses, incidental to any of the
                  foregoing;
         (gggg)   "Vendor Indemnified Parties" means the Vendors, the Principals
                  and Callon and each officer, director, employee, consultant
                  and shareholder of any such Person;
         (hhhh)   "Vendors' Solicitors" means Darcy L. Wray of Synergy Business
                  Lawyers; and
         (iiii)   "Weighted Average Price" means the price determined by
                  multiplying the daily close price of the Purchaser's shares on
                  the United States OTC Bulletin Board by the daily trading
                  volume of such shares for the thirty trading days prior to the
                  Closing Date and dividing such figure by the total trading
                  volume of such shares over the same 30 day trading period.

1.2      Schedules
         The following are the schedules and exhibits attached hereto which
         shall be deemed to be a part of this Agreement and are incorporated
         herein by this reference:

         Schedule No.     Description of Schedule
         ------------     -----------------------
         2.3(e)           Escrow Agreement
         2.4              Financial Statements and Audited Financial Statements
         2.4(f)           Extraordinary Charges and expenses incurred during the
                            stub period
         2.7              Form of the legal opinion letter
         3.1(c)           Jurisdictions
         3.1(g)           Consents
         3.1(l)           No Material Adverse Change
         3.1(m)           Ordinary Course of Business
         3.1(n)           Material Contracts
         3.1(o)           Compliance with the Material Contracts
         3.1(p)           Grants, Incentives and Subsidies
         3.1(r)           Related Party Indebtedness
         3.1(s)           No Guarantees
         3.1(u)           Title to Assets
         3.1(v)           Condition and Sufficiency of Assets
         3.1(y)           Intellectual Property
         3.1(aa)          Real Property
         3.1(cc)          Personal Property Leases
         3.1(dd)          Capital Property Purchase Agreement
         3.1(ee)          Environmental
<PAGE>
                                      -11-

         3.1hh)           Employment
         3.1mm)           Banking
         3.1(nn)          Insurance
         3.1(pp)          Customer Relations
         7.5              Consulting and Employment Agreements
         7.6              Non-Competition Agreements

                                    ARTICLE 2
                    AGREEMENT TO PURCHASE AND PURCHASE PRICE

2.1      Agreement of Purchase and Sale
         At the Time of Closing and with effect from and after the close of
         business of ESE on the Closing Date, subject to the terms and
         conditions hereof, the Vendors, the Principals and Callon hereby agree
         to sell, assign and transfer to the Purchaser and the Purchaser agrees
         to purchase, all of the Purchased Shares and Shareholder's Loan.

2.2      Amount of Purchase Price
         Subject to adjustment as contemplated in this Agreement, the purchase
         price payable by the Purchaser to the Vendors, the Principals and
         Callon for the Purchased Shares and Shareholder's Loan shall be ONE
         MILLION SEVEN HUNDRED AND FORTY THOUSAND Canadian dollars
         (CDN$1,740,000) subject to adjustment pursuant paragraph 2.4(h) herein.

2.3      Payment of Purchase Price
         Subject to the other terms and conditions herein the Purchase Price
         shall be paid to the Vendors and Principals as follows:
         (a)      ONE HUNDRED THOUSAND Canadian Dollars (CDN$100,000.00), by way
                  of a deposit previously paid to "NAI Goddard & Smith, in
                  trust", to be applied against the Purchase Price at the Time
                  of Closing or be refunded if transaction does not close;
         (b)      THREE HUNDRED THOUSAND Canadian dollars (CDN$300,000.00), by
                  way of deposit, payable to "NAI Goddard & Smith, in trust",
                  within 24 hours of execution of this Agreement and which
                  deposit funds shall be applied against the Purchase Price at
                  the Time of Closing or be refunded if transaction does not
                  close;
         (c)      SIX HUNDRED AND FORTY FOUR THOUSAND Canadian dollars
                  (CDN$644,000.00) in immediately available funds, payable to
                  the Vendors and Principals at the Time of Closing;
         (d)      FOUR HUNDRED AND FORTY TWO THOUSAND Canadian dollars (CDN
                  $442,000.00), by way of issuance to the Vendors on the Closing
                  Date of such number of common shares of the Purchaser that is
                  equal to $442,000.00 divided by the Weighted Average Price;
         (e)      EIGHTY THOUSAND Canadian dollars (CDN $80,000.00) subject to
                  adjustment as contemplated in Section2.4(h), by way issuance
                  to the Vendors and Principals on the Closing Date of such
                  number of common shares of the Purchaser that is equal to
                  $80,000.00 divided by the Weighted Average Price (the
                  "Holdback 1"), such Purchaser's Shares to be delivered to
                  Synergy Business Lawyers, in trust, as escrow agent (the
                  "Escrow Agent"); and
         (f)      ONE HUNDRED SEVENTY FOUR THOUSAND Canadian dollars (CDN
                  $174,000.00) by way of payment of $116,000.00 Canadian dollars
                  and by issuance to the Vendors and Principals on the Closing
                  Date of such number of common shares of the Purchaser that is
                  equal to $58,000.00 Canadian dollars divided by the Weighted
<PAGE>
                                      -12-

                  Average Price (the "Holdback 2"), such payment and Purchaser's
                  Shares to be delivered to the Escrow Agent.
         The parties covenant and agree to file all tax returns to reflect any
         required adjustment to the Purchase Price to be an adjustment to the
         Purchase Price pursuant to the terms hereof.

2.3a     Holdback
         The Holdback 1 shall be held by the Escrow Agent for the benefit of
         Vendors, the Principals and the Purchaser pursuant to the terms of an
         escrow agreement (the "Escrow Agreement"), which Escrow Agreement,
         attached as Schedule 2.3(e), shall provide for release to the
         Vendors/Principals or Purchaser of the Holdback 1, subject to
         adjustment as contemplated in subsection 2.4(h), on the date which is
         five (5) Business Day after acceptance (deemed or actual) or settlement
         of the Final Balance Sheet and the calculation of the Final Asset
         Amount, to be released in accordance with the provisions of the
         subsection 2.4(h) and the Escrow Agreement.

         The Holdback 2 shall be held by the Escrow Agent for the benefit of
         Vendors, the Principals and the Purchaser pursuant to the terms of the
         Escrow Agreement, which shall provide for release to the
         Vendors/Principals or Purchaser of the Holdback 2, subject to
         adjustment as contemplated in the Escrow Agreement, on the date which
         is one (1) year after the Closing Date.

2.4      Closing Balance Sheet
         (a)      It is expressly agreed that if the Net Assets indicated on the
                  Certificate (as defined herein) is greater or less than
                  $(211,070.00) (the "Base Net Assets") then the Purchase Price
                  shall be increased or reduced, as the case may be, by an
                  amount equal to such excess or deficiency;
         (b)      For the purposes hereof, "Net Assets" means the absolute
                  aggregate value of:
                  (i)      The Acquired Corporations total assets, both current
                           and fixed, minus
                  (ii)     The aggregate of:
                           (A)      the Acquired Corporations total liabilities,
                                    both current and long term (including
                                    Shareholder's Loan);
                           (B)      the Uncollected Accounts Receivable, and
                           (C)      any Prepaid Expenses which in the reasonable
                                    opinion of the Auditors, are not reasonably
                                    usable in connection with the Business,
                  all calculated on a consolidated basis, without duplication,
                  as of the Closing Date.
         (c)      The Purchaser shall conduct a physical count of ESE's
                  inventories as of 11:59AM on the Closing Date to facilitate
                  the preparation of the Final Balance Sheet (as defined below)
                  and the calculation of the Final Net Asset Amount (as defined
                  below). The Vendors and Principals or their representatives
                  shall be entitled to be present during the physical count.
         (d)      All income taxes and other governmental charges calculated up
                  to and including the Closing Date even if not yet due having
                  regard to the fact that the Closing Date is the end of a tax
                  year shall reflect as current liabilities and, for these
                  purposes, effect shall be given to the transactions
                  contemplated herein;
         (e)      The amounts described in this paragraph (e) shall, to the
                  extent payable, be paid by the relevant Acquired Corporations,
                  but shall not be reflected on the Final Balance Sheet as
                  current liabilities of the Acquired Corporations:
                  (i)      all charges to the Acquired Corporations by the
                           Auditors; and
                  (ii)     the cost of the Auditors preparing the Final Balance
                           Sheet, Financial Statements as at the Closing Date,
                           the December 31, 2005 Financial Statements and tax
                           returns of the Acquired Corporations and the
                           Certificate,
                  and for greater certainty, all of the aforesaid charges shall
                  be either paid by the Purchaser or charged to the year end of
<PAGE>
                                      -13-

                  the Acquired Corporations immediately subsequent to the
                  Closing Dated, and shall not be reflected on the Final Balance
                  Sheet;
         (f)      On or before the date which is sixty (60) days following the
                  Closing Date, the Auditors will prepare and deliver to the
                  Purchaser and the Vendors and Principals a consolidated
                  unaudited balance sheet for the Acquired Corporations (the
                  "Final Balance Sheet") as at the close of business on the
                  Closing Date, prepared in conformity with GAAP applied on a
                  basis consistent with prior fiscal periods of the Acquired
                  Corporations and in the same format as the Financial
                  Statements (except to the extent required for purposes of
                  consolidation and except that such statements shall not
                  include any notes to such statements), which will set forth
                  the book values (net of applicable reserves) of the assets and
                  liabilities of the Acquired Corporations as of the close of
                  business on the Closing Date. The Final Balance Sheet shall be
                  accompanied by a certificate (the "Certificate") prepared by
                  Mark, the CFO of ESE, setting forth the Net Assets of the
                  Acquired Corporations based on the Final Balance Sheet but
                  having regard to the matters referred to in this section 2.4
                  (and in particular subsection 2.4(b)), together with a
                  reasonable explanation of all calculations (the "Final Net
                  Asset Amount"). In the event there is a difference between
                  GAAP and the Company's accounting policies, GAAP shall prevail
                  in the preparation of the Final Balance Sheet and the
                  calculation of the Final Net Asset Amount (except to the
                  extent required for purposes of consolidation). All
                  extra-ordinary charges or expenses incurred outside the
                  Ordinary Course of Business and described in Schedule 2.4(f)
                  herein shall be deemed to have been incurred during the fiscal
                  period ended on the Closing Date.
         (g)      After receipt of the Final Balance Sheet and the calculation
                  of the Final Net Asset Amount, each of the Purchaser and the
                  Vendors shall have twenty (20) Business Days to review them.
                  During such twenty (20) Business Day period, each of the
                  Purchaser and the Vendors and Principals and their authorized
                  representatives shall have access to all books and records of
                  the Acquired Corporations and the Auditor to the extent
                  required to complete their review of the Final Balance Sheet
                  and the calculation of the Final Net Asset Amount, including,
                  but not limited to, the Auditor's working papers used in
                  preparation thereof. Within such twenty (20) Business Day
                  period, either the Purchaser or the Vendors and Principals
                  shall be entitled by written notice to the other to dispute
                  such Final Balance Sheet or the calculation of the Final Net
                  Asset Amount, which notice will set out the reasons for the
                  amount in dispute and reasonable details of the calculation of
                  such amount. Upon receipt of such notice, such disputed items
                  will be reviewed and, if necessary, revised by the Vendors and
                  Principals and the Purchaser by mutual agreement within ten
                  (10) Business Days of the receipt by the other party of such
                  dispute notice. If within such ten (10) Business Day period
                  the Vendors and Principals and the Purchaser cannot
                  unanimously settle such dispute by either amending, or
                  agreeing not to amend, such disputed items of the Final
                  Balance Sheet and the calculations of the Final Net Asset
                  Amount, then the disputed items will be referred to as soon as
                  possible thereafter by either the Vendors and Principals or
                  the Purchaser to a Canadian nationally recognized independent
                  firm of Chartered Accountants (in this section, the "Neutral
                  Auditor").

                  The fees and expenses of such accounting firm for reviewing
                  and revising the Final Balance Sheet and the calculation of
                  the Final Net Asset Amount, as applicable, will be paid by the
                  party disputing the figures set out in the Certificate and if
<PAGE>
                                      -14-

                  both parties dispute such figures, to be shared equally
                  between the parties. However, if resulting adjustment amount
                  shall be either greater than or less than 5% of the Final Net
                  Asset Amount, the parties shall pay equally.

                  The Neutral Auditor shall act as an expert and not as an
                  arbitrator and will be required to determine the items in
                  dispute that have been referred to them as soon as reasonably
                  practicable, based solely on the presentations made to them by
                  the Vendors and Purchaser, and not by independent review. The
                  Neutral Auditor's determination shall be made within thirty
                  (30) days of its engagement, shall be set forth in a written
                  statement delivered to the Vendors and the Purchaser and shall
                  be final and binding on the parties hereto.

                  If neither the Vendors, Principals nor the Purchaser dispute
                  the Final Balance Sheet or the calculation of the Final Net
                  Asset Amount within such initial ten (10) Business Day period
                  or if the Vendors and Principals and the Purchaser mutually
                  agree to settle such dispute within the second ten (10)
                  Business Day period, such Final Balance Sheet and the
                  calculation of the Final Net Asset Amount shall be final and
                  binding on the parties to this Agreement.

         (h)      In any event:
                  (i)      If the Final Net Asset Amount as specified in the
                           Certificate is finally determined to be greater than
                           the Base Net Asset Amount within ten (10) Business
                           Days after the Final Balance Sheet is completed and,
                           if necessary, reviewed and revised pursuant to this
                           section, (the amount of such excess being hereinafter
                           referred to as the "Positive Amount"), the Purchaser
                           shall be obliged to forthwith thereafter pay to the
                           Vendors and Principals the Positive Amount by way of
                           issuance of common shares of the Purchaser equal to
                           the amount of the Positive Amount divided by the
                           Weighted Average Price.
                  (ii)     If the Final Net Asset Amount as specified in the
                           Certificate is finally determined to be less than the
                           Base Net Asset Amount within ten (10) Business Days
                           after the Final Balance Sheet is completed and, if
                           necessary, reviewed and revised pursuant to this
                           section, the Vendors and Principals agree to be
                           jointly and severally liable to forthwith thereafter
                           pay to the Purchaser an amount equal to the aggregate
                           of such deficiency (the "Negative Amount"). Any
                           payment of the Negative Amount required to be made
                           pursuant to this Section 2.4(h)(ii) shall first be
                           satisfied out of the Holdback 1 by transfer of such
                           number of Purchaser's Shares that is equal to the
                           amount of the Negative Amount divided by the Weighted
                           Average Price. If the Negative Amount exceeds the
                           amount of the Holdback 1, the difference shall be
                           satisfied by the Vendors and Principals by way of
                           delivery of such additional Purchaser's Shares equal
                           to the balance to be refunded to the Purchaser
                           divided by the Weighted Average Price, after
                           offsetting the Negative Amount owing against the
                           Holdback 1.
         (i)      Following the Closing Date and until the date that is ninety
                  (90) days thereafter, the Purchaser shall cause ESE to use
                  reasonable commercial efforts to collect the Accounts
                  Receivable in accordance with the past collection policies and
                  procedures of ESE. For these purposes, any payment received by
                  ESE with respect to the Accounts Receivable which does not
                  specify the specific invoice of ESE to which such payment
                  relates shall be applied to the oldest Accounts Receivable due
                  from the person making such payment. Forthwith following the
                  Closing Date, the Purchaser shall cause ESE to transfer and
                  assign the Uncollected Accounts Receivables to the Vendors and
                  Principals, for no additional consideration and free of any
                  encumbrances and shall thereafter cause ESE to receive and
                  hold in trust and remit to the Vendors and Principals, as and
                  when received, any amounts received on account of the
                  Uncollected Accounts Receivables.
<PAGE>
                                      -15-

         (j)      Any Positive or Negative Amount shall bear interest from the
                  Closing Date through the date of payment at a compound
                  interest rate of five percent (5%) per annum, calculated and
                  accruing daily.
         (k)      Any amounts payable in cash pursuant to Sections 2.3 shall be
                  payable by wire transfer, certified cheque or other
                  immediately available funds to accounts designated by the
                  recipient or recipients thereof.

2.5      Allocation of Purchase Price
         The parties hereto acknowledge and agree that the aggregate Purchase
         Price as finally determined, shall be allocated as follows:
         (a)      to the Shareholder Loan an amount equal to the principal
                  amount outstanding on the Closing Date, together with accrued
                  and unpaid interest thereon, if any, up to and including the
                  Closing Date;
         (b)      then to the Purchased Shares as follows:
                  Class of Share                     Purchase Price
                  --------------                     --------------
                  Class B Preferred                  $185.53 per share
                  Common                             as to the balance, if any

         The parties covenant and agree to do all things necessary and desirable
         and to file all Tax Returns in a manner consistent with the foregoing
         allocation of the Purchase Price. Any change in the Purchase Price
         shall be allocated first to the Common shares, secondly to the Class B
         Preferred shares and lastly to the Shareholder's Loan.

2.6      Additional Agreement Re: Billing and Collection
         The Purchaser agrees that it will not cause ESE to change the
         billing/collecting methodology employed by ESE as at the Closing Date
         at any time prior to the date, which is sixty (60) days after the
         Closing, without the Vendors' prior written consent, which shall not be
         unreasonably withheld.

2.7      Filing of S(B)2
         The Vendors acknowledge that the Purchaser's Shares shall be subject to
         a statutory restriction on trading at the time of their issuance. The
         Purchaser agrees to use reasonable best efforts, including engaging
         such accountants or legal counsel, paying such fees, or such other
         steps which may be reasonably required to prepare and file a
         registration statement in regard to the Purchaser's Shares issued to
         the Vendors, by way of a Form S(B)2 or similar registration document on
         or before forty-five (45) business days after the Closing Date. The
         intention of the parties is that the Purchaser's Shares will be
         tradable without trade restrictions within six (6) months from the
         Closing Date. If the Purchaser is unable to file a Form S(B)2 as
         contemplated herein, the Purchaser agrees, at its sole cost, to provide
         the Vendors such legal opinions as may be reasonably required to allow
         for the free and unrestricted trade of the Purchaser's Shares on a date
         which is one (1) year after the Closing Date, the form of the opinion
         letter is attached as Schedule 2.7.
2.8      Indemnity of Mark
         The Purchaser agrees to indemnify and save harmless Mark in respect of
         the guarantee and/or primary obligation owed by Mark in respect of
         outstanding debt owed by the Company for the purchase of the 2002 Ford
         F250 Truck and the 2001 29" Frontier Trailer owned by the Company
         (copies of which are attached in Schedule 3.1(dd)), if such guarantees
         or liabilities of Mark are not released after the Closing Date. The
         Purchaser agrees to sign such documents of indemnity or to do such
         things as may be reasonably requested by Mark to give effect or to the
         evidence the terms of the indemnity contemplated in this Paragraph 2.8.
<PAGE>
                                      -16-

                                    ARTICLE 3
    REPRESENTATIONS AND WARRANTIES OF THE VENDORS, THE PRINCIPALS AND CALLON

3.1      Representations and Warranties of the Vendors and/or Mueller Trust,
         Jade Eagle Trust and the Principals Regarding the Business and Acquired
         Corporations Mueller Trust, Jade Eagle Trust and the Principals hereby
         jointly and severally represent and warrant that except as otherwise
         disclosed in this Agreement or in any Schedule attached hereto and
         hereby acknowledge and confirm that the Purchaser is relying on such
         representations and warranties in connection with the purchase by the
         Purchaser of the Purchased Shares and Shareholder's Loan:

         (a)      Issued Capital

                  The issued capital of the Acquired Corporations are as
                  follows:

                  The issued capital of PacGeo consists of only (the Purchased
                  Shares as defined in Section 1(nnn)):
                  (i)      1,000,001 Common shares without par value;
                  (ii)     1,000 Class B Preferred shares without par value.

                  The issued capital of ESE, 100% owned subsidiary of PacGeo,
                  consists of only:
                  (i)      100 Class A shares without par value;
                  (ii)     100 Class C shares without par value.

                  Any and all of such shares of the Acquired Corporations are
                  issued and outstanding as fully paid and non-assessable shares
                  in the capital of the Acquired Corporations, as applicable, as
                  of the date hereof. The Purchased Shares represent all of the
                  issued and outstanding shares in the capital of PacGeo and the
                  Purchased Shares are owned, beneficially and of record, by the
                  Vendors and Principals, in those numbers set forth in
                  Subsection 1.1(nnn). All outstanding shares in the capital of
                  the Acquired Corporations have been issued and granted in
                  compliance with (i) all applicable securities laws and other
                  applicable Legal Requirements; and (ii) all requirements set
                  forth in applicable Contracts.
         (b)      Unissued Shares
                  There are no subscriptions, options, calls, warrants, equity
                  securities, partnership interests or any other interests,
                  rights (including pre-emptive rights), commitments or
                  agreements of any character (whether or not currently
                  exercisable) to which the Acquired Corporations are a party or
                  are bound, obligating either of the Acquired Corporations to
                  issue, deliver or sell, or cause to be issued, delivered or
                  sold, or repurchased, redeemed or otherwise acquired, or cause
                  the repurchase, redemption or acquisition of, any shares in
                  their capital, partnership interests or similar ownership
                  interests of the Acquired Corporations or obligating either of
                  the Acquired Corporations to grant, extend, accelerate the
                  vesting of or enter into any such subscription, option,
                  warrant, equity security, call, right, commitment or agreement
                  and no condition or circumstance that may give rise to or
                  provide a basis for the assertion of a claim by any Person to
                  the effect that such Person is entitled to acquire or receive
                  any shares in the issued or unissued capital of either of the
                  Acquired Corporations or any other securities of either of the
                  Acquired Corporations. No Person has any agreement or option
                  or any right capable of becoming an agreement for the
                  purchase, subscription or issuance of any of the unissued
                  securities in the capital of either of the Acquired
                  Corporations.
         (c)      Organization; Good Standing
                  Each of the Acquired Corporations is a corporation duly
                  organized, validly existing and in good standing under its
                  laws of incorporation, has all requisite corporate power and
                  authority and has all requisite Government Authorizations to
                  own, lease and operate its properties and the properties it
                  purports to own and to carry on the Business as is now being
<PAGE>
                                      -17-

                  conducted, to perform its obligations under all agreements or
                  contracts by which it is bound and is duly qualified or
                  licensed and is in good standing to do business in each
                  jurisdiction listed on Schedule 3.1(c), which jurisdictions
                  represent every jurisdiction in which the nature of its
                  business or the ownership or leasing of its properties makes
                  such qualification necessary.
                  PacGeo does not currently carry on nor was it ever engaged in
                  any active business other than holding the shares of ESE for
                  investment purposes.
         (d)      No Unanimous Shareholders Agreement
                  None of the Vendors and Principals, as the sole shareholders
                  of the Purchased Shares, is a party to any shareholder
                  agreement governing the manner of their ownership of any of
                  the Purchased Shares.
         (e)      Subsidiaries
                  Except ESE as a Subsidiary of PacGeo, neither of the Acquired
                  Corporations has any Subsidiaries, own any shares of any other
                  corporation partnership, joint venture business association or
                  unincorporated entity or any rights, options, warrants or
                  other securities of any other exchangeable or exercisable for
                  any equity or similar interest in any other entity, or have
                  any agreement, lease, binding understanding, instrument, note,
                  option, license, sublicense, insurance policy benefit plan,
                  commitment or undertaking of any nature for the purchase,
                  subscription or issuance of any of the unissued shares or
                  securities in the capital for any other entity or for any
                  other future investment in or capital contribution to any
                  other entity.
         (f)      Minute Books Complete
                  The minute books of each of the Acquired Corporations contain
                  complete copies of their respective Charter Documents. Neither
                  of the Acquired Corporations is in violation of any of the
                  provisions of its respective Charter Documents. There are no
                  outstanding applications or filings which would alter in any
                  way the Charter Documents or corporate status of either of the
                  Acquired Corporations. No resolutions or by-laws have been
                  passed, enacted, consented to or adopted by the directors or
                  shareholders of either of the Acquired Corporations, except
                  those contained in the said minute books. The Mueller Trust,
                  Jade Eagle Trust and Principals have furnished to the
                  Purchaser a complete and correct copy of the Charter Documents
                  of each of the Acquired Corporations.
         (g)      No Conflict; Required Filings and Consents
                  The execution and delivery of this Agreement by each of the
                  Vendors and Principals does not, and the performance by each
                  of the Vendors and Principals of the transactions contemplated
                  hereby will not, subject to obtaining the consents, approvals,
                  authorizations, and permits and making the filings described
                  in Schedule3.1(g):
                  (i)      violate, conflict with, or result in any breach of
                           any provision of either of the Acquired Corporations'
                           Charter Documents;
                  (ii)     violate, conflict with, or result in a violation or
                           breach of, or constitute a default (with or without
                           due notice or lapse of time or both) under, or permit
                           the termination of, or result in the acceleration of
                           or alter rights or obligations of either of the
                           Acquired Corporations or third parties, or entitle
                           any party to accelerate (whether as a result of a
                           change of control of the Acquired Corporations or
                           otherwise) any obligation, or result in a loss of any
                           benefit, or give any Person the right to require any
                           security to be repurchased, or give rise to the
                           creation of any Lien upon any of the assets of either
                           of the Acquired Corporations under any of the terms,
                           conditions, or provisions of any loan or credit
<PAGE>
                                      -18-

                           agreement, note, bond, mortgage, indenture or deed of
                           trust, or any license, lease, agreement or other
                           instrument or obligation to which any of the Vendors
                           and Principals or either of the Acquired Corporations
                           is a party or by which or to which either of the
                           Acquired Corporations or any of the assets of either
                           of the Acquired Corporations may be bound or subject;
                  (iii)    violate any order, writ, judgment, injunction,
                           decree, statute, law, rule or regulation, of any
                           Governmental Entity applicable to either of the
                           Acquired Corporations or any of the Vendors or
                           Principals or by which or to which either of the
                           Acquired Corporations or any of the assets of either
                           of the Acquired Corporations are bound or subject; or
                  (iv)     invalidate or adversely affect any Permit used in the
                           conduct of the Business. No consent of, or
                           registration, declaration or filing with any
                           Governmental Entity nor any Governmental
                           Authorization is required by or with respect to any
                           of the Vendors and Principals or either of the
                           Acquired Corporations in connection with the
                           execution and delivery of this Agreement by the
                           Vendors and Principals or the consummation of the
                           transactions contemplated hereby.
         (h)      No Bankruptcy/Insolvency
                  Neither of the Acquired Corporations is insolvent, has
                  committed an act of bankruptcy, has proposed a compromise or
                  arrangement to its creditors generally, has had any petition
                  for a receiving order in bankruptcy filed against it, has
                  taken any proceeding with respect to a compromise or
                  arrangement, has taken any proceeding to have itself declared
                  bankrupt or wound-up, has taken any proceeding to have a
                  receiver appointed of any part of its assets, has had any
                  encumbrance take possession of any of its property, nor has it
                  had any execution or distress become enforceable or become
                  levied upon any of its property.
         (i)      Books and Records Complete
                  The books of account and financial records of each of the
                  Acquired Corporations have been kept in accordance with
                  applicable law on a consistent basis and fairly and correctly
                  set out and disclose in all material respects the current
                  financial position of each of the Acquired Corporations. All
                  transactions involving either of the Acquired Corporations
                  have been accurately recorded in such books and records. The
                  Mueller Trust, Jade Eagle Trust and Principals have provided
                  full access to such books and records to the Purchaser. All
                  vacation pay, bonuses, commissions and other emoluments
                  relating to each of the employees of ESE have been accrued to
                  date in such books.
         (j)      Financial Statements
                  (i)      The Mueller Trust and Jade Eagle Trust have delivered
                           to the Purchaser copies of the Financial Statements.
                           The Financial Statements, including the notes
                           thereto, if any, were (i) prepared in accordance with
                           GAAP applied on a consistent basis throughout the
                           periods covered thereby (except to the extent
                           disclosed in the Schedule 2.4 or required by changes
                           in GAAP); (ii) fairly, fully and correctly present
                           the assets, liabilities and financial position of
                           each of the Acquired Corporations, as applicable, at
                           the dates thereof and the results of operations of
                           each of the Acquired Corporations, as applicable for
                           the respective periods indicated; (iii) are in
                           accordance with the books and records of each of the
                           Acquired Corporations; (iv) contain and reflect all
                           necessary adjustments for a fair presentation of the
                           results of operations and cash flows and the
                           financial condition of the Business for the periods
                           covered thereby; and (v) contain and reflect adequate
                           provision or allowance for all reasonably anticipated
                           liabilities, expenses and losses.
<PAGE>
                                      -19-

                  (ii)     The Mueller Trust, the Jade Eagle Trust and
                           Principals shall deliver to the Purchaser the Audited
                           Financial Statements. The Audited Financial
                           Statements, including the notes thereto, shall be (i)
                           prepared in accordance with GAAP applied on a
                           consistent basis throughout the periods covered
                           thereby (except for the audit opinion qualification
                           described in Schedule 2.4 or required by changes in
                           GAAP); (ii) fairly, fully and correctly present the
                           assets, liabilities and financial position of each of
                           the Acquired Corporations, as applicable, at the
                           dates thereof and the results of operations of each
                           of the Acquired Corporations, as applicable for the
                           respective periods indicated; (iii) are in accordance
                           with the books and records of each of the Acquired
                           Corporations; (iv) contain and reflect all necessary
                           adjustments for a fair presentation of the results of
                           operations and cash flows and the financial condition
                           of the Business for the periods covered thereby; and
                           (v) contain and reflect adequate provision or
                           allowance for all reasonably anticipated liabilities,
                           expenses and losses.
                  (iii)    There is no liability or obligation of any kind,
                           whether accrued, absolute, fixed, contingent or
                           otherwise, of either of the Acquired Corporations
                           that is not reflected or reserved in the applicable
                           Financial Statements other than (i) liabilities
                           incurred in the Ordinary Course of Business in a
                           manner consistent with past practices since the
                           Balance Sheet Date, or (ii) any such liability or
                           obligation which would not have a Material Adverse
                           Effect.
         (k)      Taxation
                  (i)      Each of the Acquired Corporations has timely filed
                           all Tax Returns required to be filed by each of the
                           Acquired Corporations and such Tax Returns are true
                           and correct and have been completed in accordance
                           with applicable law.
                  (ii)     Each of the Acquired Corporations has (i) paid within
                           the time required by law, or accrued on the Financial
                           Statements all Taxes whether asserted or unasserted,
                           contingent or otherwise, they were required to pay or
                           accrue; and (ii) have withheld from each payment made
                           to each of their past or present employees, officers,
                           directors and independent contractors, creditors,
                           shareholders, non-residents or other third parties
                           all Taxes and other material deductions required to
                           be withheld and have, within the time required by
                           law, paid such withheld amounts to the proper
                           authority.
                  (iii)    Neither of the Acquired Corporations has been
                           delinquent in the payment of any Tax nor is there any
                           Tax deficiency outstanding, proposed or assessed
                           against either of the Acquired Corporations nor have
                           either of the Acquired Corporations executed any
                           waiver of any statute of limitations on or extensions
                           of the period for the assessment or collection of any
                           Tax. There are no matters relating to Taxes under
                           discussion between any taxing authority and either of
                           the Acquired Corporations.
                  (iv)     No audit or other examination of any Tax Return of
                           either of the Acquired Corporations is currently in
                           progress, nor has either of the Acquired Corporations
                           been notified of any request for such an audit or
                           other examination nor has any taxing authority
                           requested any information that could affect the Tax
                           payable or paid by either of the Acquired
                           Corporations, nor is any taxing authority asserting
                           or to the Mueller Trust, Jade Eagle Trust and
                           Principals' Knowledge without any enquiries
                           threatening to assert against either of the Acquired
                           Corporations any claim for Taxes.
<PAGE>
                                      -20-

                  (v)      No adjustment relating to any Tax Returns filed by
                           either of the Acquired Corporations has been proposed
                           in writing, formally or informally, by any Tax
                           authority to either of the Acquired Corporations or
                           any representative thereof.
                  (vi)     There are (and as of immediately following the
                           Closing Date there will be) no Liens of any sort on
                           the assets of either of the Acquired Corporations
                           relating to or attributable to Taxes nor has either
                           of the Acquired Corporations granted any waiver of
                           any statute of limitations with respect to, or any
                           extension of a period for the assessment of, any tax.
                  (vii)    Neither of the Acquired Corporations is a party to a
                           tax sharing, tax indemnity or tax allocation
                           agreement and neither of the Acquired Corporations is
                           liable for the Taxes of any other Person, whether as
                           a transferee or successor or by contract or
                           otherwise, nor do any of the Vendors owe any amount
                           under any such agreement.
                  (viii)   The Acquired Corporations tax basis in their assets,
                           the class in which such asset is included for tax
                           purposes, its loss carry forwards and investment tax
                           credits are accurately reflected on the tax books,
                           records and Tax Returns of each of the applicable
                           Acquired Corporations.
                  (ix)     No circumstances exist which would make either of the
                           Acquired Corporations subject to the application of
                           any of sections 79 to 80.04 of the Tax Act in a
                           manner that would result in a material liability to
                           either of the Acquired Corporations.
                  (x)      Neither of the Acquired Corporations has acquired
                           property or services from or disposed of property or
                           provided services to, a Person with whom it does not
                           deal at arm's length (within the meaning of the Tax
                           Act) for an amount that is other than the fair market
                           value of such property or services, or has been
                           deemed to have done so for purposes of the Tax Act.
                  (xi)     Neither of the Acquired Corporations has deducted any
                           amounts in computing its income in a taxation year
                           which may be included in a subsequent taxation year
                           under section 78 of the Tax Act.
                  (xii)    All money borrowed by either of the Acquired
                           Corporations was, at the time it was borrowed and
                           throughout the period of the borrowing, used for a
                           purpose which will result in any interest expense
                           incurred by such Acquired Corporation in connection
                           with such borrowing being deductible in accordance
                           with section 20(1)(c) of the Tax Act and the
                           equivalent provisions of any applicable provincial
                           taxing legislation.
                  (xiii)   Each of the Acquired Corporations is registered under
                           Part IX of the ETA and their registration numbers are
                           869824912-RT-0001 as to ESE and 869723965-RT-0001as
                           to PacGeo;
                  (xiv)    Each of the Acquired Corporations has duly and on a
                           timely basis filed all GST returns under Part IX of
                           the ETA that were required to be filed on or prior to
                           the date hereof and has remitted to the Receiver
                           General for Canada, the net tax, as defined for
                           purposes of the GST, for each of its completed
                           reporting periods, for GST purposes.
         (l)      No Material Adverse Change
                  Except as set out in Schedule 3.1(l) since December 31, 2003:
                  (i)      there has not been any change in the business,
                           condition, capitalization, assets, liabilities,
                           operations, financial performance or prospects of
                           either of the Acquired Corporations, and no event has
                           occurred that has had or would reasonably be expected
                           to have a Material Adverse Effect on either of the
<PAGE>
                                      -21-

                           Acquired Corporations, provided that the completion
                           of the transactions contemplated herein will result
                           in a default of the terms of the Bank Debt; and
                  (ii)     there has not been any loss, damage or destruction
                           to, or any material interruption in the use of, any
                           of the assets either of the Acquired Corporations
                           (whether or not covered by insurance) that has had or
                           would reasonably be expected to have a Material
                           Adverse Effect on either of the Acquired
                           Corporations.
         (m)      Ordinary Course of Business
                  Since incorporation, the Acquired Corporations have carried on
                  the Business in the ordinary course. Schedule 3.1(m) hereof
                  sets forth the management, senior employee, senior executive
                  and/or director compensation (including base salary, bonuses,
                  capital charges, management fees paid to any Person not
                  dealing at arm's length with the recipient of such money) for
                  or in respect of the fiscal year ending December 31, 2005 or
                  accrued to the date hereof, whether or not paid in the
                  relevant fiscal period or paid before or after such period.
                  Without limiting the generality of the foregoing, since
                  December 31, 2005, except as otherwise also disclosed in
                  Schedule 3.1(m), neither of the Acquired Corporations have:
                  (i)      failed to pay, satisfy and discharge its obligations
                           and liabilities in the Ordinary Course of Business;
                  (ii)     disposed of any of its inventories, other than in the
                           Ordinary Course of Business;
                  (iii)    sold or transferred any tangible assets or cancelled
                           or released any debts or claims, except in each case,
                           in the Ordinary Course of Business or not exceeding
                           one thousand Canadian dollars (CDN$$1,000) in any
                           single transaction or five thousand Canadian dollars
                           (CDN$5,000) in the aggregate;
                  (iv)     sold, leased, mortgaged, pledged or otherwise
                           encumbered or disposed of any of its tangible or
                           intangible assets or properties or relating to the
                           Business, except in the Ordinary Course of Business;
                  (v)      made any capital expenditures or leasehold
                           improvements, except in the Ordinary Course of
                           Business or, in any event, exceeding, in the
                           aggregate, five thousand Canadian dollars
                           (CDN$5,000), with the exception of the capital
                           expenditures listed on the "Capital Additions"
                           summary dated December 31, 2005 included in Schedule
                           3.1(m), and previously provided to the Purchaser;
                  (vi)     purchased or agreed to purchase, leased or agreed to
                           lease, acquired or agreed to acquire any additional
                           assets or property, except for purchases of materials
                           and supplies for use in the Ordinary Course of
                           Business;
                  (vii)    suffered any material damage, destruction or loss,
                           whether or not covered by insurance;
                  (viii)   incurred any debt, liability or obligation
                           whatsoever, absolute or contingent, secured or
                           unsecured, other than current liabilities in the
                           Ordinary Course of Business, nor entered into any
                           transaction or into any contract or agreement
                           whatsoever, other than in the Ordinary Course of
                           Business;
                  (ix)     assured, guaranteed or otherwise become liable for
                           the obligations of any other Person;
                  (x)      authorized, declared or paid any unusual management
                           fees, fringe benefits or bonuses, dividends or other
                           distributions on any of the shares except in the
                           Ordinary Course of Business;
                  (xi)     changed, altered or amended the accounting methods,
                           practices or principles or re-valued or written down
                           any of its assets, including without limitation, the
<PAGE>
                                      -22-

                           value of capitalized Intellectual Property or
                           inventory, and notes or accounts receivable except in
                           the ordinary course of business; or
                  (xii)    agreed or committed to take any of the actions
                           referred to above.
         (n)      Material Contracts
                  Other than as disclosed in Schedule 3.1(n), neither of the
                  Acquired Corporations is a party to, nor bound by, or entitled
                  to rights or bound by obligations under any Contract:
                  (i)      relating to the employment of, or the performance of
                           services by, any employee or consultant; (ii)
                           pursuant to which either of the Acquired Corporations
                           is or may become obligated to make any severance,
                           termination or similar payment to any current or
                           former employee or director; or (iii) pursuant to
                           which either of the Acquired Corporations is or may
                           become obligated to make any bonus or similar payment
                           (other than payments in respect of salary) in excess
                           of one thousand Canadian dollars (CDN$1,000) to any
                           current or former employee or director;
                  (ii)     with any customer;
                  (iii)    which provides for indemnification of any officer,
                           director, employee or agent;
                  (iv)     imposing any restriction on the right or ability of
                           either of the Acquired Corporations (i) to compete
                           with any other Person; (ii) to acquire any product or
                           other asset or any services from any other Person;
                           (iii) to solicit, hire or retain any Person as an
                           employee, consultant or independent contractor; (iv)
                           to develop, sell, supply, distribute, offer, support
                           or service any product or any technology or other
                           asset to or for any other Person;
                  (v)      to perform services for any other Person; or (vi) to
                           transact business or deal in any other manner with
                           any other Person; (v) (i) relating to the
                           acquisition, issuance, voting, registration, sale or
                           transfer of any securities; (ii) providing any Person
                           with any pre-emptive right, right of participation,
                           right of maintenance or any similar right with
                           respect to any securities; or (iii) providing either
                           of the Acquired Corporations with any right of first
                           refusal with respect to, or right to purchase or
                           otherwise acquire, any securities;
                  (vi)     incorporating or relating to any guarantee, warranty,
                           indemnity or similar obligation;
                  (vii)    relating to any currency hedging,
                  (viii)   imposing any confidentiality obligation on either of
                           the Acquired Corporations;
                  (ix)     (i) to which any Governmental Entity is a party or
                           under which any Governmental Entity has any rights or
                           obligations; or (ii) directly or indirectly
                           benefiting any Governmental Entity (including any
                           subcontract or other between either of the Acquired
                           Corporations and any contractor or subcontractor to
                           any Governmental Entity);
                  (x)      requiring that either of the Acquired Corporations
                           give any notice or provide any information to any
                           Person prior to considering or accepting any
                           proposal, or prior to entering into any discussions,
                           agreement, arrangement or understanding relating to,
                           any transaction for the sale of any securities in the
                           capital of either of the Acquired Corporations;
                  (xi)     that has a term of more than sixty (60) days and that
                           may not be terminated by either of the Acquired
                           Corporations (without penalty) within sixty (60) days
                           after the delivery of a termination notice by the
                           applicable Acquired Corporation, excluding employment
                           contracts with full-time employees of ESE;
<PAGE>
                                      -23-

                  (xii)    that contemplates or involves the payment or delivery
                           of cash or other consideration in an amount or having
                           a value in excess of one thousand Canadian dollars
                           (CDN$1,000) in the aggregate, or contemplates or
                           involves the performance of services having a value
                           in excess of one thousand Canadian dollars
                           (CDN$1,000) in the aggregate, excluding employment
                           contracts with full-time employees of ESE; or
                  (xiii)   not otherwise identified in clauses "(I)" through
                           "(xii)" above that could reasonably be expected to
                           have a (i) material effect on the Business,
                           condition, capitalization, assets, liabilities,
                           operations, financial performance or prospects of
                           either of the Acquired Corporations or to any of the
                           transactions contemplated by this Agreement; or (ii)
                           Material Adverse Effect on either of the Acquired
                           Corporations, taken as a whole.
                  (collectively, the "Material Contracts").
         (o)      Compliance with Material Contracts
                  Neither of the Acquired Corporations is in default in any
                  respect of any obligation under any Material Contract to which
                  it is a party or by which it is bound. To the Knowledge of the
                  Mueller Trust, Jade Eagle Trust and Principals there exists no
                  state of facts, conditions, events or circumstances which,
                  after notice or lapse of time or both, would constitute a
                  default in any material respect of any obligation under any
                  Material Contract by the Acquired Corporations or, to the
                  Mueller Trust, Jade Eagle Trust and Principals' Knowledge, by
                  any other party thereto, and each Material Contract is in good
                  standing and in full force and effect and ESE is entitled to
                  all its benefits thereunder. Except as disclosed in Schedule
                  3.1(o) herein, the execution of this Agreement and the
                  consummation of the transactions herein contemplated will not,
                  in any material way, affect the validity, enforceability or
                  continuity of any Material Contract, require the obtaining of
                  any consent or approval in order to remain in good standing or
                  result in an increase or decrease in any amounts payable
                  thereunder. Neither of the Acquired Corporations has made any
                  assignment or sub-lease of any of its rights under any of the
                  Material Contracts. True and complete copies of all written
                  Material Contracts are listed in Schedule 3.1(n) hereto and an
                  accurate summary description of all the material terms of all
                  oral Material Contracts listed therein have been provided to
                  the Purchaser. Except as disclosed in Schedule 3.1(n) hereto,
                  none of the written Material Contracts have been amended or
                  modified except pursuant to a written document, complete and
                  accurate copies of which have been delivered to the Purchaser.
                  Each of the Material Contracts is a legal, valid and binding
                  obligation of the applicable Acquired Corporation, enforceable
                  against it in accordance with its terms and is enforceable
                  except as the enforceability thereof may be limited by
                  bankruptcy, insolvency, reorganization and other laws
                  affecting creditors rights and by general principles of
                  equity.
         (p)      Regulatory Compliance
                  (i)      Neither of the Acquired Corporations is in conflict
                           with, or in default or violation of, (i) any law,
                           rule, regulation, order, judgment or decree
                           applicable to the Acquired Corporations or by which
                           their respective properties are bound or affected; or
                           (ii) any Contract, Governmental Authorization or
                           other instrument or obligation to which any of the
                           Acquired Corporations is a party or by which either
                           of the Acquired Corporations or their respective
                           properties are bound or affected. No investigation or
                           review by any Governmental Entity is pending or, to
                           the Mueller Trust, Jade Eagle Trust and Principals'
                           Knowledge, without making any investigation or
<PAGE>
                                      -24-

                           enquiry, threatened against either of the Acquired
                           Corporations, nor has any Governmental Entity given
                           to either of the Acquired Corporations written notice
                           of its intention to conduct the same.
                  (ii)     The Acquired Corporations are, and have at all times
                           since incorporation been, in compliance with all
                           applicable Legal Requirements. Neither of the
                           Acquired Corporations have received any notice or
                           other communication from any Governmental Entity or
                           other Person regarding any actual or possible
                           violation of, or failure to comply with, any Legal
                           Requirement.
                  (iii)    In attempting to secure or securing any Material
                           Contract the Acquired Corporations have not, nor to
                           the Mueller Trust, Jade Eagle Trust and Principals'
                           Knowledge, have any director, officer, shareholder,
                           agent or employee of the Acquired Corporations (i)
                           used any funds for unlawful contributions, gifts,
                           entertainment or other unlawful expenses relating to
                           political activity; (ii) made any unlawful payment
                           (whether money or property) to foreign or domestic
                           government officials or employees or to foreign or
                           domestic political parties or campaigns; (iii) made
                           any other unlawful payment (whether money or
                           property); or (iv) committed any other offence.
                  (iv)     The Acquired Corporations hold all Governmental
                           Authorizations necessary to enable ESE to conduct the
                           Business in the manner in which such business is
                           currently being conducted. All such Governmental
                           Authorizations are valid, in full force and effect
                           and have been provided to the Purchaser. Each of the
                           Acquired Corporations (as applicable) is, and at all
                           times, has been, in material compliance with the
                           terms and requirements of such Governmental
                           Authorizations. Neither of the Acquired Corporations
                           has received any notice or other communication from
                           any Governmental Entity regarding (i) any actual or
                           possible violation of or failure to comply with any
                           term or requirement of any material Governmental
                           Authorization; or (ii) any actual or possible
                           revocation, withdrawal, suspension, cancellation,
                           termination or modification of any material
                           Governmental Authorization.
                  (v)      Schedule 3.1(p)((v) describes the terms of each
                           grant, incentive or subsidy provided or made
                           available to or for the benefit of either of the
                           Acquired Corporations, and in connection with which
                           the Purchaser has received correct and complete
                           copies of all related documents, and each of the
                           Acquired Corporations is in full compliance with all
                           of the terms and requirements of each such grant,
                           incentive and subsidy. Neither the execution,
                           delivery or performance of this Agreement, nor the
                           consummation of the transactions contemplated hereby
                           will, with or without notice or lapse of time, give
                           any Person the right to revoke, withdraw, suspend,
                           cancel, terminate or modify any such grant, incentive
                           or subsidy.
         (q)      Related Party Transactions
                  Since December 31, 2005, no payments has been made or
                  authorized by either of the Acquired Corporations to, and
                  neither of the Acquired Corporations has entered into any
                  transaction with, its officers, directors, shareholders or
                  employees or any of the Affiliates of such persons except to
                  employees in the Ordinary Course of Business and at the rates
                  of salary or remuneration, including bonuses payable to such
                  persons in accordance with past practices, consistently
                  applied.
         (r)      Related Party Indebtedness
                  Except as set forth in Schedule 3.1(r) herein, neither of the
                  Acquired Corporations is indebted to any of their employees,
                  officers, directors or shareholders in any manner whatsoever
                  or to any of such Person's or either of the Acquired
<PAGE>
                                      -25-

                  Corporations' Affiliates, including, without limitation, any
                  of the Vendors and Principals and in connection therewith the
                  Purchaser has received correct and complete copies of all
                  related documentation.
         (s)      No Guarantees
                  Except as set forth in Schedule 3.1(r) herein neither of the
                  Acquired Corporations has guaranteed or otherwise given
                  security for or agreed to guarantee or give security for any
                  liability, debt or obligation of any other Person and correct
                  and complete copies of any such guarantees have been provided
                  to the Purchaser, as applicable.
         (t)      Dividends
                  No dividends or other distributions (in cash or other
                  property) on any of the shares of either of the Acquired
                  Corporations has been authorized, declared or paid since
                  December 31, 2005.
         (u)      Title of Assets
                  Except as set forth in Financial Statements (which includes
                  the Permitted Liabilities) and except as disclosed in Schedule
                  3.1(u), the Acquired Corporations are the owners of all the
                  property and assets shown in the Financial Statements or used
                  by ESE in connection with the Business (excluding property and
                  assets leased to or licensed by ESE and disclosed) with good
                  and marketable title thereto free of any Lien, claim, security
                  interest or encumbrance of any nature or kind and of any
                  rights or privileges capable of becoming Liens, claims,
                  security interests or encumbrances except those which will be
                  released and discharged in full prior to or at the Time of
                  Closing, including the current Bank Debt to be discharged by
                  the Purchaser at the Time of Closing. Without limiting the
                  generality of the foregoing, none of the Vendors and
                  Principals, any of their Affiliates, the Acquired
                  Corporations' consultants or clients, nor any employees of
                  either of the Acquired Corporations own or possess any of the
                  assets (including, without limitation, any intellectual
                  property) used by the Acquired Corporations in the Business.
         (v)      Condition and Sufficiency of Assets
                  Except as set out in Schedule 3.1(v) and having regard to
                  their age and the use to which they have been put, all
                  facilities, machinery, equipment and vehicles owned or used by
                  either of the Acquired Corporations, as applicable, in
                  connection with the Business are in good operating condition
                  and in a state of good repair and maintenance, reasonable wear
                  and tear excepted.
         (w)      No Broker
                  There is no broker, finder or other person who has any valid
                  claim against the Purchaser or either of the Acquired
                  Corporations, for a commission, finder's fee or brokerage fee
                  in connection with this Agreement or the consummation of the
                  transactions contemplated hereby, by virtue of any action
                  taken by the Vendors and Principals or either of the Acquired
                  Corporations except commission payable by the Vendors and
                  Principals to NAI Goddard & Smith.
         (x)      Accounts Receivable
                  All Accounts Receivable have been bona fide created in the
                  Ordinary Course of Business and the provision for doubtful
                  accounts established in connection therewith are reasonable.
                  The Accounts Receivable of ESE are free of all claims, Liens,
                  security interests, encumbrances and rights of set off
                  whatsoever, other than security granted in connection with the
                  Bank Debt.
         (y)      Intellectual Property
                  (i)      PacGeo does not and never did own any Intellectual
                           Property.
                  (ii)     ESE is the sole owner of all right, title and
                           interest in and are entitled to use, without payment
                           of any royalty or other fee, all Intellectual
                           Property now used in the course of carrying on the
                           Business. All registered Intellectual Property held
<PAGE>
                                      -26-

                           by ESE is valid and subsisting. Schedule 3.1(y)
                           annexed hereto contains a complete and accurate list
                           of all Intellectual Property, together with full
                           registration and other particulars thereof, including
                           any fees payable in connection therewith. To the best
                           of the Knowledge of the Mueller Trust, Jade Eagle
                           Trust and Principals, the Intellectual Property used
                           in conjunction with the Business has not been and is
                           not at present being used by any other Person. To the
                           best of the Knowledge of the Mueller Trust, Jade
                           Eagle Trust and Principals, the right of ESE to use
                           the Intellectual Property used by them in connection
                           with the Business has never been called into question
                           or challenged and to the best of the Knowledge,
                           without any enquiry or investigation made by them, of
                           the Mueller Trust, Jade Eagle Trust and Principals,
                           ESE is not infringing upon any industrial or
                           intellectual property rights of any other person,
                           firm or corporation. To the best of the Knowledge of
                           the Mueller Trust, Jade Eagle Trust and Principals,
                           ESE, the Mueller Trust, Jade Eagle Trust or
                           Principals have not received any notice (written or
                           oral) that, and is not otherwise aware that, any
                           person, firm or corporation claims that the conduct
                           of the Business infringes upon the Intellectual
                           Property rights of any person, firm or corporation.
                           ESE have not granted any right, title or interest in
                           and to the Intellectual Property used by them in
                           connection with the Business to any other firm,
                           person or corporation.
         (z)      Computer Systems
                  The computer systems of ESE, including but not limited to,
                  mini-computers, personal computers and special purpose systems
                  are fully operational and have all required licences.
         (aa)     Real Property
                  (i)      PacGeo is not and has never been a party to any Real
                           Property Leases.
                  (ii)     PacGeo is not the registered or beneficial owner of
                           any real property.
                  (iii)    The Real Property is the only real property occupied
                           by ESE which is necessary to conduct the Business as
                           carried out on the date hereof.
                  (iv)     ESE is not the registered or beneficial owner of any
                           real property.
                           The Real Property Lease is the only agreement under
                           which the ESE leases any real property. Copies of
                           such lease in its entirety have been provided to the
                           Purchaser. The Real Property Lease is in full force
                           and effect and, save as disclosed in Schedule
                           3.1(aa), is unmodified. ESE is entitled to all rights
                           and benefits as lessee under the Real Property Lease
                           and, other than in respect of the Sublease, have not
                           sublet, assigned, licensed or otherwise conveyed any
                           rights in the Leased Premises or the Real Property
                           Lease to any other person. All rental and other
                           payments and other obligations required to be paid
                           and performed by ESE pursuant to the Real Property
                           Lease have been duly paid and performed; ESE is not
                           in material default of any of its obligations under
                           the Real Property Lease; and, except as set forth in
                           Schedule 3.1(aa), to the Knowledge of the Mueller
                           Trust, Jade Eagle Trust and Principals, without
                           making any investigation or enquiry, the landlord or
                           other parties to the Real Property Lease are not in
                           default of any of their obligations under the Real
                           Property Lease. The Mueller Trust, Jade Eagle Trust
                           and Principals have obtained, or will have obtained
                           prior to the Closing Date, written consents from the
                           lessors to the completion of the transaction
                           contemplated by this Agreement which also confirm
<PAGE>
                                      -27-

                           that there are no outstanding defaults under the Real
                           Property Lease. Copies of the consents are attached
                           in Schedule 3.1(aa). Subject to obtaining such
                           consents, the terms and conditions of the Real
                           Property Lease will not be affected by, nor will any
                           of the Real Property Leases be in default as a result
                           of, the completion of the transactions contemplated
                           hereunder.
                           To the best of the Mueller Trust, Jade Eagle Trust
                           and Principals' Knowledge, without any enquiry or
                           investigation made by them, the title of the
                           respective landlords to the Leased Real Property is
                           not subject to any registered or unregistered Liens
                           that could adversely impact the marketability of the
                           Real Property Leases. If title to the Leased Real
                           Property is subject to any mortgages with priority
                           over the Real Property Leases, the Mueller Trust,
                           Jade Eagle Trust and Principals covenant that they
                           will request the landlord provide to the Acquired
                           Corporations prior to the Closing Date, if requested
                           by the Purchaser, a non-disturbance agreement from
                           all mortgagees, provided that the inability of the
                           Acquired Corporations to obtain such non-disturbance
                           agreements shall not result in any rights to the
                           Purchaser or liabilities or obligations to the
                           Vendors or the Principals.
                  (v)      The Business is not being carried on, and the Real
                           Property is not being operated, in a manner which is
                           in contravention of any statute, regulation, rule,
                           code, standard or policy except for such
                           contraventions which would not, or could not, have a
                           material adverse effect on the condition of the
                           Business. No amounts are owing by ESE or any
                           Affiliate thereof in respect of the Leased Premises
                           to any governmental authority or public utility,
                           other than current accounts which are not in arrears.
                           The Business is not being carried on in the Leased
                           Premises contrary to the terms of the Real Property
                           Leases.
                  (vi)     The Leased Real Property, is currently zoned in a
                           manner which permits its present use and occupation
                           and to the knowledge of the Vendors and the
                           Principals, without having made any investigation or
                           enquiry, such use and occupation are not in breach of
                           any statute, by-law, regulation, ordinance, order,
                           covenant, restriction or plan (including, without
                           limitation, those relating to environmental
                           protection). No charges or violations have been
                           filed, served, made or to the Vendors' and
                           Principals' Knowledge, without any enquiry or
                           investigation made by them, threatened against or
                           relating to the Leased Real Property as a result of
                           any violation or alleged violation of any of the
                           aforesaid. There are no outstanding work orders or
                           other requirements or notices relating to the
                           Business, to the Mueller Trust, Jade Eagle Trust and
                           Principals' Knowledge, without having made any
                           investigation or enquiry, any of the Leased Real
                           Property issued by any police or fire department,
                           sanitation, health or factory authorities,
                           departments or by any federal, provincial or
                           municipal or other governmental authority, agency,
                           department or board or any board of fire underwriters
                           or any insurer or any notices or matters under
                           discussion with any such departments or authorities
                           relating to work orders or other requirements or
                           notices. There are no matters under discussion by any
                           of the Mueller Trust, Jade Eagle Trust and Principals
                           or ESE with any such department or authority relating
                           to work orders, non-compliance orders, deficiency
                           notices or other such notices. There are no pending
                           or to the Mueller Trust, Jade Eagle Trust and
                           Principals' Knowledge, without any enquiry or
                           investigation made by them, threatened requests,
                           applications or proceedings to alter or restrict the
                           zoning or other restrictions applicable to the said
                           property or changes or events which might curtail or
                           interfere with the current use of any of the said
                           properties.
<PAGE>
                                      -28-

                  (vii)    To the Mueller Trust, Jade Eagle Trust and
                           Principals' Knowledge, without any enquiry or
                           investigation made by them, with respect to the
                           Leased Real Property, except as set forth in Schedule
                           3.1(aa) hereto:
                           (A)      the structures, appurtenances, fixtures and
                                    improvements on the said properties do not
                                    encroach on property of others, and are not
                                    encroached upon by structures or
                                    improvements of others;
                           (B)      ESE has full, uninterrupted and unencumbered
                                    rights of ingress to and egress from each of
                                    the said properties, to and from the public
                                    roads abutting or adjacent to each of the
                                    said properties for all pedestrians and
                                    vehicles utilizing each of the said
                                    properties adequate to operate the Business
                                    in the ordinary course;
                           (C)      there are no structural defects or
                                    weaknesses in the buildings and improvements
                                    on any of the said properties including,
                                    without limitation, in any of the structural
                                    elements thereof, in any roofing or roof
                                    membrane or in any of the mechanical,
                                    electrical or HVAC or sprinkler systems
                                    therein;
                           (D)      no Hazardous Substances including, without
                                    limitation, any asbestos, PCB's and urea
                                    formaldehyde foam insulation, is or has been
                                    located, stored, or incorporated in or on
                                    any of the said properties or any properties
                                    adjacent thereto and, without qualification,
                                    ESE has complied with all federal,
                                    provincial and local statutes, laws,
                                    ordinances, regulations and orders relating
                                    to environmental matters including, but not
                                    limited to, matters related to air
                                    pollution, water pollution, noise control,
                                    on-site or off-suite Hazardous Substance
                                    handling, discharge, disposal or recovery,
                                    Hazardous Substances (whether products or
                                    waste), including without limitation,
                                    asbestos, urea formaldehyde foam insulation
                                    and PCB's;
                           (E)      the buildings and all other improvements,
                                    fixtures and structures located on each of
                                    the properties (including all walls, roofs,
                                    floors, sub-floors, foundations, partitions
                                    and ceilings) and the pavement, sidewalks,
                                    driveways and parking areas situate upon
                                    each of the said properties are in good
                                    working order and sound condition and in a
                                    good state of repair and maintenance
                                    reasonable wear and tear excepted given the
                                    age and use of the Leased Real Property and
                                    free from all structural defects, weaknesses
                                    and leakages;
                           (F)      the heating, ventilating, plumbing,
                                    drainage, electrical and air conditioning
                                    systems and all other systems used in the
                                    Leased Premises and all machinery,
                                    equipment, tools, furniture, furnishings and
                                    materials used in the Business are in good
                                    working order, fully operational and free of
                                    any defect, except for normal wear and tear.
                           (G)      all hydro, water, sewer, gas, electric,
                                    telephone, drainage and other utility
                                    equipment, facilities and services and all
                                    mechanical systems (as aforesaid), in each
                                    case as required by law and/or necessary for
                                    the proper operation of the said properties
                                    as they are now being operated, are
                                    installed and connected pursuant to valid
                                    permits, and are adequate to service the
                                    said properties and the cost thereof is not
                                    chargeable against any of the said
                                    properties by way of local improvement
                                    charges;
                           (H)      all buildings, fixtures, structures and
                                    other improvements upon each of the said
                                    properties and the purposes for which each
                                    of the said properties is currently used by
<PAGE>
                                      -29-

                                    ESE comply in all respects with all relevant
                                    governmental laws, by-laws, ordinances,
                                    requirements, rules and regulations
                                    (including municipal and provincial fire
                                    regulations and pollution control
                                    regulations) except for any failure to
                                    comply which currently does not and cannot
                                    in the future result in a material cost or
                                    material damages to ESE or any of them;
                           (I)      ESE nor any of the Mueller Trust, Jade Eagle
                                    Trust and Principals nor anyone on their
                                    behalf has received any notice from any
                                    insurance carrier of defects or inadequacies
                                    in the said properties which, if not
                                    corrected, could result in termination of
                                    insurance coverage or an increase in the
                                    cost thereof, and there are no such defects
                                    or inadequacies;
                           (J)      ESE nor any of the Mueller Trust, Jade Eagle
                                    Trust and Principals nor anyone on their
                                    behalf has received any notice with respect
                                    to any by-law change affecting any of the
                                    said properties nor any notice relating to
                                    any threatened or pending condemnation or
                                    expropriation of any of the said properties
                                    from any governmental department, branch,
                                    agency, office or other authority, and there
                                    are no pending or threatened requests,
                                    applications or proceedings to alter or
                                    restrict the zoning or other use
                                    restrictions applicable to the said
                                    properties or changes or events which might
                                    curtail or interfere with the use of the
                                    said properties; and
                           (K)      none of the said properties, nor any lands
                                    adjacent thereto have ever been used for the
                                    purpose of the storage or disposal of
                                    Hazardous Substances.
         (bb)     Sublease
                  The Sublease is the only agreement under which ESE subleases
                  any real property. Copies of the Sublease in its entirety have
                  been provided to the Purchaser. The Sublease is in full force
                  and effect and is unmodified. ESE is entitled to all rights
                  and benefits as lessor under the Sublease. All rental
                  obligations required to be paid and performed by the subtenant
                  pursuant to the Sublease have been duly paid and performed;
                  ESE and the subtenant are not in material default of any of
                  the obligations under the Sublease. The Sublease will not be
                  affected by, nor will any of the Sublease be in default as a
                  result of, the completion of the transactions contemplated
                  hereunder.
         (cc)     Personal Property Leases
                  (i)      The Leases with the lessors listed and attached
                           hereto as Schedule 3.1(cc) as lessors, and PacGeo and
                           ESE, are the only Leases to which any of PacGeo and
                           ESE is a party or in respect of which it has provided
                           security. Copies of each such Lease is attached in
                           Schedule 3.1(cc) attached hereto. The Leases are in
                           good standing and none of PacGeo or ESE is in default
                           in payment of rent or any other amount payable
                           thereunder or in the performance in any material
                           respect of any of its other obligations thereunder.
                           The Vendors have provided to the Purchaser true and
                           complete copies of all such Leases, including
                           supplements, amendments and modifications thereof.
                           None of such Leases has been or is being further
                           modified or amended or assigned. In addition the
                           lessors under the Leases are not in breach, in any
                           material respect, of any of their obligations
                           thereunder. No state of facts exists which after
                           notice or lapse of time or both or otherwise would
                           result in a breach or default, in any material
                           respect, under any of the Leases. Neither PacGeo or
<PAGE>
                                      -30-

                           ESE has any interest in, or any right or obligation
                           to acquire any interest in, any other real or leased
                           property. The Vendors, PacGeo and ESE, as lessee
                           under the Leases, have not entered into or agreed to
                           enter into any subleases, licences or concessions
                           with respect to any such Lease.
                  (ii)     Assuming proper authorization and execution thereof
                           by the lessors, the Leases are valid, legally binding
                           and enforceable, except that the rights and remedies
                           of the parties thereto may be subject to and affected
                           by the law relating to bankruptcy, insolvency,
                           reorganization and creditors' rights generally and
                           except that a court may or may not order an
                           injunction, specific performance or other equitable
                           remedies with respect to any particular provision of
                           the Leases. The execution of this Agreement and the
                           consummation of the transactions contemplated hereby
                           in accordance with the terms hereof will not, in any
                           way, affect the validity, enforceability or
                           continuity of any of the Leases or require the
                           obtaining of any consent or approval in order to
                           maintain such lease in good standing.
         (dd)     Capital Property Purchase Agreements
                  (i)      The Capital Property Purchase Agreement (hereinafter
                           referred to as "CPPA") with the sellers listed and
                           attached hereto as Schedule 3.1(dd), as sellers, and
                           PacGeo and ESE, as buyer, are the only CPPA's to
                           which any of PacGeo and ESE is a party or in respect
                           of which it has provided security. The terms of such
                           CPPA are detailed in Schedule 3.1(dd). The CPPA's are
                           in good standing and none of PacGeo or ESE is in
                           default in payment of rent or any other amount
                           payable thereunder or in the performance in any
                           material respect of any of its other obligations
                           thereunder. The Vendors have provided to the
                           Purchaser true and complete copies of all such
                           CPPA's, including supplements, amendments and
                           modifications thereof. None of such CPPA's has been
                           or is being further modified or amended or assigned.
                           In addition, except as set out in Schedule 3.1(dd)
                           hereto, the sellers under the CPPA's are not in
                           breach, in any material respect, of any of their
                           obligations thereunder. No state of facts exists
                           which after notice or lapse of time or both or
                           otherwise would result in a breach or default, in any
                           material respect, under any of the CPPA's. Neither
                           PacGeo or ESE has any interest in, or any right or
                           obligation to acquire any interest in, any other
                           CPPA's.
                  (ii)     Assuming proper authorization and execution thereof
                           by the sellers, the CPPA's are valid, legally binding
                           and enforceable, except that the rights and remedies
                           of the parties thereto may be subject to and affected
                           by the law relating to bankruptcy, insolvency,
                           reorganization and creditors' rights generally and
                           except that a court may or may not order an
                           injunction, specific performance or other equitable
                           remedies with respect to any particular provision of
                           the Leases. The execution of this Agreement and the
                           consummation of the transactions contemplated hereby
                           in accordance with the terms hereof will not, in any
                           way, affect the validity, enforceability or
                           continuity of any of the CPPA's or require the
                           obtaining of any consent or approval in order to
                           maintain such lease in good standing.
         (ee)     Environmental
                  Except as set out in Schedule 3.1(ee):
                  (i)      The assets of ESE, the Real Property and facilities,
                           operated, and/or leased by ESE and the operations of
                           ESE thereon or in connection therewith (which
<PAGE>
                                      -31-

                           includes without limitation the Business) presently
                           comply with, and have at all times complied with, all
                           Environmental Laws.
                  To the Mueller Trust, Jade Eagle Trust and Principals'
                  Knowledge, without any enquiry or investigation made by them:
                  (ii)     No judicial proceedings are pending or threatened
                           against ESE alleging the violation of any
                           Environmental Laws, and there are no administrative
                           proceedings pending or threatened against ESE,
                           alleging the violation of any Environmental Laws and
                           no notice from any Governmental Entity or any private
                           or public Person has been received by ESE claiming
                           any violation of any Environmental Laws in connection
                           with the assets of ESE, or any Real Property or
                           facility owned, operated or leased by the ESE, or
                           requiring any remediation, clean-up, modification,
                           repairs, work, construction, alterations or
                           installations on or in connection with the assets of
                           ESE, or any Real Property or facility owned, operated
                           or leased by ESE that are necessary to comply with
                           any Environmental Laws and that have not been
                           complied with or otherwise resolved to the
                           satisfaction of the party giving notice.
                  (iii)    All Permits, orders, consents and the like required
                           to be obtained or filed by ESE under any
                           Environmental Laws in connection with ESE's
                           operations, including those activities relating to
                           the generation, use, storage, treatment, disposal,
                           release or remediation of Hazardous Substances, have
                           been duly obtained or filed and or valid and in full
                           force and effect, and each of ESE is and has at all
                           times complied in all material respects with the
                           terms and conditions of all such Permits. The list of
                           all Permits, orders, consents and the like are set
                           out in Schedule (ii)(ee).
                  (iv)     All Hazardous Substances used or generated by ESE in
                           connection with any of their assets or which are
                           located on, in, or under any of the operated, or
                           leased Real Property or facilities of the ESE is and
                           have at all times been generated, stored, used,
                           treated, disposed of and released by such on their
                           behalf in such manner as not to result in any
                           Environmental Costs or Liabilities. A list of all
                           Hazardous Substances used or generated by ESE or any
                           of their predecessors are set out in Schedule
                           3.1(ee).
                  (v)      There are not now, on, in or under any property or
                           facilities when owned, leased or operated by ESE, any
                           Hazardous Substances that are in a condition or
                           location that violates any Environmental Law or that
                           reasonably could be expected to require remediation
                           under any Environmental Laws or give rise to a claim
                           for damages or compensation by any affected Person or
                           to any Environmental Costs or Liabilities; and ESE
                           nor their predecessors has ever conducted or caused
                           to be conducted an environmental audit, assessment or
                           study of any of the assets or real properties owned,
                           leased or operated by ESE or their predecessors.
                  (vi)     ESE has not received, and Mueller Trust, Jade Eagle
                           Trust and Principals' do not expect to receive, any
                           notification from any Person advising ESE that it is
                           a potentially responsible party under any
                           Environmental Laws.
         (ff)     Other Liabilities
                  Neither of the Acquired Corporations is now subject to any
                  liabilities or obligations, direct or indirect, absolute or,
                  to the Mueller Trust, Jade Eagle Trust and Principals'
                  Knowledge, without having made any independent investigation
                  or enquiry, contingent or otherwise, other than the
                  liabilities or obligations set forth in the Financial
                  Statements and those arising since December 31, 2005 in the
                  Ordinary Course of Business, none of which is materially
                  adverse and all of which in the aggregate would not have a
<PAGE>
                                      -32-

                  Material Adverse Effect on ESE or the Business. To the Mueller
                  Trust, Jade Eagle Trust and Principals' Knowledge, there are
                  no facts or circumstances which might reasonably serve as the
                  basis for, or give rise to, any material liabilities or
                  obligations on the part of either of the Acquired
                  Corporations, other than liabilities or obligations disclosed
                  in the Financial Statements, or arising thereafter in the
                  Ordinary Course of Business (none of which is materially
                  adverse).
         (gg)     No Judgments; No Litigation
                  There are no judgments or executions outstanding against
                  either of the Acquired Corporations nor are there any suits,
                  actions or legal, administrative, arbitration or other
                  proceedings or governmental investigations affecting the
                  Business, operations, prospects, property or affairs of either
                  of the Acquired Corporations pending or, to the Mueller Trust,
                  Jade Eagle Trust and Principals' Knowledge, threatened against
                  either of the Acquired Corporations. None of the customer
                  complaints received by ESE in connection with the Business
                  have involved serious or significant injury or damages,
                  whether alleged or actual.
         (hh)     Employment Arrangements
                  (i)      PacGeo has never had employees, agents or
                           consultants;
                  (ii)     Schedule 3.1(hh) hereto contains a complete list of:
                           (A)      all written or oral contracts or
                                    arrangements for the employment of any
                                    officer, employee, agent or consultant
                                    including, but not limited to
                                    confidentiality and non competition
                                    agreements, to which ESE is a party;
                           (B)      all full-time employees (other than
                                    hourly-paid employees), their salaries, wage
                                    rates and other compensation arrangements,
                                    their positions and their length or service
                                    and particulars of any contracts,
                                    arrangements or understandings with them,
                                    including any particulars relating to
                                    relocations, repatriation, expatriation,
                                    visas or work permits.
                  (iii)    ESE is not a party to or otherwise bound by, any
                           consent decree with, or citation by, any Governmental
                           Entity relating to employees or employment practices,
                           wages, hours, and terms and conditions of employment.
                  (iv)     ESE has withheld all amounts required by law or by
                           agreement to be withheld and reported with respect to
                           wages, salaries and other payments to employees,
                           current or former, is not liable for any arrears of
                           wages or any taxes or penalties for failure to comply
                           with any of the foregoing and is not liable for any
                           payment respecting unemployment, compensation
                           benefits, pension plans, workplace safety and
                           insurance, social security or other benefits or
                           obligations related to employees, except routine
                           payments made on the Ordinary Course of Business.
                  (v)      ESE has paid in full to all of its employees, or
                           accrued in its financial books and records, all
                           wages, salaries, commissions, bonuses, benefits, and
                           other compensation due to such employees, or
                           otherwise arising under any policy, practice,
                           agreement, plan, program, statute or other law.
                  (vi)     ESE is not liable for any notice of termination,
                           severance pay or other payments to any employee or
                           former employee arising from the termination of
                           employment nor to any former employee in respect of
                           any right to reinstatement, and ESE will not have
                           liability under any benefit or severance policy,
                           practice, agreement, plan or program which exists or
                           arises, or may be deemed to exist or arise, under any
                           applicable law or otherwise, as a result of or in
                           connection with the transactions contemplated
                           hereunder or as a result of the termination by ESE of
                           any persons employed by ESE on or prior to the date
                           hereof.
<PAGE>
                                      -33-

                  (vii)    ESE has not closed any plant or facility, effectuated
                           any lay-offs of employees or implemented any early
                           retirement program within the past five (5) years,
                           except in the Ordinary Course of Business, nor has
                           ESE planned or announced any such action or program
                           for the future.
                  (viii)   ESE nor any of the Vendors has entered into any
                           agreement or made any arrangements with any of the
                           employees of ESE which would have the effect of
                           depriving the Purchaser or ESE of the continued
                           services of any such employees following the Closing
                           Date, other than arrangements with Mark and Lynn as
                           contemplated herein.
         (ii)     Change of Control Payments
                  There does not exist any plan or agreement pursuant to which
                  any amounts may become payable in cash or otherwise (whether
                  currently or in the future) to any current or former officer,
                  director or employee of either of the Acquired Corporations as
                  a result of or in connection with the transactions
                  contemplated herein.
         (jj)     Employee Benefit Matters; Labour
                  (i)      ESE has not entered into nor offered to any of it
                           employees any Employee Benefit Plan;
                  (ii)     ESE is not a party to any collective bargaining
                           agreement and, to the Mueller Trust, Eagle Jade Trust
                           and Principals' Knowledge, without any enquiry or
                           investigation made by them, no union organizational
                           campaign or representation petition is currently
                           pending with respect to any of the employees of ESE.
                  (iii)    No grievance is pending or, to the Mueller Trust,
                           Eagle Jade Trust and Principals' Knowledge, without
                           any enquiry or investigation made by them,
                           threatened, and there are no pending or outstanding
                           arbitration awards in respect of ESE.
                  (iv)     There is no labour strike or labour dispute,
                           slowdown, work stoppage or lockout pending or
                           threatened against or affecting ESE, and ESE has
                           never experienced any labour strike or labour
                           dispute, slowdown, work stoppage or lockout.
                  (v)      ESE (i) is, and has always been, in substantial
                           compliance with all applicable laws and regulations
                           regarding labour and employment practices, including,
                           without limitation, terms and conditions of
                           employment, equal employment opportunity, employee
                           compensation, employee benefits, affirmative action,
                           wages and hours, plant closing and mass layoff,
                           occupational safety and health, immigration, workers'
                           compensation, disability, unemployment compensation,
                           whistleblower laws or other employment or labour
                           relations laws; (ii) is not engaged, nor has it,
                           engaged, in any unfair labour practices, and has no,
                           and has not had, any, unfair labour practice charges
                           or complaints pending or, to the Mueller Trust, Eagle
                           Jade Trust and Principals' Knowledge, without any
                           enquiry or investigation made by them, threatened
                           against it; (iii) has no, and has not had, any,
                           grievances, arbitrations, or other proceedings
                           arising or asserted to arise under any collective
                           bargaining agreement, pending or, to the Mueller
                           Trust, Eagle Jade Trust and Principals' Knowledge,
                           without any enquiry or investigation made by them,
                           threatened, against it; (iv) has no, and has not had,
                           any charges, complaints, or proceedings before any
                           Governmental Entity responsible for regulating labour
                           or employment practices, pending or threatened
                           against it; and (v) has not granted any increase in
                           severance or termination pay under any currently
                           effective employment, severance, termination or
                           indemnification agreement.
         (kk)     Workers' Compensation Matters
                  ESE has paid all assessments pursuant to worker's compensation
                  legislation levied by all Governmental Entities and, to the
                  Mueller Trust, Jade Eagle Trust and Principals' Knowledge, ESE
                  does not have any liability for and there is not pending any
<PAGE>
                                      -34-

                  state of facts which may result in the levying of a special
                  assessment or a penalty charge of any nature with respect to
                  the period prior to the Time of Closing. ESE has filed on a
                  timely basis all payroll statements and other returns and
                  statements required to be filed pursuant to applicable
                  worker's compensation legislation. To the Mueller Trust, Eagle
                  Jade Trust and Principals' Knowledge, without any enquiry or
                  investigation made by them, ESE is not liable to indemnify any
                  of its employees or any governmental body in respect of
                  compensation and/or health-care payable to its employees
                  pursuant to applicable worker's compensation legislation. ESE
                  has notified the relevant Governmental Entities, within the
                  time periods specified by applicable legislation, of all
                  occurrences of accidents for which notification is required by
                  applicable legislation and has provided requisite details
                  thereof. The Purchaser has been provided a summary of all
                  outstanding claims made by employees of ESE to any applicable
                  workers' compensation board.
         (ll)     Pay Equity
                  ESE has complied with all of its obligations under applicable
                  "pay equity" legislation and is not required to and has not
                  filed or published any "pay equity" plans with any
                  governmental or regulatory authority or with its employees.
         (mm)     Banking
                  Included in Schedule 3.1(mm) is a true and complete list
                  showing the name and address of each financial institution in
                  which either of the Acquired Corporations has an account or
                  safety deposit box (and the details of the said accounts and
                  safety deposit box(es)) and the names of all persons
                  authorized to draw thereon or who have access thereto, and a
                  complete list and brief description of each power of attorney
                  presently in force and given by either of the Acquired
                  Corporations.
         (nn)     Insurance
                  (i)      The Acquired Corporations maintain insurance policies
                           and fidelity bonds covering its assets, employees,
                           officers and directors, as applicable, which are of
                           the type and in the amounts customarily covered by
                           persons conducting businesses similar to the
                           Business.
                  (ii)     Included in Schedule 3.1(nn) hereto is a true and
                           complete list setting forth all insurance policies
                           now in full force and effect (specifying the insurer,
                           the amount of the coverage, the type of insurance,
                           the annual premium, the amount of deductible, if any,
                           the policy number and any pending claims thereunder)
                           maintained by the Acquired Corporations on the assets
                           of the Acquired Corporations or in relation to the
                           Business and true and complete copies of the most
                           recent inspection reports, if any, received from
                           insurance underwriters as to the condition of the
                           assets of the Acquired Corporations. Neither the
                           Vendors nor either of the Acquired Corporations is in
                           default in any material respect under any of the
                           provisions contained in any insurance policy or has
                           failed to pay all premiums due under any such
                           insurance policy to date or to give any notice or
                           present any claim under any such insurance policy in
                           due and timely fashion. Since December 31, 2005,
                           there have been no material claims under any such
                           insurance policy.
         (oo)     Forward Commitments
                  All forward commitments by or to ESE for inventories, supplies
                  or services for use in connection with the Business (whether
                  or not there are any contracts in writing with respect
                  thereto) which are in existence as of the date of this
                  Agreement have been entered into by it in the Ordinary Course
                  of Business and upon terms and conditions consistent with
                  ESE's past practices.
<PAGE>
                                      -35-

         (pp)     Customer Relations
                  Since December 31, 2004, there has not been any material
                  adverse change in relations with customer or suppliers of the
                  Business, except as to dealings with those Accounts Receivable
                  listed in Schedule 3.1(pp) attached hereto. ESE has not had a
                  significant problem in obtaining in a timely manner and at
                  reasonable cost any and all materials, goods or services (raw,
                  finished or otherwise) used or to be used in the Business nor
                  do the Vendors have any reason to believe ESE will have any
                  significant problem in obtaining such materials, goods or
                  services in the future. ESE has not received written notice of
                  intent to terminate any material contracts or agreements for
                  the purchase of the services of ESE.
         (qq)     No Undisclosed Facts
                  No representation or warranty by the Vendors contained in this
                  Agreement or in any exhibit, schedule, written statement,
                  certificate or other document delivered or to be delivered by
                  the Vendors pursuant to this Agreement or in connection with
                  the consummation of the transactions contemplated hereby
                  contains or will contain any untrue statement of a material
                  fact, or omits or will omit to state any material facts known
                  to the Vendors necessary, in light of the circumstances under
                  which it was or will be made, in order to make the statements
                  herein or therein not misleading.
         (rr)     Shareholder's Loans
                  The Shareholder's Loan, the details, terms and conditions of
                  which are described in Schedule 3.1(r), shall be free and
                  clear of all encumbrances, assignable in the ordinary course,
                  due and payable without set off. The amount of the
                  Shareholder's Loan shall be no less than the aggregate amount
                  recorded on the books of the Acquired Corporations as at
                  September 30, 2005, provided that the relative allocation of
                  the Shareholder Loans among the Principals and Callon my
                  change prior to the Closing Date.

3.2      Representations and Warranties of Aries and Callon Regarding Certain of
         the Purchased Shares
         Each of Aries and Callon hereby jointly and severally represent and
         warrant that except as otherwise disclosed in this Agreement or in any
         schedule attached hereto (and hereby acknowledges and confirms that the
         Purchaser and are relying on such representations and warranties in
         connection with the purchase by the Purchaser of the Purchased Shares
         and Shareholder's Loan):
         (a)      Good Title
                  Aries is the owner, beneficially and of record, of the part of
                  the Purchased Shares as described in Section 1.1(nnn) and
                  Callon is the owner of a portion of the Shareholder's Loan as
                  described in Schedule 3.1(r) with good and marketable title
                  thereto, free of any claim, Lien, security interest or
                  encumbrance of any nature or kind, and as such Aries has the
                  exclusive right and full power to sell, transfer and assign
                  its part of the Purchased Shares and Callon has the exclusive
                  right and full power to sell, transfer and assign
                  Shareholder's Loan to the Purchaser free of any claim, Lien,
                  security interest or encumbrance of any nature or kind. In
                  addition, neither Aries nor Callon has any agreement or option
                  or any right capable of becoming an agreement for the purchase
                  of the part of the Purchased Shares owned by Aries and/or
                  Shareholder's Loan owned by Callon. There is not pending any
                  suit, action or other legal proceeding of any sort to, in any
                  manner, restrain or prevent Aries and/or Callon from
                  effectually and legally transferring the part of the Purchased
                  Shares and Shareholder's Loan owned by them respectively to
                  the Purchaser, free and clear of all claims, Liens, security
                  interests and encumbrances of any nature or kind, or any
<PAGE>
                                      -36-

                  action or proceeding, the effect of which would be to cause a
                  Lien, security interest or encumbrance of any nature or kind
                  to attach to any of such part of the Purchased Shares and/or
                  Shareholder's Loan or to divest title to or ownership of any
                  of such part of the Purchased Shares and/or Shareholder's Loan
                  in any manner whatsoever, or to make the Purchaser or Aries
                  and/or Callon liable for damages as a result of the execution
                  and delivery of this Agreement by Aries and/or Callon or the
                  completion by Aries and/or Callon of the transactions
                  contemplated herein and Aries and Callon know of no such claim
                  in connection with any of the foregoing.
         (b)      No Bankruptcy/Insolvency
                  Neither Aries nor Callon is insolvent, has committed an act of
                  bankruptcy, has proposed a compromise or arrangement to its
                  creditors generally, has had any petition for a receiving
                  order in bankruptcy filed against it, has taken any proceeding
                  with respect to a compromise or arrangement, has taken any
                  proceeding to have itself declared bankrupt or wound-up, has
                  taken any proceeding to have a receiver appointed of any part
                  of its assets, has had any encumbrances take possession of any
                  of its property, nor has it had any execution or distress
                  become enforceable or become levied upon any of its property.
         (c)      Related Agreements
                  There are no agreements, written or oral, to which Aries or
                  any of its Affiliates or Callon is a party to or by which any
                  of them is bound in respect of the Purchased Shares owned by
                  Aries and Shareholder's Loan owned by Callon.
         (d)      Shareholder's Loan
                  The part of Shareholder's Loan is legally and beneficially
                  owned by Callon, the details, terms and conditions of which
                  are described in Schedule 3.1(r), shall be free and clear of
                  any and all encumbrances, assignable in the ordinary course,
                  due and payable without set off.

                  Due Execution and Delivery - Aries and Callon

                  The execution and delivery of this Agreement by Aries and
                  Callon as contemplated herein has been duly authorized by all
                  necessary action. Aries and Callon have the legal capacity to
                  enter into this Agreement and to carry out the transactions of
                  purchase and sale contemplated herein and to perform their
                  respective obligations hereunder and pursuant to all other
                  agreements required to be delivered hereunder. This Agreement
                  has been duly and validly executed and delivered by Aries and
                  Callon and constitutes a valid and legally binding agreement,
                  enforceable in accordance with its terms subject to and
                  affected by the laws relating to bankruptcy, insolvency,
                  reorganization and creditors' rights generally and except that
                  a court may or may not order an injunction, specific
                  performance or other equitable remedies with respect to any
                  particular provision of this Agreement.

3.3      Representations and Warranties of the Lynn and the Mueller Trust
         Regarding Certain of the Purchased Shares
         Each of Lynn and the Mueller Trust hereby jointly and severally
         represent and warrant that except as otherwise disclosed in this
         Agreement or in any Schedule attached hereto (and hereby acknowledges
         and confirms that the Purchaser are relying on such representations and
         warranties in connection with the purchase by the Purchaser of the
         Purchased Shares and Shareholder's Loan.):
         (a)      Good Title
                  Each of Lynn and the Mueller Trust is the owner, beneficially
                  and of record, of the part of the Purchased Shares as
                  described in Section 1.1(nnn) and part of the Shareholder's
                  Loan as described in Schedule 3.1(r). Each of Lynn and the
                  Mueller Trust has a good and marketable title thereto, free of
<PAGE>
                                      -37-

                  any claim, Lien, security interest or encumbrance of any
                  nature or kind, and as such has the exclusive right and full
                  power to sell, transfer and assign the part of the Purchased
                  Shares and part of the Shareholder's Loan owned by Lynn and
                  the Mueller Trust to the Purchaser free of any claim, Lien,
                  security interest or encumbrance of any nature or kind. In
                  addition, neither Lynn and/or the Mueller Trust has any
                  agreement or option or any right capable of becoming an
                  agreement for the purchase of the part of the Purchased Shares
                  and part of the Shareholder's Loan owned by them. There is not
                  pending any suit, action or other legal proceeding of any sort
                  to, in any manner, restrain or prevent Lynn and/or the Mueller
                  Trust from effectually and legally transferring the part of
                  the Purchased Shares and the part of the Shareholder's Loan
                  owned by Lynn and/or the Mueller Trust to the Purchaser, free
                  and clear of all claims, Liens, security interests and
                  encumbrances of any nature or kind, or any action or
                  proceeding, the effect of which would be to cause a Lien,
                  security interest or encumbrance of any nature or kind to
                  attach to any of such part of the Purchased Shares and part of
                  the Shareholder's Loan or to divest title to or ownership of
                  any of such part of the Purchased Shares and part of the
                  Shareholder's Loan in any manner whatsoever, or to make the
                  Purchaser or Lynn and/or the Mueller Trust liable for damages
                  as a result of the execution and delivery of this Agreement by
                  Lynn and/or the Mueller Trust or the completion by Lynn and/or
                  the Mueller Trust of the transactions contemplated herein and
                  neither Lynn nor the Mueller Trust knows of such claim in
                  connection with any of the foregoing.
         (b)      No Bankruptcy/Insolvency
                  Each of Lynn and the Mueller Trust is not insolvent, has
                  committed an act of bankruptcy, has proposed a compromise or
                  arrangement to its creditors generally, has had any petition
                  for a receiving order in bankruptcy filed against it, has
                  taken any proceeding with respect to a compromise or
                  arrangement, has taken any proceeding to have itself declared
                  bankrupt or wound-up, has taken any proceeding to have a
                  receiver appointed of any part of its assets, has had any
                  encumbrances take possession of any of its property, nor has
                  it had any execution or distress become enforceable or become
                  levied upon any of its property.
         (c)      Related Agreements
                  There are no agreements, written or oral, to which Lynn and/or
                  the Mueller Trust or any of its Affiliates is a party to or by
                  which any of them is bound in respect of the Purchased Shares
                  and Shareholder's Loan.
         (d)      Shareholder's Loan
                  The part of the Shareholder's Loan are legally and
                  beneficially owned by Lynn, the details, terms and conditions
                  of which are described in Schedule 3.1(r), shall be free and
                  clear of all encumbrances, assignable in the ordinary course,
                  due and payable without set off.
         (e)      Due Execution and Delivery - Lynn and the Mueller Trust
                  The execution and delivery of this Agreement by Lynn and the
                  Mueller Trust as contemplated herein has been duly authorized
                  by all necessary action and Lynn and the Mueller Trust has the
                  legal capacity to enter into this Agreement and to carry out
                  the transactions of purchase and sale contemplated herein and
                  to perform their respective obligations hereunder and pursuant
                  to all other agreements required to be delivered hereunder.
                  This Agreement has been duly and validly executed and
                  delivered by Lynn and the Mueller Trust and constitutes a
                  valid and legally binding agreement, enforceable against Lynn
                  and/or the Mueller Trust in accordance with its terms subject
<PAGE>
                                      -38-

                  to and affected by the laws relating to bankruptcy,
                  insolvency, reorganization and creditors' rights generally and
                  except that a court may or may not order an injunction,
                  specific performance or other equitable remedies with respect
                  to any particular provision of this Agreement.

3.4      Representations and Warranties of the Mark and the Jade Eagle Trust
         Regarding Certain of the Purchased Shares
         Each of Mark and the Jade Eagle Trust hereby jointly and severally
         represent and warrant that except as otherwise disclosed in this
         Agreement or in any Schedule attached hereto (and hereby acknowledges
         and confirms that the Purchaser are relying on such representations and
         warranties in connection with the purchase by the Purchaser of the
         Purchased Shares and Shareholder's Loan.):
         (a)      Good Title
                  Each of Mark and the Jade Eagle Trust is the owner,
                  beneficially and of record, of the part of the Purchased
                  Shares as described in Section 1.1(nnn) and part of the
                  Shareholder's Loan as described in Schedule 3.1(r). Each of
                  Mark and the Jade Eagle Trust has good and marketable title
                  thereto, free of any claim, Lien, security interest or
                  encumbrance of any nature or kind, and as such has the
                  exclusive right and full power to sell, transfer and assign
                  the part of the Purchased Shares and part of the Shareholder's
                  Loan owned by Mark and the Jade Eagle Trust to the Purchaser
                  free of any claim, Lien, security interest or encumbrance of
                  any nature or kind. In addition, neither Mark nor the Jade
                  Eagle Trust has any agreement or option or any right capable
                  of becoming an agreement for the purchase of the part of the
                  Purchased Shares and part of the Shareholder's Loan owned by
                  Mark and the Jade Eagle Trust. There is not pending any suit,
                  action or other legal proceeding of any sort to, in any
                  manner, restrain or prevent Mark and/or the Jade Eagle Trust
                  from effectually and legally transferring the part of the
                  Purchased Shares and part of the Shareholder's Loan owned by
                  Mark and the Jade Eagle Trust to the Purchaser, free and clear
                  of all claims, Liens, security interests and encumbrances of
                  any nature or kind, or any action or proceeding, the effect of
                  which would be to cause a Lien, security interest or
                  encumbrance of any nature or kind to attach to any of such
                  Purchased Shares and Shareholder's Loan or to divest title to
                  or ownership of any of such Purchased Shares and Shareholder's
                  Loan in any manner whatsoever, or to make the Purchaser or
                  Mark and the Jade Eagle Trust liable for damages as a result
                  of the execution and delivery of this Agreement by Mark and
                  the Jade Eagle Trust or the completion by Mark and the Jade
                  Eagle Trust of the transactions contemplated herein and each
                  of Mark and the Jade Eagle Trust knows of no such claim in
                  connection with any of the foregoing.
         (b)      No Bankruptcy/Insolvency
                  Each of Mark and the Jade Eagle Trust is not insolvent, has
                  committed an act of bankruptcy, has proposed a compromise or
                  arrangement to its creditors generally, has had any petition
                  for a receiving order in bankruptcy filed against it, has
                  taken any proceeding with respect to a compromise or
                  arrangement, has taken any proceeding to have itself declared
                  bankrupt or wound-up, has taken any proceeding to have a
                  receiver appointed of any part of its assets, has had any
                  encumbrances take possession of any of its property, nor has
                  it had any execution or distress become enforceable or become
                  levied upon any of its property.
         (c)      Related Agreements
                  There are no agreements, written or oral, to which Mark and
                  the Jade Eagle Trust or any of its Affiliates is a party to or
                  by which any of them is bound in respect of the part of the
                  Purchased Shares and part of the Shareholder's Loan.
<PAGE>
                                      -39-

         (d)      Shareholder's Loan
                  The part of the Shareholder's Loan are legally and
                  beneficially owned by Mark, the details, terms and conditions
                  of which are described in Schedule 3.1(r), shall be free and
                  clear of all encumbrances, assignable in the ordinary course,
                  due and payable without set off.

                  Due Execution and Delivery - Mark and the Jade Eagle Trust

                  The execution and delivery of this Agreement by Mark and the
                  Jade Eagle Trust as contemplated herein has been duly
                  authorized by all necessary action and Mark and the Jade Eagle
                  Trust have the legal capacity to enter into this Agreement and
                  to carry out the transactions of purchase and sale
                  contemplated herein and to perform their respective
                  obligations hereunder and pursuant to all other agreements
                  required to be delivered hereunder. This Agreement has been
                  duly and validly executed and delivered by Mark and the Jade
                  Eagle Trust and constitutes a valid and legally binding
                  agreement, enforceable against Mark and/or the Jade Eagle
                  Trust in accordance with its terms subject to and affected by
                  the laws relating to bankruptcy, insolvency, reorganization
                  and creditors' rights generally and except that a court may or
                  may not order an injunction, specific performance or other
                  equitable remedies with respect to any particular provision of
                  this Agreement.

                                    ARTICLE 4
                 COVENANTS OF THE VENDORS, PRINCIPALS AND CALLON

4.1      Interim Period
         The Vendors, Principals and Callon hereby jointly and severally
         covenant that, during the Interim Period except as otherwise provided
         in this Agreement, the Vendors, Principals and Callon will and will
         cause the Acquired Corporations to:

         (a)      conduct the Business and its operations in the Ordinary Course
                  of Business and in material compliance with all applicable
                  Legal Requirements and the material requirements of all
                  Contracts to which any of them is a party;
         (b)      maintain the accounting methods principles and practices used
                  by the Acquired Corporations;
         (c)      preserve intact each of the Acquired Corporations' current
                  business organization, use reasonably commercial efforts to
                  keep available the services of its current officers and other
                  employees and use reasonable commercial efforts to maintain
                  its relations and goodwill with all suppliers, customers,
                  landlords, creditors, licensors, licensees, employees and
                  other Persons having business relationships with either of the
                  Acquired Corporations;
         (d)      take all steps commercially reasonably required by the
                  Purchaser to assist it in retaining the goodwill of ESE,
                  including, if requested by the Purchaser, introducing the
                  Purchaser or representatives of the Purchaser to the customers
                  and suppliers of ESE, arranging the opportunity for the
                  Purchaser or its representatives to meet such employees,
                  customers and suppliers;
         (e)      use reasonable commercial efforts to preserve and prevent any
                  damage to, destruction or loss of any assets of ESE, whether
                  or not such assets are covered by insurance;
         (f)      take all action necessary to prevent the loss, cancellation,
                  abandonment, forfeiture or expiration of any Intellectual
                  Property of ESE;
         (g)      give to the Purchaser, the Purchaser's Solicitors, the
                  Purchaser's advisors and other representatives of the
                  Purchaser, full access during normal business hours to
<PAGE>
                                      -40-

                  management, employees, properties, books, contracts,
                  commitments and records of each of the Acquired Corporations;
                  provided such access does not unreasonably interfere with the
                  day-to-day operations of the Business;
         (h)      furnish the Purchaser with all information concerning the
                  affairs of either of the Acquired Corporations as the
                  Purchaser may reasonably request;
         (i)      instruct and authorize the Vendors' and the Auditors and
                  solicitors to cooperate with the Purchaser's advisors and the
                  Purchaser's Solicitors and instruct the Auditors to give to
                  the Purchaser's advisors full access during such period to
                  their files and working papers with respect to the Acquired
                  Corporations and the Business;
         (j)      permit the Purchaser to observe all operations of ESE and
                  authorize the Purchaser's advisors to contact the owner of the
                  Real Property in respect of the status of the Leases;
         (k)      promptly advise the Purchaser in writing of any material
                  change in the condition, financial or otherwise, in the
                  Business, or the Acquired Corporations;
         (l)      provide the Purchaser with all information required to enable
                  the Purchaser to prepare and file all notices and applications
                  required to be filed for the purposes of obtaining of any
                  regulatory consent which is required in connection with the
                  transactions contemplated herein;
         (m)      do all reasonable things and cause all reasonable things to be
                  done to ensure that all of the representations and warranties
                  contained in this Agreement remain materially true and correct
                  throughout the Interim Period as if such representations and
                  warranties were continuously made throughout such period;
         (n)      keep in full force and effect the insurance referred to
                  herein;
         (o)      not enter into nor modify, amend or terminate any Contracts,
                  commitments or transactions nor waive, relinquish or assign
                  any Contracts or rights or claims under any Contract,
                  pertaining to the Business, except, unless otherwise herein
                  provided, in the Ordinary Course of Business;
         (p)      not incur any indebtedness, obligations or liability or make
                  any payment in respect thereof, nor cancel or forgive any
                  indebtedness except in the Ordinary Course of Business;
         (q)      not increase the wages or salaries or any other form of
                  remuneration, direct or indirect, nor increase any benefits or
                  entitlements, of any of the employees of ESE, except in the
                  Ordinary Course of Business;
         (r)      not acquire or agree to acquire (by merger, consolidation, or
                  acquisition of shares or assets) any additional assets, except
                  inventories and supplies purchased in the Ordinary Course of
                  Business;
         (s)      not sell, agree to sell or otherwise dispose of or license,
                  pledge or encumber any of the assets of either of the Acquired
                  Corporations, except Inventories sold in the Ordinary Course
                  of Business;
         (t)      not sell, transfer, license, sublicense or otherwise dispose
                  of any Intellectual Property of ESE, or amend or modify any
                  existing agreements or rights with respect to any Intellectual
                  Property of, or used by, ESE, other than nonexclusive object
                  and source code licenses in the Ordinary Course of Business
                  provided that in no event shall ESE license on an exclusive
                  basis or sell any Intellectual Property of ESE;
         (u)      not make any material Tax election or settle or compromise any
                  material federal, state, provincial, local or foreign Tax
                  liability or agree to an extension of a statute of limitations
                  except to the extent the amount of any such settlement has
                  been reserved for on the Financial Statements;
         (v)      not waive the benefits of, agree to modify in any manner,
                  terminate, release any person from or knowingly fail to
                  enforce any confidentiality or similar agreement to which
<PAGE>
                                      -41-

                  either of the Acquired Corporations is a party or of which
                  either of the Acquired Corporations is a beneficiary;
         (w)      not pay, discharge or satisfy any claims, liabilities or
                  obligations (absolute, accrued, asserted or unasserted,
                  contingent or otherwise) or litigation (whether or not
                  commenced prior to the date of this Agreement), other than the
                  payment, discharge or satisfaction in the Ordinary Course of
                  Business or in accordance with their terms, or liabilities
                  reflected or reserved against in the Financial Statements or
                  incurred in the Ordinary Course of Business;
         (x)      not declare, accrue, set aside or pay any dividend or make any
                  other distribution in respect of any shares, or repurchase,
                  redeem or otherwise reacquire any shares or other securities;
         (y)      not propose to or sell, issue, deliver, pledge, grant or
                  authorize the issuance or grant of (i) any of its shares or
                  other securities; (ii) any option, call, warrant or right to
                  acquire any of its shares or other securities; or (iii) any
                  instrument convertible into or exchangeable for any of its
                  shares or other securities or enter into other agreements or
                  commitments of any character obligating the issuance of any
                  such shares or convertible securities, or any other ownership
                  interest (including without limitation, any phantom interest)
                  in either of the Acquired Corporations;
         (z)      not split, combine or reclassify the share capital of either
                  of the Acquired Corporations;
         (aa)     not amend or waive any of its rights under, or accelerate the
                  vesting under, any provision of any stock option plans, any
                  provision of any agreement evidencing any outstanding stock
                  option or any restricted stock purchase agreement, or
                  otherwise reprise, extend the term of or in any other way
                  amend or modify any of the terms of any outstanding option,
                  warrant or other security;
         (bb)     not form any Subsidiary or acquire any equity interest or
                  other interest in any other entity;
         (cc)     not amend or permit the adoption of any amendment to its
                  Charter Documents or effect or become a party to any merger,
                  consolidation, amalgamation, share exchange, business
                  combination, recapitalization, reclassification of shares,
                  stock split, division or subdivision of shares, reverse stock
                  split, consolidation of shares or similar transaction;
         (dd)     not make any individual or series of related payments outside
                  of the Ordinary Course of Business of any kind in connection
                  with either of the Acquired Corporations;
         (ee)     not oblige either of the Acquired Corporations to pay or
                  otherwise be responsible for the payment of any brokerage fees
                  or other commissions relating to the purchase and sale of the
                  Purchased Shares and Shareholder's Loan contemplated herein;
                  and
         (ff)     not take, or agree in writing or otherwise to take, any of the
                  actions described in (a) through (ff) above, or any action
                  which would make any of the representations or warranties in
                  this Agreement untrue or incorrect in any material respect or
                  prevent the Vendors, Principals and Callon from performing
                  their respective covenants hereunder or result in any of the
                  conditions to the Agreement set forth herein not being
                  satisfied.

4.2      Time of Closing
         The Vendors and the Principals hereby jointly and severally covenant
         and, as applicable, Callon covenants that, at the Time of Closing:
         (a)      the Vendors, Principals and Callon will furnish the Purchaser
                  with a statutory declaration that the representations and
                  warranties of Jade Eagle Trust, Mueller Trust, Aries and the
                  Principals contained in this Agreement are true as at the Time
                  of Closing, as though then made, and that the covenants of the
                  Vendors, Principals and Callon to be complied with at or prior
                  to the Time of Closing have been materially complied with;
                  provided that the receipt of such statutory declaration and
<PAGE>
                                      -42-

                  the closing of the transactions contemplated herein shall not
                  be a waiver of the representations, warranties and covenants
                  of all the parties, which are contained in this Agreement;
         (b)      the Vendors, Principals and Callon will deliver to the
                  Purchaser evidence satisfactory to the Purchaser's Solicitors
                  that all necessary corporate, trust and other necessary
                  authorizations authorizing and approving the transactions
                  contemplated herein have been obtained;
         (c)      the Vendors, Principals and Callon will deliver or cause to be
                  delivered any consents, waivers or approvals which may be
                  required from third parties to the sale of the Purchased
                  Shares and Shareholder's Loan;
         (d)      the Vendors, the Principals and Callon will provide the
                  Purchaser with a statutory declaration that each of them is
                  not then a "non-resident" of Canada within the meaning of the
                  Tax Act;
         (e)      the Vendors, the Principals and Callon will execute all
                  assignments and documents delivered pursuant to this Agreement
                  at the Time of Closing which require execution by them;
         (f)      the Vendors, the Principals and Callon will cause all
                  necessary steps and proceedings as may reasonably be approved
                  by the Purchaser's Solicitors to be taken so that the
                  Purchased Shares and Shareholder's Loan may be properly
                  transferred to the Purchaser at the Time of Closing; and in
                  that regard, to deliver to the Purchaser at the Time of
                  Closing certificates representing the Purchased Shares, such
                  certificates being duly endorsed for transfer to the Purchaser
                  and cause transfers of the Purchased Shares and the
                  Shareholder's Loan to be duly and regularly recorded in the
                  name of the Purchaser or as it may in writing direct;
         (g)      the Vendors, Principals will:
                  (i)      cause all of the directors and officers of the
                           Acquired Corporations to resign in favour of nominees
                           of the Purchaser, in each case at no expense or
                           liability to the Acquired Corporations; and
                  (ii)     deliver, and cause to be delivered by the Vendors and
                           Principals, and all the directors and officers of the
                           Acquired Corporations, and all members of the
                           Vendors' and Principals' immediate families who were
                           employed by or were paid by the Acquired
                           Corporations, a mutual release, with effect from the
                           Time of Closing, of any claims by and against the
                           Acquired Corporations which any of such parties may
                           have, in form satisfactory to the Purchaser
                           (excepting non-compliance with law, fraud or anything
                           contemplated in this Agreement);
         (h)      the Vendors and the Principals will deliver to the Purchaser
                  the written covenant of the Royal Bank of Canada and the
                  Business Development Bank of Canada as to the terms and
                  conditions upon which it will discharge the Bank Debt and
                  release the Acquired Corporations from all obligations
                  thereunder or under any related security;
         (i)      the Vendors and Principals will, excluding under the Bank
                  Debt, cause the Acquired Corporations to be released from all
                  guarantees or other covenants in favour of the Vendors and/or
                  the Purchasers and/or Callon, the directors, officers or
                  shareholders of the Acquired Corporations or any Person with
                  whom any of such persons does not deal "at arm's length" (as
                  defined in the Tax Act), and to obtain and, where appropriate,
                  arrange for the registration of the discharge of all security
                  given by the Acquired Corporations in support of any such
                  guarantee or covenant;
         (j)      the Vendors, Principals and Callon will except in respect of
                  the Shareholder's Loan, pay and cause to be paid to the
                  Acquired Corporations all amounts owing by them, any of their
<PAGE>
                                      -43-

                  respective Affiliates or any other Person with whom any of the
                  Vendors and the Principals and Callon does not deal "at arm's
                  length" (as defined in the Tax Act); and
         (k)      the Vendors, Principals and Callon will deliver and cause to
                  be delivered to the Purchaser the corporate seals, minute
                  books, share certificates, share certificate books, share
                  transfers, share register books, directors' registers and any
                  and all documents, records, books, instruments and agreements
                  of or pertaining or relating to the Acquired Corporations and
                  the Business.

4.3      Tax Matters
         (a)      Returns
                  (i)      The Vendors and the Principals shall prepare or cause
                           PacGeo to prepare all Tax Returns for the Acquired
                           Corporations for all periods ending on or before the
                           Closing Date that are to be filed after the Closing
                           Date, shall allow Purchaser to review and comment on
                           each such Tax Return and shall consider any such
                           comments as the Purchaser may reasonably provide.
                  (ii)     For income tax purposes the parties agree to
                           apportion income for the year of Closing based upon
                           an interim closing of the Acquired Corporations'
                           books on or immediately prior to the Closing Date (as
                           applicable) in a manner consistent with the past
                           practices of the Acquired Corporations for reporting
                           income Tax items. In order to appropriately apportion
                           any non-income Taxes relating to any taxable year
                           beginning before (and ending after) the Closing Date,
                           the parties hereto shall apportion such non-income
                           Taxes to the taxable period ending on or before the
                           Closing Date as follows: (x) ad valorem Taxes
                           (including, without limitation, real and personal
                           property taxes) shall be accrued on a monthly basis
                           over the period for which such Taxes are levied, or
                           if it cannot be determined over the period such Taxes
                           are being levied, over the fiscal period of the
                           relevant taxing authority, in each case irrespective
                           of the lien or assessment date of such Taxes, (y) all
                           Taxes relating to actions outside the ordinary course
                           of business occurring on or after the Closing Date
                           shall be apportioned to the period ending after the
                           Closing Date, and (z) franchise and other privilege
                           Taxes not measured by income shall be accrued on a
                           monthly basis over the period to which the privilege
                           relates.
                  (iii)    The Vendors and Principals shall be liable for, and
                           shall jointly and severally indemnify and hold the
                           Purchaser (including any successors thereof) harmless
                           against all Taxes of the Acquired Corporations
                           payable for any taxable year, taxable period or
                           portion thereof ending on or before the Closing Date
                           which tax liability is not disclosed in the Audited
                           Financial Statements or in the Final Balance Sheet
                           and to the extent such tax liability is not
                           disclosed, the Vendors and the Principals will be
                           liable to the Purchaser pursuant to this sub-section.
                           The Purchaser and the Acquired Corporations shall be
                           liable for, and shall indemnify and hold the Vendors
                           and the Principals harmless against any and all Taxes
                           imposed on the Acquired Corporations relating or
                           apportioned to any taxable year or portion thereof
                           ending on or after the Closing Date, except as
                           otherwise disclosed or accrued in the Final Balance
                           Sheet.
         (b)      Refunds or Credits
                  The Purchaser, or the Acquired Corporations shall promptly pay
                  to the Vendors and Principals any refunds or credits of Taxes
                  to the extent such refunds or credits are not included on the
                  Final Balance Sheet for which the Vendors and Principals may
                  be liable under Section 4.3(a) hereof or that relate to Tax
<PAGE>
                                      -44-

                  periods or portions thereof ending on or prior to the Closing
                  Date. For purposes of this Section 4.3(b), the term "refund"
                  shall include a reduction in Taxes and the use of an
                  overpayment of Taxes as an audit or other Tax offset and
                  receipt of a refund shall occur upon the filing of a return or
                  an adjustment thereto using such reduction, overpayment or
                  offset, or upon the receipt of cash. Upon the reasonable
                  request of any Vendor and/or Principal, the Vendors and/or
                  Principals shall prepare and file, or cause to be prepared and
                  filed, all claims for refunds relating to such Taxes. In no
                  event shall the Purchaser amend any of the Acquired
                  Corporations' Tax Returns relating to any Taxes for a period
                  (or portion thereof) ending on or prior to the Closing Date or
                  the carry-back of an item to a period ending prior to Closing
                  Date without the Vendors' and Principals' prior written
                  consent (which will not be unreasonably withheld).
         (c)      Mutual Cooperation
                  As soon as practicable, but in any event within fifteen (15)
                  days after either the Vendors'/Principals' or the Purchaser's
                  request, as the case may be, the Purchaser shall deliver to
                  the Vendors and Principals or the Vendors and Principals shall
                  deliver to the Purchaser, as the case may be, such information
                  and other data relating to the Tax Returns and Taxes of the
                  Acquired Corporations and shall provide such other assistance
                  as may reasonably be requested, to cause the completion and
                  filing of all Tax Returns or to respond to audits by any
                  taxing authorities with respect to any Tax Returns or taxable
                  periods or to otherwise enable the Vendors, the Principals,
                  the Purchaser, or the Acquired Corporations to satisfy their
                  accounting or Tax requirements.
         (d)      Contests
                  Whenever any taxing authority asserts a claim, makes an
                  assessment, or otherwise disputes the amount of Taxes for
                  which the Vendors are or may be liable under this Agreement,
                  the Purchaser shall, if informed of such an assertion,
                  promptly inform the Vendors, and the Vendors shall have the
                  right to control any resulting proceedings and to determine
                  whether and when to settle any such claim, assessment or
                  dispute to the extent such proceedings or determinations
                  affect the amount of Taxes for which any Vendor may be liable
                  under the Agreement. Whenever any taxing authority asserts a
                  claim, makes an assessment or otherwise disputes the amount of
                  Taxes for which the Purchaser is liable under this Agreement,
                  the Purchaser shall have the right to control any resulting
                  proceedings and to determine whether and when to settle any
                  such claim, assessment or dispute, except to the extent such
                  proceedings affect the amount of Taxes for which the Vendors
                  are liable under this Agreement.
         (e)      Resolution of Disagreements Between the Sellers and Purchaser
                  If either the Vendors and Principals or the Purchaser disagree
                  as to the amount of Taxes for which either the Vendors and
                  Principals or the Purchaser may be liable under this
                  Agreement, either the Vendors and Principals or the Purchaser
                  shall promptly consult each other in an effort to resolve such
                  dispute. If any such point of disagreement cannot be resolved
                  within sixty (60) days of the date of consultation, the
                  dispute shall be settled by a Neutral Auditor. The fees and
                  expenses of the Neutral Auditor for such dispute resolution
                  work will be paid by the Purchaser as to 50% of the costs, and
                  by the Vendors and Principals as to 50% of the costs. The
                  Neutral Auditor shall act as an expert and not as an
                  arbitrator and will be required to determine the items in
                  dispute that have been referred to them as soon as reasonably
                  practicable, based solely on the presentations made to them by
                  the Vendors, the Principals and Purchaser, and not by
                  independent review. The Neutral Auditor's determination shall
                  be made within thirty (30) days of its engagement, shall be
                  set forth in a written statement delivered to the Vendors, the
                  Principals and the Purchaser and shall be final and binding on
                  the parties hereto.
<PAGE>
                                      -45-

         (f)      Survival of Obligations
                  Notwithstanding anything else herein, the obligations of the
                  parties set forth in this Section 4.3 shall be unconditional
                  and absolute, and shall remain in effect without limitation as
                  to time or amount of recovery.
         (g)      Adjustment
                  Any payment to the Vendors and Principals under this Section
                  4.3 will be deemed to be an adjustment to the Purchase Price
                  unless, under applicable law, such payment is not treated as
                  received by such other parties.

4.4      Additional Covenants
         The Vendors, the Principals and Callon hereby jointly and severally
         covenant that, subsequent to the Closing Date, they will:
         (a)      at the request of the Purchaser, execute and deliver such
                  additional conveyances, transfers and other assurances as may,
                  in the reasonable opinion of the Purchaser's Solicitors, be
                  required to carry out the intent of this Agreement.

4.5      Integrity of Representations and Warranties
         No investigation or due diligence of the Purchaser, or any lack
         thereof, or disclosures of the Vendors or of any other Person, shall
         qualify, prejudice reduce, detract from, mitigate or otherwise
         compromise the integrity or authority of the Vendor's representations
         and covenants under this Agreement.

                                    ARTICLE 5
                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants as follows and hereby acknowledge
and confirm that the Vendors, the Principals and Callon are relying on such
representations and warranties in connection with the entering into this
Agreement by them and the transactions contemplated herein:

5.1      Organization; Good Standing
         The Purchaser is a corporation duly organized, validly existing and in
         good standing under the laws of the State of Nevada. The Purchaser has
         all requisite corporate power and authority to own, lease and operate
         its properties and to carry on its business as now being conducted, to
         perform its obligations under all agreements or contracts by which it
         is bound and is duly qualified and in good standing to do business in
         each jurisdiction in which the nature of its business or the ownership
         or leasing of its properties makes such qualification necessary.

5.2      Due Execution and Delivery
         The execution and delivery of this Agreement by the Purchaser
         hereunder, and the execution and delivery of this Agreement by the
         Purchaser and its purchase of the Purchased Shares and Shareholder's
         Loan contemplated herein, have been duly authorized by all necessary
         corporate action and the Purchaser has all requisite corporate power
         and authority to enter into this Agreement and to carry out the
         transactions of purchase and sale contemplated herein to which it is a
         party and to perform its obligations hereunder and pursuant to all
         other agreements required to be delivered by it hereunder. This
         Agreement has been duly and validly executed and delivered by the
         Purchaser and constitutes a valid and legally binding agreement,
         enforceable against such parties in accordance with its terms subject
         to and affected by the laws relating to bankruptcy, insolvency,
<PAGE>
                                      -46-

         reorganization and creditors' rights generally and except that a court
         may or may not order an injunction, specific performance or other
         equitable remedies with respect to any particular provision of this
         Agreement.

5.3      No Bankruptcy/Insolvency
         The Purchaser is not insolvent, has not committed an act of bankruptcy,
         has not proposed a compromise or arrangement to its creditors
         generally, has had any petition for a receiving order in bankruptcy
         filed against it, has taken any proceeding with respect to a compromise
         or arrangement, has taken any proceeding to have itself declared
         bankrupt or wound-up, has taken any proceeding to have a receiver
         appointed of any part of its assets, has had any encumbrances take
         possession of any of its property, nor has it had any execution or
         distress become enforceable or become levied upon any of its property.

5.4      No Legal Proceedings
         There is not pending any suit, action or other legal proceeding of any
         sort to in any manner restrain or prevent the Purchaser from
         effectually and legally purchasing the Purchased Shares and
         Shareholder's Loan or to make the Vendors, the Principals and/or Callon
         liable for damages as a result thereof and the Purchaser knows of no
         such claims in connection with any of the foregoing.

5.5      No Conflict; Required Filings and Consents
         The execution and delivery of this Agreement by the Purchaser and the
         observance and performance of the terms and provisions of this
         Agreement on the part of the Purchaser to be observed and performed do
         not constitute a violation of applicable law or violation or breach of
         the Purchaser's Charter Documents or any provision of any contract,
         indenture, undertaking or other instrument to which either the
         Purchaser is a party or by which it is bound, or any order, writ,
         injunction, decree, statute, rule, by-law or regulation applicable to
         it, nor do they constitute a default (or would with the passage of time
         or the giving of notice for both, or otherwise, constitute a default)
         under any contract, agreement or instrument to which the Purchaser is a
         party or by which it is bound.

5.6      No Broker
         There is no broker, finder or other person who has any valid claim
         against the Vendors for a commission, finder's fee or brokerage fee in
         connection with this Agreement or the consummation of the transactions
         contemplated hereby, by virtue of any action taken by the Purchaser.

                                    ARTICLE 6
                           COVENANTS OF THE PURCHASER

6.1      Time of Closing
         The Purchaser hereby covenants that, at the Time of Closing, the
         Purchaser will:
         (a)      furnish the Vendors, the Principals and Callon with a
                  certificate from an officer of the Purchaser that the
                  representations and warranties of the Purchaser contained in
                  this Agreement are true as at the Time of Closing, as though
                  then made, and that the covenants of the Purchaser to be
                  complied with at or prior to the Time of Closing have been
                  complied with; provided that the receipt of such evidence and
                  the closing of the transactions contemplated herein shall not
                  be a waiver of the representations, warranties and covenants
                  of the Purchaser which are contained in this Agreement;
<PAGE>
                                      -47-

         (b)      deliver to the Vendors and Principals and Callon evidence
                  satisfactory to the Vendors and Principals and Callon's
                  Solicitors that all necessary corporate and other
                  authorizations authorizing and approving the transaction
                  contemplated herein have been obtained;
         (c)      execute all assignments and documents delivered pursuant to
                  this Agreement at the Time of Closing which require execution
                  by the Purchaser;
         (d)      provide the Vendors, the Principals and Callon with a
                  favourable opinion of the Purchaser's Solicitors to the effect
                  that this Agreement has been duly executed and delivered by
                  the Purchaser and constitutes a valid and binding obligation
                  of the Purchaser enforceable against it in accordance with its
                  terms (subject to bankruptcy laws and the availability of
                  equitable remedies), in a form reasonably satisfactory to the
                  Vendors and Principals and Callon's Solicitors; and
         (e)      pay the Purchase Price as contemplated in Section 2.3; and
         (f)      advise the Vendors, Principals and Callon in writing if it has
                  actual notice of any fact or circumstance which would cause
                  any representation and warranty of the Vendors and/or
                  Principals and/or Callon contained in this Agreement to be
                  untrue at the Time of Closing.

6.2      Interim Period
         The Purchaser covenants that, during the Interim Period, the Purchaser
         will perform its due diligence investigation of the Business.

6.3      Post Closing
         The Purchaser covenants that, immediately after the acquisition of the
         Purchased Shares and the Shareholder Loans, and as part of the closing
         of the transactions contemplated herein, it shall either:
         (a)      advance to the Acquired Corporations, in a manner to be
                  determined by the Purchaser, sufficient funds to retire in
                  full the Bank Debt against releases from each of Royal Bank of
                  Canada and Business Development Bank of Canada of all charges
                  and security interests it has on the assets of the Acquired
                  Corporations for such debt, together with the releases of any
                  guarantees of any of the Vendors or the Principals in
                  connection therewith; or
         (b)      secure such financing on behalf of the Acquired Corporations
                  to retire in full the Bank Debt, together with the releases of
                  any guarantees of any of the Vendors or the Principals in
                  connection therewith;
         In addition, the Purchaser shall do all such acts and things as may be
         required to comply with the provisions of subsection 2.7 herein.

                                    ARTICLE 7
                                   CONDITIONS

The completion of the purchase and sale of the Purchased Shares and
Shareholder's Loan contemplated herein is subject to the following conditions
having been satisfied. All of the conditions contained in Sections 7.1 through
7.10 inclusive, are declared to be for the exclusive benefit of the Purchaser.
The conditions contained in Sections 7.11 and 7.12 are declared to be for the
exclusive benefit of the Vendors and Principals and Callon. The condition
contained in Section 7.13 is declared for the benefit of each of the Vendors and
Principals and Callon and the Purchaser, which condition may only be waived in
writing by all of such parties. All the conditions referred to herein are to be
satisfied at the Time of Closing. The following are the conditions:
<PAGE>
                                      -48-

7.1      Vendor Representations
         (a)      Each representation, warranty and covenant of the Vendors, the
                  Principals and Callon contained in this Agreement:
                  (i)      shall have been true and correct as of the date of
                           this Agreement; and
                  (ii)     shall be true and correct on and as at the Time of
                           Closing with the same force and effect as if made at
                           the Time of Closing except:
                           (A)      for changes contemplated by this Agreement;
                                    and
                           (B)      for those representations and warranties
                                    which address matters only as of a
                                    particular date (which representations shall
                                    have been true and correct subject to the
                                    qualifications as set forth in the preceding
                                    clause (i) as of such particular date).

7.2      Financial Statements
         The difference between the "Total Equity" as disclosed in the December
         31, 2005 management prepared financial statements attached hereto as
         Schedule 2.4 (being the aggregate of the share capital and retained
         earnings of the Acquired Corporations) and the Total Equity disclosed
         in the Audited Financial Statements for the same period shall not
         reflect a reduction of the equity of the Acquired Corporations by an
         amount greater than ONE HUNDRED AND FIFTY THOUSAND Canadian dollars
         (CDN $150,000.00), provided:
         (a)      such reduction is not a result of the application of GAAP
                  resulting in the re-allocation of the accounts receivable of
                  the Acquired Corporations from accounts receivable to doubtful
                  accounts; and
         (b)      the Vendors and the Principals shall be entitled to make such
                  cash advances to the Acquired Corporations as may be required
                  to ensure satisfaction of this condition precedent, such
                  advances to be by way of loan to the Acquired Corporations
                  (which loan(s) shall be included as part of the Shareholder
                  Loans to be sold to the Purchaser, shall be deemed to have
                  been advanced as at December 31, 2005 notwithstanding the
                  actual date of advance, and shall not be included as a
                  liability when calculating the equity of the Acquired
                  Corporations for the purposes of determining satisfaction of
                  this condition precedent).

7.3      Vendor Performance
         The Vendors, the Principals and Callon shall have performed or complied
         in all material respects with all agreements and covenants required by
         this Agreement to be performed or complied with by them on or prior to
         the Time of Closing.

7.4      Approvals
         All appropriate approvals and consents, including but not limited to
         any required Governmental Authorizations, shall have been obtained in
         form and upon terms satisfactory to the Purchaser's Solicitors in order
         to permit the change of ownership of the Purchased Shares and
         Shareholder's Loan contemplated herein in compliance with applicable
         laws and without affecting or resulting in the cancellation or
         termination of any licence or Permit held by the Acquired Corporations
         or agreement to which the Acquired Corporations are subject.

7.5      Consulting/Employment Agreement
         (a)      Lynn shall have executed an employment agreement for two (2)
                  years in favour of ESE and its respective Affiliates (the
                  "Employment Agreement"), in the form attached hereto as
                  Schedule 7.5, to provide advisory and consulting services to
                  such parties in connection with the Business.
<PAGE>
                                      -49-

         (b)      Pursuant to the Employment Agreement:
                  (i)      If Lynn is terminated from his employment by ESE for
                           just cause as contemplated at Article 15.01 of the
                           Employment Agreement or if Lynn terminates his
                           employment with ESE for any reason other than as
                           contemplated at Article 14.01 of the Employment
                           Agreement, at any time during the first year of his
                           employment, the Vendors and the Principals jointly
                           and severally agree to pay to the Purchaser a penalty
                           in the amount of FIVE HUNDRED THOUSAND Canadian
                           dollars (CDN $500,000.00);
                  (ii)     If Lynn is terminated from his employment by ESE for
                           just cause as contemplated at Article 15.01 of the
                           Employment Agreement or if Lynn terminates his
                           employment with ESE for any reason other than as
                           contemplated at Article 14.01 of the Employment
                           Agreement, during the second 12 months of his
                           employment, the Vendors and Principals jointly and
                           severally agree to pay to the Purchaser a penalty
                           equal to:
                           (A)      FIVE HUNDRED THOUSAND Canadian dollars (CDN
                                    $500,000) during months one to three of such
                                    second 12 months;
                           (B)      THREE HUNDRED AND SEVENTY FIVE THOUSAND
                                    Canadian dollars (CDN $375,000) during month
                                    four to six of such second 12 months;
                           (C)      TWO HUNDRED AND FIFTY THOUSAND Canadian
                                    dollars (CDN $250,000) during month seven to
                                    nine of such second 12 months; and
                           (D)      ONE AND TWENTY FIVE THOUSAND Canadian
                                    dollars (CDN $125,000) during month ten to
                                    twelve of such second 12 months,
                           all without duplication, and for the purposes of this
                           subsection if Lynn's employment is terminated other
                           than at the end of a month, he shall be deemed to
                           have worked through to the end of the applicable
                           month,
                  (iii)    If Lynn becomes Disabled during the first 12 months
                           of his employment pursuant to the Employment
                           Agreement, the Vendors and Principals jointly and
                           severally agree to pay to the Purchaser a penalty in
                           the amount of TWO HUNDRED FIFTY THOUSAND Canadian
                           dollars (CDN $250,000.00),
                  which penalties may be paid, at the discretion of the Vendors,
                  either (I) entirely in cash or (II) by delivery cash and an
                  appropriate number of common shares of the Purchaser, with
                  such payment made as to 2/3rd of such amount in cash and 1/3rd
                  of such amount in common shares of the Purchaser, and for
                  greater certainty, the inability of Lynn to provide employment
                  services pursuant to the Employment Agreement for reasons of
                  death shall not constitute grounds for the Vendors and the
                  Principals to pay the penalty contemplated herein.
         (c)      Mark shall have executed a consulting agreement in favour of
                  ESE and its respective Affiliates, in the form attached hereto
                  as Schedule 7.5, to provide advisory and consulting services
                  to such parties in connection with the Business.

7.6      Non-Competition and Non-Solicitation Agreement
         Lynn and Mark shall have executed a non-competition and
         non-solicitation agreement in favour of the Purchaser and ESE their
         respective Affiliates, in the form attached hereto as Schedule 7.6,
         restricting their interest or participation in any business or
         enterprise carrying on business similar to the Business.
<PAGE>
                                      -50-

7.7      Vendors' Solicitors' Opinion
         The Vendors and Principals and Callon shall provide the Purchaser with
         a favourable opinion of the Vendors and Principals and Callon's
         Solicitors addressed to the Purchaser and (if so requested) their
         lenders with respect to the Acquired Corporations, the Vendor and
         Principals and Callon and the transactions herein contemplated, in a
         form reasonably satisfactory to the Purchaser's Solicitors.

7.8      Legal Proceedings
         There shall not be pending or threatened any legal proceeding in which
         a Governmental Entity is or is threatened to become a party or is
         otherwise involved, and neither the Vendors and Principals and Callon
         or the Acquired Corporations, shall have received any communication
         from any Governmental Entity in which such Governmental Entity
         indicates the possibility of commencing any legal proceeding or taking
         any other action:
         (a)      challenging or seeking to restrain or prohibit the
                  consummation of the transactions contemplated by this
                  Agreement;
         (b)      relating to the transactions contemplated herein and seeking
                  to obtain from the Purchaser, the Vendors and Principals and
                  Callon or the Acquired Corporations, any damages or other
                  relief;
         (c)      seeking to prohibit or limit in any material respect the
                  Purchaser's ability to vote, receive dividends with respect to
                  or otherwise exercise ownership rights with respect to the
                  shares of the Acquired Corporations; or
         (d)      which would materially and adversely affect the right of the
                  Purchaser or the Acquired Corporations to own their assets or
                  operate the Business.

7.9      Material Adverse Change
         There shall have been no material adverse change, financial or
         otherwise, in the Acquired Corporations, or the Business from the date
         of this Agreement through to the Closing Date.

7.10     Liabilities
         At the Time of Closing, the Acquired Corporations will not be subject
         to any liabilities or obligations, direct or indirect, absolute or
         contingent, or otherwise, other than Permitted Liabilities. As at the
         Time of Closing, there will be no facts or circumstances which might
         reasonably serve as a basis for, or give rise to, any material
         liabilities or obligations on the part of the Acquired Corporations
         other than Permitted Liabilities.

7.11     Purchaser Representations
         Each representation and warranty of the Purchaser contained in this
         Agreement:
         (a)      shall have been materially true and correct as of the date of
                  this Agreement; and
         (b)      shall be materially true and correct on and as at the Time of
                  Closing with the same force and effect as if made at the Time
                  of Closing except:
                  (i)      for changes contemplated by this Agreement; and
                  (ii)     for those representations and warranties which
                           address matters only as of a particular date (which
                           representations shall have been true and correct
                           (subject to the qualifications as set forth in the
                           preceding clause (i) as of such particular date),
         and for the purposes of this paragraph "material" shall mean such
         circumstance is material in respect of any particular fact or state of
         affairs, but shall also include any single or multiple facts, events or
         state of affairs when considered in light of all such facts, events or
         circumstances, whether material or immaterial, when taken as a whole
         would constitute materiality.
<PAGE>
                                      -51-

7.12     Purchaser Performance
         The Purchaser and shall have performed or complied in all material
         respects with all agreements and covenants required by this Agreement
         to be performed or complied with by it on or prior to the Time of
         Closing.

7.13     Legal Restraints
         No court of competent jurisdiction or other Governmental Entity shall
         have issued an order, decree, ruling or other legal restraint or
         prohibition or taken any other action (which order, decree or ruling
         the parties hereto shall use their best efforts to lift), in each case
         restraining, enjoining or otherwise prohibiting the transactions
         contemplated by this Agreement.

7.14     Purchaser Remedies
         In case any of the foregoing conditions hereinbefore declared to be for
         the benefit of the Purchaser shall not be satisfied at the Time of
         Closing, the Purchaser may:
         (a)      refuse to complete the transactions contemplated herein by
                  notice to the Vendors and Principals and Callon and in such
                  event the Purchaser shall be released from all obligations
                  hereunder, it being expressly understood and agreed that the
                  Purchaser may rely, notwithstanding such refusal, upon the
                  representations, warranties, covenants and conditions
                  contained in this Agreement. The deposit of FOUR HUNDRED
                  THOUSAND Canadian dollars (CDN $400,000.00) paid by the
                  Purchaser shall be refunded by the Vendors and Principals and
                  Callon to the Purchaser; or
         (b)      complete the transaction contemplated herein, it being
                  expressly understood and agreed that the Purchaser may rely,
                  notwithstanding such completion, upon the representations,
                  warranties, covenants and conditions contained in this
                  Agreement.
         Provided that any of the said conditions may be waived in whole or in
         part by the Purchaser without prejudice to its rights of rescission in
         the event of the non-fulfilment and/or non-performance of any other
         condition or conditions, any such waiver prior to the Time of Closing
         to be binding on the Purchaser only if the same is in writing.

7.15     Vendor Remedies
         In case any of the foregoing conditions hereinbefore declared to be for
         the benefit of the Vendors and Principals and Callon shall not be
         satisfied at the Time of Closing, the Vendors and Principals and Callon
         may:
         (a)      refuse to complete the transaction contemplated herein by
                  notice to the Purchaser advising of such determination, with
                  the Vendors entitled to receive the sum of $100,000 of the
                  Deposit, together will all accrued interest on such funds,
                  together with the issuance of such number of common shares of
                  the Purchaser equal to $50,000 divided by the Weighted Average
                  Price (to be free trading in the manner contemplated at
                  paragraph 2.7 herein) as liquidated damages for the Vendors
                  failure to satisfy such conditions, which amounts shall be
                  released by the Agent in accordance with the its obligations
                  as a stakeholder under the provisions of s. 59 of the Real
                  Estate Act (British Columbia). In such event the Vendors,
                  Principals and Callon shall be released from all obligations
                  hereunder. The balance of the Deposit, being THREE HUNDRED
                  THOUSAND Canadian Dollars (CDN $300,000), shall be released to
                  the Purchaser upon confirmation by the Vendors of receipt of
                  the shares of the Purchaser contemplated in this paragraph
                  7.15(a); or
         (b)      complete the transaction contemplated herein, it being
                  expressly understood and agreed that following such
                  completion, the Vendors and Principals and Callon may rely,
<PAGE>
                                      -52-

                  notwithstanding such completion, upon the representations,
                  warranties, covenants and conditions contained in this
                  Agreement.
         Provided that any of the said conditions may be waived in whole or in
         part by the Vendors and Principals and Callon without prejudice to
         their rights of rescission in the event of the non-fulfilment and/or
         non-performance of any other condition or conditions, any such waiver
         prior to the Time of Closing to be binding on the Vendors and
         Principals and Callon only if the same is in writing.

7.16     Deposit
         Subject to paragraph7.17 below, NAI Goddard & Smith (the "Agent") will
         hold the Deposit paid to them in trust, pursuant to the terms of this
         Agreement and the provisions of the Real Estate Act (British Columbia),
         and on the Closing Date, the Deposit will be credited on account of the
         Purchase Price. If the transaction contemplated by this Agreement is
         not completed on the Closing Date by reason of the non fulfilment by
         the Vendors, the Principals or Callon of one or more of the conditions
         precedent contained in paragraph 7.1 through 7.10 and 7.13 herein or
         such condition precedent is not removed on the dates provided for
         therein, or as a consequence of the default of the Vendors, the
         Principals or Callon in the performance of any of their obligations
         hereunder, the Deposit will forthwith be returned to the Purchaser,
         without deduction. If the transaction contemplated by this Agreement is
         not completed on the Closing Date by reason of the non fulfilment by
         the Purchaser of one or more of the conditions precedent contained in
         paragraph 7.11 through 7.13 herein or such condition precedent is not
         removed on the dates provided for therein, or as a consequence of the
         default of the Purchaser in the performance of any of its obligations
         hereunder, the Deposit will be dealt with in accordance with the
         provisions of paragraph 7.15.

7.17     Agent Authorization
         The Agent is authorized to pay all or any portion of the deposit to the
         Vendors' or Purchaser's conveyancer (the "Conveyancer") without further
         written direction of the Vendors or Purchaser, provided that (a) the
         Conveyancer is a lawyer; (b) such money is to be held in trust by the
         Conveyancer as a stakeholder, pursuant to the provisions of the Real
         Estate Act and this Agreement pending the completion of the transaction
         and not on behalf of any of the principals to the transaction.

                                    ARTICLE 8
              SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1      Survival
         All the representations, warranties and covenants made herein or in any
         agreement, certificate or other document delivered or given pursuant to
         this Agreement shall survive the execution and delivery of this
         Agreement and the completion of the transactions contemplated herein
         and, notwithstanding such completion and any investigations made by or
         on behalf of the party to this Agreement to whom or in whose favour
         such covenants, representations and warranties were made, shall
         continue in full force and effect for a period ending on the second
         (2nd) anniversary of the Closing Date, after which period the
         respective parties shall be released from their respective obligations
         and liabilities hereunder, except in respect of claims made in writing
         prior to the expiry of such period, provided that:
         (a)      all covenants, representations and warranties relating to
                  Taxes, tax liability or other tax matters for any period
                  ending prior to or on the Closing Date shall survive the
                  closing of the transactions contemplated herein for any period
                  during which any taxing authority may make any claim or
                  assessment based on any Tax Return filed, after which period
<PAGE>
                                      -53-

                  the party making such covenants, representations and
                  warranties shall be released from their obligations and
                  liabilities hereunder, except in respect of claims made in
                  writing prior to the expiry of such period;
         (b)      any claims based upon or with respect to the inaccuracy or
                  non-performance or non-fulfilment or breach of any
                  representation, warranty or covenant respecting Taxes, tax
                  liability or other tax matters set out herein may be brought
                  at any time, if such claim is based upon any failure or
                  omission to file a Tax Return or any misrepresentation made or
                  fraud committed in filing a return or in supplying information
                  under any legislation pursuant to which any Taxes are imposed;
         (c)      any claims based upon any misrepresentation, or breach or
                  inaccuracy in any of the representations and warranties set
                  out herein may be brought against such party at any time if
                  such claim is based upon fraud in respect of or relating to
                  such misrepresentation, breach or inaccuracy at the time such
                  representation or warranty was made by such party;
         (d)      any claim based upon the representations and warranties
                  contained in Section 3.1(ee), environmental, and any claim
                  based upon the representations and warranties otherwise
                  contained in Sections 3.1(a) -(i), which relate to the
                  incorporation or corporate status of the Acquired
                  Corporations, the capacity of or due authorization of this
                  Agreement by any Vendors or the Acquired Corporations, the
                  enforceability of any Vendors' obligations under this
                  Agreement or to the title of any Person to any property
                  (whether real, personal or intangible) shall survive for and
                  until the limitation period under the applicable statute for
                  bringing a claim in respect of such matter has expired; and
         (e)      for greater certainty, any claim under an indemnity, or for
                  breach of any representation, warranty or covenant under this
                  Agreement, shall not be considered to have been made before
                  the date on which the claiming party gives proper notice to
                  the other party or parties that are the subject of the claim
                  in accordance with the terms hereof.

8.2      Effective Date of Representations
         All representations and warranties contained herein are as at the date
         of the execution and delivery of this agreement unless specifically
         stated to be as at an earlier date or as at the Closing Date.

                                    ARTICLE 9
                                    INDEMNITY

9.1      Indemnification of Purchaser Indemnified Parties
         From and after the Closing Date and subject to the provisions of this
         Article 9, the Mueller Trust, Jade Eagle Trust, and the Principals
         jointly and severally agree to indemnify and hold harmless the
         Purchaser Indemnified Parties from and against any and all Purchaser
         Indemnified Costs.

9.2      Indemnification of Vendor Indemnified Parties
         From and after the Closing Date and subject to the provisions of this
         Article 9, the Purchaser agrees to indemnify and hold harmless the
         Vendor Indemnified Parties from and against any and all Vendor
         Indemnified Costs.

9.3      Defence of Third-Party Claims
         An Indemnified Party shall give prompt written notice to any entity or
         Person who is obligated to provide indemnification hereunder (an
         "Indemnifying Party") of the commencement or assertion of any action,
         proceeding, demand, or claim by a third party (collectively, a "Third
<PAGE>
                                      -54-

         Party Action") in respect of which such Indemnified Party shall seek
         indemnification hereunder. Any failure to notify an Indemnifying Party
         shall not relieve such Indemnifying Party from any liability that it,
         he, or she may have to such Indemnified Party under this Article 9
         unless, and then only to the extent that, the failure to give such
         notice materially and adversely prejudices such Indemnifying Party. The
         Indemnifying Party shall have the right to assume control of the
         defence of, settle, or otherwise dispose of such Third Party Action on
         such terms as it deems appropriate, provided that:
         (a)      the Indemnified Party shall be entitled, at its own expense,
                  to participate in the defence of such Third Party Action
                  (provided, however, that the Indemnifying Party shall pay the
                  legal fees of the Indemnified Party if the employment of
                  separate counsel shall have been authorized in writing by such
                  Indemnifying Party in connection with the defence of such
                  Third Party Action, the Indemnifying Party shall not have
                  employed counsel reasonably satisfactory to the Indemnified
                  Party to have charge of such Third Party Action, or the
                  Indemnified Party's counsel shall have advised the Indemnified
                  Party in writing, with a copy delivered to the Indemnifying
                  Party, that there is a conflict of interest that could make it
                  inappropriate under applicable standards of professional
                  conduct to have common counsel);
         (b)      the Indemnifying Party shall obtain the prior written approval
                  of the Indemnified Party before entering into or making any
                  settlement, compromise, admission, or acknowledgment of the
                  validity of such Third Party Action or any liability in
                  respect thereof if, pursuant to or as a result of such
                  settlement, compromise, admission, or acknowledgment,
                  injunctive or other equitable relief would be imposed against
                  the Indemnified Party or if, in the opinion of the Indemnified
                  Party, such settlement, compromise, admission, or
                  acknowledgment could have an adverse effect on its business
                  acting reasonably;
         (c)      no Indemnifying Party shall consent to the entry of any
                  judgment or enter into any settlement that does not include as
                  an unconditional term thereof the giving by each claimant or
                  plaintiff to each Indemnified Party of a release from all
                  liability in respect of such Third Party Action; and
         (d)      the Indemnifying Party shall not be entitled to control (but
                  shall be entitled to participate at its own expense in the
                  defence of), and the Indemnified Party shall be entitled to
                  have sole control over, the defence or settlement, compromise,
                  admission, or acknowledgment of any Third Party Action as to
                  which the Indemnifying Party fails to assume the defence
                  within a reasonable length of time or to the extent the Third
                  Party Action seeks an order, injunction, or other equitable
                  relief against the Indemnified Party which, if successful,
                  would materially adversely affect the business, operations,
                  assets, or financial condition of the Indemnified Party;
                  provided, however, that the Indemnified Party shall make no
                  settlement, compromise, admission, or acknowledgment that
                  would give rise to liability on the part of any Indemnifying
                  Party without the prior written consent of such Indemnifying
                  Party.
         The parties hereto shall extend reasonable cooperation in connection
         with the defence of any Third Party Action pursuant to this Article 9
         and, in connection therewith, shall furnish such records, information,
         and testimony and attend such conferences, discovery proceedings,
         hearings, trials, and appeals as may be reasonably requested.

9.4      Direct Claims
         In any case in which an Indemnified Party seeks indemnification
         hereunder which is not subject to Section 9.3 because no Third Party
         Action is involved, the Indemnified Party shall notify the Indemnifying
         Party in writing of any Indemnified Costs which such Indemnified Party
<PAGE>
                                      -55-

         claims are subject to indemnification under the terms hereof. The
         failure of the Indemnified Party to exercise promptness in such
         notification shall not amount to a waiver of such claim unless the
         resulting delay materially prejudices the position of the Indemnifying
         Party with respect to such claim. Any Indemnifying Parties shall
         promptly (but in no event later than fifteen (15) days after the date
         on which the Indemnifying Party receives notice from the Indemnified
         Party of a claim for Indemnification under the terms hereof) pay,
         reimburse, repay or otherwise discharge any Indemnified Costs of the
         Indemnified Party.

9.5      Determination of Breach
         For purposes of determining whether an Indemnifying Party shall be
         required to indemnify an Indemnified Party under this Article 9, each
         representation and warranty contained in this Agreement for which
         indemnification can be or is sought hereunder shall be read (including
         for purposes of determining whether a breach of such representation or
         warranty has occurred) without regard to materiality (including
         Material Adverse Effect) qualifications that may be contained therein
         provided that no claim will be made unless the aggregate of all claims
         exceed fifteen thousand Canadian dollars (CDN$15,000.00), in which
         event the Vendors and the Principals shall only be liable for the
         amount by which such claim and any previous claims exceeds such fifteen
         thousand Canadian dollars (CDN$15,000.00) amount.

9.6      Tax Related Adjustments
         The Vendors, the Principals and the Purchaser agree that any payment of
         Indemnified Costs made hereunder will be treated by the parties on
         their Tax Returns as an adjustment to the Purchase Price. If,
         notwithstanding such treatment by the parties, any payment of
         Indemnified Costs is determined to be taxable income rather than
         adjustment to Purchase Price by any taxing authority, then the
         Indemnifying Party shall indemnify the Indemnified Party for any Taxes
         payable by the Indemnified Party or any subsidiary by reason of the
         receipt of such payment (including any payments under this Section
         9.6), determined at an assumed marginal tax rate equal to the highest
         marginal tax rate then in effect for corporate taxpayers in the
         relevant jurisdiction.

9.7      No Waiver Relating to Claims for Fraud
         The liability of any party under this Article 9 shall be in addition
         to, and not exclusive of any other liability that such party may have
         at law or equity based on such party's fraudulent acts or omissions.
         None of the provisions set forth in this Agreement shall be deemed a
         waiver by any party to this Agreement of any right or remedy which such
         party may have at law or equity based on any other party's fraudulent
         acts or omissions, nor shall any such provisions limit, or be deemed to
         limit (i) the amounts of recovery sought or awarded in any such claim
         for fraud; (ii) the time period during which a claim for fraud may be
         brought; or (iii) the recourse which any such party may seek against
         another party with respect to a claim for fraud; provided, that with
         respect to such rights and remedies at law or equity, the parties
         further acknowledge and agree that none of the provisions of this
         Section 9.7 shall be deemed a waiver of any defences which may be
         available in respect of actions or claims for fraud, including but not
         limited to, defences of statutes of limitations or limitations of
         damages.

9.8      Set-Off
         If the Vendors and Principals or any of them are liable to the
         Purchaser in respect of any indemnity contained herein prior to the
         date on which the Holdback is released, and such liability is not
         satisfied by the Vendors and Principals or any of them forthwith upon
<PAGE>
                                      -56-

         demand, then and not otherwise, the Purchaser shall be entitled to
         set-off the amount of such liability against the Holdback.
         Notwithstanding the foregoing, the right of the Purchaser to claim
         set-off against the Holdback shall only arise at such time as the claim
         by the Purchaser has been acknowledged by the Vendor and Principals in
         writing, or has been finally determined by a court of competent
         jurisdiction.

9.9      Qualification
         Notwithstanding the foregoing, the parties have agreed to certain
         rights, obligations and processes in connection with certain tax
         matters pursuant to Section 4.3, for which purposes the provisions
         thereof shall apply to the extent of any inconsistency with this
         Article 9.

                                   ARTICLE 10
                                   EXCLUSIVITY

10.1     Exclusivity Obligations
         The Vendors and Principals and the Acquired Corporations (collectively
         sometimes called the "Vendor Group") hereby jointly and severally
         covenant and agree that until the Time of Closing, none of them shall,
         and each of them will ensure that none of them shall permit their
         respective directors, officers, employees, representatives or advisors
         or affiliates, to directly or indirectly:
         (a)      solicit, initiate or engage in any discussions or negotiations
                  with any person, firm or corporation, encourage the submission
                  of any enquiries, proposals, or offers by, or take any other
                  action intended or designed to facilitate the efforts of any
                  such person, other than the Purchaser, relating to:
                  (i)      the possible acquisition of or business combination
                           with either of the Acquired Corporations or any of
                           them (whether by way of amalgamation, arrangement,
                           consolidation, take-over bid, purchase of shares,
                           purchase of assets or otherwise, directly or
                           indirectly);
                  (ii)     the possible acquisition of a material portion of the
                           shares of capital stock or assets of either of the
                           Acquired Corporations;
                  (iii)    any take-over bid or exchange offer or other
                           secondary purchase that, if consummated, will result
                           in any person: (i) other than the Vendors and
                           Principals, beneficially owning any securities in the
                           capital of either of the Acquired Corporations; (ii)
                           other than either of the Acquired Corporations,
                           beneficially owning any securities in the capital of
                           any of the Vendors; or
                  (iv)     any other transaction, the consummation of which
                           would reasonably be expected to prevent or materially
                           impede, interfere with or delay the consummation of
                           the acquisition of all of the issued and outstanding
                           shares in the capital of the Acquired Corporations by
                           the Purchaser, and, indirectly, taking control of the
                           Acquired Corporations;
                  (any of the foregoing, a "Competing Proposal");
         (b)      provide non-public information with respect to either of the
                  Acquired Corporations or any of their respective businesses or
                  affairs or afford any access to the properties, books or
                  records of same to any person, firm or corporation, other than
                  the Purchaser that may wish to propose or pursue a Competing
                  Proposal.

10.2     Relations
         Without limiting the foregoing, it is understood that any violation of
         the restrictions set forth herein by any member of the Vendor Group or
         by any of their respective officers, directors, employees or other
         advisors or representatives shall be deemed to be a breach of this
         Agreement. Each member of the Vendor Group shall, and shall direct
         their respective subsidiaries, directors, officers, employees and other
<PAGE>
                                      -57-

         advisors to immediately cease any and all activities or discussions or
         negotiations with any parties conducted heretofore with respect to any
         of the foregoing.

10.3     Competing Proposal
         Each member of the Vendor Group shall promptly provide written notice
         to the Purchaser of any enquiry or proposal that may be received by any
         of them after the execution of this agreement which may lead to or be a
         Competing Proposal including the terms of the proposal and the identity
         of the enquirer or offeror, provided that the Purchaser must hold such
         information in strict confidence (it being understood that any breach
         of such confidence could cause economic harm to the Vendors and
         Principals if for any reason whatsoever the Purchaser fails to complete
         the purchase of the Purchased Shares and Shareholder's Loan).

10.4     Remedies
         The parties hereto acknowledge that the remedy of law for breach of the
         obligations undertaken by any member of the Vendor Group is and shall
         be insufficient and inadequate and that the Purchaser shall be entitled
         to equitable relief, in addition to remedies at law. In the event of
         any action to enforce the provisions of this Agreement, each member of
         the Vendor Group waives the defence that there is an adequate remedy at
         law. Without limiting any remedies the Purchaser may otherwise have, in
         the event that any member of the Vendor Group refuses to perform its
         obligations under this Agreement, the Purchaser shall have, in addition
         to any other remedy at law and equity, the right to a specific
         performance.

                                   ARTICLE 11
                           GENERAL CONTRACT PROVISIONS

11.1     Closing
         The closing of the transactions contemplated herein shall take place at
         the Time of Closing, on the Closing Date, at the offices of the Vendors
         Solicitors or at such other place as may be agreed to in writing by the
         parties hereto.

11.2     Termination

         Notwithstanding the provisions of Article 8, this Agreement shall be
         terminated:
         (a)      prior to the Time of Closing if by written consent of all of
                  the parties hereto; or
         (b)      by the Purchaser if a court of competent jurisdiction or other
                  Governmental Entity shall have issued an order, decree, or
                  ruling or taken any other action (which order, decree or
                  ruling the parties hereto shall use their best efforts to
                  lift), in each case permanently restraining, enjoining or
                  otherwise prohibiting the transactions contemplated by this
                  Agreement.
         In the event of a termination of this Agreement as provided above,
         there shall be no liability on the part of any of the parties except
         for liability arising out of a breach of this Agreement.

11.3     Right of Set-Off
         Each of the parties hereto shall have the right to satisfy any amount
         owing from time to time to such party by the other party with respect
         to Net Assets by reducing any amount from time to time owing to the
         other party by such party, howsoever arising.

11.4     Notices
         All notices, requests, demands or other communications by the terms
         hereof required or permitted to be given by one party to another shall
         be given in writing by personal delivery, facsimile transmission or by
<PAGE>
                                      -58-

         registered mail, postage prepaid, addressed to such other party or
         delivered to such other party as follows:
         to the Vendors, c/o
         the Vendors' Solicitors:          Synergy Business Lawyers
                                           Oceanic Plaza Building
                                           680 - 1066 West Hastings Street
                                           P.O. Box 12577
                                           Vancouver, B.C.
                                           V6E 3X2
                                           Attention: Darcy Wray
                                           Facsimile Number: 604-685-8187
                                           Email: dwray@synergylaw.ca
         to the Purchaser:                 Holmes & Company
                                           Suite 1880 Oceanic Plaza
                                           Vancouver, British Columbia, Canada
                                           V6E 3X1
                                           Attention: Stephen D. Holmes
                                           Facsimile Number: 604-688-0426
                                           Email: sdh@holmescompany.com

         or at such other address as may be given by any of them to the others
         in writing from time to time and such notices, requests, demands or
         other communications shall be deemed to have been received, if sent by
         facsimile, on the first (1st) Business Day after sending or, if sent by
         registered mail, on the fifth (5th) Business Day after mailing or, if
         delivered, upon the date of delivery.

11.5     Tender of Documents and Funds
         Any tender of documents or money hereunder may be made upon the Vendors
         and Principals or the Purchaser or their solicitors and money may be
         tendered by negotiable cheque certified by a Canadian chartered bank or
         trust company, bank draft or other immediately available funds.

11.6     Further Assurances
         The parties hereto covenant and agree to sign such other papers, cause
         such meetings to be held, resolutions passed and by-laws enacted,
         exercise their vote and influence, do and perform and cause to be done
         and performed such further and other acts and things as may be
         necessary, proper, advisable, or desirable in order to give full effect
         to this Agreement and every part thereof including obtaining in a
         timely manner all necessary waivers consents and approvals and
         effecting all necessary registrations and filings, and to otherwise use
         all commercially reasonable efforts to satisfy or cause to be satisfied
         all conditions precedent to its obligation under this Agreement.

11.7     Governing Law and Venue
         This Agreement shall be governed by the laws of the Province of British
         Columbia and the federal laws of Canada applicable therein. Any legal
         action or other legal proceeding relating to this Agreement or its
         enforcement may be brought in any provincial or federal court in the
         Provinces of British Columbia or any state or federal court in the
         state of Nevada. Each party hereto expressly and irrevocably (a)
         consents and attorns to the jurisdiction of each provincial or federal
         court in the Provinces of British Columbia and each state or federal
         court in the state of Nevada in connection with any such legal
         proceeding, (b) agrees that each such court shall be a convenient
         forum; and (c) agrees not to assert in any such legal proceeding any
         claim that it or he is not subject personally to the jurisdiction of
<PAGE>
                                      -59-

         such court, that such legal proceeding has been brought in an
         inconvenient forum, that the venue of such proceeding is improper or
         that this Agreement or its subject matter may not be enforced in or by
         such court. The priority shall be first given to the British Columbia
         courts.

11.8     Currency
         Except as otherwise stated herein, dollar amounts referred to in this
         Agreement shall be in Canadian funds.

11.9     Interpretation
         All words and personal pronouns relating thereto shall be read and
         construed as the number and gender of the party or parties referred to
         in each case require and the verb shall be construed and agreeing with
         the required word and/or pronoun. The division of this Agreement into
         articles, sections, subsections and schedules and the provision of a
         table of contents are for convenience of reference only and shall not
         affect the interpretation or construction of this Agreement.

11.10    Rules of Construction
         The parties hereto agree that they have been represented by counsel
         during the negotiation and execution of this Agreement and, therefore,
         waive the application of any law, regulation, holding or rule of
         construction providing that ambiguities in an agreement or other
         document will be construed against the party drafting such agreement or
         document.

11.11    Expenses
         Save and except as otherwise provided herein, each party shall be
         responsible for its own legal, accounting and other expenses incurred
         in connection with the purchase and sale of the Purchased Shares and
         Shareholder's Loan, the completion of the transactions contemplated
         herein and any post-closing matters in connection with the transactions
         contemplated herein.

11.12    Time of the Essence
         Time shall be of the essence of this Agreement and of every part hereof
         and no extension or variation of this Agreement shall operate as a
         waiver of this provision.

11.13    Entire Agreement
         This Agreement, the Schedules hereto and the documents and instruments
         and other agreements among the parties hereto as contemplated by or
         referred to herein constitute the entire agreement among the parties
         hereto with respect to the subject matter hereof and supersede all
         prior agreements and understandings, both written and oral, among the
         parties (or among their respective counsel) with respect to the subject
         mater hereof including, without limitation, provided, however, that any
         confidentiality agreements, or confidentiality provisions contained in
         any agreements, executed between any of the parties hereto in
         connection with the transactions contemplated herein shall continue in
         full force and effect until the Time of Closing and shall survive any
         termination of this Agreement.

11.14    Amendment
         This Agreement shall not be amended except in writing signed by all of
         the parties hereto, and any amendment hereof shall be null and void and
         shall not be binding upon any party which has not given its consent as
         aforesaid.
<PAGE>
                                      -60-

11.15    Assignment
         No party hereto may assign this Agreement or any part hereof without
         the prior written consent of the other parties hereto. Subject to the
         foregoing, this Agreement shall enure to the benefit of and be binding
         upon the parties hereto and their respective heirs, executors,
         administrators, successors and assigns. The Vendors and Principals
         hereby acknowledge, confirm and consent to the Purchaser assigning this
         Agreement to any financial institutions as security for any credit
         facility by such institutions to the Purchaser or any Affiliate of the
         Purchaser; provided that: (i) save as set forth below such financial
         institutions shall in no way be liable for any of the liabilities or
         the obligations of the Purchaser hereunder and (ii) the Purchaser shall
         remain liable to the Vendors and Principals for their liabilities and
         obligations hereunder in the event of such assignment or to a
         subsidiary of the Purchaser. In connection with such assignment, the
         Vendors and Principals shall execute such assurances, instruments and
         consents as may be reasonably requested to confirm such assignment and
         such financial institution shall be entitled to enforce this Agreement
         directly against the Vendors and Principals. Notwithstanding anything
         else contained herein, in the event that any claim is made against the
         Vendors by any financial institution to which this Agreement has been
         assigned, the Vendors and Principals shall be entitled to avail
         themselves of any rights or entitlement they would have had if such
         claim had been brought by the Purchaser.

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

11.17    Severability
         In the event that any of the representations, warranties or covenants
         or any portion of them contained in this Agreement are unenforceable or
         are declared invalid for any reason whatsoever, such unenforceability
         or invalidity shall not affect the enforceability or the validity of
         the remaining terms or portions thereof of this Agreement, and such
         unenforceable or invalid representation, warranty or covenant or
         portion thereof shall be severable from the remainder of this
         Agreement.

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of
the date first above written.

SIGNED, SEALED AND DELIVERED by        )
MARK MCCOOEY in the presence of:       )
                                       )
 /s/                                   )   /s/ Mark McCooey
------------------------------------   )  ---------------------------------
Witness                                )  MARK MCCOOEY
                                       )
SIGNED, SEALED AND DELIVERED by        )
LYNN MUELLER in the presence of:       )
                                       )
/s/                                    )   /s/ Lynn Mueller
------------------------------------   )  ---------------------------------
Witness                                )  LYNN MUELLER
<PAGE>
                                      -61-

                                       )
SIGNED,  SEALED AND DELIVERED by       )
JADE EAGLE TRUST in the presence of:   )
                                       )
 /s/                                   )   /s/ Mark McCooey
------------------------------------   )  ---------------------------------
Witness                                )  JADE EAGLE TRUST
                                       )
SIGNED, SEALED AND DELIVERED by        )
LYNN  MUELLER in the presence of:      )
                                       )
 /s/                                   )   /s/ Lynn Mueller
------------------------------------   )  ---------------------------------
Witness                                )  MUELLER FAMILY TRUST
                                       )
EXECUTED by ARIES DEVELOPMENT LTD.     )  ARIES DEVELOPMENT LTD.
in the presence of:                    )  Per:
                                       )
 /s/                                   )   /s/ Paul Callon
------------------------------------   )  ----------------------------------
Witness                                )  Authorized Signatory
                                       )
SIGNED, SEALED AND DELIVERED by        )
PAUL CALLON in the presence of:        )
                                       )
 /s/                                   )   /s/ Paul Callon
------------------------------------   )  ---------------------------------
Witness                                )  PAUL CALLON
                                       )
EXECUTED by EARTH SOURCE ENERGY CORP.  )  EARTH SOURCE ENERGY CORP.
in the presence of:                    )  Per:
                                       )
 /s/                                   )    /s/ Mark McCooey
------------------------------------   )  --------------------------------
Witness                                )  Authorized Signatory
                                       )
EXECUTED by PACIFIC GEO EXCHANGE INC.  )  PACIFIC GEO EXCHANGE INC.
in the presence of:                    )  Per:
                                       )
 /s/                                   )   /s/ Lynn Mueller
------------------------------------   )  --------------------------------
Witness                                )  Authorized Signatory
                                       )
EXECUTED by ESSENTIAL INNOVATIONS      )  ESSENTIAL INNOVATIONS TECHNOLOGY CORP.
TECHNOLOGY CORP. in the presence of:   )  Per:
                                       )
 /s/                                   )   /s/ Jason McDiarmid
------------------------------------   )  --------------------------------
Witness                                )  Authorized Signatory

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