Document:

SETTLEMENT AGREEMENT AND RELEASE

      This Settlement  Agreement and Release (this  "Agreement") is entered into
this 20th day of March, 2004, by and between Reality Wireless Networks,  Inc., a
Nevada  corporation  ("RWNT"),  and  Merrill  Communication,  LLC, a  California
limited  liability  company  ("Merrill").  RWNT and Merrill shall be referred to
collectively herein as the "Parties."

                                   WITNESSETH:

      WHEREAS,   Merrill  alleges  that  it  is  currently  owed   approximately
$14,079.00 by RWNT (the "Outstanding Debt") in connection with services rendered
by  Merrill  to Dicom  Imaging  Systems,  Inc.,  the  predecessor  to RWNT  (the
"Services").

      WHEREAS,  Merrill,  in connection  with its allegation that it is owed the
Outstanding  Debt by RWNT for the  Services,  filed a complaint  in the Superior
Court of California, County of Santa Barbara, against RWNT, on or around October
24, 2003,  case number:  103  CV007768,  alleging  breach of contract and unjust
enrichment and seeking damages of $9,170.47,  18% interest from the date of June
28, 2001 and attorney's fees of $660.00 (the "Suit").

      WHEREAS,  RWNT and  Merrill  desire to  amicably  settle,  compromise  and
resolve any and all controversies and claims between themselves,  including, but
not limited to, all controversies and claims between  themselves with respect to
the Outstanding Debt, the Services and the Suit, to avoid the burden and expense
of arbitration and/or litigation.

      WHEREAS, in connection with the resolution of such matters,  Merrill shall
provide RWNT with (i) a full release and settlement,  and (ii) a Stipulation for
Entry of Judgment Upon Default,  a copy of which is attached hereto as Exhibit A
(the  "Stipulation"),  in exchange for the Cash  (defined in Section 1 below) in
accordance with the terms hereinafter set forth.

      NOW,  THEREFORE,  it is the desire of the  Parties to state in writing the
details of their  agreements.  For money paid and  received  and other  valuable
consideration between the Parties, it is mutually agreed as follows:

      1.  Settlement of Claims  against and Release of RWNT. In exchange for the
payment  by RWNT to  Merrill  of $6,0001  (the  "Cash"),  Merrill,  on behalf of
itself,  its  employees,   affiliates  and  assigns,   hereby  fully,   forever,
irrevocably and unconditionally  releases,  remises and discharges RWNT and each
of its former, current and future officers, directors, stockholders,  attorneys,
agents, spouses,  administrators,  employees and all persons acting by, through,
under,  or in concert  with them from any and all claims,  charges,  complaints,
demands,  actions, causes of action, suits, rights, debts, sums of money, costs,
accounts,  reckonings,   covenants,  contracts,  agreements,  promises,  doings,
omissions,   damages,   executions,   obligations,   liabilities,  and  expenses
(including  attorneys'  fees and  costs),  of every  kind and  nature,  known or
unknown, which Merrill ever had or

      (1) The Cash shall be paid as follows: One Thousand Dollars ($1,000) shall
be paid to  Merrill  on or before  the 25th day of each month for six (6) months
following the execution of this Agreement,  with the first payment being made on
March 25, 2004, and the final payment being made on August 25, 2004.

<PAGE>

now has against RWNT,  including,  but not limited to, all claims arising out of
the  Outstanding  Debt,  the  Services  and the  Suit,  all  common  law  claims
including, but not limited to, actions in tort, defamation,  breach of contract,
and any  claims  under  federal,  state  or local  statutes  or  ordinances  not
expressly referred to above.

      2. Representations and Warranties of the Parties.

            2.1  Authority.  Each of the Parties has full power and authority to
enter  into  this  Agreement.  All  action  on the  part of each of the  Parties
necessary for the authorization,  execution and delivery of this Agreement,  the
performance of all obligations of each of the Parties  hereunder has been taken,
and each of the Parties has all requisite power and authority to enter into this
Agreement.

            2.2 Consents and Approvals;  No Conflict. The execution and delivery
of this  Agreement by each of the Parties does not, and the  performance of this
Agreement by the Parties will not, require any consent, approval,  authorization
or other  action by, or filing  with or  notification  to, any  governmental  or
regulatory authority. The execution,  delivery and performance of this Agreement
by the  Parties  does not (i)  conflict  with or violate the charter or by-laws,
partnership or other governing documents of any of the Parties, or (ii) conflict
with or violate any law, rule,  regulation,  order, writ, judgment,  injunction,
decree, determination, contract or award applicable to any of the Parties.

            2.3  Effectiveness of  Representations  and Warranties.  Each of the
Parties' representations and warranties contained in this Agreement are true and
correct.

      3. Miscellaneous Provisions.

            3.1 This Agreement  constitutes the complete and exclusive agreement
of the Parties.

            3.2  The  Parties  understand  that  this  Agreement  constitutes  a
compromise  and  settlement of disputed  claims.  No action taken by the Parties
hereto,  or any of them,  either previously or in connection with this Agreement
shall be deemed to be (a) an  admission  of the truth or  falsity  of any claims
heretofore  made or (b) an  acknowledgement  or admission by either party of any
fault or liability whatsoever to the other Party or to any third party.

            3.3 Each of the Parties  declares  and  represents  that no promise,
inducement or agreement which is not specifically provided in this Agreement has
been  made by any Party to this  Agreement;  that this  Agreement  contains  the
entire agreement among the Parties;  and that the terms of this Agreement cannot
be modified except in writing signed by all Parties hereto.

            3.4 Each of the Parties  agrees not to  disclose to or discuss  with
any person, except as where such disclosure may be required by law, court order,
government agency request or subpoena, or in connection with a legal proceeding,
the  substance of this  Agreement or matters  relating to any act or omission of
any Party in connection with any other Party.

                                       2
<PAGE>

            3.5 This Agreement  shall be construed,  interpreted  and applied in
accordance  with  the  substantive  laws of the  State  of  Washington,  without
reference to its conflicts of law rules.

            3.6 Any dispute  between the Parties  pertaining  to this  Agreement
shall  be  resolved  through  binding  arbitration  conducted  by  the  American
Arbitration Association. The Parties agree that any arbitration proceeding shall
be conducted in Seattle,  Washington,  and consent to exclusive jurisdiction and
venue there. The award of the arbitrator(s) shall be final and binding,  and the
Parties waive any right to appeal the arbitral award, to the extent that a right
to appeal may be lawfully waived.  Each Party retains the right to seek judicial
assistance  (a) to compel  arbitration,  (b) to  obtain  injunctive  relief  and
interim  measures  of  protection  pending  arbitration,  and (c) to enforce any
decision of the arbitrator(s), including but not limited to the final award.

            3.7 No Party may  assign  any of its  rights  under  this  Agreement
without the prior consent of the other Parties,  which shall not be unreasonably
withheld.  Subject to the preceding sentence,  this Agreement shall apply to, be
binding in all respects  upon,  and inure to the benefit of the  successors  and
permitted  assigns of the  Parties.  Nothing  expressed  or  referred to in this
Agreement  shall be  construed to give any person other than the Parties to this
Agreement any legal or equitable right,  remedy,  or claim under or with respect
to this Agreement or any provision of this Agreement.  This Agreement and all of
its  provisions  and  conditions  are for the sole and exclusive  benefit of the
Parties to this Agreement and their successors and assigns.

            3.8 All notices,  demands and  communications  hereunder shall be in
writing and  personally  delivered  or sent by first class  mail,  certified  or
registered,  postage prepaid, return receipt requested, addressed to the parties
at the  addresses  set forth below,  or at such other address as any Party shall
have  furnished  to the other party in writing,  or shall be given by  telegram,
telex, facsimile  transmission,  overnight courier or hand delivery, in any case
to be effective  when received,  provided that actual  receipt shall  constitute
notice regardless of method of delivery.

         If to RWNT:           Reality Wireless Networks, Inc.
                               7235 North Creek loop
                               Gig Harbor, WA  98335
                               (253) 853-3632 tel

         With a copy to:       David M. Otto
                               The Otto Law Group, PLLC
                               900 Fourth Ave., Suite 3140
                               Seattle, WA 98164

         If to Merrill:        Joseph R. Kafka, Esq.
                               Law Offices of Joseph R. Kafka
                               1541 The Almeda
                               San Jose, CA 95126

                                       3
<PAGE>

            3.9 If any term or  provision of this  Agreement or any  application
thereof  shall be  invalid or  unenforceable,  such term or  provision  shall be
deemed  to be  severed  and the  remainder  of  this  Agreement  and  any  other
application  of such term or  provision  shall not be  affected  or  invalidated
thereby.

            3.10 This  Agreement may be executed by facsimile and in one or more
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument.

            IN WITNESS  WHEREOF,  the Parties have executed this Agreement as of
the date first above written.

                                          REALITY WIRELESS NETWORKS, INC.

                                          --------------------------------
                                          Name:  Steve Careaga
                                          Title: Chief Executive Officer

                                          MERRILL COMMUNICATIONS, LLC

                                          --------------------------------
                                          Name:
                                          Title:

                                       4
<PAGE>

                                    Exhibit A
                                    ---------

                 Stipulation for Entry of Judgment Upon Default

                                       5EXHIBIT 10.1

                                AGENCY AGREEMENT

May 11, 2004

EmergenSys Corporation
400 boul. Jean-Lesage
Suite 045
Quebec, Quebec G1K 8W1

ATTENTION: DANIEL VEILLEUX, PRESIDENT

Dear Sir:

The undersigned,  Desjardins  Securities Inc. ("VMD" or the "AGENT") understands
that  EmergenSys  Corporation  (the  "COMPANY")  proposes,  subject to the terms
hereof, to offer for sale to the public  12,500,000  special warrants at a price
of $0.40 per special warrant (the "SPECIAL WARRANTS"), for a total consideration
of $5,000,000.

The Special Warrants will be sold on a private  placement basis,  subject to the
terms and  conditions  set out  herein  and in the  Special  Warrant  Indenture.
Subject to any adjustment  contemplated in the Special Warrant  Indenture,  each
Special   Warrant   shall  be   exercisable   to  acquire,   for  no  additional
consideration,  one common share in the capital of the Company  (each, a "COMMON
SHARE" and  collectively,  the "COMMON  SHARES") and one Common  Share  purchase
warrant  (individually,  a "PURCHASE  WARRANT" and  collectively,  the "PURCHASE
WARRANTS").  Each Purchase  Warrant shall entitle the holder thereof to purchase
one Common  Share at a price of $0.50 from the Special  Warrant  Closing Date to
April 30, 2005 and at a price of $0.60 from May 1, 2005 to April 30,  2006.  The
Company and each  Purchaser  shall enter into a  Subscription  Agreement for the
purchase of Special Warrants.

The Company has requested  the Agent to act as sole and  exclusive  agent of the
Company to solicit  offers to purchase  the Special  Warrants  and the Agent has
agreed to act as such on the terms and conditions stated herein.

The Agent also understands that the Company  proposes,  subject to the terms and
conditions hereof, to issue and sell to the Agent, at the election of the Agent,
additional  Special  Warrants  representing  up to  2,500,000  Special  Warrants
($1,000,000), to cover over-allotments, if any (the "OVER-ALLOTMENT OPTION").

The Agent may  exercise the  Over-Allotment  Option in whole or in part during a
60-day period following the Special Warrant Closing Date solely for the purposes
of covering  over-allotments  made by the Agent in connection with the Offering.
The  Over-Allotment  Option may be  exercised  only once by the Agent by written
notice  from the Agent to the  Company  setting  forth the  aggregate  number of
Special Warrants to be purchased and the date on which such Special Warrants are
to be delivered, which date shall be as determined by the Agent but shall not be
earlier than the Special Warrant Closing Date and shall be, unless the Agent and

                                       1
<PAGE>

the Company  otherwise  agree in writing,  within the period  commencing  on the
second  business day and ending on the tenth business day after the date of such
notice.  Upon the furnishing of any such notice, the Agent shall be committed to
purchase and the Company  shall be obligated  to issue and sell,  in  accordance
with and subject to the provisions  hereof and subject to applicable  regulatory
requirements, the number of Special Warrants therein indicated.

The  Common  Shares and  Purchase  Warrants  issuable  by the  Company  upon the
exercise of the Special Warrants are referred to as the "UNDERLYING SECURITIES".
Each Special  Warrant  will be  automatically  exercised at 5:00 p.m.  (Montreal
time) (the  "EXPIRY  TIME") on the  earlier  of:

(i)   the date of the Liquidity Transaction;

(ii)  12 months and one day after the Special Warrant Closing Date (the
      "QUALIFICATION DEADLINE")

If any of the  foregoing  days is not a Business  Day,  then the action or event
will occur on the first Business Day following such day.

The net proceeds from the Offering (the "ESCROW  FUNDS") will be deposited  with
and held in trust by Lavery, de Billy (the "ESCROW AGENT") pursuant to an escrow
agreement  (the  "ESCROW  AGREEMENT")  to be entered into by the Company and the
Escrow Agent,  at or prior to the Closing Time. The Escrow Funds,  together with
any  interest  earned  thereon but less any  amounts  required to be deducted or
withheld by law, will be released in the manner  provided under the terms of the
Escrow Agreement.

The Company  shall prepare and file,  in  accordance  herewith,  a Prospectus in
order to qualify the  distribution  of the Underlying  Securities and the Broker
Warrants in each of the Qualifying Provinces.

The  Company  hereby  agrees to offer  for sale to  Purchasers  resident  in the
Qualifying  Provinces  or in those  jurisdictions  outside  of Canada  where the
Special  Warrants  may be lawfully  sold,  an aggregate  of  15,000,000  Special
Warrants, subject to the terms and conditions hereinafter provided. The Offering
is conducted  outside the United States in accordance  with  Regulation S of the
U.S.  Securities Act. The parties  acknowledge that the Special Warrants and the
Underlying  Securities  have not been and will not be registered  under the U.S.
Securities  Act or under the laws of any state of the United  States and may not
be offered or sold,  or  re-offered  or re-sold by the Agent except  pursuant to
exemptions from the U.S.  Securities Act and the applicable laws of any state of
the United States.

In consideration for the services to be rendered by the Agent in connection with
the Offering pursuant to this Agreement,  including assisting in the preparation
of the Prospectus and all other matters in connection with the issue and sale of
the Special  Warrants and the issue of the  Underlying  Securities,  the Company
shall pay a fee to the Agent equal to 10% of the aggregate gross proceeds raised
in connection with the Offering (the "AGENT'S COMMISSION") payable in accordance
with the  provisions  of Section 14, but  exclusive of the amounts to be paid to
the Agent  pursuant to Section 18. The Company  shall also issue to the Agent in
accordance  with the  provisions  of  Section  14, a  compensation  option  (the
"COMPENSATION  OPTION")  to acquire,  for no  additional  consideration,  broker
warrants  (each, a "BROKER  WARRANT" and  collectively,  the "BROKER  WARRANTS")
equal in number to 10% of the Special  Warrants issued pursuant to the Offering.

                                       2
<PAGE>

Each Broker  Warrant  shall  entitle the holder  thereof to purchase  one Common
Share at a price of $0.40 per  Common  Share for a period of two years  from the
Special  Warrant  Closing Date. Each such Common Share shall be accompanied by a
Purchase Warrant.

                                   DEFINITIONS

In this Agreement,  in addition to the terms defined above,  the following terms
shall have the following meanings:

"AFFILIATE" has the meaning ascribed to it in Ontario Securities Commission Rule
45-501 as it is constituted on the date hereof;

"AGREEMENT" means the agreement  resulting from the acceptance by the Company of
the offer made by the Agent by this  letter,  as it may be amended  from time to
time;

"AMF" means the Autorite des marches financiers (Quebec);

"BUSINESS  DAY" means a day which is not a Saturday,  a Sunday or a statutory or
civic holiday in the City of Montreal, Quebec or a day when the principal office
of the Warrant  Agent in such city is not  generally  open to the public for the
transaction of business;

"CANADIAN SECURITIES LAWS" means,  collectively,  the applicable securities laws
of each of the  Qualifying  Provinces and the respective  regulations  and rules
made  thereunder  together  with all  applicable  published  policy  statements,
blanket orders and rulings of the Securities  Commissions and all  discretionary
orders or rulings, if any, of the Securities Commissions made in connection with
the transactions contemplated hereunder;

"CLAIM" has the meaning ascribed to it in subsection 20(1);

"CLOSING  TIME" means 10:00 a.m. on the  Special  Warrant  Closing  Date or such
other time on the Special  Warrant Closing Date as the Company and the Agent may
agree;

"FINAL  PROSPECTUS"  means the final  prospectus  of the  Company in the English
language  approved,  signed  and  certified  in  accordance  with  the  Canadian
Securities Laws, and the French language version thereof, if required,  relating
to the  qualification  for  distribution  of the  Underlying  Securities and the
Broker Warrants under the Canadian Securities Laws through the Agent;

"FINANCIAL INFORMATION" has the meaning ascribed to it in subsection 6(1)(c);

"FINANCIAL  STATEMENTS"  means the  audited  consolidated  balance  sheet of the
Company as at December 31, 2003 and the  consolidated  statements  of operations
and comprehensive loss,  stockholders' equity and cash flows for the fiscal year
then ended,  together with the report of Ernst & Young LLP thereon and the notes
thereto;

"INCOME  TAX  ACT"  means  the  Income  Tax Act  (Canada)  and  the  regulations
thereunder, in each case as amended;

                                       3
<PAGE>

"INDEMNIFIED PARTY" and "INDEMNIFIED PARTIES" have the meanings ascribed thereto
in subsection 20(1);

"INTELLECTUAL PROPERTY" means:

      (i)   all inventions, arts, processes, machines, manufacture, compositions
            of matter and improvements,  whether or not patentable,  patented or
            the subject of applications for patents;

      (ii)  all  trade-marks,  service  marks,  trade  dress,  corporate  names,
            business  names and other trade names and all domain names,  whether
            or not registered or the subject of  registrations  or  applications
            for registrations;

      (iii) all confidential information, proprietary information, trade secrets
            and know-how;

      (iv)  all  software,  computer  programs  and code of all types,  layouts,
            interfaces,  applications  and tools,  all  databases  and  database
            layouts and other copyright  works,  including  literary and graphic
            works,  whether  or not  registered  or  the  subject  of  copyright
            registration or applications for registration;

      (v)   all industrial  designs,  whether or not  registerable,  patented or
            registered   or  the   subject   of   applications   for  patent  or
            registration;

      (vi)  all ideas, plans,  developments,  specifications,  performance data,
            quality control information,  blueprints, flow sheets, equipment and
            parts  list,  instructions,  manuals,  records,  procedures  and all
            licenses, agreements and other contracts and commitments relating to
            any of the  foregoing,  and any other  intellectual  and  industrial
            property, whether or not registerable or the subject of registration
            or applications for registration; and

      (vii) all  patterns,  plans,  designs  research  data,  other  proprietary
            know-how, processes,  drawings,  technology,  inventions,  formulae,
            specifications,   performance  data,  quality  control  information,
            unpatented  blue  prints,  flow sheets,  equipment  and parts lists,
            instructions,  manuals,  records and  procedures,  and all licenses,
            agreements and other  contracts and  commitments  relating to any of
            the foregoing;

"INTELLECTUAL PROPERTY RIGHTS" means:

      (i)   all  patents,   pending  patent  applications,   provisional  patent
            applications,  and  rights  to  file  applications  for  inventions,
            including  all  rights of  priority  and  rights  in  continuations,
            continuations  in part,  divisions,  re-examinations,  re-issues and
            other derivative applications;

      (ii)  all common law trade-mark rights, trade-mark registrations,  pending
            applications and  registration  and rights to file  applications for
            trade-marks, including all rights of priority;

                                       4
<PAGE>

      (iii) all copyright and copyright registrations,  pending applications for
            registrations  and rights to file applications for property referred
            to in the definition of "Intellectual Property", above;

      (iv)  all design patents, design registrations,  pending patent and design
            applications  and  rights  to file  applications  for  the  designs,
            including  all  rights of  priority  and  rights  in  continuations,
            continuations  in part,  divisions,  re-examinations,  re-issues and
            other derivative applications; and

      (v)   all  rights  in  the  property  referred  to in  the  definition  of
            "Intellectual Property", above;

"KNOWLEDGE  OF THE  COMPANY"  means the  knowledge of the  directors  and senior
officers of the Company after having made due inquiry;

"LIQUIDITY TRANSACTION",  refers to (a) the obtaining of a receipt for the Final
Prospectus in the Qualifying  Provinces and (b) the listing of the Common Shares
of the Company on the TSX Venture;

"MISREPRESENTATION",   "MATERIAL   FACT",   "MATERIAL   CHANGE",   "SUBSIDIARY",
"ASSOCIATE" and  "DISTRIBUTION"  have the respective  meanings  ascribed to such
terms in the Securities Act (Ontario);

"MRRS" means the mutual  reliance  review system  procedures  provided for under
National  Policy 43-201,  Mutual  Reliance  Review System for  Prospectuses  and
Annual Information Forms of the Securities Commissions;

"NOTICE" has the meaning ascribed to it in Section 24;

"OFFERING"  means the  offering of  15,000,000  Special  Warrants,  at $0.40 per
Special Warrant, for an aggregate consideration of $6,000,000;

"PERSON" shall include any individual,  partnership,  limited partnership, joint
venture, syndicate, sole proprietorship, company or corporation (with or without
share  capital),   unincorporated   association,   trust,   trustee,   executor,
administrator  or  other  personal  representative,   regulatory  body,  agency,
government or governmental  agency,  authority or entity, in each case howsoever
designated or constituted;

"PRELIMINARY  PROSPECTUS" means the preliminary prospectus of the Company in the
English language approved,  signed and certified in accordance with the Canadian
Securities Laws, and the French language version thereof, if required,  relating
to the  qualification  for  distribution  of the  Underlying  Securities and the
Broker Warrants under the Canadian Securities Laws through the Agent;

"PROSPECTUS" means the Preliminary Prospectus and the Final Prospectus;

"PURCHASE  WARRANT  AGENT" means  Computershare  Trust Company of Canada or such
other  party  who is the  purchase  warrant  agent  under the  Purchase  Warrant
Indenture;

                                       5
<PAGE>

"PURCHASE WARRANT  INDENTURE" means a warrant indenture to be entered into prior
to the Special Warrant Closing Date between the Company and the Purchase Warrant
Agent  providing  for the issue of the Purchase  Warrants in a form to be agreed
upon between the Company and the Agent;

"PURCHASERS"  means the persons,  including the Agent, who as purchasers acquire
Special  Warrants  from  the  Company  by  duly  completing  and  executing  the
Subscription  Agreements and having such Subscription Agreements accepted by the
Company, and the permitted assignees or transferees of such persons from time to
time; "QUALIFYING PROVINCES" means the Provinces of Quebec, Ontario, Alberta and
British Columbia;

"REGISTRANTS" has the meaning ascribed to it in subsection 10(3);

"SECURITIES  COMMISSIONS"  means the  securities  regulatory  authorities in the
Qualifying Provinces;

"SELLING  FIRM"  and  "SELLING  FIRMS"  have the  meanings  ascribed  to them in
subsection 1(2);

"SPECIAL  WARRANT  CERTIFICATES"  has the meaning  ascribed to it in  subsection
13(A)(f);

"SPECIAL  WARRANT  CLOSING"  means the  completion  of the issue and sale by the
Company of the  Special  Warrants  and the  purchase  by the  Purchasers  of the
Special  Warrants  pursuant  to  the  Subscription  Agreements  and  the  Escrow
Agreement;

"SPECIAL  WARRANT  CLOSING  DATE" means the date upon which all  conditions  set
forth in the Escrow  Agreement and in section 16 hereof,  to be satisfied by the
Company, have been met ;

"SPECIAL WARRANT  INDENTURE" means a warrant  indenture to be entered into prior
to the Special  Warrant  Closing Date between the Company and the Warrant  Agent
providing  for the issue of the  Special  Warrants  in a form to be agreed  upon
between the Company and the Agent;

"SUBSCRIPTION AGREEMENTS" means the subscription agreements entered into between
the Company and the Purchasers  pursuant to which the Purchasers have subscribed
for Special  Warrants and shall include,  for greater  certainty,  all schedules
thereto, the terms of which are incorporated herein by reference;

"SUBSIDIARIES"  means  collectively  EmergenSys  Canada Inc. and Scan-R  Urgence
Inc.;

"SUPPLEMENTARY  MATERIAL" means  collectively,  any amendment to the Preliminary
Prospectus or the Final Prospectus,  any amendment or supplemental prospectus or
any ancillary  materials  that may be filed by or on behalf of the Company under
the Canadian  Securities  Laws relating to the  distribution  of the  Underlying
Securities and the Broker Warrants;

"TAXES" has the meaning ascribed to it in subsection 13(A)(x);

                                       6
<PAGE>

"TRANSACTION  AGREEMENTS" means this Agreement,  the Special Warrant  Indenture,
the Purchase Warrant Indenture,  the Subscription  Agreements,  the Compensation
Option and the Escrow Agreement;

"TSX VENTURE" means the TSX Venture Exchange;

"U.S.  SECURITIES  ACT"  means the  United  States  Securities  Act of 1933,  as
amended;

"UNITED  STATES"  means  the  United  States of  America,  its  territories  and
possessions, any state of the United States, and the District of Columbia; and

"WARRANT AGENT" means  Computershare Trust Company of Canada or such other party
who is the special warrant agent under the Special Warrant Indenture;

Any  reference in this  Agreement to a Section,  subsection  or Schedule  shall,
unless otherwise  indicated,  refer to a section or subsection of or Schedule to
this Agreement.  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 as agreeing  with the required
word and/or pronoun. Unless otherwise indicated,  all dollar amounts referred to
in this Agreement are in lawful money of Canada.

                              TERMS AND CONDITIONS

1.    SALE ON EXEMPT BASIS.

      (1)   The Agent  shall offer for sale on behalf of the Company the Special
            Warrants:

            (a)   in  the  Qualifying  Provinces  in  compliance  with  Canadian
                  Securities  Laws only to such Purchasers and in such manner so
                  that,  pursuant to the provisions of Canadian Securities Laws,
                  no prospectus or offering memorandum or other similar document
                  needs to be filed or delivered in connection therewith; and

            (b)   in such other  jurisdictions  on a private  placement basis in
                  compliance  with all applicable  laws of such  jurisdiction in
                  such a manner so that no prospectus,  registration  statement,
                  offering  memorandum  or other  similar  document  needs to be
                  filed or delivered in connection therewith.

      (2)   The Agent shall be permitted to appoint  additional  dealers (each a
            "SELLING FIRM" and,  collectively  "SELLING FIRMS") as its agents in
            the  Offering and may  determine  the  remuneration  payable to such
            Selling  Firm(s).  The  Company  shall have no  obligations  to such
            Selling  Firm(s) for any fees in connection  with the Offering.  The
            Company  grants all of the rights and  benefits  of the Agent  under
            this  Agreement to any Selling Firm duly  appointed by the Agent and
            appoints  such Agent as trustee of such rights and benefits for such
            Selling  Firm,  and such Agent accepts such trust and agrees to hold
            such rights and benefits for and on behalf of such Selling Firm. The
            Agent shall ensure that any Selling Firm appointed by it pursuant to

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<PAGE>

            the  provisions  contained  herein  or with  whom  the  Agent  has a
            contractual  relationship  with  respect  to the  Offering,  if any,
            agrees  with  it  in  writing  to  comply  with  the  covenants  and
            obligations given by the Agent herein.

      (3)   Subject to compliance by the Company with its obligations hereunder,
            and provided that the Agent is satisfied in its sole discretion that
            the Preliminary  Prospectus,  Final Prospectus and any Supplementary
            Material  contain  full,  true and plain  disclosure of all material
            facts  relating  to the  Company  and the  securities  offered by or
            referred to in such  materials,  the Agent shall execute and deliver
            to the Company the certificate  required (in the reasonable  opinion
            of Company's counsel) to be executed by it under Canadian Securities
            Laws in  connection  with  the  Preliminary  Prospectus,  the  Final
            Prospectus and any Supplementary Material.

      (4)   Notwithstanding the foregoing  provisions of this Section, the Agent
            will not be liable to the Company under this Section with respect to
            a default under this Section by Selling Firm.

2.    FILINGS.

The Company  undertakes  to file or cause to be filed all forms or  undertakings
required to be filed by the Company or secure all  prospectus  exemptions  which
are required in  connection  with the Offering so that the  distribution  of the
Special   Warrants  may  lawfully  occur  without  the  necessity  of  filing  a
prospectus, a registration statement, an offering memorandum or similar document
in Canada or the United  States  (but on terms that will  permit the  Underlying
Securities  to be sold by  Purchasers  of  Special  Warrants  at any time in the
Qualifying  Provinces,  subject to  Canadian  Securities  Laws and the terms and
conditions  contained  herein),  and the Agent undertakes to cause Purchasers of
Special  Warrants to complete  and deliver to the Company any forms  required by
Canadian  Securities Laws or under other  applicable  securities  laws. All fees
payable in  connection  with such  filings  shall be at the sole  expense of the
Company.

3.    NO OFFERING MEMORANDUM.

Neither the Company  nor the Agent shall (i) provide to  prospective  purchasers
any document or other  material  that would  constitute  an offering  memorandum
within the meaning of Canadian Securities Laws or applicable  securities laws of
the United  States or any state or territory  thereof or (ii) engage in any form
of general  solicitation or general advertising in connection with the offer and
sale of the Special  Warrants or the  Underlying  Securities,  including but not
limited  to,  causing  the  sale  of the  Special  Warrants  or  the  Underlying
Securities to be advertised in any  newspaper,  magazine,  printed public media,
printed  media or  similar  medium of  general  and  regular  paid  circulation,
broadcast over radio,  television or  telecommunications,  including  electronic
display, or conduct any seminar or meeting relating to any offer and sale of the
Special  Warrants or Underlying  Securities whose attendees have been invited by
general solicitation or advertising.

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<PAGE>

4.    PRELIMINARY PROSPECTUS.

The Company shall,  as soon as  practicable,  prepare and file under  applicable
Canadian  Securities  Laws  of  each  of the  Qualifying  Provinces  and use its
commercially  reasonable best efforts to obtain a decision document from the AMF
under the MRRS  evidencing  that a receipt has been  issued for the  Preliminary
Prospectus by each of the Securities Commissions.

5.    FINAL PROSPECTUS.

The Company shall  promptly  resolve all comments  received from the  Securities
Commissions  and as  soon  as  practicable  after  all  comments  of  Securities
Commissions  have been  satisfied  with respect to the  Preliminary  Prospectus,
prepare  and  file  under  applicable  Canadian  Securities  Laws  and  use  its
commercially  reasonable  best  efforts to obtain  within 90 days of the Special
Warrant Closing Date a decision  document from the AMF under the MRRS evidencing
that a  receipt  has  been  issued  for  the  Final  Prospectus  by  each of the
Securities Commissions.

The  Preliminary  Prospectus  and the Final  Prospectus  will also  qualify  the
issuance of additional Common Shares to the public in order to ensure that there
is a sufficient number of public  shareholders to meet the listing  requirements
of the TSX Venture.

6.    DELIVERIES AT TIME OF FILING.

      (1)   The Company  shall  deliver to the Agent  contemporaneously  with or
            prior to the  filing  of the  Preliminary  Prospectus  or the  Final
            Prospectus, as the case may be, with the Securities Commissions:

            (a)   a copy of the Preliminary  Prospectus or Final Prospectus,  as
                  the case may be, signed and certified;

            (b)   signed  copies of any other  document  required to be filed by
                  the  Company at the time of filing of each of the  Preliminary
                  Prospectus and the Final Prospectus under Canadian  Securities
                  Laws,   including  a  copy  of  the  Form  6  certificates  of
                  authentication  in respect of the Final Prospectus  signed and
                  certified as required by the Canadian Securities Laws;

            (c)   at the time of  filing of each of the  Preliminary  Prospectus
                  and the Final  Prospectus,  an  opinion of  McCarthy  Tetrault
                  addressed to the Agent,  Agent's  counsel and the Company,  in
                  form  and  substance   satisfactory   to  the  Agent,   acting
                  reasonably,  to the effect that the French language version of
                  each of the Preliminary  Prospectus and Final  Prospectus,  as
                  the case may be, except for the financial statements and notes
                  to such statements and the related auditors' reports contained
                  in  the  Preliminary   Prospectus  and  the  Final  Prospectus
                  (collectively, the "FINANCIAL INFORMATION") is in all material
                  respects a complete  and accurate  translation  of the English
                  language  version  thereof,  and that such  English and French
                  language  versions  are  not  susceptible  to  any  materially
                  different  interpretation with respect to any matter contained
                  therein;

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<PAGE>

      (d)   at the time of filing of each of the Preliminary  Prospectus and the
            Final  Prospectus,  an opinion of Ernst & Young LLP addressed to the
            Agent,  Agent's  counsel  and the  Company,  to the effect  that the
            Financial  Information  contained in the Preliminary  Prospectus and
            the  Final  Prospectus,  as the  case  may  be,  is in all  material
            respects,  a complete and proper French  translation  of the English
            language versions thereof;

      (e)   in the case of the Final  Prospectus,  a  long-form  comfort  letter
            dated  the  date of the  Final  Prospectus,  in form  and  substance
            satisfactory to the Agent, acting reasonably, addressed to the Agent
            and the board of  directors  of the Company  from Ernst & Young LLP,
            with respect to the financial and accounting  information  contained
            in the Final Prospectus,  which letter shall be based on a review by
            the applicable  auditors  within a cut-off date of not more than two
            Business  Days  prior to the date of the  letter,  and which  letter
            shall be in addition to the  auditors'  consent  letters and comfort
            letters addressed to the Securities Commissions; and

      (f)   at the time of filing of the Final  Prospectus,  the  Company  shall
            cause  McCarthy  Tetrault  to deliver to the Agent and its counsel a
            legal  opinion  dated  and  delivered  at such  time,  in  form  and
            substance  satisfactory  to  the  Agent  and  its  counsel,   acting
            reasonably to the effect that:

            (i)   the statements in the Prospectus  under the heading  "Canadian
                  Federal   Income   Tax   Considerations",   subject   to   the
                  qualifications,   assumptions   and   restrictions   set   out
                  thereunder,   constitute  a  fair  summary  of  the  principal
                  Canadian  federal  income tax  considerations  pursuant to the
                  Income Tax Act  generally  applicable to a person who acquires
                  Underlying  Securities pursuant to the Prospectus and who, for
                  the  purposes  of the Income Tax Act,  is  resident in Canada,
                  holds the Underlying  Securities as capital property and deals
                  at arm's  length with the Company and is not  affiliated  with
                  the Company; and

            (ii)  subject to the  qualifications,  assumptions and  restrictions
                  set out under "Canadian Federal Income Tax  Considerations" in
                  the  Prospectus,   the  Underlying  Securities  are  qualified
                  investments  for  trusts  governed  by  registered  retirement
                  savings plans,  registered retirement income funds, registered
                  education  savings  plans and deferred  profit  sharing  plans
                  under the Income Tax Act.

7.    SUPPLEMENTARY MATERIAL.

The Company  shall also  prepare  and deliver  promptly to the Agent and Agent's
counsel  English and French  versions of all  Supplementary  Material signed and
certified as required by the Canadian  Securities  Laws.  Concurrently  with the
delivery of any Supplementary  Material,  the Company shall deliver to the Agent
and Agent's counsel, with respect to such Supplementary  Material,  opinions and
comfort  letters  substantially  similar  to those  referred  to in  subsections
6(1)(c), (d) and (e).

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<PAGE>

8.    COMMERCIAL COPIES.

The Company shall cause commercial copies of the Preliminary  Prospectus and the
Final Prospectus to be delivered to the Agent without charge in such numbers and
in  such  cities  as the  Agent  may  reasonably  request  on  oral  or  written
instruction from VMD to the Company or the printer of such documents given on or
about the dates the Preliminary Prospectus and the Final Prospectus are filed in
each of the  Qualifying  Provinces.  Such delivery  shall be effected as soon as
practicable  after  the MRRS  decision  document  has been  issued by the AMF in
respect thereof and, in any event,  not later than 5:00 p.m.  (Montreal time) on
the day  following  the  issuance  of the MRRS  decision  document by the AMF in
respect of the  Prospectus.  The Company shall  similarly  cause to be delivered
commercial  copies of the Supplementary  Material  required to be delivered,  on
request or otherwise,  to the Agent.  The commercial  copies of the  Preliminary
Prospectus,  the  Final  Prospectus  and any  Supplementary  Material  shall  be
identical in content to the  electronically  transmitted  versions thereof filed
with  Canadian  securities  regulatory  authorities  pursuant  to the System for
Electronic  Document  Analysis  and  Retrieval.  The  Agent  shall  cause  to be
delivered to holders of Special  Warrants in the Qualifying  Provinces copies of
the Final Prospectus and any required Supplementary Material.

9.    REPRESENTATION AS TO PROSPECTUS AND SUPPLEMENTARY MATERIAL.

Delivery  of  the  Preliminary   Prospectus,   the  Final   Prospectus  and  any
Supplementary  Material by the Company shall constitute the  representation  and
warranty of each of the Company to the Agent and to the Purchasers that:

      (1)   all  information and statements  (except  information and statements
            relating   solely  to  the  Agent)   contained  in  the  Preliminary
            Prospectus or the Final Prospectus or any Supplementary Material, as
            the case may be, are true and  correct in all  material  respects at
            the time of delivery  thereof and contain no  misrepresentation  and
            that  the  Preliminary  Prospectus,  the  Final  Prospectus  or  any
            Supplementary  Material,  as the case may be, constitutes full, true
            and plain  disclosure of all material  facts relating to the Company
            and the Underlying Securities;

      (2)   no material fact or information has been omitted  therefrom  (except
            facts or information relating solely to the Agent) which is required
            under the Canadian  Securities  Laws to be stated in such disclosure
            or is necessary to make the statements or  information  contained in
            such disclosure not misleading in light of the  circumstances  under
            which they were made;

      (3)   the financial statements contained in the Preliminary  Prospectus or
            the Final Prospectus or any Supplementary  Material, as the case may
            be, accurately  reflect the financial  position of the Company as at
            the respective  dates thereof and no material  adverse change in the
            financial position of the Company has taken place since December 31,
            2003; and

      (4)   such  documents   comply  with  the  requirements  of  the  Canadian
            Securities Laws.

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<PAGE>

Such deliveries  shall also constitute the Company's  consent to the Agent's use
of the  Preliminary  Prospectus,  the  Final  Prospectus  and any  Supplementary
Material,  as the case  may be,  in  connection  with  the  distribution  of the
Underlying  Securities and the Broker Warrants in compliance with this Agreement
unless otherwise advised in writing.

10.   ADDITIONAL COVENANTS OF THE COMPANY.

The Company hereby covenants with the Agent and to the Purchasers that:

      (1)   the Company  shall duly  execute  and  deliver  the Special  Warrant
            Indenture,  the Purchase Warrant Indenture, the Escrow Agreement and
            the Compensation Option, each in form and substance  satisfactory to
            the Agent, prior to the Special Warrant Closing Date;

      (2)   the  Company  shall  at  all  times  prior  to  the  filing  of  the
            Preliminary  Prospectus and the Final Prospectus allow the Agent and
            its representatives to conduct all due diligence which the Agent may
            reasonably   require  to  be   conducted  in  order  to  fulfil  its
            obligations as agent under Canadian  Securities Laws and in order to
            enable the Agent to responsibly execute any certificate  required to
            be  executed  by  the  Agent  in  connection  with a  Prospectus  or
            Supplementary Material under Canadian Securities Laws;

      (3)   the Company  shall employ its best efforts to complete the Liquidity
            Transaction  on or prior to August 31, 2004.  If the Company has not
            yet filed the Preliminary Prospectus in the Qualifying Provinces and
            a listing  application with the TSX Venture,  by July 31, 2004, each
            Special  Warrant  exercised  will  entitle  the  holder  thereof  to
            increase by 10% the number of Common  Shares and  Purchase  Warrants
            represented thereby without payment of any additional consideration;

      (4)   the Company  shall  employ its best  efforts to acquire  100% of the
            share capital of 3720161 Canada  Corporation  (doing  business under
            the name Mobilair  Integration) within 90 days following the Special
            Warrant Closing Date,  failing which each Special Warrant  exercised
            will  entitle  the holder  thereof to  increase by 10% the number of
            Common  Shares and Purchase  Warrants  represented  thereby  without
            payment of any additional consideration;

      (5)   the  Company  will  fulfill,  or cause to be  fulfilled,  all  legal
            requirements  to  permit  the  issuance,  offering  and  sale of the
            Special Warrants and the Underlying  Securities  including,  without
            limitation,  compliance with Canadian  Securities Laws to enable the
            Special  Warrants to be offered for sale and sold to  purchasers  in
            the  Qualifying  Provinces,  through  investment  dealers or brokers
            registered under Canadian Securities Laws who have complied with the
            relevant  provisions  of  such  legislation  ("REGISTRANTS")  and to
            enable the  Underlying  Securities to be issued upon the exercise of
            the Special Warrants (including obtaining the Conversion Order);

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<PAGE>

      (6)   the Company shall use its  commercially  reasonable  best efforts to
            fulfill,  at or prior to the Special  Warrant  Closing Date, each of
            the conditions set out in Section 16;

      (7)   the  Company  will  advise  the  Agent and each  holder  of  Special
            Warrants  (at each  holder's  address  appearing in a register to be
            established  and  maintained  by the Warrant Agent under the Special
            Warrant Indenture),  promptly after receiving notice thereof, of the
            time when the  Prospectus  and any  Supplementary  Material has been
            filed and  receipts  therefor  have been  obtained  and will provide
            evidence  reasonably  satisfactory  to the Agent of each such filing
            and copies of such receipts;

      (8)   the Company will advise the Agent,  promptly after receiving  notice
            or  obtaining  knowledge  thereof,  of:  (i)  the  issuance  by  any
            Securities  Commission of any order suspending or preventing the use
            of  the  Preliminary   Prospectus,   the  Final  Prospectus  or  any
            Supplementary  Material; (ii) the suspension of the qualification of
            the Common Shares, the Purchase Warrants or the Compensation  Option
            in  any  of  the  Qualifying   Provinces;   (iii)  the  institution,
            threatening  or   contemplation  of  any  proceeding  for  any  such
            purposes; or (iv) any requests made by any Securities Commission for
            amending or  supplementing  the Preliminary  Prospectus or the Final
            Prospectus  or  for  additional   information;   and  will  use  its
            commercially reasonable efforts to prevent the issuance of any order
            referred to in (i) above and, if any such order is issued, to obtain
            the withdrawal thereof as quickly as possible;

      (9)   the Company will keep the Agent fully  informed on a timely basis of
            all  material  business and  financial  developments  affecting  the
            Company, the Subsidiaries and their respective businesses;

      (10)  the Company  shall retain,  at its sole expense,  if required by the
            Agent and subject to the approval of the Agent,  acting  reasonably,
            legal,  accounting  and tax  advisors  experienced  in  transactions
            similar  to the  Offering  to work  with  the  Agent to  effect  the
            Offering;

      (11)  the  Company   shall  file  the   required   notices,   reports  and
            attestations  containing the prescribed  information within the time
            limits prescribed by Canadian Securities Laws.

11.   MATERIAL CHANGES DURING DISTRIBUTION.

During the period from the date  hereof to the Expiry  Time,  the Company  shall
promptly  notify  the  Agent,  or cause the Agent to be  notified  promptly,  in
writing of:

            (a)   any change (actual,  anticipated,  contemplated or threatened,
                  financial or otherwise) in the business, affairs,  operations,
                  assets,  liabilities  (contingent  or otherwise) or capital of
                  the Company or either Subsidiary;

            (b)   any material fact that has arisen or has been discovered which
                  would  have  been   required   to  have  been  stated  in  the
                  Preliminary  Prospectus or the Final  Prospectus  had the fact

                                       13
<PAGE>

                  arisen or been  discovered  on,  or prior to,  the date of the
                  Preliminary  Prospectus or the Final  Prospectus,  as the case
                  may be;

            (c)   any change in any  material  fact  (which for the  purposes of
                  this  Agreement  shall be deemed to include the  disclosure of
                  any previously  undisclosed  material fact) in the Preliminary
                  Prospectus, the Final Prospectus or Supplementary Material, or
                  the existence of any new material fact; and

            (d)   any judicial,  governmental or regulatory authority requesting
                  any  information,  meeting or hearing related to the Offering,
                  the  Company  or  either   Subsidiary   or  their   respective
                  businesses,  which change or new material  fact is, or may be,
                  of such a nature as:

            (e)   to render the Preliminary Prospectus,  the Final Prospectus or
                  Supplementary  Material, as they exist taken together in their
                  entirety  immediately  prior to such change or material  fact,
                  misleading or untrue or would result in any of such documents,
                  as they exist  taken  together in their  entirety  immediately
                  prior  to  such  change  or  material   fact,   containing   a
                  misrepresentation;

            (f)   would  result  in  the  Preliminary   Prospectus,   the  Final
                  Prospectus or any Supplementary  Material, as they exist taken
                  together in their entirety immediately prior to such change or
                  material   fact,  not  complying  with  any  of  the  Canadian
                  Securities Laws; or

            (g)   would  reasonably be expected to have a significant  effect on
                  the market price or value of the Common Shares.

During the period from the date  hereof to the Expiry  Time,  the Company  shall
promptly  comply with all  applicable  filing and other  requirements  under the
Canadian  Securities  Laws  arising as a result of any  change,  fact,  event or
circumstance  referred to in this  Section and shall  prepare and file under all
applicable  Canadian  Securities  Laws, with all possible  dispatch,  and in any
event within any time limit  prescribed  under  applicable  Canadian  Securities
Laws, any  Supplementary  Material as may be required under applicable  Canadian
Securities Laws; provided that the Company shall allow the Agent and its counsel
to participate  fully in the  preparation of any  Supplementary  Material and to
conduct all due diligence  investigations which the Agent may reasonably require
in order to fulfil its  obligations as Agent under Canadian  Securities Laws and
in order to enable the Agent to execute responsibly any certificate  required to
be  executed  by it in any  Supplementary  Material  and the  Agent  shall  have
approved  the  form  of any  Supplementary  Material,  such  approval  not to be
unreasonably withheld and to be provided in a timely manner.

The  Company  shall in good faith  discuss  with the Agent any fact or change in
circumstances (actual, anticipated, contemplated or threatened, and financial or
otherwise)  which  is of such a nature  that  there  is  reasonable  doubt as to
whether  notice in writing  need be given to the Agent  pursuant to this Section
11.

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<PAGE>

The  delivery  to  the  Agent  of  Supplementary  Material  shall  constitute  a
representation  and  warranty  to the Agent by the Company  with  respect to the
Prospectus as amended, modified or superseded by such Supplementary Material and
by any Supplementary Material previously delivered to the Agent as aforesaid, to
the same effect as set forth in Section 9. Such delivery  shall also  constitute
the consent of the Company to the use of the Prospectus, as amended, modified or
superseded,  by the Agent in  connection  with the  distribution  of  securities
hereunder.

12.   CHANGE IN CANADIAN SECURITIES LAWS.

If prior to the Expiry  Time,  there shall be any change in Canadian  Securities
Laws which in the  opinion of counsel to the Company or of counsel to the Agent,
acting reasonably,  requires the filing of Supplementary  Material,  the Company
shall, to the satisfaction of its counsel and the Agent's  counsel,  each acting
reasonably,  promptly  prepare and file,  or cause to be promptly  prepared  and
filed, such Supplementary  Material with the appropriate  Securities Commissions
in the Qualifying Provinces where such filing is required.

13. (A)   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company  hereby  represents  and warrants to the Agent and to the Purchasers
that:

      (a)   the Company is a company duly incorporated and organized and validly
            subsisting  under the laws of Delaware and has all requisite  power,
            capacity and authority to own,  lease and operate its properties and
            assets and to carry on its  business as presently  conducted  and to
            enter into and  deliver  this  Agreement  and the other  Transaction
            Agreements  to which it is or will become a party and to perform its
            obligations hereunder and thereunder;

      (b)   each Subsidiary has been duly created or incorporated  and organized
            under the laws of the  jurisdiction  in which it has been created or
            incorporated and has all requisite power,  capacity and authority to
            own, lease and operate its properties and assets and to carry on its
            business as  presently  conducted,  the Company has no  subsidiaries
            other than the Subsidiaries;

      (c)   all necessary  action has been taken by the Company to authorize the
            execution and delivery by the Company of this  Agreement,  the other
            Transaction  Agreements,  the certificates  representing the Special
            Warrants  (the "SPECIAL  WARRANT  CERTIFICATES"),  the  certificates
            representing the Common Shares,  Purchase Warrants, the Compensation
            Option and Broker Warrants and the performance by the Company of its
            obligations hereunder and thereunder,  including the issuance of the
            Special  Warrants,  the  Underlying  Securities,   the  Compensation
            Option,  the  Broker  Warrants  and the Common  Shares  which may be
            acquired  upon the exercise of the Purchase  Warrants and the Broker
            Warrants;  and this Agreement,  each of the Transaction  Agreements,
            the Special Warrant Certificates and the

                                       15
<PAGE>

            certificates  representing the Purchase  Warrants,  the Compensation
            Option  and  Broker  Warrants  have  been or will be at the  Special
            Warrant Closing (or will be, upon issuance  thereof,  in the case of
            the certificates representing the Common Shares, the Broker Warrants
            and  the  Purchase   Warrants)   duly  executed  and  delivered  and
            constitutes  a valid and legally  binding  obligation of the Company
            enforceable  against it in  accordance  with its terms  (subject  to
            applicable bankruptcy, insolvency,  reorganization and other laws of
            general  application  limiting the enforcement of creditors'  rights
            generally and to the fact that specific  performance is an equitable
            remedy available only in the discretion of a court);

      (d)   the Company has all  requisite  power,  capacity  and  authority  to
            execute and deliver each of the Preliminary Prospectus and the Final
            Prospectus   and  to  file  such   documents   with  the  Securities
            Commissions,  and all necessary action has been taken by the Company
            to  authorize  the   execution  and  delivery  of  the   Preliminary
            Prospectus  and the Final  Prospectus and the filing of each of them
            with the Securities  Commissions (or all such necessary  action will
            have been taken by the  Company  prior to the time of the filings of
            the Preliminary Prospectus and the Final Prospectus);

      (e)   the Financial Information when included in the Prospectus:

            (i)   will be in accordance with the books,  records and accounts of
                  the Company;

            (ii)  will be true and  correct  and  present  fairly the results of
                  operations  and the  financial  position  of the  Company on a
                  consolidated  basis for the  periods  ended on, and as at, the
                  dates indicated;

            (iii) will have been prepared in accordance  with Canadian or United
                  States generally accepted accounting  principles  consistently
                  applied; and

            (iv)  will present  fairly all of the assets and  liabilities of the
                  Company  on a  consolidated  basis as at the  dates  indicated
                  including  all  contingent  liabilities  of the  Company  on a
                  consolidated basis as at the dates indicated;

      (f)   the audited consolidated balance sheet of the Company as at December
            31,  2003  and  the   consolidated   statements  of  operations  and
            comprehensive  loss,  stockholders'  equity  and cash  flows for the
            fiscal  year then ended,  together  with the report of Ernst & Young
            LLP thereon and the notes thereto:

            (i)   are in accordance with the books,  records and accounts of the
                  Company;

                                       16
<PAGE>

            (ii)  are true  and  correct  and  present  fairly  the  results  of
                  operations  and the  financial  position  of the  Company on a
                  consolidated  basis for the  periods  ended on, and as at, the
                  dates indicated therein;

            (iii) have been  prepared  in  accordance  with  Canadian  or United
                  States generally accepted accounting  principles  consistently
                  applied; and

            (iv)  present  fairly  all  of the  assets  and  liabilities  of the
                  Company  on a  consolidated  basis as at the  dates  indicated
                  therein including all contingent liabilities of the Company on
                  a consolidated basis as at the dates indicated;

      (g)   the  Company  is  authorized  to issue  100,000,000  Shares of which
            80,000,000   shares  are  designated  as  common  stock,  par  value
            US$0.0001 per share and 20,000,000  shares are designated  preferred
            stock,  par value  US$0.0001  per  shares..  As at the date  hereof,
            30,124,005  Common Shares are issued and  outstanding  as fully paid
            and  non-assessable,  not including the committed or reserved shares
            of common stock to be issued as per the disclosure  made in the Form
            10-KSB dated April 14, 2004 filed with the United States  Securities
            and Exchange  Commission  (the "FORM 10-K") and the 50,000 shares of
            common stock to be issued to Gottbetter & Partners LLP;

      (h)   all the  outstanding  shares of each  Subsidiary  have been duly and
            validly authorized and issued and are fully paid and non-assessable,
            and,  to the  knowledge  of the  Company,  have not been  issued  in
            violation of or subject to any  pre-emptive  right arising under the
            certificate  of  incorporation  or the  law of its  jurisdiction  of
            incorporation,  co-sale  right,  right  of  first  refusal  or other
            similar right;

      (i)   Computershare  Trust  Company of Canada has been duly  appointed  as
            Warrant Agent under the Special  Warrant  Indenture and the Purchase
            Warrant Agent under the Purchase Warrant Indenture;

      (j)   Lavery,  de Billy has been duly  appointed as Escrow Agent under the
            Escrow Agreement;

      (k)   Continental  Stock  Transfer & Trust Company has been duly appointed
            as registrar and transfer agent of the Common Shares;

      (l)   except as has been publicly disclosed by the Company, since December
            31, 2003 (i) there has not been any  material  change or a change in
            material fact (actual,  threatened or contemplated) in the business,
            affairs,  operations,  business  prospects,  assets,  liabilities or
            obligations,  contingent or otherwise,  or capital of the Company or
            either  Subsidiary;  and (ii) there has been no transaction  entered
            into by the  Company or either  Subsidiary,  other than those in the
            ordinary course of business;

                                       17
<PAGE>

      (m)   other  than as  disclosed  in the Form 10 - K, no person now has any
            agreement or option, or right or privilege  (whether  pre-emptive or
            contractual)  capable of becoming an agreement or option  (including
            convertible  or   exchangeable   securities  or  warrants)  for  the
            purchase,  subscription for or issuance of securities of any kind of
            the  Company  or either  Subsidiary,  other  than  pursuant  to this
            Agreement;

      (n)   the  execution  and  delivery  of  this   Agreement  and  the  other
            Transaction  Agreements,  and the fulfilment of the terms hereof and
            thereof by the Company,  and the issuance,  sale and delivery of the
            Special Warrants to be issued and sold by the Company,  the issuance
            of the Underlying  Securities upon exercise of the Special Warrants,
            the issuance of the Compensation  Option, the issuance of the Broker
            Warrants upon the exercise of the Compensation  Option and the issue
            of Common Shares upon the exercise of the Purchase  Warrants and the
            Broker Warrants do not and will not:

            (i)   require the consent, approval, authorization,  registration or
                  qualification of or with, or any filing with, any governmental
                  authority,  stock  exchange,  Securities  Commission  or other
                  regulatory  commission or agency or third party,  except those
                  that are required under applicable Canadian Securities Laws or
                  stock exchange regulations, all of which have been obtained or
                  made  (except for a filing of a notice of exempt  distribution
                  containing  the  prescribed  information  in the  province  of
                  Quebec,  a report on Form  45-501F1 in the province of Ontario
                  or the Form 45-103F4 or equivalents in other jurisdictions, or

            (ii)  result in a breach of or  default  under,  and do not and will
                  not create a state of facts  which,  after  notice or lapse of
                  time or both, will result in a breach of or default under, and
                  do not and will not conflict:

                        I.  with any of the provisions of the articles,  by-laws
                            or resolutions of the shareholders, directors or any
                            committee   of  directors  of  the  Company  or  any
                            indenture,  agreement or other  instrument  to which
                            the   Company   is  a  party   or  by  which  it  is
                            contractually bound; or

                        II. with any statute, rule, regulation or law applicable
                            to the Company,  including,  without limitation, the
                            Canadian  Securities Laws or any judgment,  order or
                            decree of any governmental body, agency, commission,
                            tribunal  or  court  having  jurisdiction  over  the
                            Company;

      (o)   other than the proposed  acquisition of 3720161 Canada  Corporation,
            no reorganization,  amalgamation, merger, acquisition or disposition
            of assets not in the  ordinary  course of business by the Company or

                                       18
<PAGE>

            any of its Subsidiaries or other change in the business,  operations
            or capital of the Company or either Subsidiary is pending;

      (p)   each of the Company and the Subsidiaries holds all permits, by-laws,
            licences, concessions,  waivers, exemptions, consents, certificates,
            registrations,  authorizations, approvals, rights, rights of way and
            entitlements  and the like which are required from any  governmental
            authority or any other  person  required or necessary to conduct its
            business and activities as currently conducted and all such permits,
            by-laws,  licences,  waivers,  exemptions,  consents,  certificates,
            registrations,  authorizations, approvals, rights, rights of way and
            entitlements  and the like are in full  force and effect and in good
            standing;

      (q)   each  of the  Company  and the  Subsidiaries  has  conducted  and is
            conducting  its activities or business in material  compliance  with
            all applicable laws, by-laws,  rules and regulations,  including but
            not limited to those in respect of anti-pollution  and environmental
            protection,  of each  jurisdiction  in  which it  carries  on or has
            carried  on  business  and the  Company  is not  aware  of any  such
            applicable  law,  by-law,  rule or regulation  currently in force or
            proposed  to be  brought  into force by any  governmental  authority
            which the Company  anticipates  the Company or a Subsidiary  will be
            unable to comply with without  materially  adversely  affecting  the
            Company's or such Subsidiary's business;

      (r)   each  of  the  Company  and  the   Subsidiaries  is  duly  licensed,
            registered  or  qualified  in all  jurisdictions  in  which it owns,
            leases or operates its  properties  or carries on business to enable
            its business to be carried on as now  conducted and its property and
            assets to be  owned,  leased  and  operated  and all such  licenses,
            registrations  and  qualifications  are valid and  subsisting and in
            good standing;

      (s)   subject to the rights  granted to La Financiere du Quebec by 3720161
            Canada Corporation, the Company has good and marketable title to all
            of its assets, free and clear of all charges, hypothecs,  mortgages,
            encumbrances  or other liens. No other property rights are necessary
            for  the  conduct  of the  Company's  business  in  respect  of such
            material  assets.  There are no  restrictions  on the ability of the
            Company to use,  transfer or  otherwise  exploit  any such  property
            rights,  and to the  knowledge of the Company,  there is no claim or
            basis for a claim that may adversely affect such rights;

      (t)   there  is  no  claim,  action,  suit,  proceeding  or  investigation
            (whether  or  not  purportedly  on  behalf  of  the  Company  or the
            Subsidiaries)   pending  or,  to  the   knowledge  of  the  Company,
            threatened  against or affecting the Company or either Subsidiary or
            any  of  their  properties,  or  to  which  the  Company  or  either
            Subsidiary  is or may be a party or to  which  any  property  of the

                                       19
<PAGE>

            Company  or either  Subsidiary  is or may be  subject,  at law or in
            equity, or before or by any federal, provincial,  municipal or other
            governmental  department,  commission,  board or agency, domestic or
            foreign,  which is, or could reasonably be expected to, individually
            or in aggregate,  result in a material adverse effect to the Company
            or either Subsidiary,  or which questions the validity of any action
            taken or to be taken by the  Company  pursuant  to or in  connection
            with this Agreement, or any of the other Transaction Agreements;

      (u)   no  default  exists  under and no event has  occurred  which,  after
            notice or lapse of time or both,  or otherwise,  would  constitute a
            default under or breach of, by the Company or either Subsidiary, any
            material obligation,  agreement,  covenant or condition contained in
            any contract, indenture, trust deed, mortgage, loan agreement, note,
            lease, licence or other agreement or instrument to which the Company
            or a Subsidiary  is or will be a party or by which either of them or
            any of their respective properties may be bound and which would have
            a material adverse effect on the Company.  Subject to the default of
            3720161  Canada  Corporation  of  its  obligations  under  the  Loan
            Agreement  entered into on August 2, 2002 by La Financiere du Quebec
            and accepted by 3720161  Canada  Corporation  on August 8, 2002 (the
            "FINANCIERE  LOAN") and of its obligations under the related movable
            hypothec  granted by 3720161 Canada  Corporation to La Financiere du
            Quebec on August 21, 2002, to the knowledge of the Company, no party
            to any contract,  indenture,  trust deed, mortgage,  loan agreement,
            note,  lease,  license or other  agreement or  instrument  which the
            Company or a Subsidiary is a party is in material  default or breach
            of such contract,  indenture,  trust deed, mortgage, loan agreement,
            note,  lease,  license or other  agreement or instrument.  No order,
            ruling or determination  having the effect of suspending the sale or
            ceasing the trading of any securities of the Company has been issued
            or made by any Securities  Commission or stock exchange or any other
            regulatory  authority and is continuing in effect and no proceedings
            for that purpose have been instituted or are pending or, to the best
            of the Company's  knowledge,  contemplated or threatened by any such
            authority or under the applicable  securities  laws in each province
            and territory of Canada;

      (v)   no  agreement  is  currently  in force or effect which in any manner
            affects  the  voting  or  control  of any of the  securities  of the
            Company;

      (w)   none of the Company or the  Subsidiaries  has  committed  any act of
            bankruptcy  or is  insolvent,  nor  have  any  of  them  proposed  a
            compromise or arrangement to its creditors generally, had a petition
            for a  receiving  order  in  bankruptcy  filed  against  it,  made a
            voluntary  assignment  in  bankruptcy,  taken any  proceedings  with
            respect to a compromise or  arrangement,  taken any  proceedings  to
            have itself  declared  bankrupt,  wound-up or  dissolved,  taken any
            proceedings to have a receiver appointed over any of its property or
            assets,  and no proceedings  have been instituted or are pending or,

                                       20
<PAGE>

            to the knowledge of the Company,  are contemplated or threatened for
            any  execution  or distress  against  their  respective  property or
            assets;

      (x)   other than filing its US tax return for the year ended  December 31,
            2003, all taxes  (including  income tax, capital tax, payroll taxes,
            employer health tax, workers' compensation payments, custom and land
            transfer taxes), duties,  royalties,  levies, imposts,  assessments,
            deductions, charges or withholdings and all liabilities with respect
            thereto and any penalty and interest  payable with respect  thereto,
            and whether disputed or not, (collectively, "TAXES") due and payable
            by the Company and each  Subsidiary have been paid. All tax returns,
            declarations,  remittances and filings that are required to be filed
            by the  Company  and each  Subsidiary  have been filed in proper and
            timely fashion with all appropriate governmental authorities and all
            such returns, declarations, remittances and filings are complete and
            accurate and no material  fact or facts have been omitted  therefrom
            which would make any of them misleading  except where the failure to
            file such documents would not constitute an adverse material fact of
            the Company and the  Subsidiaries  or result in an adverse  material
            change to the Company and the Subsidiaries.  To the knowledge of the
            Company,  no  examination of any tax return of the Company or either
            Subsidiary  is  currently  in  progress  and  there are no issues or
            disputes outstanding with any governmental  authority respecting any
            Taxes that have been paid,  or may be  payable,  by the  Company and
            either Subsidiary except where such examinations, issues or disputes
            would not constitute an adverse material fact of the Company and the
            Subsidiaries or result in an adverse  material change to the Company
            and the Subsidiaries.  The Company and each Subsidiary have withheld
            from each payment made to present or former employees,  officers and
            directors,  and to all non-residents of Canada within the meaning of
            the Income Tax Act all amounts required to be withheld by applicable
            governmental  authorities  and has remitted such amounts as and when
            required to the  appropriate  governmental  bodies.  The Company and
            each Subsidiary have remitted all Canada Pension Plan contributions,
            provincial pension plan contributions, employment insurance premiums
            and other Taxes payable in respect of their employees,  officers and
            directors and have remitted such amounts to the proper  governmental
            bodies as and when required.  The Company and each  Subsidiary  have
            charged,  collected  and remitted as and when  required all Taxes as
            required  under  applicable  legislation  on  any  sale,  supply  or
            delivery whatsoever, made by the Company or such Subsidiary;

      (y)   there are no  existing  or, to the best  knowledge  of the  Company,
            threatened  labour  disputes with the employees of the Company or of
            either  Subsidiary,  and the Company is not aware of any existing or
            imminent labour disturbance by the employees of any of its principal
            contractors   which  would  reasonably  be  expected  to  materially
            adversely affect the Company or either Subsidiary;

                                       21
<PAGE>

      (z)   the  Company has full  corporate  power and  authority  to issue the
            Special  Warrants,  the Underlying  Securities and the  Compensation
            Option,  to issue  the  Broker  Warrants  upon the  exercise  of the
            Compensation  Option,  and to  issue  the  Common  Shares  upon  the
            exercise of the Purchase  Warrants and the Broker  Warrants  and, at
            the Special Warrant Closing Date:

            (i)   each of the Special Warrants and the Compensation  Option will
                  be duly and validly created, authorized and issued,

            (ii)  the  Purchase  Warrants  issuable  upon  the  exercise  of the
                  Special Warrants will be duly and validly created, authorized,
                  allotted  and reserved  for  issuance  upon such  exercise and
                  will,  upon exercise of the Special  Warrants  accordance with
                  the terms of the Special Warrant Indenture, be validly issued,

            (iii) the Common  Shares  issuable  upon the exercise of the Special
                  Warrants  and the Purchase  Warrants  will be duly and validly
                  authorized,  allotted  and  reserved  for  issuance  upon such
                  exercise and will,  upon  exercise of the Special  Warrants in
                  accordance with the terms of the Special Warrant  Indenture or
                  the  Purchase  Warrants  in  accordance  with the terms of the
                  Purchase  Warrant  Indenture,  be validly  issued and be fully
                  paid and non-assessable,

            (iv)  the  Broker  Warrants   issuable  upon  the  exercise  of  the
                  Compensation  Option  will be  duly  and  validly  authorized,
                  allotted  and reserved  for  issuance  upon such  exercise and
                  will, upon exercise of the  Compensation  Option in accordance
                  with the terms of the  Compensation  Option  certificates,  be
                  validly issued, and

            (v)   the Common  Shares and  Purchase  Warrants  issuable  upon the
                  exercise  of the  Broker  Warrants  will be duly  and  validly
                  authorized,  allotted  and  reserved  for  issuable  upon such
                  exercise  and will,  upon  exercise of the Broker  Warrants in
                  accordance with the terms of the Broker  Warrants,  be validly
                  issued and be fully paid and non-assessable;

      (aa)  the  corporate  records  and  minute  books of the  Company  contain
            complete and accurate  minutes,  in all material respects and of all
            material decisions, of all meetings and resolutions of the directors
            (and any committees thereof) and shareholders of the Company;

      (bb)  the statements set forth in the information filed by or on behalf of
            the Company with the Securities  Commissions were true,  correct and
            complete and did not contain any misrepresentation as of the date of
            each document or statement included therein;

                                       22
<PAGE>

      (cc)  except as contemplated in this Agreement,  there is no person,  firm
            or corporation  acting for the Company  entitled to any brokerage or
            finder's  fee  in  connection  with  this  Agreement  or  any of the
            transactions contemplated hereunder;

      (dd)  all assets of the Company and each  Subsidiary  are insured  against
            loss or damage with responsible  insurers on a basis consistent with
            insurance obtained by reasonably  prudent industry  participants for
            comparable  operations,  or the  Company  has  solicited  bids  from
            insurance companies to secure such coverage, and such coverage is in
            full force and effect  and none of the  Company or the  Subsidiaries
            has failed to promptly give any notice or present any material claim
            thereunder; and

      (ee)  in connection with Intellectual  Property and Intellectual  Property
            Rights:

            (i)   each of the  Company and its  Subsidiaries  is an owner of, or
                  has the  sole  and  exclusive  or  non-exclusive  right to use
                  pursuant  to a license  or  sub-license  agreement,  including
                  pursuant to the license  agreements set out in Schedule 13(ee)
                  (the  "LICENSE  AGREEMENTS"),  all  Intellectual  Property and
                  Intellectual  Property  Rights  required for the  operation of
                  their respective businesses  (collectively referred to in this
                  Agreement as "THE COMPANY'S MATERIAL IP");

            (ii)  to  the  knowledge  of the  Company,  none  of  the  Company's
                  Material IP has been  derived,  in whole or in part,  from the
                  Intellectual  Property or Intellectual  Property Rights of any
                  other person other than Intellectual  Property or Intellectual
                  Property  Rights that have been acquired by the Company or its
                  Subsidiaries   or  that  are  the  subject  of  a  license  or
                  sub-license in favour of the Company or its Subsidiaries  from
                  another person;

            (iii) neither  the  Company  nor its  Subsidiaries  has  granted any
                  license or other  rights to any other person in respect of the
                  Company's Material IP other than in the ordinary course of the
                  business  and  in  compliance   with  its  licenses  or  other
                  agreements relating to the Company's Material IP;

            (iv)  to the  knowledge  of the  Company,  after due  enquiry of and
                  review with  applicable  legal counsel,  the Company's and its
                  Subsidiaries'  Intellectual  Property  Rights  are  valid  and
                  legally  enforceable  and  the  Company  acknowledges  that no
                  patents  have  yet  been  issued  relating  to  the  Company's
                  Material  IP.  Without  limitation,  to the  knowledge  of the
                  Company, after due enquiry of and review with applicable legal
                  counsel,  no event has  occurred  during the  registration  or
                  filing of, or during any proceeding relating to, the Company's
                  and its Subsidiaries'  Intellectual Property Rights that would

                                       23
<PAGE>

                  make such rights invalid or  unenforceable or which materially
                  adversely affects the right of the Company or its Subsidiaries
                  to use any of the Company's Material IP;

      (v)   the Company and its Subsidiaries shall take and continue to take all
            commercially  reasonable  steps to  ensure  the  prompt  protection,
            prosecution,  issuance  and  maintenance  of the  Company's  and its
            Subsidiaries' Intellectual Property Rights and maintain them in full
            force and effect;

      (vi)  to the knowledge of the Company,  there is no Intellectual  Property
            of  any  person   which   impairs  or  prevents   the   development,
            manufacture,  marketing,  use, sale,  lease,  license and service of
            products of the Company or the  Subsidiaries,  now existing or under
            development  by the  Company  or a  Subsidiary,  or  the  use of any
            process  or  know-how  owned  or  licensed  by  the  Company  or its
            Subsidiaries,  or currently under  development by the Company or its
            Subsidiaries;

      (vii) to  the  knowledge  of  the  Company,   none  of  the   development,
            manufacture,  marketing, use, sale, lease, license,  sub-license and
            service of the  products,  processes  or know-how of the Company and
            its  Subsidiaries,  now existing or under development by the Company
            or  its  Subsidiaries,  infringes  or  will  infringe  any  existing
            Intellectual Property or Intellectual Property Rights of any person.
            None of the Company and the  Subsidiaries  has  received any notice,
            complaint or claim alleging infringement,  anywhere in the world, of
            the  Intellectual  Property or  Intellectual  Property Rights of any
            person  resulting  from the use of the Company's  Material IP by the
            Company or its Subsidiaries;

      (viii)none of the development,  manufacture,  marketing, use, sale, lease,
            license and service of any of the products, processes or know-how of
            the  Company  or  the   Subsidiaries,   either   existing  or  under
            development  by the  Company or a  Subsidiary,  violates  or, to the
            knowledge of the Company,  will  violate,  any contract to which the
            Company or such Subsidiary is a party;

      (ix)  the License  Agreements  do not conflict  with any other  agreement,
            order or  judgment to which the  Company or its  Subsidiaries  are a
            party of or by which they are bound,  other than the Financiere Loan
            and related hypothec;

      (x)   the Company's Material IP has commercial viability and utility;

      (xi)  none of the Company's  Material IP has been or is being infringed by
            an unauthorized third party;

                                       24
<PAGE>

      (xii) the  Company  has  ensured  after  proper  due  diligence  that  the
            licensors  who have  granted  the license  rights  under the License
            Agreements  to the  Company  have not  granted  any  rights to third
            parties  that may prevent the Company  from freely using the license
            rights, other than the Financiere Loan and related hypothec;

      (xiii)neither a government,  a research centre nor a university  holds any
            rights on the license rights under the License Agreements;

      (xiv) the Company has  constantly  used its best efforts to  commercialize
            the Company's Material IP;

      (xv)  the Company's  Material IP is and shall continue to be fully insured
            for general liability and product liability;

      (xvi) the Company has ensured  that,  other than the  Financiere  Loan and
            related hypothec,  the licensors who have granted the license rights
            under the License  Agreements  have full and exclusive  ownership of
            all Intellectual  Property and Intellectual  Property Rights covered
            under the License Agreements and that such rights are valid;

      (xvii)the  Company has ensured  that the  trademarks  it may be allowed to
            use under the License  Agreements  are valid and do not infringe any
            third parties rights;

    (xviii) the Company has ensured  that the  licensors  who have granted the
            license  rights  under the  License  Agreements  shall  protect  and
            enforce the licensed Intellectual Property and Intellectual Property
            Rights  and that they will hold  harmless  and  indemnify  fully the
            Company;

      (xix) the Company has ensured that the  commercial  proposal  initiated by
            Mobilair in March 2003 has not  impacted  negatively  on the license
            rights  granted under the License  Agreements  and will not do so in
            the future;

      (xx)  the Company has  received no verbal or written  notice of default or
            early termination notice of any of the License Agreements;

      (xxi) all the source code escrow  agreements  that the Company has entered
            into or the  undertakings  it may have made in regards to any source
            code  escrow  agreement  does not allow any  third  party  ownership
            rights on the Company's Material IP at any time;

                                       25
<PAGE>

     (xxii) the Company has ensured  that it has reserved the domain names it is
            presently using and will continue to do so;

    (xxiii) the  Company  has  ensured  after  proper due  diligence  that all
            creators of the  license  rights  granted to the  Company  under the
            License Agreements have duly waived all their moral rights in favour
            of the licensors;

     (xxiv) all  third  party  software  it  may  need  to  freely  exploit  the
            Company's  Material IP have been duly obtained by the Company and it
            is not in default of any of its  obligations  toward the third party
            software owners;

      (xxv) the  Company  is not in  default  in any  manner  under the  License
            Agreements;

     (xxvi) the Company's Material IP has not been pledged,  mortgaged or in any
            way  encumbered,  other than  pursuant  to the  Financiere  Loan and
            related hypothec;

    (xxvii) the execution,  delivery and performance of this Agreement and the
            consummation  of  the  transactions  contemplated  hereby  will  not
            breach,  violate or conflict  with any  instrument  or  agreement to
            which the Company or its  Subsidiaries is a party,  governing any of
            the  Company's  Material  IP and will not  cause the  forfeiture  or
            termination,  or give rise to a right of forfeiture or  termination,
            of any of the Company's or its Subsidiaries'  Intellectual  Property
            Rights  or in  any  way  impair  the  right  of the  Company  or its
            Subsidiaries to use, sell, license, sub-license or dispose of any of
            the  Company's  Material  IP,  or bring  any  action  for  breach or
            infringement  of the  Company's  or its  Subsidiaries'  Intellectual
            Property Rights;

   (xxviii) the Company and each  Subsidiary  has entered  into an  agreement
            with all appropriate  employees,  consultants and contractors of the
            Company  or such  Subsidiary,  pursuant  to which  the  Intellectual
            Property  developed  by them  during the term of their  relationship
            with the Company or such  Subsidiary and relating to the business of
            the Company or such  Subsidiary,  is owned  solely,  and without any
            restrictions  or  obligations  whatsoever,  by the  Company  or such
            Subsidiary.   The  Company  and  each   Subsidiary   has  taken  all
            commercially   reasonable  steps  (including,   without  limitation,
            entering into confidentiality or non-disclosure  agreements with all
            appropriate employees, consultants and contractors of the Company or
            such  Subsidiary,  and any other persons with access to or knowledge
            of  the  Company's  Material  IP)  to  safeguard  and  maintain  the
            confidentiality   of   the   Company's   confidential   information,
            proprietary  information,  trade secrets and know-how of the Company
            and such Subsidiary and the ownership of the Company's  Intellectual
            Property Rights.  To the knowledge of the Company,  all confidential

                                       26
<PAGE>

            information,  proprietary information, trade secrets and know-how of
            the  Company  and  each  Subsidiary  and all  proprietary  technical
            information  developed  by and  belonging  to the  Company  or  each
            Subsidiary  which has not been copyrighted or patented has been kept
            confidential; and

     (xxix) to the  knowledge  of the  Company,  no current or former  director,
            employee,   consultant  or  contractor  of  the  Company  or  either
            Subsidiary  is in  violation  of any  term  of any  confidentiality,
            non-disclosure,  proprietary rights,  intellectual property or other
            similar  agreement,  or any  provision  of any  employment  or other
            agreement  relating to the Company's Material IP between such person
            and the  Company  or such  Subsidiary  or, in the case of the senior
            officers of the  Company,  between  any such  officer and any former
            employer of such officer.

13.   (B) REPRESENTATIONS AND WARRANTIES OF THE AGENT.

The Agent  represents  and  warrants to the Company  and  acknowledges  that the
Company is relying upon such  representations  and  warranties in performing its
obligations hereunder, that at the Special Warrant Closing Date:

      (a)   in respect of the  Offering,  the Agent has complied  with,  or will
            comply with, the Canadian Securities Laws and all applicable laws of
            the  jurisdictions  outside  Canada in which it has offered  Special
            Warrants;

      (b)   the Agent and its representatives have not engaged in or authorized,
            and  will  not  engage  in  or   authorize,   any  form  of  general
            solicitation or general advertising in connection with or in respect
            of  the  Special  Warrants  or  the  Underlying  Securities  in  any
            newspaper,  magazine,  printed  media of general  and  regular  paid
            circulation or any similar medium,  printed public media,  broadcast
            over radio,  television or telecommunications,  including electronic
            display, or conducted any seminar or meeting concerning the offer or
            sale of the Special  Warrants  or the  Underlying  Securities  whose
            attendees have been invited by any general  solicitation  or general
            advertising;

      (c)   the Agent has not and will not  solicit  offers to  purchase or sell
            the Special  Warrants  so as to require  the filing of a  prospectus
            with respect  thereto or the provision of a contractual or statutory
            right  of  action  or  equivalent  remedy  under  the  laws  of  any
            jurisdiction, including without limitation, the United States or any
            state thereof; and

      (d)   the Agent  will,  subject  to  compliance  by the  Company  with its
            obligations  hereunder and provided that it shall,  as determined by
            the Agent in its sole  discretion,  otherwise be responsible for the
            Agent to do so,  execute and deliver to the Company any  certificate
            required  to be  executed by it under  Canadian  Securities  Laws in
            connection with the Preliminary Prospectus, the Final Prospectus and
            any Supplementary Material.

                                       27
<PAGE>

14.   SPECIAL WARRANT CLOSING DELIVERIES.

The  purchase  and sale of the  Special  Warrants  under the  Offering  shall be
completed at the Closing  Time at the offices of McCarthy  Tetrault in Montreal,
or at such other place as the Agent and the Company may agree upon.  At or prior
to the Closing  Time,  the Company  shall duly and validly  deliver to the Agent
certificates in definitive form representing  Special Warrants registered in the
names of such  Purchasers or such other names as the Agent shall have  directed,
against  payment  to the  Company  of the  aggregate  subscription  price of the
Special  Warrants  sold,  in  lawful  money of Canada by  certified  cheques  or
banker's  drafts  payable at par in the City of Montreal  against  delivery of a
receipt therefor. The Company shall contemporaneously pay the Agent's Commission
to the Agent in lawful money of Canada,  by certified  cheque or banker's  draft
payable in the City of  Montreal,  against  delivery of a receipt  therefor  and
deliver the Compensation Option to the Agent, or such other person or persons as
shall be designated by the Agent on or prior to the Closing Time, to acquire the
Broker Warrants.  Notwithstanding  the foregoing,  the Agent and the Company may
discharge their payment  obligations  under this Section 14, and the Company may
discharge  its payment  obligations  under  Section 18, by delivery of certified
cheques or bank  drafts  from the Agent to the  Company  equal to the  aggregate
purchase  price  for the  Special  Warrants  issued  and  sold  by it  less  the
applicable Agent's Commission.

15.   DELIVERY OF CERTIFICATES TO WARRANT AGENT.

The Company shall, prior to the Special Warrant Closing Date, make all necessary
arrangements  for the  delivery of  definitive  certificates  representing  such
number of the Special  Warrants  registered in such names as shall be designated
by the Agent at or prior to the Closing Time. The Company shall pay all fees and
expenses  payable  to the  Warrant  Agent in  connection  with the  preparation,
delivery,  certification and exchange of the Special Warrants in accordance with
the terms and conditions hereof and the fees and expenses payable to the Warrant
Agent in connection with the initial or additional  transfers as may be required
for a period of 30 Business Days following the Special  Warrant  Closing Date in
the course of the distribution of the Special Warrants.

16.   SPECIAL WARRANT CLOSING CONDITIONS.

The obligation of the Purchasers to purchase the Special Warrants at the Closing
Time shall be  conditional  upon the fulfilment at or before the Closing Time of
the following  conditions  which may be waived in writing in whole or in part by
the Agent on behalf of the Agent and the Purchasers:

(1)   each of the Transaction  Agreements shall have been executed and delivered
      by the parties thereto,  all such Transaction  Agreements shall be in form
      and substance  satisfactory  to the Agent and each of the parties  thereto
      shall have performed such of their obligations  thereunder which are to be
      performed or completed at or prior to the Closing Time to the satisfaction
      of the Agent;

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<PAGE>

(2)   the Company shall deliver to the Agent, at the Closing Time, a certificate
      dated the Special  Warrant  Closing  Date  addressed  to the Agent and the
      Purchasers and signed by the President and Chief Executive  Officer of the
      Company and the Chief Financial  Officer of the Company,  on behalf of the
      Company,  or  such  other  senior  officer(s)  of  the  Company  as may be
      acceptable to the Agent,  certifying  for and on behalf of the Company and
      without personal liability, after having made due enquiries, to the effect
      that:

            (i)   the  representations  and warranties of the Company  contained
                  herein are true and correct as at the Closing  Time,  with the
                  same force and effect as if made on and as at the Closing Time
                  after giving effect to the transactions contemplated hereby;

            (ii)  no  order,  ruling  or  determination  having  the  effect  of
                  suspending  the sale or ceasing  the  trading  of the  Special
                  Warrants or the Underlying Securities,  has been issued by any
                  Securities  Commission  and is  continuing  in  effect  and no
                  proceedings  for that  purpose  have  been  instituted  or are
                  pending or, to the knowledge of such officers, contemplated or
                  threatened by any Securities Commission;

            (iii) the Company has complied  with all the covenants and satisfied
                  all the terms and  conditions of this Agreement on its part to
                  be  complied  with and  satisfied  at or prior to the  Closing
                  Time; and

            (iv)  such other matters as the Agent may reasonably request;

(3)   the Agent shall have  received a  certificate  dated the  Special  Warrant
      Closing Date signed by the Chief  Executive  Officer of the Company or any
      other senior officer of the Company, as may be acceptable to the Agent, in
      form and content  satisfactory to the Agent's counsel,  acting reasonably,
      with respect to:

      (a)   the articles of incorporation and by-laws of the Company;

      (b)   the resolutions of the board of directors of the Company relevant to
            the  issue  and  sale of the  Special  Warrants  and the  Underlying
            Securities by the Company,  the issuance of the Compensation  Option
            and the Broker Warrants by the Company to the Agent and the issuance
            of the Common Shares issuable upon exercise of the Purchase Warrants
            and the Broker  Warrants and the  authorization  of the  Transaction
            Agreements; and

      (c)   the incumbency and signatures of signing officers of the Company;

(4)   the Company shall deliver to the Agent, at the Closing Time, a certificate
      dated the Special  Warrant  Closing  Date  addressed  to the Agent and the
      Purchasers and signed by the President and Chief Executive  Officer of the
      Company and the Chief  Financial  Officer of the Company,  personally,  or
      such other senior  officer(s)  of the Company as may be  acceptable to the
      Agent,  to the  effect  that the  representations  and  warranties  of the

                                       29
<PAGE>

      Company contained herein are true and correct as at the Closing Time, with
      the same force and effect as if made on and as at the  Closing  Time after
      giving effect to the transactions contemplated hereby;

(5)   the Subscription  Agreements shall have been executed and delivered by the
      Company in form and substance  satisfactory  to the Agent and its counsel,
      acting reasonably;

(6)   the Agent shall have  received a  certificate  dated the  Special  Warrant
      Closing  Date from  Continental  Stock  Transfer  & Trust  Company in form
      satisfactory  to the Agent  setting out the number of Common Shares issued
      and outstanding as at the Special Warrant Closing Date;

(7)   the  Agent  shall  have  received  a  favourable  legal  opinion  from the
      Company's counsel and where appropriate,  local counsel,  addressed to the
      Agent,  Agent's counsel and the Purchasers with respect to such matters as
      the Agent may reasonably request relating to the transactions contemplated
      hereunder,  in form and  substance  satisfactory  to the Agent's  counsel,
      acting reasonably, including to the effect that:

            (i)   the Company has been duly created and organized and is validly
                  existing  under the laws of  Delaware,  and has all  requisite
                  power,  capacity  and  authority  to own  its  properties  and
                  assets, to carry on its business, to enter into this Agreement
                  and  the  other   Transaction   Agreements   and  perform  its
                  obligations  hereunder and thereunder and to issue the Special
                  Warrants, the Underlying Securities issuable upon the exercise
                  of the Special Warrants,  the Compensation  Option, the Broker
                  Warrants issuable upon the exercise of the Compensation Option
                  and the  Common  Shares  issuable  upon  the  exercise  of the
                  Purchase Warrants and Broker Warrants;

            (ii)  all  necessary  action  has  been  taken  by  the  Company  to
                  authorize  each of the  Transaction  Agreements,  the  Special
                  Warrant  Certificates  and the  certificates  representing the
                  Compensation  Option,  and each of these has been,  or will at
                  the  Closing  Time be,  duly  executed  and  delivered  by the
                  Company and is or shall be, as the case may be, a legal, valid
                  and binding obligation of the Company  enforceable against the
                  Company in  accordance  with its terms  (subject to applicable
                  bankruptcy,  insolvency  and other similar laws  affecting the
                  enforcement  of  creditors'   rights   generally  and  to  the
                  discretion  of the  courts  in  granting  equitable  remedies,
                  including the remedies of specific performance and injunction,
                  and subject to usual  limitations on the enforcement of rights
                  of indemnity or contribution),  and the execution and delivery
                  of each such agreement or certificate  and the  performance of
                  the terms and  conditions  hereof and thereof by the  Company,
                  and the issuance,  sale and  delivery,  as the case may be, of

                                       30
<PAGE>

                  the  Special   Warrants,   the  Underlying   Securities,   the
                  Compensation Option, the Broker Warrants and the Common Shares
                  issuable  upon the exercise of the  Purchase  Warrants and the
                  Broker  Warrants  will not result in a breach of, and will not
                  create a state of facts which,  after notice or lapse of time,
                  or both,  will result in a breach of, any  applicable  laws or
                  any of the terms,  conditions or provisions of the articles or
                  any by-laws or resolutions of the Company;

            (iii) all  necessary  action  has  been  taken  by  the  Company  to
                  authorize the creation of the Special Warrants,  the issue and
                  sale of the Special  Warrants to the Purchasers,  the issue of
                  the  Underlying  Securities  issuable  upon  exercise  of  the
                  Special Warrants,  the issue of the Compensation Option to the
                  Agent,  the issue of the Broker  Warrants upon the exercise of
                  the  Compensation  Option,  and the issue of the Common Shares
                  upon the  exercise  of the  Purchase  Warrants  and the Broker
                  Warrants;

            (iv)  no  consent,  approval,  authorization  or order of or filing,
                  registration  or  qualification  with any court,  governmental
                  agency, commission or body or regulatory authority is required
                  for the execution and delivery of the  Transaction  Agreements
                  or the performance by the Company of its obligations under the
                  Transaction Agreements or the consummation of the transactions
                  contemplated  therein,  except  for such as have  been made or
                  obtained;

            (v)   the Special  Warrants have been validly created and issued and
                  the  Purchase  Warrants  to be issued on the  exercise  of the
                  Special  Warrants have been validly  created and such Purchase
                  Warrants  will be, upon due exercise of the Special  Warrants,
                  validly  issued  and the  Common  Shares  to be  issued on the
                  exercise of the Special  Warrants  and the  Purchase  Warrants
                  have been set aside and  reserved for issuance and such Common
                  Shares will be, upon due  exercise of the Special  Warrants or
                  the  Purchase  Warrants,  as the case may be,  issued as fully
                  paid and  non-assessable  Common Shares of the Company and the
                  Special Warrants,  the Common Shares and the Purchase Warrants
                  have the attributes and  characteristics  contemplated by this
                  Agreement;

            (vi)  the  Compensation  Option has been validly  created and issued
                  and the Broker  Warrants  to be issued on the  exercise of the
                  Compensation  Option have been validly created and such Broker
                  Warrants  will  be,  upon  due  exercise  of the  Compensation
                  Option,  validly issued and the Compensation Option and Broker
                  Warrants have the attributes and characteristics  contemplated
                  by this Agreement;

                                       31
<PAGE>

            (vii) the Common  Shares and  Purchase  Warrants to be issued on the
                  exercise  of the  Broker  Warrants  have  been set  aside  and
                  reserved  for  issuance  and such Common  Shares and  Purchase
                  Warrants  will  be,  upon  the  due  exercise  of  the  Broker
                  Warrants,  issued  as  fully  paid and  non-assessable  Common
                  Shares and Purchase Warrants of the Company;

            (viii)the  issuance  and  sale  of  the  Special   Warrants  to  the
                  Purchasers has been effected in such a manner as to be exempt,
                  either by statute or regulation or order,  from the prospectus
                  and registration  requirements of the Canadian Securities Laws
                  subject to the filing of all necessary  reports,  certificates
                  or undertakings  required to be filed pursuant to the Canadian
                  Securities Laws;

            (ix)  the issuance of the Underlying  Securities by the Company upon
                  the  exercise  of the Special  Warrants  pursuant to the terms
                  thereof  prior  to  the  issuance  of a  receipt  for a  Final
                  Prospectus in each of the Qualifying Provinces shall be exempt
                  from  the  prospectus  and  registration  requirements  of the
                  Canadian Securities Laws;

            (x)   upon the  issuance  of a receipt for the Final  Prospectus  in
                  each of the Qualifying  Provinces prior to the exercise of the
                  Special  Warrants,  the  Underlying  Securities  qualified for
                  distribution  by the Final  Prospectus  will not be subject to
                  any statutory hold period under the Canadian  Securities  Laws
                  and no other  documents are required to be filed,  proceedings
                  taken   or   approvals,    permits,    consents,   orders   or
                  authorizations  of  regulatory   authorities  required  to  be
                  obtained under Canadian  Securities Law in connection with the
                  first  trade  of  such   securities   by  such  party  through
                  Registrants  registered under the Canadian  Securities Law who
                  have complied with such  applicable laws (unless such trade is
                  a trade from a "control block" within the meaning  ascribed to
                  that term in applicable  Canadian  Securities Laws and subject
                  to the usual qualifications);

            (xi)  each of the  forms  of  certificate  representing  the  Common
                  Shares,  the Purchase Warrants,  the Compensation  Option, the
                  Broker  Warrants  and  the  Special  Warrants  has  been  duly
                  approved by the Company;

            (xii) as at the  Closing  Time,  as to  the  authorized  and  issued
                  capital of the Company;

            (xiii)Computershare  Trust Company of Canada has been duly appointed
                  as Warrant Agent under the Special  Warrant  Indenture and the
                  Purchase Warrant Agent under the Purchase  Warrant  Indenture;
                  and

                                       32
<PAGE>

            (xiv) such other matters as the Agent may reasonably request.

      In giving the opinions contemplated above, counsel to the Company shall be
      entitled to rely, as to matters of fact not within their knowledge, upon a
      certificate  of  fact  from  responsible  persons  in a  position  to have
      knowledge of such facts and their  accuracy.  The Company  agrees that the
      aforesaid legal opinion, certificate and covenant delivered at the Closing
      Time  will  also be  addressed  to the  Purchasers  and that the Agent may
      deliver copies thereof to such Purchasers; and

(8)   if any Special  Warrants are sold in  transactions  requiring an exemption
      from the  registration  requirements  under the U.S.  Securities  Act, the
      Company  shall  cause a  favourable  legal  opinion of U.S.  counsel to be
      delivered to the Agent and its counsel to the effect that no  registration
      of the Special  Warrants is required under the U.S.  Securities  Act, such
      opinion to be subject to such  qualifications and assumptions as the Agent
      and its counsel may agree, acting reasonably.

17.   RIGHTS OF TERMINATION.

(1)   LITIGATION.   If  any  inquiry,   action,  suit,  investigation  or  other
      proceeding,  whether  formal or  informal,  is  instituted,  announced  or
      threatened  or any  order  is made by any  federal,  provincial  or  other
      governmental  authority in relation to the Company or either Subsidiary or
      any law or regulation is promulgated,  changed or announced, which, in the
      sole  opinion  of the Agent,  acting  reasonably,  operates  to prevent or
      materially  restrict the distribution or trading of the Special  Warrants,
      the Underlying  Securities or any other securities of the Company or which
      has or may  have a  material  adverse  effect  on the  business,  affairs,
      operations,  assets,  liabilities  (contingent or  otherwise),  capital or
      control of the Company and the Subsidiaries,  taken as a whole, the market
      price or value of the  Special  Warrants,  the Common  Shares or any other
      securities of the Company, the Agent shall be entitled,  at its option and
      in accordance with Section 17(6), to terminate its obligations  under this
      Agreement  (and  the  obligations  of  the  Purchasers  arranged  by it to
      purchase  Special  Warrants) by notice to that effect given to the Company
      any time prior to the Closing Time.

(2)   DISASTER  OUT CLAUSE.  In the event that prior to the  Closing  Time there
      should develop, occur or come into effect or existence, any event, action,
      state,   condition   or  major   financial   occurrence   of  national  or
      international consequence,  acts of hostility or escalation thereof or any
      other  calamity  or  crisis  or any  change  or  development  involving  a
      prospective  change in national or international  political,  financial or
      economic conditions, or any law or regulation is enacted or changed which,
      in the sole opinion of the Agent, acting reasonably,  materially adversely
      affects or involves,  or could be expected to materially adversely affect,
      the  financial  markets  generally or the business,  affairs,  operations,
      assets,  liabilities (contingent or otherwise),  capital or control of the
      Company and the  Subsidiaries,  taken as a whole,  or the market  price or
      value of the Special  Warrants,  the Common Shares or any other securities
      of the  Company,  then the  Agent  shall be  entitled  at its  option,  in
      accordance  with Section 17(6),  to terminate its  obligations  under this

                                       33
<PAGE>

      Agreement  (and  the  obligations  of  the  Purchasers  arranged  by it to
      purchase  Special  Warrants) by written notice to that effect given to the
      Company prior to the Closing Time.

(3)   CHANGE IN MATERIAL FACT. In the event that prior to the Closing Time there
      shall occur any material  change  (actual,  anticipated,  contemplated  or
      threatened,  financial or otherwise) in the business, affairs, operations,
      assets,  liabilities (contingent or otherwise),  capital or control of the
      Company  and the  Subsidiaries,  taken as a  whole,  or  there  should  be
      discovered any previously undisclosed material fact (other than a material
      fact  related  solely to any of the  Agent),  in each case  which,  in the
      opinion of the Agent, acting reasonably,  has or may be expected to have a
      material  adverse  effect  on the  market  price or  value of the  Special
      Warrants,  the  Underlying  Securities  or  any  other  securities  of the
      Company,  the Agent shall be entitled,  at its option,  in accordance with
      Section 17(6), to terminate its obligations  under this Agreement (and the
      obligations of the Purchasers arranged by it to purchase Special Warrants)
      by written notice to that effect given to the Company prior to the Closing
      Time.

(4)   MARKET OUT CLAUSE.  In the event that prior to the Closing  Time the state
      of the financial markets is such that, in the opinion of the Agent, acting
      reasonably,  the Special Warrants cannot be marketed profitably, the Agent
      shall be entitled,  at its option,  in accordance  with Section 17(6),  to
      terminate its obligation  under this Agreement (and the obligations of the
      Purchasers  arranged by it to purchase Special Warrants) by written notice
      to that effect given to the Company prior to the Closing Time.

(5)   NON-COMPLIANCE WITH CONDITIONS.  The Company agrees that all conditions in
      this  Agreement  to be  fulfilled at or prior to the Closing Time shall be
      construed as  conditions  and  complied  with so far as the same relate to
      acts to be performed or caused to be performed by it, that it will use its
      reasonable  best efforts to cause such conditions to be complied with, and
      any breach or failure by the Company to comply with any of such conditions
      shall entitle the Agent to terminate its obligations  under this Agreement
      (and the obligations of the Purchasers  arranged by it to purchase Special
      Warrants) by notice to that effect given to the Company at or prior to the
      Closing Time, unless otherwise  expressly provided in this Agreement.  The
      Agent may  waive,  in whole or in part or extend  the time for  compliance
      with, any terms and conditions  without prejudice to its rights in respect
      of any other of such  terms  and  conditions  or any  other or  subsequent
      breach or non-compliance, provided that any such waiver or extension shall
      be binding upon the Agent only if the same is in writing and signed by the
      Agent.

(6)   EXERCISE OF TERMINATION  RIGHTS.  The rights of  termination  contained in
      subsections 17(1), (2), (3), (4) and (5) may be exercised by the Agent and
      are in  addition  to any other  rights or  remedies  the Agent may have in
      respect of any  default,  act or failure to act or  non-compliance  by the
      Company in respect of any of the matters contemplated by this Agreement or
      otherwise. In the event of any such termination, there shall be no further
      liability  on the part of the Agent to the  Company  or on the part of the

                                       34
<PAGE>

      Company to the Agent  except in respect  of any  liability  which may have
      arisen prior to, or after, such termination under Sections 18, 20 and 21.

18.   EXPENSES.

Whether or not the Offering shall be completed, all expenses of or incidental to
the  Offering  and of or  incidental  to all  matters  in  connection  with  the
transactions  herein set out shall be borne by the Company,  including,  without
limitation,  expenses in  connection  with the  issuance and sale of the Special
Warrants,  listing fees,  all private  placement  fees required  under  Canadian
Securities Laws, the qualification of the Underlying Securities for distribution
to the public and the  qualification  of the Broker Warrants for distribution to
the Agent, the fees and expenses of counsel to the Company and all local counsel
selected by the Company  (including  its United  States  counsel),  the fees and
expenses of the Company's  auditors,  the fees and expenses of the Warrant Agent
and the  Purchase  Warrant  Agent,  all costs  incurred in  connection  with the
preparation,  translation and printing of the Preliminary Prospectus,  the Final
Prospectus  and  any  Supplementary  Material,  printing  costs  for  the  share
certificates  and  warrant  certificates,  all costs and out of pocket  expenses
incurred in due diligence including related travel expenses,  all costs relating
to roadshows,  information meetings and to preparation of audio-visual and other
information  meeting materials and the fees and disbursements  (including taxes)
of counsel to the Agent.

19.   SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

All warranties,  representations,  covenants and agreements  herein contained or
contained  in  any  documents  submitted  pursuant  to  this  Agreement  and  in
connection with the transactions  herein  contemplated shall survive the Special
Warrant  Closing  and  continue  in full  force and effect for a period of three
years after the Special  Warrant  Closing  Date for the benefit of the Agent and
the Purchasers and shall not be limited or prejudiced by any investigation  made
by or on behalf of the Agent in connection  with the Offering or the preparation
of the Final Prospectus or otherwise.

20.   INDEMNIFICATION BY THE COMPANY.

      (1)   The Company shall fully indemnify and save harmless the Agent,  each
            of  its  subsidiaries  and  each  of its  affiliates,  shareholders,
            directors,  officers,  employees, agents and advisors (collectively,
            the "INDEMNIFIED  PARTIES" and individually an "INDEMNIFIED  PARTY")
            from and  against  any and all losses  (other  than loss of profit),
            expenses,  claims  (including  shareholder  actions,  derivative  or
            otherwise),  actions,  damages  and  liabilities,  joint or several,
            including the aggregate amount paid in reasonable  settlement of any
            actions,  suits,  proceedings,  investigations  or  claims  and  the
            reasonable  fees and  expenses  of the Agent's  counsel  that may be
            incurred  in  investigating  and  advising  with  respect  to and/or
            defending any action, suit, proceeding,  investigation or claim that
            may be  made or  threatened  against  any  Indemnified  Party  or in
            enforcing this indemnity  (collectively,  the "CLAIMS") to which any
            Indemnified Party may become subject or otherwise  involved,  in any
            capacity  insofar as Claims  relate to, are caused by,  result from,
            arise  out  of  or  are  based  upon,  directly  or  indirectly  the

                                       35
<PAGE>

            engagement   and  activities  of  the  Agent  under  this  Agreement
            including without limitation:

      (a)   any  breach  by  the  Company  of its  representations,  warranties,
            covenants or obligations hereunder;

      (b)   any  information or statement  (except any  information or statement
            relating solely to the Agent)  contained in any of the Prospectus or
            any  Supplementary  Material  or  any  certificate  of  the  Company
            delivered  pursuant to this Agreement which at the time and in light
            of the  circumstances in which it was made contains or is alleged to
            contain a misrepresentation;

      (c)   any omission or alleged  omission to state in the  Prospectus or any
            Supplementary  Material or any certificate of the Company  delivered
            under this Agreement any material fact (except facts relating solely
            to the Agent) required to be stated in such document or necessary to
            make any statement in such  document not  misleading in light of the
            circumstances under which it was made;

      (d)   any order made or enquiry,  investigation or proceeding commenced or
            threatened by any securities commission or other competent authority
            based upon any  untrue  statement  or  omission  or  alleged  untrue
            statement or alleged  omission or any  misrepresentation  or alleged
            misrepresentation   (except  a  statement  or  omission  or  alleged
            statement   or   omission   or  a   misrepresentation   or   alleged
            misrepresentation relating solely to the Agent) in the Prospectus or
            any Supplementary Material, or based upon any failure of the Company
            to comply with applicable securities laws (other than any failure or
            alleged  failure to comply by the Agent)  preventing or  restricting
            the trading in or the sale of the Special Warrants or the Underlying
            Securities in any Qualifying Province; or

      (e)   any non-compliance or alleged non-compliance by the Company with any
            applicable  securities  laws in  connection  with  the  transactions
            contemplated hereby including non-compliance by the Company with any
            statutory requirement to make any document available for inspection.

      The Company also agrees to  reimburse  the Agent for the time spent by its
      personnel in connection with any Claim at their normal per diem rates.

(2)   Promptly  after  receiving  notice of a Claim or  receipt of notice of the
      commencement of any investigation which is based,  directly or indirectly,
      upon any matter in respect of which indemnification may be sought from the
      Company,  an  Indemnified  Party will notify the Company in writing of the
      particulars  thereof,  provided that the omission to so notify the Company
      shall not relieve the Company of any liability  which the Company may have
      to any Indemnified Party except and only to the extent that any such delay
      in or failure to give notice as herein required materially  prejudices the

                                       36
<PAGE>

      defence  of such  action,  suit,  proceeding,  claim or  investigation  or
      results in any material  increase in the  liability  which the Company has
      under this indemnity.

(3)   The Company shall, subject as hereinafter  provided,  be entitled (but not
      required) to assume the defence on behalf of the Indemnified  Party of any
      suit brought to enforce  such claim;  provided  that the defence  shall be
      through  legal  counsel  selected  by the Company  and  acceptable  to the
      Indemnified Party, acting reasonably,  and no admission of liability shall
      be made by the Company or the Indemnified Party without, in each case, the
      prior  written  consent of all the  Indemnified  Parties  affected and the
      Company,  in each case such consent not to be  unreasonably  withheld.  An
      Indemnified  Party shall have the right to employ separate  counsel in any
      such suit and participate in the defence thereof but the fees and expenses
      of such counsel shall be at the expense of the Indemnified Party unless:

      (a)   the  Company  fails to assume the  defence of such suit on behalf of
            the Indemnified Party within 10 Business Days of receiving notice of
            such suit;

      (b)   the  employment of such counsel has been  authorized by the Company;
            or

      (c)   the named  parties  to any such suit  (including  any added or third
            parties)  include  the  Indemnified  Party and the  Company  and the
            Indemnified Party and the Company shall have been advised in writing
            by counsel  that  there is an actual or  potential  conflict  in the
            Company's  and  the  Indemnified  Party's  respective  interests  or
            additional  defences are available to the Indemnified  Party,  which
            makes representation by the same counsel inappropriate;

            (in each of cases (a),  (b) or (c),  the Company  shall not have the
            right  to  assume  the  defence  of  such  suit  on  behalf  of  the
            Indemnified  Party,  but the Company shall only be liable to pay the
            reasonable fees and disbursements of one firm of separate counsel in
            any one jurisdiction for all Indemnified Parties).

(4)   The Company hereby  acknowledges and agrees that, with respect to Sections
      20 and 21,  the Agent is  contracting  on its own  behalf and as agent for
      their affiliates, shareholders, directors, officers, employees, agents and
      advisors and their respective  directors,  officers,  employees and agents
      (collectively,  the "BENEFICIARIES").  In this regard, the Agent shall act
      as trustee for the  Beneficiaries  of the  covenants of the Company  under
      Sections 20 and 21 with  respect to the  Beneficiaries  and accepts  these
      trusts  and  shall  hold and  enforce  such  covenants  on  behalf  of the
      Beneficiaries.

(5)   The rights of  indemnity  contained  in this Section 20 shall not enure to
      the benefit of the Agent or any other Indemnified Party if the Company has
      complied with the provisions of Sections 6, 8 and 11, as  applicable,  and
      the  person  asserting  any claim  contemplated  by this  Section  was not

                                       37
<PAGE>

      provided with a copy of the  Prospectus or  Supplementary  Material  which
      corrects  any  untrue  statement  or  information,   misrepresentation  or
      omission  which is the basis of such claim and which is required under the
      Canadian  Securities  Laws to be  delivered to such person by the Agent or
      members of its banking or selling group (if any).

(6)   The Company also agrees that no Indemnified Party shall have any liability
      (whether  direct or  indirect,  in contract or tort or  otherwise)  to the
      Company  or any  person  asserting  claims on behalf of or in right of the
      Company for or in connection  with the matters  provided for herein except
      to  the  extent  any  losses,   expenses,   claims,  actions,  damages  or
      liabilities incurred by the Company are determined by a court of competent
      jurisdiction  in a final judgment that has become  non-appealable  to have
      resulted  from  the  gross  negligence  or  willful   misconduct  of  such
      Indemnified Party. Neither the Company nor the Agent will, without each of
      the other's  prior  written  consent  and the consent of each  Indemnified
      Party,  settle,  compromise,  consent to the entry of any  judgement in or
      otherwise seek to terminate any action, suit, proceeding, investigation or
      claim in respect of which indemnification may be sought hereunder (whether
      or not any Indemnified  Party is a party thereto) unless such  settlement,
      compromise,   consent   or   termination   includes   a  release  of  each
      Indemnification  Party from any liabilities arising out such action, suit,
      proceeding, investigation or claim.

21.   CONTRIBUTION.

(1)   In order to provide for just and equitable  contribution in  circumstances
      in which the indemnity provided in Section 20 would otherwise be available
      in  accordance   with  its  terms  but  is,  for  any  reason  not  solely
      attributable  to any one or more of the  Indemnified  Parties,  held to be
      unavailable to or unenforceable by the Indemnified  Parties or enforceable
      otherwise than in accordance  with its terms,  or is  insufficient to hold
      any Indemnified Party harmless, the Company shall contribute to the amount
      paid or  payable by the  Indemnified  Parties as a result of such Claim in
      such  proportion  as is  appropriate  to  reflect  not only  the  relative
      benefits  received by the Company,  on the one hand,  and the  Indemnified
      Party,  on the other hand,  but also the relative fault of the Company and
      the Indemnified  Party as well as any relevant  equitable  considerations;
      provided  that  the  Company  shall  in  any  event  be  liable  to pay or
      contribute  to the amount paid or payable by the  Indemnified  Party under
      the  Claim any  amounts  in  excess  of the  aggregate  amount of the fees
      actually received by the Indemnified Party under this Agreement.  However,
      no party who has  engaged in any fraud,  fraudulent  misrepresentation  or
      gross negligence shall be entitled to claim  contribution  from any person
      who has not engaged in such fraud,  fraudulent  misrepresentation or gross
      negligence.

(2)   For greater certainty,  in the event of unenforceability or unavailability
      of the  indemnity  provided in Section 20, the Company  shall not have any
      obligation  to  contribute  pursuant to this  Section 21 in respect of any
      Claim except to the extent the  indemnity  given by it in Section 20 would
      have been applicable to such Claim in accordance with its terms,  had such

                                       38
<PAGE>

      indemnity  been found to be enforceable  and available to the  Indemnified
      Parties.

(3)   The  rights  to  contribution  provided  in this  Section  21  shall be in
      addition to and not in derogation of any other right to contribution which
      the  Indemnified  Parties may have by statute or otherwise at law provided
      that  subsections  (1)  and  (2) of  this  Section  shall  apply,  mutatis
      mutandis, in respect of such other right.

22.   ADVERTISEMENTS.

The  Company  acknowledges  that the  Agent  shall  have the  right,  at its own
expense,  to  place  such  advertisement  or  advertisements   relating  to  the
completion  of the Offering as the Agent may consider  desirable or  appropriate
and as may be permitted  by  applicable  law.  Each of the Company and the Agent
agrees  that  they  will not make or  publish  any  advertisement  in any  media
whatsoever  relating to, or otherwise  publicize,  the transaction  provided for
herein so as to result in any exemption  from the  prospectus  and  registration
requirements  of applicable  securities  legislation  in any of the provinces of
Canada or of the United States, or of any state, being unavailable in respect of
the Offering to prospective Purchasers.

23.   RIGHTS AND BENEFITS IN FAVOUR OF THE PURCHASERS.

The Company  appoints the Agent as the trustee for the  Purchasers of the rights
and  benefits of this  Agreement  and the Agent  agrees to accept such trust and
hold the  rights  and  benefits  of this  Agreement  for and on  behalf  of such
Purchasers.

24.      NOTICES.

Unless herein otherwise  expressly  provided,  any notice,  request,  direction,
consent, waiver,  extension,  agreement or other communication (each a "NOTICE")
that is or may be  given  or may  hereunder  shall be in  writing  addressed  as
follows:

         If to the Company:

         EMERGENSYS CORPORATION
         400 boul. Jean-Lesage
         Suite 045
         Quebec, Quebec G1K 8W1
         Attention: Daniel Veilleux, President
         Facsimile: (418) 380-9011

         In case of any Notice to the Company, with a copy to:

         MCCARTHY TETRAULT

         Le Complexe St-Amable
         1150, rue de Claire-Fontaine, Suite 700
         Quebec, Quebec G1R 5G4
         Attention: Philippe Leclerc
         Facsimile: (418) 521-3099

                                       39
<PAGE>

         and with a copy to:
         GOTTBETTER & PARTNERS LLP
         480 Madison Avenue
         New York, New York
         Attention:        Scott E. Rapfogel
         Facsimile:        (212) 400-6901

         If to the Agent at:
         DESJARDINS SECURITIES INC.
         1 Place Ville-Marie, Suite 2707
         Montreal, Quebec H3B 4G4
         Attention:        Richard Groome
         Facsimile:        (514) 842-0681

         with a copy to:

         LAVERY DE BILLY

         1 Place Ville Marie, Suite 4000
         Montreal, Quebec H3B 4M4
         Attention:        Rene Branchaud
         Facsimile:        (514) 871-8977

or to such other  address as any of the persons may designate by notice given to
the others in  accordance  with this  Section.  Each Notice shall be  personally
delivered or sent by  commercial  courier to the addressee or sent by fax to the
addressee and (a) a Notice which is couriered or personally  delivered shall, if
delivered  before 5:00 p.m.  (Montreal  time) on a Business Day, be deemed to be
given and received on that day and, in any other case, be deemed to be given and
received on the first  Business Day  following the day on which it is delivered,
and (b) a Notice which is sent by  facsimile  transmission  shall,  if sent on a
Business  Day and the machine on which it is sent  receives the answer back code
of the party to whom it is sent before 5:00 p.m.  (Montreal  time), be deemed to
be given and received on that day and, in any other case,  be deemed to be given
and received on the first Business Day following the day on which it is sent.

25.   ENTIRE AGREEMENT; COUNTERPARTS AND EXECUTION BY FACSIMILE.

This  Agreement  constitutes  the entire  agreement  between the Company and the
Agent in connection with the Offering and supersedes the letter  agreement dated
February  10, 2004  between VMD and the  Company  and all prior  discussions  in
connection  with the  Offering.  This  Agreement  may be executed in one or more
counterparts   together  constituting  one  original  document  which  shall  be
effective  as of the  date  hereof.  The  transmission  by fax of a copy  of the
execution  page hereof  reflecting  the execution of this Agreement by any party
hereto shall be effective to evidence that party's intention to be bound by this
Agreement and that party's  agreement to the terms,  provisions  and  conditions
hereof,  all without the necessity of having to produce an original copy of such
execution page.

                                       40
<PAGE>

26.   STANDSTILL.

The Company  undertakes  that for a period of 12 months from the Special Warrant
Closing Date,  it will not,  directly or  indirectly,  without the prior written
consent of VMD, acting  reasonably,  issue or sell, or offer to sell,  grant any
option to purchase or otherwise  dispose of, or announce  publicly its intention
to do so, any Common Shares or other equity securities or securities convertible
or  exchangeable  into or exercisable  for Common  Shares,  at a price less than
$0.40 per Common Share,  other than (i) pursuant to the Offering,  (ii) pursuant
to the exercise of employee  stock options  granted  under the  Company's  stock
option plan, (iii) pursuant to the exercise of convertible  securities,  options
or  warrants  outstanding  as at the  date  hereof,  or (iv) as full or  partial
consideration for arm's length acquisitions of assets or shares.

27.   PRESS RELEASES.

During the period  commencing  on the date  hereof and until  completion  of the
distribution of the Underlying Securities,  the Company will promptly provide to
the Agent  drafts of any press  releases  of the Company for review by the Agent
and the Agent's counsel prior to issuance, provided that any such review will be
completed in a timely manner.

28.   TIME OF THE ESSENCE.

Time shall, in all respects, be of the essence hereof.

29.   HEADINGS.

The headings  contained herein are for convenience only and shall not affect the
meaning or interpretation hereof.

30.   SEVERABILITY.

The invalidity or unenforceability of any particular provision of this Agreement
shall not  affect or limit  the  validity  or  enforceability  of the  remaining
provisions of this Agreement.

31.   GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the laws of
the province of Quebec and the laws of Canada applicable therein.  The Agent and
the Company hereby submit to the  jurisdiction  of the courts of the province of
Quebec.

32.   SUCCESSORS AND ASSIGNS.

This  Agreement  shall enure to the benefit of, and shall be binding  upon,  the
Agent and the Company and their respective successors and legal representatives;
provided that, except as provided herein or in the Subscription Agreements, this
Agreement  shall not be assignable  by any party without the written  consent of
the others.

                                       41
<PAGE>

33.   FURTHER ASSURANCES.

Each of the  parties  hereto  shall do,  or cause to be done,  all such acts and
things and shall execute or cause to be executed, all such documents, agreements
and other  instruments  as may  reasonably  be necessary  or  desirable  for the
purpose of carrying out the provisions and intent of this Agreement.

34.   EFFECTIVE DATE.

This  Agreement  is  intended  to and shall take effect as of the date first set
forth above,  notwithstanding its actual date of execution or delivery.  If this
letter accurately  reflects the terms of the transactions  which we are to enter
into and are agreed to by you, please  communicate  your acceptance by executing
the enclosed copies of this letter where indicated and returning them to Richard
Groome at VMD.

                                       Yours very truly,

                                       DESJARDINS SECURITIES INC.

                                       By: /s/ Richard Groome
                                           -------------------------------------
                                           Richard Groome

Accepted  and agreed to by the  undersigned  as of the date of this letter first
written above.

                                       EMERGENSYS CORPORATION

                                       By: /s/ Jean Guy Lambert
                                           -------------------------------------
                                           Jean Guy Lambert

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