Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - CounterPath Corporation - Exhibit 10-1

	 
	AGREEMENT OF MERGER AND 
	PLAN OF REORGANIZATION 
	 

BY AND AMONG 

COUNTERPATH CORPORATION 

COUNTERPATH ACQUISITION CORP. 

BRIDGEPORT NETWORKS, INC. 

POLARIS VENTURE PARTNERS IV, L.P. 

POLARIS VENTURE PARTNERS ENTREPRENEURS FUND IV, L.P. 

GENERAL CATALYST GROUP II, L.P. 

GC ENTREPRENEURS FUND II, L.P. 

TORONTO DOMINION CAPITAL (USA), INC. 

AND 

SUMMERHILL VENTURES I L.P. 

 

Dated as of February 1, 2008

- 1 -

AGREEMENT OF MERGER AND PLAN OF REORGANIZATION 

          THIS
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this “Agreement”) is made
and entered into on February 1, 2008, by and among COUNTERPATH CORPORATION, a
Nevada corporation (“Parent”), COUNTERPATH ACQUISITION CORP., a Delaware
corporation (“Acquisition Corp.”), which is a wholly-owned subsidiary of
Parent, BRIDGEPORT NETWORKS, INC., a Delaware corporation (the
“Company”), POLARIS VENTURE PARTNERS IV, L.P., a limited partnership
(“Polaris”), POLARIS VENTURE PARTNERS ENTREPRENEURS FUND IV, L.P., a
limited partnership (“Polaris Venture”), GENERAL CATALYST GROUP II, L.P.,
a limited partnership (“General Catalyst”), GC ENTREPRENEURS FUND II,
L.P., a limited partnership (“GC”), TORONTO DOMINION CAPITAL (USA), INC.,
a corporation (“Toronto Dominion”) and SUMMERHILL VENTURES I, L.P., a
limited partnership (“Summerhill”). 

W I T N E S S E T H : 

          WHEREAS,
the Board of Directors of each of Acquisition Corp., Parent and the Company have
determined that it is fair to and in the best interests of their respective
corporations and stockholders for Acquisition Corp. to be merged with and into
the Company (the “Merger”) upon the terms and subject to the conditions
set forth herein;

          WHEREAS,
the Board of Directors of each of Parent, Acquisition Corp. and the Company have
approved the Merger in accordance with the General Corporation Law of the State
of Delaware (the “DGCL”) and upon the terms and subject to the conditions
set forth herein, in the Certificate of Merger attached as Exhibit A
hereto (the “Certificate of Merger”). 

          WHEREAS,
the requisite stockholders of the Company (the “Stockholders”) have
approved by written consent pursuant to Section 228(a) of the DGCL this
Agreement, the Certificate of Merger and the transactions contemplated and
described hereby and thereby, including, without limitation, the Merger, and
Parent, as the sole stockholder of Acquisition Corp., has approved by written
consent pursuant to Section 228(a) of the DGCL this Agreement, the Certificate
of Merger and the transactions contemplated and described hereby and thereby,
including, without limitation, the Merger; 

          WHEREAS,
the parties hereto intend that the Merger contemplated herein shall constitute a
taxable sale of the Company under the Internal Revenue Code of 1986, as amended;
and 

          WHEREAS,
Polaris, Polaris Venture, General Catalyst, GC, Toronto Dominion and Summerhill
(collectively, the “Company Shareholders”) have agreed to enter into this
Agreement in order to represent, warrant and covenant certain matters as set out
herein and to indemnify Parent and Acquisition Corp. from certain liabilities as
set out herein. 

          NOW,
THEREFORE, in consideration of the mutual agreements and covenants hereinafter
set forth, the parties hereto agree as follows: 

ARTICLE 1 
THE MERGER 

Section 1.1 Merger. Subject to the terms and conditions
of this Agreement and the Certificate of Merger, Acquisition Corp. shall be
merged with and into the Company in accordance with Section 251 of the DGCL. At
the Effective Time (as defined below), the separate legal existence of
Acquisition Corp. shall cease, and the Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the
“Surviving Corporation”) and shall continue its corporate existence under
the laws of the State of Delaware under the name “Bridgeport Networks, Inc.”.

Section 1.2 Effective Time. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware in accordance with Section 251 of the DGCL. The
time at which the Merger shall become effective as aforesaid is referred to
hereinafter as the “Effective Time”. 

Section 1.3 Closing. The closing of the Merger (the
“Closing”) shall occur concurrently with the Effective Time (the
“Closing Date”). The Closing shall occur at the offices of Clark Wilson
LLP referred to in Section 7.1 hereof. At the Closing, all of the documents,
certificates, agreements, opinions and instruments referenced in Article 5 will
be executed and delivered as described therein. At the Effective Time, all
actions to be taken at the Closing shall be deemed to be taken simultaneously.

Section 1.4 Certificate of Incorporation, Bylaws, Directors
and Officers. 

	 	(a) 	
      The Certificate of Incorporation of the Company, as in
      effect immediately prior to the Effective Time, attached as Exhibit B
      hereto, shall be the Certificate of Incorporation of the Surviving
      Corporation from and after the Effective Time until amended in accordance
      with applicable law and such Certificate of Incorporation.

	 	 	 
	 	(b) 	
      The Bylaws of the Company, as in effect immediately prior
      to the Effective Time, attached as Exhibit C hereto, shall be the
      Bylaws of the Surviving Corporation from and after the Effective Time
      until amended in accordance with applicable law, the Certificate of
      Incorporation of the Surviving Corporation and such Bylaws.

	 	 	 
	 	(c) 	
      The directors and officers listed in Exhibit D
      hereto shall be the directors and officers of the Surviving
      Corporation, and each shall hold his or her respective office or offices
      from and after the Effective Time until his or her successor shall have
      been elected and shall have qualified in accordance with applicable law,
      or as otherwise provided in the Certificate of Incorporation or Bylaws of
      the Surviving Corporation.

Section 1.5 Assets and Liabilities. At the Effective
Time, the Surviving Corporation shall possess all the rights, privileges, powers
and franchises of a public as well as of a private nature, and be subject to all
the restrictions, disabilities and duties of each of Acquisition Corp. and the
Company (collectively, the “Constituent Corporations”); and all the
rights, privileges, powers 

- 2 - 

and franchises of each of the Constituent Corporations, and all
property, real, personal and mixed, and all debts due to any of the Constituent
Corporations on whatever account, as well as all other things in action or
belonging to each of the Constituent Corporations, shall be vested in the
Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectively
the property of the Surviving Corporation as they were of the several and
respective Constituent Corporations, and the title to any real estate vested by
deed or otherwise in either of such Constituent Corporations shall not revert or
be in any way impaired by the Merger; but all rights of creditors and all liens
upon any property of any of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had been incurred or contracted by it, subject to any rights the Surviving
Corporation may have against the Company Shareholders under this Agreement. 

Section 1.6 Manner and Basis of Converting Shares. 

	 	(a) 	
      At the Effective Time:

	 	 	 	 
	 		(i) 	
      each share of common stock, par value $0.01 per share (if
      applicable rounded up to, the nearest whole share), of Acquisition Corp.
      that shall be outstanding immediately prior to the Effective Time shall,
      by virtue of the Merger and without any action on the part of the holder
      thereof, be converted into the right to receive one (1) share of common
      stock, par value $0.01 per share, of the Surviving Corporation, so that at
      the Effective Time, Parent shall be the holder of all of the issued and
      outstanding shares of the Surviving Corporation;

	 	 	 	 
	 		(ii) 	
      all issued and outstanding shares of the Company’s
      capital stock, including (A) the shares of common stock, par value $0.01
      per share of the Company (the “Company Common Stock”) and (B) the
      shares of preferred stock, series A-1 voting preferred shares (the
      “Company Preferred Stock”), (the Company Common Stock and the
      Company Preferred Stock collectively referred to as the “Company
      Stock”) (other than shares of Company Stock as to which appraisal
      rights are perfected pursuant to the applicable provisions of the DGCL and
      not withdrawn or otherwise forfeited), shall, by virtue of the Merger and
      without any action on the part of the holders thereof, be cancelled in the
      Merger and cease to exist; and

	 	 	 	 
	 		(iii) 	
      each share of Company Stock held in the treasury of the
      Company immediately prior to the Effective Time shall be cancelled in the
      Merger and cease to exist.

	 	 	 	 
	 	(b) 	
      After the Effective Time, there shall be no further
      registration of transfers on the stock transfer books of the Surviving
      Corporation of the shares of Company Stock that were outstanding
      immediately prior to the Effective Time.

- 3 - 

Section 1.7 Operation of Surviving Corporation. The
Company acknowledges that upon the effectiveness of the Merger, and the material
compliance by Parent and Acquisition Corp. with their respective duties and
obligations hereunder, Parent shall have the absolute and unqualified right to
deal with the assets and business of the Surviving Corporation as its own
property without limitation on the disposition or use of such assets or the
conduct of such business.

ARTICLE 2 
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY 

          As
of the Closing and except as set forth in the disclosure statement signed and
dated by Parent and the Company and delivered by the Company to Parent at
Closing (the “Disclosure Statement”), the Company represents and
warrants to Parent and Acquisition Corp., and acknowledges that the Parent and
Acquisition Corp. are relying upon such representations and warranties, in
connection with the execution, delivery and performance of this Agreement,
notwithstanding any investigation made by or on behalf of Parent and Acquisition
Corp., as follows: 

Section 2.1 Organization and Good Standing. The Company
is a corporation duly incorporated, organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite corporate
power and authority to own, lease and to carry on its business as now being
conducted. The Company is duly qualified to do business and is in good standing
as a foreign corporation in each of the jurisdictions in which the Company is
otherwise required to do so, except where the failure to be so qualified would
not have a Material Adverse Effect (as defined below) on the Company. For the
purposes of this Agreement, “Material Adverse Effect” means, when
used in connection with an entity, any change, event, violation, inaccuracy,
circumstance or effect that is materially adverse to the business, assets
(including intangible assets), Liabilities (as defined below), capitalization,
ownership, financial condition or results of operations of such entity or
subsidiaries taken as a whole. For the purposes of this Agreement, the term
“Liabilities” includes any direct or indirect indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate,
liquidated or unliquidated, secured or unsecured. 

Section 2.2 Authority. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and any
other document contemplated by this Agreement (collectively, the “Company
Documents”) to be signed by the Company and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of each of the Company Documents by the Company and the
consummation of the transactions contemplated hereby have been duly authorized
by the Company’s Board of Directors and the Stockholders. No other corporate or
shareholder proceedings on the part of the Company is necessary to authorize
such documents or to consummate the transactions contemplated hereby. This
Agreement has been, and the other Company Documents when executed and delivered
by the Company as contemplated by this Agreement will be, duly executed and
delivered by the Company and this Agreement is, and the other Company Documents
when executed and delivered by the Company as contemplated hereby will be, valid
and binding obligations of the Company enforceable in accordance with their
respective terms except: 

- 4 - 

	 	(a) 	
      as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, and other laws of general application
      affecting enforcement of creditors’ rights generally;

	 	 	 
	 	(b) 	
      as limited by laws relating to the availability of
      specific performance, injunctive relief, or other equitable remedies;
      and

	 	 	 
	 	(c) 	
      as limited by public policy.

Section 2.3 Capitalization of The Company. The entire
authorized capital stock and other equity securities of the Company consists of:
(i) 28,000,000 shares of Company Common Stock and (ii) 17,000,000 shares of
Company Preferred Stock. As of the date of this Agreement, there are: (i)
4,071,067 shares of Company Common Stock issued and outstanding; (ii) 16,736,214
shares of Company Preferred Stock issued and outstanding; and (iii) 2,381,010
unexercised options outstanding (the “Company Options”); and (iv) 3,610
unexercised warrants outstanding (the “Company Warrants”). All of the
issued and outstanding shares of the Company have been duly authorized, are
validly issued, were not issued in violation of any pre-emptive rights and are
fully paid and non-assessable, are not subject to pre-emptive rights and were
issued in full compliance with all federal, state, and local laws, rules and
regulations. Except for the Company Stock, the Company Options and the Company
Warrants, there are no outstanding options, warrants, subscriptions, conversion
rights, or other rights, agreements, or commitments obligating the Company to
issue any additional shares of Company Stock, or any other securities
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire from the Company any shares of Company Stock. Other than the Second
Amended and Restated Stockholders Agreement dated October 31, 2006, there are no
agreements purporting to restrict the transfer of any of the issued and
outstanding shares of the Company Stock, no voting agreements, shareholders’
agreements, voting trusts, or other arrangements restricting or affecting the
voting of any of the shares of the Company to which the Company is a party or of
which the Company is aware. 

Section 2.4 Security Holders of the Company. At Closing,
to the best knowledge of the Company, the Disclosure Statement contains a true
and complete list of the holders of all issued and outstanding Company Stock,
including each holder’s name, class and number of Company Stock held. 

Section 2.5 Directors and Officers of The Company. The
duly elected or appointed directors and the duly appointed officers of the
Company are as set out in the Disclosure Statement. 

Section 2.6 Corporate Records of The Company. The
corporate records of the Company, as required to be maintained by it pursuant to
the laws of the State of Delaware, are accurate, complete and current in all
material respects, and the minute book of the Company is, in all material
respects, correct and contains all material records required by the laws of the
State of Delaware, in regards to all proceedings, consents, actions and meetings
of the shareholders and the Board of Directors of the Company. 

Section 2.7 Non-Contravention. Neither the execution,
delivery and performance of this Agreement, nor the consummation of the Merger,
will: 

- 5 - 

	 	(a) 	
      conflict with, result in a violation of, cause a default
      under (with or without notice, lapse of time or both) or give rise to a
      right of termination, amendment, cancellation or acceleration of any
      obligation contained in or the loss of any material benefit under, or
      result in the creation of any lien, security interest, charge or
      encumbrance upon any of the material properties or assets of the Company
      or any of its subsidiaries under any term, condition or provision of any
      loan or credit agreement, note, debenture, bond, mortgage, indenture,
      lease or other agreement, instrument, permit, license, judgment, order,
      decree, statute, law, ordinance, rule or regulation applicable to the
      Company or any of its subsidiaries, or any of their respective material
      property or assets;

	 	 	 
	 	(b) 	
      violate any provision of the applicable incorporation or
      charter documents of the Company; or

	 	 	 
	 	(c) 	
      violate any order, writ, injunction, decree, statute,
      rule, or regulation of any court or governmental or regulatory authority
      applicable to the Company, any of its subsidiaries or any of their
      respective material property or assets.

Section 2.8 Actions and Proceedings. To the best
knowledge of the Company, there is no basis for and there is no action, suit,
judgment, claim, demand or proceeding outstanding or pending, or, to the best
knowledge of the Company, threatened against or affecting the Company or which
involves any of the business, or the properties or assets of the Company that,
if adversely resolved or determined, would have a Material Adverse Effect on the
Company. There is no reasonable basis for any claim or action that, based upon
the likelihood of its being asserted and its success if asserted, would have a
Material Adverse Effect on the Company. 

Section 2.9 Compliance. 

	 	(a) 	
      To the best knowledge of the Company, the Company is in
      compliance with, is not in default or violation in any material respect
      under, and has not been charged with or received any notice at any time of
      any material violation of any statute, law, ordinance, regulation, rule,
      decree or other applicable regulation to the business or operations of the
      Company;

	 	 	 
	 	(b) 	
      To the best knowledge of the Company, the Company is not
      subject to any judgment, order or decree entered in any lawsuit or
      proceeding applicable to its business and operations that would have a
      Material Adverse Effect on the Company;

	 	 	 
	 	(c) 	
      The Company has duly filed all reports and returns
      required to be filed by it with governmental authorities and has obtained
      all governmental permits and other governmental consents, except as may be
      required after the execution of this Agreement or where the failure to do
      so would not have a Material Adverse Effect on the Company. All of such
      permits and consents are in full force and effect, and no proceedings for
      the suspension or cancellation of any of them, and no investigation
      relating to any of them, is pending or to the best knowledge of
  the

- 6 - 

	 		
      Company, threatened, and none of them will be affected in
      a material adverse manner by the consummation of the Merger; and

	 	 	 
	 	(d) 	
      The Company has operated in material compliance with all
      laws, rules, statutes, ordinances, orders and regulations applicable to
      its business. The Company has not received any notice of any violation
      thereof, neither is the Company nor the Company Shareholders aware of any
      valid basis therefore.

Section 2.10 Filings, Consents and Approvals. No filing
or registration with, no notice to and no permit, authorization, consent, or
approval of any public or governmental body or authority or other Person (as
defined below) is necessary for the consummation by the Company of the Merger
contemplated by this Agreement. For the purposes of this Agreement,
“Person” means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity. 

Section 2.11 Assets and Liabilities. The assets and
liabilities of the Company consist of those set out in the Disclosure Statement.

Section 2.12 Financial Representations. The consolidated
audited balance sheet for the Company as delivered to Parent for the Company’s
fiscal year ended December 31, 2005, the consolidated unaudited balance sheets
for the Company’s fiscal years ended December 31, 2006 and 2007, together with
related statements of income, cash flows, and changes in shareholder’s equity
for such fiscal years (collectively, the “Company Financial Statements”):

	 	(a) 	
      are in accordance with the books and records of the
      Company;

	 	 	 
	 	(b) 	
      present fairly the financial condition of the Company as
      of the respective dates indicated and the results of operations for such
      periods; and

	 	 	 
	 	(c) 	
      have been prepared in accordance with United States
      generally accepted accounting principles applied in a manner consistent
      with prior periods (“GAAP”).

The Company has not received any advice or notification from
its independent certified public accountants that the Company has used any
improper accounting practice that would have the effect of not reflecting or
incorrectly reflecting in the Company Financial Statements or the books and
records of the Company, any properties, assets, Liabilities, revenues, or
expenses. The books, records, and accounts of the Company accurately and fairly
reflect, in reasonable detail, the assets, and Liabilities of the Company. The
Company has not engaged in any transaction, maintained any bank account, or used
any funds of the Company, except for transactions, bank accounts, and funds
which have been and are reflected in the normally maintained books and records
of the Company. 

Section 2.13 Absence of Undisclosed Liabilities. Other
than the costs and expenses incurred in connection with the negotiation and
consummation of the Merger, including Liabilities and obligations in respect of
the termination of the employment of those Company employees set out in writing
to Parent on or prior to Closing (the “Terminated Employees”), the
Company does not 

- 7 - 

have any material Liabilities or obligations either direct or
indirect, matured or unmatured, absolute, contingent or otherwise that exceed
$50,000, which: 

	 	(a) 	
      are not set forth in the Company Financial Statements,
      the Disclosure Statement or have not heretofore been paid or
      discharged;

	 	 	 
	 	(b) 	
      did not arise in the regular and ordinary course of
      business under any agreement, contract, commitment, lease or plan
      specifically disclosed in writing to Parent; or

	 	 	 
	 	(c) 	
      have not been incurred in amounts and pursuant to
      practices consistent with past business practice, in or as a result of the
      regular and ordinary course of its business since the date of the last
      Company Financial Statements.

Section 2.14 Tax Matters. 

	 	(a) 	
      As of the date hereof:

	 	 	 	 
	 		(i) 	
      the Company has timely filed all tax returns in
      connection with any Taxes (as defined below) which are required to be
      filed on or prior to the date hereof, taking into account any extensions
      of the filing deadlines which have been validly granted to the Company,
      and

	 	 	 	 
	 		(ii) 	
      all such returns are true and correct in all material
      respects;

	 	 	 	 
	 	(b) 	
      the Company has paid all Taxes that have become or are
      due with respect to any period ended on or prior to the date hereof, and
      has established an adequate reserve therefore on its balance sheets for
      those Taxes not yet due and payable, except for any Taxes the non-payment
      of which will not have a Material Adverse Effect on the Company;

	 	 	 	 
	 	(c) 	
      to the best knowledge of the Company, the Company is not
      presently under or has not received notice of, any contemplated
      investigation or audit by any regulatory or governmental agency of body or
      any foreign or state taxing authority concerning any fiscal year or period
      ended prior to the date hereof;

	 	 	 	 
	 	(d) 	
      all Taxes required to be withheld on or prior to the date
      hereof from employees for income Taxes, social security Taxes,
      unemployment Taxes and other similar withholding Taxes have been properly
      withheld in all material respects and, if required on or prior to the date
      hereof, have been deposited with the appropriate governmental
    agency;

	 	 	 	 
	 	(e) 	
      to the best knowledge of the Company, and except as
      disclosed in the Disclosure Statement, the Company Financial Statements
      contain full provision for all Taxes including any deferred Taxes that may
      be assessed to the Company for the accounting period ended on December 31,
      2007 (the “Company Accounting Date”) or for any prior period in
      respect of any transaction, event or omission occurring, or any profit
      earned, on or prior to the Company Accounting Date or for any profit
      earned by the Company on or prior to the Company
  Accounting

- 8 - 

	 		
      Date or for which the Company is accountable up to such
      date and all contingent Liabilities for Taxes have been provided for or
      disclosed in the Company Financial Statements; and

	 	 	 
	 	(f) 	
      for the purposes of this Agreement, “Taxes”
      includes international, federal, state, provincial and local income taxes,
      capital gains tax, value-added taxes, franchise, personal property and
      real property taxes, levies, assessments, tariffs, duties (including any
      customs duty), business license or other fees, sales, use and any other
      taxes relating to the assets of the designated party or the business of
      the designated party for all periods up to and including the Closing Date,
      together with any related charge or amount, including interest, fines,
      penalties and additions to tax, if any, arising out of tax
    assessments.

Section 2.15 Absence of Changes. Except as set out in
the Disclosure Statement, since January 15, 2008, the execution date of the
Letter of Intent, the Company has not: 

	 	(a) 	
      incurred any Liabilities, other than Liabilities incurred
      in the ordinary course of business consistent with past practice and costs
      and expenses incurred in connection with the negotiation and consummation
      of the Merger, including Liabilities and obligations in respect of the
      termination of the employment of the Terminated Employees, or discharged
      or satisfied any lien or encumbrance, or paid any Liabilities, other than
      in the ordinary course of business consistent with past practice, or
      failed to pay or discharge when due any Liabilities of which the failure
      to pay or discharge has caused or will cause any material damage or risk
      of material loss to it or any of its assets or properties;

	 	 	 
	 	(b) 	
      sold, encumbered, assigned or transferred any material
      fixed assets or properties;

	 	 	 
	 	(c) 	
      created, incurred, assumed or guaranteed any indebtedness
      for money borrowed, or mortgaged, pledged or subjected any of the material
      assets or properties of the Company or its subsidiaries to any mortgage,
      lien, pledge, security interest, conditional sales contract or other
      encumbrance of any nature whatsoever;

	 	 	 
	 	(d) 	
      made or suffered any amendment or termination of any
      material agreement, contract, commitment, lease or plan to which it is a
      party or by which it is bound, or cancelled, modified or waived any
      substantial debts or claims held by it or waived any rights of substantial
      value, other than in the ordinary course of business;

	 	 	 
	 	(e) 	
      declared, set aside or paid any dividend or made or
      agreed to make any other distribution or payment in respect of its capital
      shares or redeemed, purchased or otherwise acquired or agreed to redeem,
      purchase or acquire any of its capital shares or equity
  securities;

	 	 	 
	 	(f) 	
      suffered any damage, destruction or loss, whether or not
      covered by insurance, that has had or may be reasonably expected to have a
      Material Adverse Effect on the Company;

- 9 - 

	 	(g) 	
      received notice or had knowledge of any actual or
      threatened labor trouble, termination, resignation, strike or other
      occurrence, event or condition of any similar character which has had or
      might have a Material Adverse Effect on the Company;

	 	 	 
	 	(h) 	
      made commitments or agreements for capital expenditures
      or capital additions or betterments exceeding in the aggregate
    $15,000;

	 	 	 
	 	(i) 	
      other than in the ordinary course of business, increased
      the salaries or other compensation of, or made any advance (excluding
      advances for ordinary and necessary business expenses) or loan to, any of
      its employees or directors or made any increase in, or any addition to,
      other benefits to which any of its employees or directors may be
      entitled;

	 	 	 
	 	(j) 	
      entered into any transaction other than in the ordinary
      course of business consistent with past practice or as contemplated by
      this Agreement; or

	 	 	 
	 	(k) 	
      agreed, whether in writing or orally, to do any of the
      foregoing.

Section 2.16 Absence of Certain Changes or Events. Since
January 15, 2008, the execution date of the Letter of Intent, there has not
been: 

	 	(a) 	
      a Material Adverse Effect with respect to the Company;
      or

	 	 	 
	 	(b) 	
      any material change by the Company in its accounting
      methods, principles or practices.

Section 2.17 Subsidiaries. Except as set out in the
Disclosure Statement, the Company does not have any subsidiaries or agreements
of any nature to acquire any subsidiary or to acquire or lease any other
business operations. 

Section 2.18 Personal Property. The Company possesses,
and has good and marketable title of or adequate rights to use all property
necessary for the continued operation of the business of the Company as
presently conducted and as represented to Parent, including the capital assets
set out in the Disclosure Statement. All such property is used in the business
of the Company. All such property is in reasonably good operating condition
(normal wear and tear excepted), and is reasonably fit for the purposes for
which such property is presently used. All material equipment, furniture,
fixtures and other tangible personal property and assets owned or leased by the
Company is owned by the Company free and clear of all liens, security interests,
charges, encumbrances, and other adverse claims, except as disclosed in the
Disclosure Statement. 

Section 2.19 Intellectual Property 

	 	(a) 	
      Intellectual Property Assets. The Company owns or
      holds an interest in all intellectual property assets necessary for the
      operation of the business of the Company as it is currently conducted
      (collectively, the “Intellectual Property Assets”),
    including:

- 10 - 

	 	(i) 	
      all functional business names, trading names, registered
      and unregistered trademarks, service marks, and applications
      (collectively, the “Marks”);

	 	 	 
	 	(ii) 	
      all patents, patent applications, and inventions,
      methods, processes and discoveries that may be patentable (collectively,
      the “Patents”);

	 	 	 
	 	(iii) 	
      all copyrights in both published works and unpublished
      works (collectively, the “Copyrights”); and

	 	 	 
	 	(iv) 	
      all know-how, trade secrets, confidential information,
      customer lists, software, technical information, data, process technology,
      plans, drawings, and blue prints owned, used, or licensed by the Company
      as licensee or licensor (collectively, the “Trade
  Secrets”).

	 	(b) 	
      Agreements. The Disclosure Statement contains a
      complete and accurate list of all material contracts and agreements
      relating to the Intellectual Property Assets to which the Company is a
      party or by which the Company is bound, except for any license implied by
      the sale of a product and perpetual, paid-up licenses for commonly
      available software programs with a value of less than $15,000 under which
      the Company is the licensee. To the best knowledge of the Company, there
      are no outstanding or threatened disputes or disagreements with respect to
      any such agreement.

	 	 	 
	 	(c) 	
      Intellectual Property and Know-How Necessary for the
      Business. Except as set forth in the Disclosure Statement, the Company
      is the owner of all right, title, and interest in and to each of the
      Intellectual Property Assets, free and clear of all liens, security
      interests, charges, encumbrances, and other adverse claims, and has the
      right to use without payment to a third party of all the Intellectual
      Property Assets. Except as set forth in the Disclosure Statement, all
      former and current employees and contractors of the Company have executed
      written contracts, agreements or other undertakings with the Company that
      assign all rights to any inventions, improvements, discoveries, or
      information relating to the business of the Company. No employee,
      director, officer or shareholder of the Company owns directly or
      indirectly in whole or in part, any Intellectual Property Asset which the
      Company is presently using or which is necessary for the conduct of its
      business. To the best knowledge of the Company, no employee or contractor
      of the Company has entered into any contract or agreement (except in favor
      of the Company) that restricts or limits in any way the scope or type of
      work in which the employee may be engaged or requires the employee to
      transfer, assign, or disclose information concerning his work to anyone
      other than the Company.

	 	 	 
	 	(d) 	
      Patents. Except as set forth in the Disclosure
      Statement, the Company does not hold any right, title or interest in and
      to any Patent and the Company has not filed any patent application with
      any third party. To the best knowledge of the Company, none of the
      products manufactured and sold, nor any process or know- how used, by the
      Company infringes or is alleged to infringe any patent or other
      proprietary night of any other Person.

- 11 - 

	 	(e) 	
      Trademarks. Except as set forth in the Disclosure
      Statement, the Company does not hold any right, title or interest in and
      to any Mark and the Company has not registered or filed any application to
      register any Mark with any third party. To the best knowledge of the
      Company, none of the Marks, if any, used by the Company infringes or is
      alleged to infringe any trade name, trademark, or service mark of any
      third party.

	 	 	 
	 	(f) 	
      Copyrights. The Company is the owner of all right,
      title, and interest in and to each of the Copyrights, free and clear of
      all liens, security interests, charges, encumbrances, and other adverse
      claims. If applicable, all registered Copyrights are currently in
      compliance with formal legal requirements, are valid and enforceable, and
      are not subject to any maintenance fees or taxes or actions falling due
      within ninety days after the Closing Date. To the best knowledge of the
      Company, no Copyright is infringed or has been challenged or threatened in
      any way and none of the subject matter of any of the Copyrights infringes
      or is alleged to infringe any copyright of any third party or is a
      derivative work based on the work of a third party. All works encompassed
      by the Copyrights have been marked with the proper copyright
  notice.

	 	 	 
	 	(g) 	
      Trade Secrets. The Company has taken all
      reasonable precautions to protect the secrecy, confidentiality, and value
      of its Trade Secrets. The Company has good title or an absolute right to
      use the Trade Secrets. The Trade Secrets are not part of the public
      knowledge or literature, and to the best knowledge of the Company, have
      not been used, divulged, or appropriated either for the benefit of any
      Person or to the detriment of the Company. No Trade Secret is subject to
      any adverse claim or has been challenged or threatened in any
  way.

Section 2.20 Insurance. The products sold by and the
assets owned by the Company are insured under various policies of general
product liability and other forms of insurance consistent with prudent business
practices. All such policies are in full force and effect in accordance with
their terms, no notice of cancellation has been received, and there is no
existing default by the Company, or, except as set forth in the Disclosure
Statement, any event which, with the giving of notice, the lapse of time or
both, would constitute a default thereunder. All premiums to date have been paid
in full. 

Section 2.21 Employees and Consultants. All employees
and consultants of the Company have been paid all salaries, wages, income and
any other sum due and owing to them by the Company, as at the end of the most
recent completed pay period except for accrued but unpaid vacation pay or as set
forth in the Disclosure Statement. The Company is not aware of any labor
conflict with any employees that might reasonably be expected to have a Material
Adverse Effect on the Company. To the best knowledge of the Company, no employee
of the Company is in violation of any term of any employment contract,
non-disclosure agreement, non-competition agreement or any other contract or
agreement relating to the relationship of such employee with the Company or any
other nature of the business conducted or to be conducted by the Company. 

Section 2.22 Real Property. The Company does not own any
real property. Each of the leases, subleases, claims or other real property
interests (collectively, the “Leases”) to which the 

- 12 - 

Company is a party or is bound, as set out in the Disclosure
Statement, is legal, valid, binding enforceable and in full force and effect in
all material respects. All rental and other payments required to be paid by the
Company pursuant to any such Leases have been duly paid and no event has
occurred which, upon the passing of time, the giving of notice, or both, would
constitute a breach or default by any party under any of the Leases. The Leases
will continue to be legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing Date. The Company has not
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in the Leases or the leasehold property pursuant thereto. 

Section 2.23 Material Contracts and Transactions. The
Disclosure Statement sets forth each contract, agreement, license, permit,
arrangement, commitment or instrument to which the Company is a party and which
is material to the conduct of the business of the Company (each, a
“Contract”). Each Contract is in full force and effect, and there exists
no material breach or violation of or default by the Company under any Contract,
or any event that with notice or the lapse of time, or both, will create a
material breach or violation thereof or default under any Contract by the
Company. To the best knowledge of the Company, and except as set forth in the
Disclosure Statement, the continuation, validity, and effectiveness of each
Contract will in no way be affected by the consummation of the Merger
contemplated by this Agreement. There exists no actual or threatened
termination, cancellation, or limitation of, or any amendment, modification, or
change to any Contract. 

Section 2.24 Certain Transactions. The Company is not a
guarantor or indemnitor of any indebtedness of any Person. 

Section 2.25 No Brokers. The Company has not incurred
any independent obligation or liability to any party for any brokerage fees,
agent’s commissions, or finder’s fees in connection with the Merger contemplated
by this Agreement. 

Section 2.26 Waiver of Rights. The Company has received
the requisite written approvals and waivers of the Company Shareholders in order
to approve and consummate the Merger under the DGCL, the Company’s Certificate
of Incorporation, as amended, the Company’s Bylaws, as amended, and any
agreement to which they are a party, which may be triggered as a result of the
consummation of the Merger. 

Section 2.27 Completeness of Disclosure. No
representation or warranty by the Company and the Company Shareholders in this
Agreement nor any certificate, schedule, exhibit, statement, document or
instrument furnished or to be furnished to the Company and the Company
Shareholders pursuant hereto contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not materially misleading. 

ARTICLE 3 
REPRESENTATIONS AND WARRANTIES OF PARENT
AND ACQUISITION CORP.

          As
of the Closing, Parent and Acquisition Corp. represent and warrant to the
Company and the Company Shareholders and acknowledge that the Company and the
Company Shareholders are relying upon such representations and warranties in
connection with the 

- 13 - 

execution, delivery and performance of this Agreement,
notwithstanding any investigation made by or on behalf of the Company and the
Company Shareholders, as follows: 

Section 3.1 Organization and Good Standing. Parent is
corporation duly incorporated, organized, validly existing and in good standing
under the laws of the State of Nevada and has all requisite corporate power and
authority to own, lease and to carry on its business as now being conducted.
Parent is duly qualified to do business and is in good standing as a foreign
corporation in each of the jurisdictions in which Parent is required to do so,
except where the failure to be so qualified would not have a Material Adverse
Effect on Parent. 

Section 3.2 Organization and Good Standing of Acquisition
Corp. Acquisition Corp. is corporation duly incorporated, organized, validly
existing and in good standing under the laws of the State of Delaware. 

Section 3.3 Acquisition Corp. Acquisition Corp. is a
wholly-owned Delaware subsidiary of Parent that was formed specifically
for the purpose of the Merger and that has not conducted any business or
acquired any property, and will not conduct any business or acquire any property
prior to the Closing Date, except in preparation for and otherwise in connection
with the transactions contemplated by the Merger and the other agreements to be
made pursuant to or in connection with the Merger. 

Section 3.4 Authority. Parent has all requisite
corporate power and authority to execute and deliver this Agreement and any
other document contemplated by this Agreement (collectively, the “Parent
Documents”) to be signed by Parent and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of each of the Parent Documents by Parent and the consummation by
Parent of the transactions contemplated hereby have been duly authorized by
Parent’s Board of Directors. No other corporate or shareholder proceedings on
the part of Parent is necessary to authorize such documents or to consummate the
transactions contemplated hereby. This Agreement has been, and the other Parent
Documents when executed and delivered by Parent as contemplated by this
Agreement will be, duly executed and delivered by Parent and this Agreement is,
and the other Parent Documents when executed and delivered by Parent, as
contemplated hereby will be, valid and binding obligations of Parent enforceable
in accordance with their respective terms except: 

	 	(a) 	
      as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, and other laws of general application
      affecting enforcement of creditors’ rights generally;

	 	 	 
	 	(b) 	
      as limited by laws relating to the availability of
      specific performance, injunctive relief, or other equitable remedies;
      and

	 	 	 
	 	(c) 	
      as limited by public policy.

Section 3.5 Capitalization of Parent. The entire
authorized capital stock and other equity securities of Parent consists of: (i)
415,384,500 shares of common stock with a par value of $0.001 (the “Parent
Common Stock”); (ii) 100,000,000 shares of preferred stock with a par value
of $0.001 (the “Parent Preferred Stock”); (iii) options to purchase
19,000,000 shares of Parent Common Stock (the “Parent Options”); and (iv)
warrants to purchase 5,000,000 shares of Parent 

- 14 - 

Common Stock (the “Parent Warrants”). As of the date of
this Agreement, there are: (i) 95,108,887 shares of Parent Common Stock issued
and outstanding; (ii) one share of Parent Preferred Stock, designated as a
Series A Special Voting Share issued and outstanding; (iii) 18,248,674 Parent
Options outstanding and unexercised; and (iv) 5,000,000 Parent Warrants
outstanding and unexercised. In addition, there are 1,849,180 preferred shares
of 6789722 Canada Inc., a subsidiary of Parent, which are exchangeable into
1,849,180 common shares of Parent (the “Exchangeable Shares”). All of the
issued and outstanding shares of Parent Common Stock and Parent Preferred Stock
have been duly authorized, are validly issued, were not issued in violation of
any pre-emptive rights and are fully paid and non-assessable, are not subject to
pre-emptive rights and were issued in full compliance with all federal, state,
and local laws, rules and regulations. Except for the Parent Common Stock,
Parent Preferred Stock, Parent Options, Parent Warrants and Exchangeable Shares,
there are no outstanding options, warrants, subscriptions, conversion rights, or
other rights, agreements, or commitments obligating Parent to issue any
additional shares of Parent Common Stock, or any other securities convertible
into, exchangeable for, or evidencing the right to subscribe for or acquire from
Parent any shares of Parent Common Stock. There are no agreements purporting to
restrict the transfer of any of the issued and outstanding shares of Parent, no
voting agreements, shareholders’ agreements, voting trusts, or other
arrangements restricting or affecting the voting of any of the shares of Parent
to which Parent is a party or of which Parent is aware. 

Section 3.6 Directors and Officers of Parent. The duly
elected or appointed directors and the duly appointed officers of Parent are as
listed on Exhibit D. 

Section 3.7 Corporate Records of Parent. The corporate
records of Parent, as required to be maintained by it pursuant to the laws of
the State of Nevada, are accurate, complete and current in all material
respects, and the minute book of Parent is, in all material respects, correct
and contains all material records required by the laws of the State of Nevada in
regards to all proceedings, consents, actions and meetings of the shareholders
and the Board of Directors of Parent. 

Section 3.8 Non-Contravention. Neither the execution,
delivery and performance of this Agreement, nor the consummation of the Merger,
will: 

	 	(a) 	
      conflict with, result in a violation of, cause a default
      under (with or without notice, lapse of time or both) or give rise to a
      right of termination, amendment, cancellation or acceleration of any
      obligation contained in or the loss of any material benefit under, or
      result in the creation of any lien, security interest, charge or
      encumbrance upon any of the material properties or assets of Parent or any
      of its subsidiaries under any term, condition or provision of any loan or
      credit agreement, note, debenture, bond, mortgage, indenture, lease or
      other agreement, instrument, permit, license, judgment, order, decree,
      statute, law, ordinance, rule or regulation applicable to Parent or any of
      its subsidiaries or any of their respective material property or
      assets;

	 	 	 
	 	(b) 	
      violate any provision of the applicable incorporation or
      charter documents of Parent, any of its subsidiaries or any applicable
      laws; or

- 15 - 

	 	(c) 	
      violate any order, writ, injunction, decree, statute,
      rule, or regulation of any court or governmental or regulatory authority
      applicable to Parent, any of its subsidiaries or any of their respective
      material property or assets.

Section 3.9 Actions and Proceedings. Except as disclosed
in the Parent SEC Documents (hereinafter defined), to the best knowledge of
Parent, there is no basis for and there is no action, suit, judgment, claim,
demand or proceeding outstanding or pending, or, to the best knowledge of
Parent, threatened against or affecting Parent or which involves any of the
business, or the properties or assets of Parent that, if adversely resolved or
determined, would have a Material Adverse Effect on Parent. There is no
reasonable basis for any claim or action that, based upon the likelihood of its
being asserted and its success if asserted, would have a Material Adverse Effect
on Parent. 

Section 3.10 Compliance. 

	 	(a) 	
      To the best knowledge of Parent, Parent is in compliance
      with, is not in default or violation in any material respect under, and
      has not been charged with or received any notice at any time of any
      material violation of any statute, law, ordinance, regulation, rule,
      decree or other applicable regulation to the business or operations of
      Parent;

	 	 	 
	 	(b) 	
      To the best knowledge of Parent, Parent is not subject to
      any judgment, order or decree entered in any lawsuit or proceeding
      applicable to its business and operations that would have a Material
      Adverse Effect on Parent;

	 	 	 
	 	(c) 	
      Parent has duly filed all reports and returns required to
      be filed by it with governmental authorities and has obtained all
      governmental permits and other governmental consents, except as may be
      required after the execution of this Agreement. All of such permits and
      consents are in full force and effect, and no proceedings for the
      suspension or cancellation of any of them, and no investigation relating
      to any of them, is pending or to the best knowledge of Parent, threatened,
      and none of them will be affected in a material adverse manner by the
      consummation of the Merger; and

	 	 	 
	 	(d) 	
      Parent has operated in material compliance with all laws,
      rules, statutes, ordinances, orders and regulations applicable to its
      business. Parent has not received any notice of any violation thereof, nor
      is Parent aware of any valid basis therefore.

Section 3.11 Filings, Consents and Approvals. Except as
required to comply with applicable securities legislation, no filing or
registration with, no notice to and no permit, authorization, consent, or
approval of any public or governmental body or authority or other Person is
necessary for the consummation by Parent of the Merger contemplated by this
Agreement to continue to conduct its business after the Closing Date in a manner
which is consistent with that in which it is presently conducted. 

Section 3.12 SEC Filings. Parent is a registrant and
reporting company under the United States Securities Exchange Act of 1934, as
amended (the “Exchange Act”). Parent has furnished or 

- 16 - 

made available to the Company and the Company Shareholders a
true and complete copy of each report, schedule, registration statement and
proxy statement filed by Parent with the United States Securities and Exchange
Commission (the “SEC”) (collectively, and as such documents have since
the time of their filing been amended, the “Parent SEC Documents”). As of
their respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the United States Securities Act of 1933, as
amended, or the Exchange Act, as the case may be, and the rules and regulations
of the SEC thereunder applicable to such Parent SEC Documents. The Parent SEC
Documents constitute all of the documents and reports that Parent was required
to file with the SEC pursuant to the Exchange Act and the rules and regulations
promulgated thereunder by the SEC. 

Section 3.13 Financial Representations. Included with
the Parent SEC Documents are true, correct, and complete copies of audited
balance sheets for Parent dated as of April 30, 2007 and unaudited but auditor
reviewed balance sheets for Parent dated as of October 31, 2007 (the “Parent
Accounting Date”), together with related statements of income, cash flows,
and changes in shareholder’s equity for the fiscal year and interim period then
ended (collectively, the “Parent Financial Statements”). The
Parent Financial Statements: 

	 	(a) 	
      are in accordance with the books and records of
      Parent;

	 	 	 
	 	(b) 	
      present fairly the financial condition of Parent as of
      the respective dates indicated and the results of operations for such
      periods; and

	 	 	 
	 	(c) 	
      have been prepared in accordance with
  GAAP.

Parent has not received any advice or notification from its
independent certified public accountants that Parent has used any improper
accounting practice that would have the effect of not reflecting or incorrectly
reflecting in the Parent Financial Statements or the books and records of
Parent, any properties, assets, Liabilities, revenues, or expenses. The books,
records, and accounts of Parent accurately and fairly reflect, in reasonable
detail, the assets, and Liabilities of Parent. Parent has not engaged in any
transaction, maintained any bank account, or used any funds of Parent, except
for transactions, bank accounts, and funds which have been and are reflected in
the normally maintained books and records of Parent. 

Section 3.14 Absence of Undisclosed Liabilities. Parent
has no material Liabilities or obligations either direct or indirect, matured or
unmatured, absolute, contingent or otherwise, which: 

	 	(a) 	
      are not set forth in the Parent Financial Statements or
      have not heretofore been paid or discharged;

	 	 	 
	 	(b) 	
      did not arise in the regular and ordinary course of
      business under any agreement, contract, commitment, lease or plan
      specifically disclosed in writing to the Company; or

	 	 	 
	 	(c) 	
      have not been incurred in amounts and pursuant to
      practices consistent with past business practice, in or as a result of the
      regular and ordinary course of its business since the date of the last
      Parent Financial Statements.

- 17 - 

Section 3.15 Tax Matters. 

	 	(a) 	
      Except as set forth in the disclosure statement signed
      and dated by Parent and the Company and delivered by Parent to the Company
      and the Company Shareholders at Closing (the “Parent Disclosure
      Statement”), as of the date hereof:

	 	 	 	 
	 		(i) 	
      Parent has timely filed all tax returns in connection
      with any Taxes which are required to be filed on or prior to the date
      hereof, taking into account any extensions of the filing deadlines which
      have been validly granted to them, and

	 	 	 	 
	 		(ii) 	
      all such returns are true and correct in all material
      respects;

	 	 	 	 
	 	(b) 	
      Parent has paid all Taxes that have become or are due
      with respect to any period ended on or prior to the date hereof and has
      established an adequate reserve therefore on its balance sheets for those
      Taxes not yet due and payable, except for any Taxes the non-payment of
      which will not have a Material Adverse Effect on Parent;

	 	 	 	 
	 	(c) 	
      to the best knowledge of Parent, Parent is not presently
      under and has not received notice of, any contemplated investigation or
      audit by any regulatory or government agency or body or any foreign or
      state taxing authority concerning any fiscal year or period ended prior to
      the date hereof;

	 	 	 	 
	 	(d) 	
      all Taxes required to be withheld on or prior to the date
      hereof from employees for income Taxes, social security Taxes,
      unemployment Taxes and other similar withholding Taxes have been properly
      withheld in all material respects and, if required on or prior to the date
      hereof, have been deposited with the appropriate governmental agency;
      and

	 	 	 	 
	 	(e) 	
      to the best knowledge of Parent, the Parent Financial
      Statements contain full provision for all Taxes including any deferred
      Taxes that may be assessed to Parent for the accounting period ended on
      the Parent Accounting Date or for any prior period in respect of any
      transaction, event or omission occurring, or any profit earned, on or
      prior to the Parent Accounting Date or for any profit earned by Parent on
      or prior to the Parent Accounting Date or for which Parent is accountable
      up to such date and all contingent Liabilities for Taxes have been
      provided for or disclosed in the Parent Financial
  Statements.

Section 3.16 Absence of Changes. Since the Parent
Accounting Date, except as disclosed in the Public SEC Documents and except as
contemplated in this Agreement, Parent has not: 

	 	(a) 	
      incurred any Liabilities, other than Liabilities incurred
      in the ordinary course of business consistent with past practice, or
      discharged or satisfied any lien or encumbrance, or paid any Liabilities,
      other than in the ordinary course of business consistent with past
      practice, or failed to pay or discharge when due
any

- 18 - 

	 		
      Liabilities of which the failure to pay or discharge has
      caused or will cause any material damage or risk of material loss to it or
      any of its assets or properties;

	 	 	 
	 	(b) 	
      sold, encumbered, assigned or transferred any material
      fixed assets or properties;

	 	 	 
	 	(c) 	
      created, incurred, assumed or guaranteed any indebtedness
      for money borrowed, or mortgaged, pledged or subjected any of the material
      assets or properties of Parent to any mortgage, lien, pledge, security
      interest, conditional sales contract or other encumbrance of any nature
      whatsoever;

	 	 	 
	 	(d) 	
      made or suffered any amendment or termination of any
      material agreement, contract, commitment, lease or plan to which it is a
      party or by which it is bound, or cancelled, modified or waived any
      substantial debts or claims held by it or waived any rights of substantial
      value, other than in the ordinary course of business;

	 	 	 
	 	(e) 	
      declared, set aside or paid any dividend or made or
      agreed to make any other distribution or payment in respect of its capital
      shares or redeemed, purchased or otherwise acquired or agreed to redeem,
      purchase or acquire any of its capital shares or equity
  securities;

	 	 	 
	 	(f) 	
      suffered any damage, destruction or loss, whether or not
      covered by insurance, that has had or may be reasonably expected to have a
      Material Adverse Effect on Parent;

	 	 	 
	 	(g) 	
      suffered any material adverse change in its business,
      operations, assets, properties, prospects or condition (financial or
      otherwise);

	 	 	 
	 	(h) 	
      received notice or had knowledge of any actual or
      threatened labor trouble, termination, resignation, strike or other
      occurrence, event or condition of any similar character which has had or
      might have an adverse effect on its business, operations, assets,
      properties or prospects;

	 	 	 
	 	(i) 	
      made commitments or agreements for capital expenditures
      or capital additions or betterments exceeding in the aggregate
    $15,000;

	 	 	 
	 	(j) 	
      other than in the ordinary course of business, increased
      the salaries or other compensation of, or made any advance (excluding
      advances for ordinary and necessary business expenses) or loan to, any of
      its employees or directors or made any increase in, or any addition to,
      other benefits to which any of its employees or directors may be
      entitled;

	 	 	 
	 	(k) 	
      entered into any transaction other than in the ordinary
      course of business consistent with past practice; or

	 	 	 
	 	(l) 	
      agreed, whether in writing or orally, to do any of the
      foregoing.

- 19 - 

Section 3.17 Absence of Certain Changes or Events. Since
the Parent Accounting Date, except as and to the extent disclosed in the Parent
SEC Documents, there has not been: 

	 	(a) 	
      a Material Adverse Effect with respect to Parent;
    or

	 	 	 
	 	(b) 	
      any material change by Parent in its accounting methods,
      principles or practices.

Section 3.18 Subsidiaries. Except for Acquisition Corp.
and CounterPath Technologies Inc., Parent does not have any subsidiaries or
agreements of any nature to acquire any subsidiary or to acquire or lease any
other business operations, except as disclosed in the Parent SEC Documents. 

Section 3.19 Personal Property. There are no material
equipment, furniture, fixtures and other tangible personal property and assets
owned or leased by Parent, except as disclosed in the Parent SEC Documents.
Parent possesses, and has good and marketable title of all property necessary
for the continued operation of the business of Parent as presently conducted and
as represented to the Company and the Company Shareholders. All such property is
used in the business of Parent. All such property is in reasonably good
operating condition (normal wear and tear excepted), and is reasonably fit for
the purposes for which such property is presently used. All material equipment,
furniture, fixtures and other tangible personal property and assets owned or
leased by Parent is owned by Parent free and clear of all liens, security
interests, charges, encumbrances, and other adverse claims, except as previously
disclosed to the Company or in the Parent SEC Documents. 

Section 3.20 Intellectual Property 

	 	(a) 	
      Intellectual Property Assets. Parent owns or holds
      an interest in all intellectual property assets necessary for the
      operation of the business of Parent as it is currently conducted
      (collectively, the “Parent Intellectual Property Assets”),
      including:

	 	 	 	 
	 		(i) 	
      all functional business names, trading names, registered
      and unregistered trademarks, service marks, and applications
      (collectively, the “Parent Marks”);

	 	 	 	 
	 		(ii) 	
      all patents, patent applications, and inventions,
      methods, processes and discoveries that may be patentable (collectively,
      the “Parent Patents”);

	 	 	 	 
	 		(iii) 	
      all copyrights in both published works and unpublished
      works (collectively, the “Parent Copyrights”); and

	 	 	 	 
	 		(iv) 	
      all know-how, trade secrets, confidential information,
      customer lists, software, technical information, data, process technology,
      plans, drawings, and blue prints owned, used, or licensed by Parent as
      licensee or licensor (collectively, the “Parent Trade
    Secrets”).

	 	 	 	 
	 	(b) 	
      Agreements. Parent has previously provided the
      Company with a complete and accurate list of all material contracts and
      agreements relating to the Parent Intellectual Property Assets to which
      Parent is a party or by which Parent is

- 20 - 

	 		
      bound, except for any license implied by the sale of a
      product and perpetual, paid- up licenses for commonly available software
      programs with a value of less than $15,000 under which Parent is the
      licensee as set forth in the Parent Disclosure Statement. To the best
      knowledge of Parent, there are no outstanding or threatened disputes or
      disagreements with respect to any such agreement.

	 	 	 
	 	(c) 	
      Intellectual Property and Know-How Necessary for the
      Business. Except as previously provided in the Parent Disclosure
      Statement, Parent is the owner of all right, title, and interest in and to
      each of the Parent Intellectual Property Assets, free and clear of all
      liens, security interests, charges, encumbrances, and other adverse
      claims, and has the right to use without payment to a third party of all
      the Parent Intellectual Property Assets. Except as provided in the Parent
      Disclosure Statement, all former and current employees and contractors of
      Parent have executed written contracts, agreements or other undertakings
      with Parent that assign all rights to any inventions, improvements,
      discoveries, or information relating to the business of Parent. No
      employee, director, officer or shareholder of Parent owns directly or
      indirectly in whole or in part, any Parent Intellectual Property Asset
      which Parent is presently using or which is necessary for the conduct of
      its business. To the best knowledge of Parent, no employee or contractor
      of Parent has entered into any contract or agreement that restricts or
      limits in any way the scope or type of work in which the employee may be
      engaged or requires the employee to transfer, assign, or disclose
      information concerning his work to anyone other than Parent.

	 	 	 
	 	(d) 	
      Patents. Except as previously provided in the
      Parent Disclosure Statement, Parent does not hold any right, title or
      interest in and to any Parent Patent and Parent has not filed any patent
      application with any third party. To the best knowledge of Parent, none of
      the products manufactured and sold, nor any process or know-how used, by
      Parent infringes or is alleged to infringe any patent or other proprietary
      night of any other Person.

	 	 	 
	 	(e) 	
      Trademarks. Except as previously provided in the
      Parent Disclosure Statement, Parent does not hold any right, title or
      interest in and to any Parent Mark and Parent has not registered or filed
      any application to register any Parent Mark with any third party. To the
      best knowledge of Parent, none of the Parent Marks, if any, used by Parent
      infringes or is alleged to infringe any trade name, trademark, or service
      mark of any third party.

	 	 	 
	 	(f) 	
      Copyrights. Parent is the owner of all right,
      title, and interest in and to each of the Parent Copyrights, free and
      clear of all liens, security interests, charges, encumbrances, and other
      adverse claims. If applicable, all registered Parent Copyrights are
      currently in compliance with formal legal requirements, are valid and
      enforceable, and are not subject to any maintenance fees or taxes or
      actions falling due within ninety days after the Closing Date. To the best
      knowledge of Parent, no Parent Copyright is infringed or has been
      challenged or threatened in any way and none of the subject matter of any
      of the Parent Copyrights infringes or is alleged to infringe any copyright
      of any third party or is a derivative work

- 21 - 

	 		
      based on the work of a third party. All works encompassed
      by the Parent Copyrights have been marked with the proper copyright
      notice.

	 	 	 
	 	(g) 	
      Trade Secrets. Parent has taken all reasonable
      precautions to protect the secrecy, confidentiality, and value of its
      Parent Trade Secrets. Parent has good title and an absolute right to use
      the Parent Trade Secrets. The Parent Trade Secrets are not part of the
      public knowledge or literature, and to the best knowledge of Parent, have
      not been used, divulged, or appropriated either for the benefit of any
      Person or to the detriment of Parent. No Parent Trade Secret is subject to
      any adverse claim or has been challenged or threatened in any
  way.

Section 3.21 Insurance. The products sold by and the
assets owned by Parent are insured under various policies of general product
liability and other forms of insurance consistent with prudent business
practices. All such policies are in full force and effect in accordance with
their terms, no notice of cancellation has been received, and there is no
existing default by Parent, or any event which, with the giving of notice, the
lapse of time or both, would constitute a default thereunder. All premiums to
date have been paid in full. 

Section 3.22 Employees and Consultants. To the best
knowledge of Parent, no employee of Parent is in violation of any term of any
employment contract, non-disclosure agreement, non-competition agreement or any
other contract or agreement relating to the relationship of such employee with
Parent or any other nature of the business conducted or to be conducted by
Parent. 

Section 3.23 Real Property. Parent does not own any real
property. Each of the leases, subleases, claims or other real property interests
(collectively, the “Parent Leases”) to which Parent is a party or is
bound, as disclosed in writing to the Company or as disclosed in the Parent SEC
Documents, is legal, valid, binding enforceable and in full force and effect in
all material respects. All rental and other payments required to be paid by
Parent pursuant to any such Parent Leases have been duly paid and no event has
occurred which, upon the passing of time, the giving of notice, or both, would
constitute a breach or default by any party under any of the Parent Leases. The
Parent Leases will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the Closing Date. Parent has not
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in the Parent Leases or the leasehold property pursuant thereto. 

Section 3.24 Material Contracts and Transactions. Other
than as expressly contemplated by this Agreement, there are no material
contracts, agreements, licenses, permits, arrangements, commitments, instruments
or understandings, whether written or oral, express or implied, contingent,
fixed or otherwise, to which Parent is a party (the “Parent Contracts”)
except as previously disclosed to the Company or as disclosed in the Parent SEC
Documents. Parent has made available to the Company and the Company Shareholders
each Parent Contract. Each Parent Contract is in full force and effect, and
there exists no material breach or violation of or default by Parent under any
Parent Contract, or any event that with notice or the lapse of time, or both,
will create a material breach or violation thereof or default under any Parent
Contract by Parent. To the best knowledge of Parent, the continuation, validity,
and effectiveness of each Parent Contract will in no way be affected by the
consummation of the Merger contemplated by 

- 22 - 

this Agreement. There exists no actual or threatened
termination, cancellation, or limitation of, or any amendment, modification, or
change to any Parent Contract. 

Section 3.25 Certain Transactions. Except as previously
disclosed to the Company or as disclosed in the Parent SEC Documents, Parent is
not a guarantor or indemnitor of any indebtedness of any Person. 

Section 3.26 No Brokers. Parent has not incurred any
independent obligation or liability to any party for any brokerage fees, agent’s
commissions, or finder’s fees in connection with the Merger contemplated by this
Agreement. 

Section 3.27 Completeness of Disclosure. No
representation or warranty by Parent and Acquisition Corp. in this Agreement nor
any certificate, schedule, statement, document or instrument furnished or to be
furnished to the Company pursuant hereto contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make any statement
herein or therein not materially misleading. 

ARTICLE 4 
COVENANTS AND AGREEMENTS 

Section 4.1 Grant of Parent Options. Provided Parent
receives duly executed certificates as set out below, Parent will, within six
months of Closing, grant the holders of Company Options (the “Company Option
Holders”) who are retained as employees by the Company (the “Retained
Option Holders”) Parent Options on the terms at the discretion of Parent.
The requirement to grant the Parent Options is conditional upon each Retained
Option Holder executing and delivering Parent’s standard form of stock option
agreement in order to comply with applicable securities legislation and: 

	 	(a) 	
      if the Retained Option Holder is not a resident in the
      United States, a Regulation S Certificate set out in Exhibit E;
      or

	 	 	 
	 	(b) 	
      if the Retained Option Holder is resident in the United
      States, a Rule 506 Certificate set out in Exhibit
  F.

Section 4.2 Cancellation of Company Options. Prior to
Closing, the Board of Directors of the Company will exercise its authority under
the Company’s stock option plan to accelerate the vesting of all Company Options
held by the Company Option Holders and provide that any such Company Options
which remain unexercised at the Effective Time will expire. 

Section 4.3 Cancellation of Convertible Debt. Prior to
Closing, the Company will cause all of the Company’s convertible debt, together
with all accrued interest thereon, to be cancelled. 

ARTICLE 5 
CONDITIONS TO PARTIES’ OBLIGATIONS

Section 5.1 Conditions to Parent and Acquisition Corp.
Obligations. The obligation of Parent and Acquisition Corp. to consummate
the Merger is subject to the satisfaction or written waiver 

- 23 - 

of the conditions set forth below by a date mutually agreed
upon by the parties hereto in writing and in accordance with Section 7. The
Closing of the Merger contemplated by this Agreement will be deemed to mean a
waiver of all conditions to Closing. These conditions precedent are for the
benefit of Parent and Acquisition Corp. and may be waived by Parent and
Acquisition Corp. in their discretion: 

	 	(a) 	
      the representations and warranties of the Company and the
      Company Shareholders under this Agreement shall be deemed to have been
      made again on the Closing Date and shall then be true and correct in all
      material respects;

	 	 	 	 
	 	(b) 	
      the Company and the Company Shareholders shall have
      performed and complied in all material respects with all agreements and
      conditions required by this Agreement to be performed or complied with by
      them on or before the Closing Date;

	 	 	 	 
	 	(c) 	
      no Material Adverse Effect will have occurred in respect
      of the Company since the date of this Agreement;

	 	 	 	 
	 	(d) 	
      no action or proceeding before any court, governmental
      body or agency shall have been threatened, asserted or instituted to
      restrain or prohibit, or to obtain substantial damages in respect of, the
      Merger or the carrying out of the transactions contemplated by the
      Merger;

	 	 	 	 
	 	(e) 	
      no suit, action, or proceeding will be pending or
      threatened before any governmental or regulatory authority wherein an
      unfavorable judgment, order, decree, stipulation, injunction or charge
      would result in and/or:

	 	 	 	 
	 		(i) 	
      prevent the consummation of any of the transactions
      contemplated by this Agreement; or

	 	 	 	 
	 		(ii) 	
      cause the Merger to be rescinded following
      consummation;

	 	 	 	 
	 	(f) 	
      there will be no outstanding options, warrants,
      subscriptions, conversion rights, or other rights, agreements, or
      commitments obligating the Company to issue any additional shares of the
      Company Stock, or any other securities convertible into, exchangeable for,
      or evidencing the right to subscribe for or acquire from the Company any
      shares of the Company Stock;

	 	 	 	 
	 	(g) 	
      on Closing, the Company will not have any Liabilities and
      unrecorded obligations that will become Liabilities following the Closing
      (the “Future Obligations”) other than the Liabilities and the
      Future Obligations set forth in the Disclosure Statement (the
      “Permitted Company Liabilities”) and aggregate additional
      Liabilities of less than $50,000 incurred as a result of operating
      expenses incurred in the normal course of business;

	 	 	 	 
	 	(h) 	
      on Closing, the Company will have no unexercised Company
      Options or Company Warrants outstanding;

- 24 - 

	 	(i) 	
      on Closing, the Company will have no indebtedness for
      borrowed money except as set forth in the Disclosure Statement and no
      outstanding convertible debt;

	 	 	 	 
	 	(j) 	
      on or prior to Closing, the senior management of the
      Company will have entered into severance agreements with the
    Company;

	 	 	 	 
	 	(k) 	
      on Closing, each of the directors and officers of the
      Company will have resigned from their respective positions;

	 	 	 	 
	 	(l) 	
      the Company will have been assigned all of the
      Intellectual Property Assets pursuant to written assignment
    agreements;

	 	 	 	 
	 	(m) 	
      Parent and Acquisition Corp. will have received written
      consents from any parties from whom consent is required to consummate the
      Merger and the transactions contemplated herein;

	 	 	 	 
	 	(n) 	
      Parent and Acquisition Corp. shall have received the
      following:

	 	 	 	 
	 		(i) 	
      copies of resolutions of the Board of Directors and the
      shareholders of the Company, certified by the Secretary of the Company,
      authorizing and approving the execution, delivery and performance of the
      Merger and all other documents and instruments to be delivered pursuant
      thereto,

	 	 	 	 
	 		(ii) 	
      a certificate of incumbency executed by the Secretary of
      the Company certifying the names, titles and signatures of the officers
      authorized to execute any documents referred to in this Agreement and
      further certifying that the incorporation documents of the Company
      delivered to Parent and Acquisition Corp. at the time of the execution of
      this Agreement have been validly adopted and have not been amended or
      modified,

	 	 	 	 
	 		(iii) 	
      evidence as of a recent date and within five (5) days of
      the Effective Date of the good standing and corporate existence of the
      Company issued by the Secretary of State of the State of Delaware and
      evidence that the Company is qualified to transact business in each
      jurisdiction where the character of the property owned or leased by it or
      the nature of its activities makes such qualification necessary,

	 	 	 	 
	 		(iv) 	
      Parent will have received duly executed copies of all
      third party consents and approvals contemplated by this Agreement, in form
      and substance reasonably satisfactory to Parent,

	 	 	 	 
	 		(v) 	
      evidence that is reasonably satisfactory to Parent
      regarding the cancellation of the Company Options and the Company
      Warrants, including copies of requisite directors’ resolutions authorizing
      same, cancelled stock option agreements and warrant
certificates,

	 	 	 	 
	 		(vi) 	
      evidence reasonably satisfactory to Parent regarding the
      cancellation of all convertible debt,

- 25 - 

	 	(vii) 	
      duly executed copies of all assignment agreements
      contemplated in Section 5.1(l),

	 	 	 
	 	(viii) 	
      duly executed resignations from the directors and senior
      officers of the Company,

	 	 	 
	 	(ix) 	
      duly executed copies of severance agreements regarding
      the termination of senior management of the Company,

	 	 	 
	 	(x) 	
      duly executed releases signed by each officer of the
      Company who resigned or entered into a severance agreement in
      contemplation of this Agreement, which release will release the Company
      and the Surviving Corporation from all claims and liabilities (except for
      any claims or liabilities that such person may be indemnified against in
      accordance with the Company’s Bylaws) in a form which is agreed to by
      Parent and its counsel, acting reasonably, and

	 	 	 
	 	(xi) 	
      such additional supporting documentation and other
      information with respect to the transactions contemplated hereby as Parent
      and Acquisition Corp. may reasonably request;

	 	(o) 	
      all corporate and other proceedings and actions taken in
      connection with the transactions contemplated hereby and all certificates,
      opinions, agreements, instruments and documents mentioned herein or
      incident to any such transactions shall be reasonably satisfactory in form
      and substance to Parent and Acquisition Corp. The Company and Company
      Shareholders shall furnish to Parent and Acquisition Corp. such supporting
      documentation and evidence of the satisfaction of any or all of the
      conditions precedent specified in this Section 5.1 as Parent or its
      counsel may reasonably request; and

	 	 	 
	 	(p) 	
      at or prior to Closing, the Company and the Company
      Shareholders will use their reasonable efforts to obtain and collect
      certificates representing shares of Company Stock that were outstanding
      immediately prior to the Effective Time, and deliver such certificates to
      Parent (other than shares of Company Stock as to which appraisal rights
      are perfected pursuant to the applicable provisions of the DGCL and not
      withdrawn or otherwise forfeited).

Section 5.2 Conditions to the Obligations of the Company and
the Company Shareholders. The obligation of the Company and the Company
Shareholders to consummate the Merger is subject to the satisfaction or written
waiver of the conditions set forth below by a date mutually agreed upon by the
parties hereto in writing and in accordance with Section 7. The Closing of the
Merger will be deemed to mean a waiver of all conditions to Closing. These
conditions precedent are for the benefit of the Company and the Company
Shareholders and may be waived by the Company and the Company Shareholders in
their discretion: 

	 	(a) 	
      the representations and warranties of Parent and
      Acquisition Corp. under this Agreement shall be deemed to have been made
      again on the Closing Date and shall then be true and correct in all
      material respects;

- 26 - 

	 	(b) 	
      Parent and Acquisition Corp. shall have performed and
      complied in all material respects with all agreements and conditions
      required by this Agreement to be performed or complied with by them on or
      before the Closing Date;

	 	 	 	 
	 	(c) 	
      no Material Adverse Effect will have occurred in respect
      of either Parent or Acquisition Corp. since the date of this
    Agreement;

	 	 	 	 
	 	(d) 	
      no action or proceeding before any court, governmental
      body or agency shall have been threatened, asserted or instituted to
      restrain or prohibit, or to obtain substantial damages in respect of, the
      Merger or the carrying out of the transactions contemplated by the
      Merger;

	 	 	 	 
	 	(e) 	
      no suit, action, or proceeding will be pending or
      threatened before any governmental or regulatory authority wherein an
      unfavorable judgment, order, decree, stipulation, injunction or charge
      would result in and/or:

	 	 	 	 
	 		(i) 	
      prevent the consummation of any of the transactions
      contemplated by this Agreement, or

	 	 	 	 
	 		(ii) 	
      cause the Merger to be rescinded following
      consummation;

	 	 	 	 
	 	(f) 	
      the Company and the Company Shareholders shall have
      received the following:

	 	 	 	 
	 		(i) 	
      copies of resolutions from the Board of Directors of
      Parent and Acquisition Corp. and from Parent as sole shareholder of
      Acquisition Corp., certified by their respective secretaries, authorizing
      and approving, to the extent applicable, the execution, delivery and
      performance of the Merger and all other documents and instruments to be
      delivered by them pursuant thereto,

	 	 	 	 
	 		(ii) 	
      a certificate of incumbency executed by the respective
      Secretaries of Parent and Acquisition Corp. certifying the names, titles
      and signatures of the officers authorized to execute the documents
      referred to in this Agreement and further certifying that the
      incorporation documents of Parent and Acquisition Corp. appended thereto
      have not been amended or modified,

	 	 	 	 
	 		(iii) 	
      evidence as of a recent date and within five (5) days of
      the Effective Date of the good standing and corporate existence of each of
      Parent issued by the Secretary of State of the State of Nevada and
      Acquisition Corp. issued by the Secretary of State of the State of
      Delaware and evidence that Parent and Acquisition Corp. are qualified to
      transact business in each jurisdiction where the character of the property
      owned or leased by them or the nature of their activities makes such
      qualification necessary,

	 	 	 	 
	 		(iv) 	
      the Company and Company Shareholders will have received
      duly executed copies of all third party consents and approvals
      contemplated by

- 27 - 

	 		
      this Agreement, in form and substance reasonably
      satisfactory to the Company and the Company Shareholders, and

	 	 	 
	 	(v) 	
      such additional supporting documentation and other
      information with respect to the transactions contemplated hereby as the
      Company may reasonably request; and

	 	(g) 	
      all corporate and other proceedings and actions taken in
      connection with the transactions contemplated hereby and all certificates,
      opinions, agreements, instruments and documents mentioned herein or
      incident to any such transactions shall be satisfactory in form and
      substance to the Company and Company Shareholders. Parent and Acquisition
      Corp. shall furnish to the Company such supporting documentation and
      evidence of satisfaction of any or all of the conditions specified in this
      Section 5.2 as the Company may reasonably request.

ARTICLE 6 
INDEMNIFICATION AND RELATED MATTERS 

Section 6.1 Certain Definitions. For the purposes of
this Article 6 the terms “Loss” and “Losses” mean any and
all demands, claims, actions or causes of action, assessments, losses, damages,
Liabilities, costs, and expenses, including without limitation, interest,
penalties, fines and reasonable attorneys, accountants and other professional
fees and expenses, but excluding any indirect, consequential or punitive damages
suffered by Parent or the Company including damages for lost profits or lost
business opportunities. 

Section 6.2 Agreement of the Company to Indemnify. The
Company will indemnify, defend, and hold harmless, to the full extent of the
law, Parent, Acquisition Corp. and their respective shareholders from, against,
and in respect of any and all Losses asserted against, relating to, imposed
upon, or incurred by Parent and Acquisition Corp. and their respective
shareholders by reason of, resulting from, based upon or arising out of: 

	 	(a) 	
      the breach by the Company of any representation or
      warranty of the Company contained in or made pursuant to this Agreement,
      any Company Document or any certificate or other instrument delivered
      pursuant to this Agreement; or

	 	 	 
	 	(b) 	
      the breach or partial breach by the Company of any
      covenant or agreement of the Company made in or pursuant to this
      Agreement, any Company Document or any certificate or other instrument
      delivered pursuant to this Agreement.

Section 6.3 Agreement of the Company Shareholders to
Indemnify. The Company Shareholders will, in the ratios set out in the
Disclosure Statement, each severally indemnify, defend, and hold harmless to the
full extent of the law, Parent, Acquisition Corp. and their respective
shareholders from, against, and in respect of any and all Losses asserted
against, relating to, imposed upon, or incurred by Parent and Acquisition Corp.
and their respective shareholders by reason of, resulting from, based upon or
arising out of: 

	 	(a) 	
      the breach of any representation or warranty of the
      Company or Company Shareholder contained in or made pursuant to this
      Agreement, any Company

- 28 - 

	 		
      Document or any certificate or other instrument delivered
      pursuant to this Agreement;

	 	 	 
	 	(b) 	
      the breach or partial breach of any covenant or agreement
      of the Company or Company Shareholder made in or pursuant to this
      Agreement, any Company Document or any certificate or other instrument
      delivered pursuant to this Agreement;

	 	 	 
	 	(c) 	
      any and all Liabilities and Losses, other than the
      Permitted Company Liabilities, incurred and brought forth after the
      Closing Date, including legal proceedings brought against the Company or
      the Surviving Corporation, which Liabilities and Losses were incurred or
      arose prior to the Closing Date; or

	 	 	 
	 	(d) 	
      any and all Liabilities and Losses resulting from claims
      of any shareholder of the Company resulting from the consummation of the
      Merger, including in connection with any appraisal rights pursuant to the
      applicable provisions of the DGCL that may be available as a result of or
      in connection with the Merger.

Section 6.4 Agreement of Parent and Acquisition Corp. to
Indemnify. Parent and Acquisition Corp. will indemnify, defend, and hold
harmless, to the full extent of the law, the Company Shareholders from, against,
for, and in respect of any and all Losses asserted against, relating to, imposed
upon, or incurred by the Company and the Company Shareholders by reason of,
resulting from, based upon or arising out of: 

	 	(a) 	
      the breach by Parent or Acquisition Corp. of any
      representation or warranty of Parent or Acquisition Corp. contained in or
      made pursuant to this Agreement, any Parent Document or any certificate or
      other instrument delivered pursuant to this Agreement; or

	 	 	 
	 	(b) 	
      the breach or partial breach by Parent or Acquisition
      Corp. of any covenant or agreement of Parent or Acquisition Corp. made in
      or pursuant to this Agreement, any Parent Document or any certificate or
      other instrument delivered pursuant to this
Agreement.

Section 6.5 Limitation on Indemnity. Any party entitled
to indemnification under Sections 6.2, 6.3 or 6.4 shall only be entitled to
indemnification (a) for a period of one (1) year from the Closing Date, and (b)
in respect of any Losses after the aggregate amount of such Losses exceeds
$50,000 in any calendar year, at which point the indemnified party shall be
entitled to recover the entire amount of such Losses from the first dollar
(including the first $50,000); provided, however, the aggregate indemnification
obligations of the Company Shareholders contained in this Agreement shall be
limited to $500,000 and the aggregate indemnification obligations of the Parent
and Acquisition Corp. shall be limited to $500,000. 

Section 6.6 Indemnification Procedures. If any action
shall be brought against any party in respect of which indemnity may be sought
pursuant to this Agreement (“Indemnified Party”), such Indemnified Party
shall promptly notify the party from whom indemnity is being sought
(“Indemnifying Party”) in writing, and the Indemnifying Party shall have
the right to assume the defense thereof with counsel of its own choosing. Any
Indemnified Party shall have the right to 

- 29 - 

employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party except to the extent that the employment
thereof has been specifically authorized by the Indemnifying Party in writing,
the Indemnifying Party has failed after a reasonable period of time to assume
such defense and to employ counsel or in such action there is, in the reasonable
opinion of such separate counsel, a material conflict on any material issue
between the position of the Indemnifying Party and the position of such
Indemnified Party which would make joint representation inappropriate under
applicable canons of professional ethics. The Indemnifying Party will not be
liable to any Indemnified Party under this Article 6 for any settlement by an
Indemnified Party effected without the Indemnifying Party’s prior written
consent, which shall not be unreasonably withheld or delayed; or to the extent,
but only to the extent that a loss, claim, damage or liability is attributable
to any Indemnified Party’s indemnification pursuant to this Article 6. 

Section 6.7 Sole Remedy. The indemnification provided
for in this Article 6 shall be the sole remedy for any breach of or claims with
respect to this Agreement, any Company Document or Parent Document, as
applicable, or the transactions contemplated herein. 

ARTICLE 7 
MISCELLANEOUS 

Section 7.1 Notices. Any notice, request or other
communication hereunder shall be given in writing and shall be served either
personally, by overnight delivery or delivered by mail, certified return receipt
and addressed to the following addresses: 

	 	(a) 	
      If to Parent, the Company or Acquisition Corp.:

	 	 	 
	 		
      CounterPath Corporation 

	 	 	Suite 300, One Bentall Centre
	 		505 Burrard St
	 	 	Vancouver, BC V7X 1M3 
	 		
      Attention: David Karp

	 	 	 
	 		
      With a copy to:

	 	 	 
	 		
      Clark Wilson LLP

	 	 	800 - 885 West Georgia Street
	 		Vancouver, BC V6C 3H1 
	 		
      Attention: Virgil Hlus

	 	 	 
	 	(b) 	
      If to Polaris:

	 	 	 
	 		
      Polaris Venture Partners IV, L.P. 
1000 Winter Street,
      Suite 3350 
Waltham, MA 02451 
Attention: Robert
  Geiman

- 30 - 

	 	(c) 	
      If to Polaris Venture:

	 	 	 
	 		
      Polaris Venture Partners Entrepreneurs Fund IV, L.P.
      
1000 Winter Street, Suite 3350 
Waltham, MA 02451 
Attention:
      Robert Geiman

	 	 	 
	 	(d) 	
      If to General Catalyst:

	 	 	 
	 		
      General Catalyst Group II, LP

	 		20 University Road, Suite 450
	 		
      Cambridge, MA 02138 
Attention: John Simon

	 	 	 
	 	(e) 	
      If to GC:

	 	 	 
	 		
      GC Entrepreneurs Fund II, L.P.

	 		20 University Road, Suite 450
	 		
      Cambridge, MA 02138 
Attention: John Simon

	 	 	 
	 	(f) 	
      If to Toronto Dominion:

	 	 	 
	 		
      Toronto Dominion Capital (USA), Inc.

	 		909 Fannin, Suite 1950
	 		
      Houston, TX 77010 
Attention: Martha Gariepy

	 	 	 
	 	(g) 	
      If to Summerhill:

	 	 	 
	 		
      Summerhill Ventures I L.P.

	 		21 St. Clair Avenue East, Suite 1400
	 		
      Toronto, Ontario 
Attention: Ommer Chohan

	 	 	 
	 		
      If to Polaris, Polaris Venture, General Catalyst, GC,
      Toronto Dominion or Summerhill, with a copy to:

	 	 	 
	 		
      Goodwin Procter LLP 
Exchange Place, 53 State Street
      
Boston, MA 02109 
Attention: Jack Steele

Notices shall be deemed received at the earlier of actual
receipt or three (3) business days following mailing. Counsel for a party (or
any authorized representative) shall have authority to accept delivery of any
notice on behalf of such party. 

- 31 - 

Section 7.2 Entire Agreement. This Agreement, including
the schedules and exhibits attached hereto and other documents referred to
herein, contains the entire understanding of the parties hereto with respect to
the subject matter hereof. This Agreement supersedes all prior agreements and
undertakings between the parties with respect to such subject matter. 

Section 7.3 Expenses. Each party shall bear and pay all
of the legal, accounting and other expenses incurred by it in connection with
the transactions contemplated by this Agreement. 

Section 7.4 Time. Time is of the essence in the
performance of the parties’ respective obligations herein contained. 

Section 7.5 Severability. Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. 

Section 7.6 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns and heirs; provided, however, that neither party
shall directly or indirectly transfer or assign any of its rights hereunder in
whole or in part without the written consent of the others, which may be
withheld in its sole discretion, and any such transfer or assignment without
said consent shall be void. 

Section 7.7 No Third Parties Benefited. Except as
provided in Section 7.14, this Agreement is made and entered into for the sole
protection and benefit of the parties hereto, their successors, assigns and
heirs, and no other Person shall have any right or action under this Agreement.

Section 7.8 Counterparts. This Agreement may be executed
in one or more counterparts, with the same effect as if all parties had signed
the same document. Each such counterpart shall be an original, but all such
counterparts together shall constitute a single agreement. 

Section 7.9 Fax and Electronic Execution. This Agreement
may be executed by delivery of executed signature pages by fax or other
electronic means and such execution will be effective for all purposes. 

Section 7.10 Business Days. If the last or appointed day
for the taking of any action required or the expiration of any rights granted
herein shall be a Saturday, Sunday or a legal holiday in the Provinces of
British Columbia, then such action may be taken or right may be exercised on the
next succeeding day which is not a Saturday, Sunday or such a legal holiday.

Section 7.11 Recitals, Schedules and Exhibits. The
Recitals, Schedules and Exhibits to this Agreement are incorporated herein and,
by this reference, made a part hereof as if fully set forth herein. 

Section 7.12 Section Headings and Gender. The Section
headings used herein are inserted for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement. All personal
pronouns used in this Agreement shall include the other genders, 

- 32 - 

whether used in the masculine, feminine or neuter gender, and
the singular shall include the plural, and vice versa, whenever and as often as
may be appropriate. 

Section 7.13 Governing Law. This Agreement shall be
exclusively governed by and construed and enforced in accordance with the
internal laws of the Province of British Columbia without regard to principles
of conflicts of laws, except that provisions regarding the effectiveness and
effect of the Merger shall be governed by, construed and enforced in accordance
with the internal laws of the State of Delaware without regard to principles of
conflict of laws. 

Section 7.14 Directors and Officers Indemnification.
Parent agrees to cause the Surviving Corporation to honor its indemnification
obligations to the Company’s directors and officers in accordance with the terms
and conditions of the Amended and Restated Bylaws of the Company as of the date
hereof. The Company’s directors and officers are intended third party
beneficiaries of this provision and may enforce this provision. 

[Signature Page Follows]

- 33 - 

          IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to be legally
binding and effective as of the day and year first above written. 

COUNTERPATH CORPORATION 

	Per: 	/s/ Donovan Jones 	 
	  	Authorized Signatory 	 

COUNTERPATH ACQUISITION CORP. 

	Per: 	/s/ David Karp 	 
	  	Authorized Signatory 	 

BRIDGEPORT NETWORKS, INC. 

	Per: 	/s/ Edward Battle 	 
	  	Authorized Signatory 	 

POLARIS VENTURE PARTNERS IV, L.P. 

	Per: 	/s/ Signed 	 
	  	Authorized Signatory 	 

POLARIS VENTURE PARTNERS ENTREPRENEURS FUND IV, L.P.

	Per: 	/s/ Signed 	 
	  	Authorized Signatory 	 

GENERAL CATALYST GROUP II, L.P. 

	Per: 	/s/ Signed 	 
	  	Authorized Signatory 	 

[SIGNATURE PAGE TO AGREEMENT OF MERGER AND PLAN OF
REORGANIZATION] 

GC ENTREPRENEURS FUND II, L.P. 

	Per: 	/s/ Signed 	 
	  	Authorized Signatory 	 

TORONTO DOMINION CAPITAL (USA), INC. 

	Per: 	/s/ Martha Gariepy 	 
	  	Authorized Signatory 	 

SUMMERHILL VENTURES I L.P. 

Summerhill Venture Partners LP, its General Partner

Summerhill Venture Partners Inc., Its General Partner 

	By:	/s/ Signed 	 
	 	Name: 	 
	 	Title: 	 

[END OF SIGNATURE PAGES TO AGREEMENT OF MERGER AND PLAN OF
REORGANIZATION] 

- 35 - 

Exhibit A 

(Certificate of Merger) 

- 36 - 

 

Exhibit B 

(Certificate of Incorporation) 

- 37 - 

Exhibit C 

(Bylaws) 

- 38 - 

Exhibit D 

(Directors and Officers of Surviving Corporation) 

Greg Pelling: President and Director 

Donovan Jones: Chief Operating Officer and Director 

David Karp: Secretary, Treasurer and Director 

- 39 - 

Exhibit E 

(Regulation S Certificate) 

CERTIFICATE OF NON-U.S. SHAREHOLDER 

In connection with the issuance of options (the “Pubco
Options”) of COUNTERPATH CORPORATION, a Nevada corporation (“Pubco”), to the
undersigned, pursuant to that certain Agreement of Merger and Plan of
Reorganization dated February 1, 2008 (the “Agreement”), the undersigned hereby
agrees, acknowledges, represents and warrants that: 

          1.      the
undersigned is not a “U.S. Person” as such term is defined by Rule 902 of
Regulation S under the United States Securities Act of 1933, as amended (“U.S.
Securities Act”) (the definition of which includes, but is not limited to, an
individual resident in the U.S. and an estate or trust of which any executor or
administrator or trust, respectively is a U.S. Person and any partnership or
corporation organized or incorporated under the laws of the U.S.); 

          2.      none
of the Pubco Options have been or will be registered under the U.S. Securities
Act, or under any state securities or “blue sky” laws of any state of the United
States, and may not be offered or sold in the United States or, directly or
indirectly, to U.S. Persons, as that term is defined in Regulation S, except in
accordance with the provisions of Regulation S or pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the U.S.
Securities Act and in compliance with any applicable state and foreign
securities laws; 

          3.     
the undersigned understands and agrees that offers and sales of any of the Pubco
Options and the common shares issuable upon the exercise of the Pubco Options
(collectively, the “Pubco Securities”) prior to the expiration of a period set
out in Regulation S of the U.S. Securities Act (such period hereinafter referred
to as the “Distribution Compliance Period”), shall only be made in compliance
with the safe harbor provisions set forth in Regulation S, pursuant to the
registration provisions of the U.S. Securities Act or an exemption therefrom,
and that all offers and sales after the Distribution Compliance Period shall be
made only in compliance with the registration provisions of the U.S. Securities
Act or an exemption therefrom and in each case only in accordance with
applicable state and foreign securities laws; 

          4.      the
undersigned understands and agrees not to engage in any hedging transactions
involving any of the Pubco Securities unless such transactions are in compliance
with the provisions of the U.S. Securities Act and in each case only in
accordance with applicable state and provincial securities laws; 

          5.      the
undersigned is acquiring the Pubco Securities for investment only and not with a
view to resale or distribution and, in particular, it has no intention to
distribute either directly or indirectly any of the Pubco Securities in the
United States or to U.S. Persons; 

          6.      the
undersigned has not acquired the Pubco Securities as a result of, and will not
itself engage in, any directed selling efforts (as defined in Regulation S under
the U.S. Securities Act) in the United States in respect of the Pubco Securities
which would include any activities undertaken for the purpose of, or that could
reasonably be expected to have the effect of, 

- 40 - 

conditioning the market in the United States for the resale of
any of the Pubco Securities; provided, however, that the undersigned may sell or
otherwise dispose of the Pubco Securities pursuant to registration thereof under
the U.S. Securities Act and any applicable state and provincial securities laws
or under an exemption from such registration requirements; 

          7.      the
statutory and regulatory basis for the exemption claimed for the sale of the
Pubco Securities, although in technical compliance with Regulation S, would not
be available if the offering is part of a plan or scheme to evade the
registration provisions of the U.S. Securities Act or any applicable state and
provincial securities laws; 

          8.      except
as set out in the Agreement, Pubco has not undertaken, and will have no
obligation, to register any of the Pubco Securities under the U.S. Securities
Act; 

          9.     
Pubco is entitled to rely on the acknowledgements, agreements, representations
and warranties and the statements and answers of the undersigned contained in
this Certificate, and the undersigned will hold harmless Pubco from any loss or
damage either one may suffer as a result of any such acknowledgements,
agreements, representations and/or warranties made by the undersigned not being
true and correct; 

          10.     
the undersigned has been advised to consult their own respective legal, tax and
other advisors with respect to the merits and risks of an investment in the
Pubco Securities and, with respect to applicable resale restrictions, is solely
responsible (and Pubco is not in any way responsible) for compliance with
applicable resale restrictions; 

          11.     
the undersigned and the undersigned’s advisor(s) have had a reasonable
opportunity to ask questions of and receive answers from Pubco in connection
with the acquisition of the Pubco Securities under the Agreement, and to obtain
additional information, to the extent possessed or obtainable by Pubco without
unreasonable effort or expense; 

          12.     
the books and records of Pubco were available upon reasonable notice for
inspection, subject to certain confidentiality restrictions, by the undersigned
during reasonable business hours at its principal place of business and that all
documents, records and books in connection with the acquisition of the Pubco
Securities under the Agreement have been made available for inspection by the
undersigned, the undersigned’s attorney and/or advisor(s); 

          13.      the
undersigned: 

	 	(a) 	
      is knowledgeable of, or has been independently advised as
      to, the applicable securities laws of the securities regulators having
      application in the jurisdiction in which the undersigned is resident (the
      “International Jurisdiction”) which would apply to the acquisition of the
      Pubco Securities;

	 	 	 
	 	(b) 	
      the undersigned is acquiring the Pubco Securities
      pursuant to exemptions from prospectus or equivalent requirements under
      applicable securities laws or, if such is not applicable, the undersigned
      is permitted to acquire the Pubco Securities under the applicable
      securities laws of the securities

- 41 - 

	 		
      regulators in the International Jurisdiction without the
      need to rely on any exemptions;

	 	 	 	 
	 	(c) 	
      the applicable securities laws of the authorities in the
      International Jurisdiction do not require Pubco to make any filings or
      seek any approvals of any kind whatsoever from any securities regulator of
      any kind whatsoever in the International Jurisdiction in connection with
      the issue and sale or resale of the Pubco Securities; and

	 	 	 	 
	 	(d) 	
      the acquisition of the Pubco Securities by the
      undersigned does not trigger:

	 	 	 	 
	 		(i) 	
      any obligation to prepare and file a prospectus or
      similar document, or any other report with respect to such purchase in the
      International Jurisdiction; or

	 	 	 	 
	 		(ii) 	
      any continuous disclosure reporting obligation of Pubco
      in the International Jurisdiction; and

	 	 	 	 
	 		(iii) 	
      the undersigned will, if requested by Pubco, deliver to
      Pubco a certificate or opinion of local counsel from the International
      Jurisdiction which will confirm the matters referred to in Sections 13(c)
      and 13(d) above to the satisfaction of Pubco, acting
  reasonably;

          14.     
the undersigned (i) is able to fend for itself in connection with the
acquisition of the Pubco Securities; (ii) has such knowledge and experience in
business matters as to be capable of evaluating the merits and risks of its
prospective investment in the Pubco Securities; and (iii) has the ability to
bear the economic risks of its prospective investment and can afford the
complete loss of such investment; 

          15.      the
undersigned is not aware of any advertisement of any of the Pubco Securities and
is not acquiring the Pubco Securities as a result of any form of general
solicitation or general advertising including advertisements, articles, notices
or other communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising; 

          16.      except
as set out in the Agreement, no Person has made to the undersigned any written
or oral representations: 

	 	(a) 	
      that any Person will resell or repurchase any of the
      Pubco Securities;

	 	 	 
	 	(b) 	
      that any Person will refund the purchase price of any of
      the Pubco Securities;

	 	 	 
	 	(c) 	
      as to the future price or value of any of the Pubco
      Securities; or

- 42 - 

	 	(d) 	
      that any of the Pubco Securities will be listed and
      posted for trading on any stock exchange or automated dealer quotation
      system or that application has been made to list and post any of the Pubco
      Securities on any stock exchange or automated dealer quotation system,
      except that currently certain market makers make market in the common
      shares of Pubco on the OTC Bulletin Board;

          17.     
none of the Pubco Securities are listed on any stock exchange or automated
dealer quotation system and, except as set out in the Agreement, no
representation has been made to the undersigned that any of the Pubco Securities
will become listed on any stock exchange or automated dealer quotation system,
except that currently certain market makers make market in the common shares of
Pubco on the OTC Bulletin Board; 

          18.      the
undersigned is outside the United States when receiving and executing this
Agreement and is acquiring the Pubco Securities as principal for their own
account, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, and no other
Person has a direct or indirect beneficial interest in the Pubco Securities;

          19.     
neither the SEC nor any other securities commission or similar regulatory
authority has reviewed or passed on the merits of the Pubco Securities; 

          20.     
the Pubco Securities are not being acquired, directly or indirectly, for the
account or benefit of a U.S. Person or a Person in the United States; 

          21.     
the undersigned acknowledges and agrees that Pubco shall refuse to register any
transfer of Pubco Securities not made in accordance with the provisions of
Regulation S, pursuant to registration under the U.S. Securities Act, or
pursuant to an available exemption from registration under the U.S. Securities
Act; 

          22.     
the undersigned understands and agrees that the Pubco Securities will bear the
following legend: 

  
    “THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED
      IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED
      HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT
      OF 1933, AS AMENDED (THE “1933 ACT”). 

    NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED
      UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED,
      MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES
      (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS
      OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION 

  

- 43 - 

  
    REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE
      WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS
      INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
      THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE
      AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”; 

  

          23.      the
address of the undersigned included herein is the sole address of the
undersigned as of the date of this Certificate; and 

Capitalized terms used but not otherwise defined in this
Certificate shall have the meanings given to such terms in the Agreement. 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Non-U.S. Shareholder. 

	                                                                                                                                               	Date:___________________________________
      ,_______ 
	Signature 	  
	 	 
	 	 
	Print Name 	  
	 	 
	 	 
	Title (if applicable) 	  
	 	 
	 	 
	  	  
	Address 	  
	 	 

- 44 - 

Exhibit F 

(Rule 506 Certificate) 

CERTIFICATE OF U.S. SHAREHOLDER 

In connection with the issuance of options (the “Pubco
Options”) of COUNTERPATH CORPORATION, a Nevada corporation (“Pubco”), to the
undersigned, pursuant to that certain Agreement of Merger and Plan of
Reorganization dated February 1, 2008 (the “Agreement”), the undersigned hereby
agrees, acknowledges, represents and warrants that: 

     1. the undersigned satisfies one
or more of the categories of “Accredited Investors”, as defined by Regulation D
promulgated under the United States Securities Act of 1933, as amended (the
“U.S. Securities Act”), as indicated below: (Please initial in the space provide
those categories, if any, of an “Accredited Investor” which the undersigned
satisfies.) 

		________	Category 1 	
      An organization described in Section 501(c)(3) of the
      United States Internal Revenue Code, a corporation, a Massachusetts or
      similar business trust or partnership, not formed for the specific purpose
      of acquiring the Shares, with total assets in excess of US $5,000,000.
    

	 	 	  	
       

		________	Category 2 	
      A natural person whose individual net worth, or joint net
      worth with that person's spouse, on the date of purchase exceeds US
      $1,000,000. 

	 	 	  	
       

		________	Category 3 	
      A natural person who had an individual income in excess
      of US $200,000 in each of the two most recent years or joint income with
      that person's spouse in excess of US $300,000 in each of those years and
      has a reasonable expectation of reaching the same income level in the
      current year. 

	 	 	  	
       

		________	Category 4 	
      A "bank" as defined under Section (3)(a)(2) of the 1933
      Act or savings and loan association or other institution as defined in
      Section 3(a)(5)(A) of the Securities Act acting in its individual or
      fiduciary capacity; a broker dealer registered pursuant to Section 15 of
      the Securities Exchange Act of 1934 (United States); an insurance
      company as defined in Section 2(13) of the 1933 Act; an investment company
      registered under the Investment Company Act of 1940 (United
      States) or a business development company as defined in Section 2(a)(48)
      of such Act; a Small Business Investment Company licensed by the U.S.
      Small Business Administration under Section 301(c) or (d) of the Small
      Business Investment Act of 1958 (United States); a plan with total
      assets in excess of $5,000,000 established and maintained by a state, a
      political subdivision thereof, or an agency or instrumentality of a state
      or a political subdivision thereof, for the benefit of its employees; an
      employee benefit plan within the meaning of the Employee Retirement
      Income Security Act of 1974 (United States) whose investment
      decisions are made by a plan fiduciary, as defined in Section 3(21) of
      such Act, which is either a bank, savings and loan association, insurance
      company or registered investment adviser, or if the employee benefit plan
      has total assets in excess of $5,000,000, or, if a self-directed plan,
      whose investment decisions are made solely by persons that are accredited
      investors. 

- 45 - 

		________	Category 5 	
      A private business development company as defined in
      Section 202(a)(22) of the Investment Advisers Act of 1940 (United
      States). 

	 	 	 	
       

	 	________	Category 6 	
      A director or executive officer of the Company.

	 	 	 	
       

		________	Category 7 	
      A trust with total assets in excess of $5,000,000, not
      formed for the specific purpose of acquiring the Shares, whose purchase is
      directed by a sophisticated person as described in Rule 506(b)(2)(ii)
      under the 1933 Act. 

	 	 	 	
       

		________	Category 8 	
      An entity in which all of the equity owners satisfy the
      requirements of one or more of the foregoing categories.

Note that for any person claiming to
satisfy one of the above categories of Accredited Investor may be required to
supply Pubco with a balance sheet, prior years’ federal income tax returns or
other appropriate documentation to verify and substantiate the undersigned's
status as an Accredited Investor. 

If the undersigned is an entity which
initialled Category 8 in reliance upon the Accredited Investor categories above,
state the name, address, total personal income from all sources for the previous
calendar year, and the net worth (exclusive of home, home furnishings and
personal automobiles) for each equity owner of the said entity:

__________________________________________________________________________________

          2.      none
of the Pubco Options nor any of the shares issuable upon exercise of the Pubco
Options (collectively, the “Pubco Securities”) have been or will be registered
under the U.S. Securities Act, or under any state securities or “blue sky” laws
of any state of the United States, and may not be offered or sold in the United
States or, directly or indirectly, to U.S. Persons, as that term is defined in
Regulation S, except in accordance with the provisions of Regulation S or
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the U.S. Securities Act and in compliance with any
applicable state and foreign securities laws; 

          3.      the
undersigned understands and agrees that offers and sales of any of the Pubco
Securities shall be made only in compliance with the registration provisions of
the U.S. Securities Act or an exemption therefrom and in each case only in
accordance with applicable state and foreign securities laws; 

          4.      the
undersigned understands and agrees not to engage in any hedging transactions
involving any of the Pubco Securities unless such transactions are in compliance
with the provisions of the U.S. Securities Act and in each case only in
accordance with applicable state and provincial securities laws; 

          5.      the
undersigned is acquiring the Pubco Securities for investment only and not with a
view to resale or distribution and, in particular, it has no intention to
distribute either directly or indirectly any of the Pubco Securities in the
United States or to U.S. Persons; 

          6.      except
as set out in the Agreement, Pubco has not undertaken, and will have no
obligation, to register any of the Pubco Securities under the U.S. Securities
Act; 

- 46 - 

          7.     
Pubco is entitled to rely on the acknowledgements, agreements, representations
and warranties and the statements and answers of the undersigned contained this
Certificate, and the undersigned will hold harmless Pubco from any loss or
damage either one may suffer as a result of any such acknowledgements,
agreements, representations and/or warranties made by the undersigned not being
true and correct; 

          8.     
the undersigned has been advised to consult their own respective legal, tax and
other advisors with respect to the merits and risks of an investment in the
Pubco Securities and, with respect to applicable resale restrictions, is solely
responsible (and Pubco is not in any way responsible) for compliance with
applicable resale restrictions; 

          9.      the
undersigned and the undersigned’s advisor(s) have had a reasonable opportunity
to ask questions of and receive answers from Pubco in connection with the
acquisition of the Pubco Securities under the Agreement, and to obtain
additional information, to the extent possessed or obtainable by Pubco without
unreasonable effort or expense; 

          10.      the
books and records of Pubco were available upon reasonable notice for inspection,
subject to certain confidentiality restrictions, by the undersigned during
reasonable business hours at its principal place of business and that all
documents, records and books in connection with the acquisition of the Pubco
Securities under the Agreement have been made available for inspection by the
undersigned, the undersigned’s attorney and/or advisor(s); 

          11.     
the undersigned (i) is able to fend for itself in connection with the
acquisition of the Pubco Securities; (ii) has such knowledge and experience in
business matters as to be capable of evaluating the merits and risks of its
prospective investment in the Pubco Securities; and (iii) has the ability to
bear the economic risks of its prospective investment and can afford the
complete loss of such investment; 

          12.      the
undersigned is not aware of any advertisement of any of the Pubco Securities and
is not acquiring the Pubco Securities as a result of any form of general
solicitation or general advertising including advertisements, articles, notices
or other communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising; 

          13.      except
as set out in the Agreement, no person has made to the undersigned any written
or oral representations: 

	 	(a) 	
      that any person will resell or repurchase any of the
      Pubco Securities;

	 	 	 
	 	(b) 	
      that any person will refund the purchase price of any of
      the Pubco Securities;

	 	 	 
	 	(c) 	
      as to the future price or value of any of the Pubco
      Securities; or

	 	 	 
	 	(d) 	
      that any of the Pubco Securities will be listed and
      posted for trading on any stock exchange or automated dealer quotation
      system or that application has been made to list and post any of the Pubco
      Securities on any stock exchange or automated dealer quotation system,
      except that

- 47 - 

currently certain market makers make market in the
  common shares of Pubco on the OTC Bulletin Board; 

          14.     
none of the Pubco Securities are listed on any stock exchange or automated
dealer quotation system and, except as set out in the Agreement, no
representation has been made to the undersigned that any of the Pubco Securities
will become listed on any stock exchange or automated dealer quotation system,
except that currently certain market makers make market in the common shares of
Pubco on the OTC Bulletin Board; 

          15.      the
undersigned is acquiring the Pubco Securities as principal for their own
account, for investment purposes only, and not with a view to, or for, resale,
distribution or fractionalization thereof, in whole or in part, and no other
person has a direct or indirect beneficial interest in the Pubco Securities;

          16.     
neither the SEC nor any other securities commission or similar regulatory
authority has reviewed or passed on the merits of the Pubco Securities; 

          17.      the
undersigned acknowledges and agrees that Pubco shall refuse to register any
transfer of Pubco Securities not made in accordance with the provisions of
Regulation S, pursuant to registration under the U.S. Securities Act, or
pursuant to an available exemption from registration under the U.S. Securities
Act; 

          18.      the
undersigned understands and agrees that the Pubco Securities will bear the
following legend: 

  
    “NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN
      REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
      “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
      REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
      STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH
      THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
      FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
      OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS. “UNITED STATES” AND “U.S. PERSON” ARE
      AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”; 

  

          19.      the
address of the undersigned included herein is the sole address of the
undersigned as of the date of this certificate.; 

Capitalized terms used but not otherwise defined in this
Certificate shall have the meanings given to such terms in the Agreement. 

- 48 - 

IN WITNESS WHEREOF, the undersigned has executed this
Certificate of U.S. Shareholder. 

		Date:__________________________________,
      __________
	Signature 	  
	 	 
	Print Name 	  
	 	 
	 	 
	Title (if applicable) 	  
	 	 
	  	  
	Address 	  
	 	 

- 49 -ex10p1.htm

     

    
      

    

    Exhibit 10.1

     

    ANGELICA
      CORPORATION

    LONG
      TERM INCENTIVE PROGRAM

    CASH
      AWARD AGREEMENT

    

    

    This
      Cash
      Award Agreement (this “Agreement”) is made and entered into as of the ____ day
      of ____________, _____ by and between Angelica Corporation, a Missouri
      corporation (the “Company”) and _____________________ (“Employee”).

    

    WHEREAS,
      Employee has been designated a participant in the Company’s Long-Term Incentive
      Program for the ___________  performance period; and

    

    WHEREAS,
      in consideration of the foregoing, the Board of Directors of the Company desires
      to award a cash amount (the “Cash Award”), to Employee under and in accordance
      with the terms of the ____ Long Term Incentive Program (the “____ Program”), and
      Employee desires to receive such Cash Award on the terms and conditions, and
      subject to the restrictions, herein set forth; and

    

    NOW,
      THEREFORE, in consideration of the terms and conditions herein contained and
      for
      other good and valuable consideration, the receipt and sufficiency of which
      is
      hereby acknowledged by each of the parties hereto, the parties hereby agree
      as
      follows:

    

    Section
      1.                                
Definitions.

    

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    

    
      	
               

            	
              A.

            	
              “Cash
                Award” means the award provided for in Section 2.
                

            

    

    

    
      	
               

            	
              B.

            	
              “Board
                of Directors” means the Board of Directors of the Company.
                

            

    

    

    
      	
               

            	
              C.

            	
              “Cause”
                means (i) Employee’s willful and continued failure to substantially
                perform his duties and responsibilities with the Company (other than
                as a
                result of incapacity due to a physical or mental condition), after
                a
                written demand for substantial performance is delivered by the Company
                to
                Employee in which there is a specific identification of the manner
                in
                which Employee is not substantially performing his duties and
                responsibilities; (ii) Employee’s commission of an act constituting a
                criminal offense involving moral turpitude, dishonesty or breach
                of trust;
                or (iii) Employee’s material breach of the terms of any employment
                agreement between Employee and the Company.

            

    

    

    
      	
               

            	
              D.

            	
              “Change
                of Control” means Change of Control as defined in the Company’s 1999
                Performance Plan. 

            

    

    

    
      	
               

            	
              E.

            	
              “Date
                of Award” means  _____________, ______.
                

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
               

            	
              F.

            	
              “Disability” means
                that Employee has been unable to perform the duties and
                responsibilities then required of him on a full-time basis for a
                period of
                180 consecutive business days by reason of physical or mental
                condition.  Disability shall be deemed to exist when certified
                by a physician or physicians selected by the Company who are acceptable
                to
                Employee or Employee’s legal representative, such agreement as to
                acceptability not to be unreasonably
                withheld.

            

    

    

    
      	
               

            	
              G.

            	
              “Performance
                Period” means the period of three consecutive fiscal years of the Company,
                commencing January __, _____. 

            

    

    

    
      	
               

            	
              H.

            	
              “Restrictions”
                mean the restrictions on the Cash Award as provided for in Sections
                3, 4
                and 5 of this Agreement. 

            

    

    

    Section
2.                        Award.  Subject
      to the terms of this Agreement, effective as of the Date of Award, the Company
      awards to Employee an aggregate cash amount of ______________ ($______), subject
      to the Restrictions and the limitations on transfer set forth in Section
      6.

    

    Section
      3.                         Forfeiture of Cash
      Award for
      Certain Terminations of Employment during the Performance
      Period.

    

    (a)                      If
      Employee shall cease to be employed by the Company at any time prior to the
      end
      of the Performance Period due to a termination by the Company for Cause or
      termination by Employee for any reason other than death or Disability, or if,
      at
      any time during the initial eighteen (18) months of the Performance Period,
      Employee shall cease to be employed by the Company due to a termination by
      the
      Company without Cause, Employee shall immediately forfeit to the Company the
      entire amount of the Cash Award that has not previously been earned as provided
      in Section 5, without any consideration paid to Employee, and, thereafter,
      Employee shall have no further rights with respect to such Cash
      Award.

    

    (b)                      Provided
      that the Cash Award has not previously been earned as provided in Section 5,
      if
      Employee’s employment with the Company terminates prior to the end of the
      Performance Period and such termination occurred by reason of Employee’s death
      or Disability, or if, during the final eighteen (18) months of the Performance
      Period Employee’s employment with the Company terminates and such
      termination  was initiated by the Company for any reason other than
      Cause, Employee shall immediately forfeit to the Company that portion of the
      Cash Award determined by multiplying the amount of the Cash Award by a fraction,
      the numerator of which is the number of whole months from the date of
      termination of employment to the end of the Performance Period and the
      denominator of which is 36.  The remaining portion of the Cash Award
      will be earned and paid, or forfeited, in accordance with Section
      4.

    

    Section
      4.                         Forfeiture of Cash
      Award if
      Maximum Performance Goals are not Achieved; Payment of Earned Cash Award.
      If Employee shall have been continuously employed by the Company from the Date
      of Award through the end of the Performance Period, and the Cash Award has
      not
      previously been earned pursuant to Section 5, the portion of the Cash Award
      to
      be
      forfeited by Employee, if any, shall be that portion that has not been earned
      by
      Employee

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    based
      on
      achievement of the performance goals established under the Company’s 2008
      Long-Term Incentive Program, as set forth in Attachment A.  The Cash
      Award earned, if any, shall be payable as soon as administratively feasible
      following the determination of achievement, but not later than the end of the
      calendar year in which the Performance Period ends.

    

    Section
      5.                          Change of
      Control.

    

    (a)                     
      Notwithstanding Section 4, in the event of a Change of Control prior to the
      end
      of the Performance Period, and provided Employee is employed by the Company
      on
      the effective date of the Change of Control, the full amount of the Cash Award
      will be earned and payable to Employee as of the earlier of either: (i) the
      date
      that is one (1) year following the effective date of such Change of Control;
      (ii) the date upon which Employee’s employment is terminated by the Company for
      any reason other than for Cause; or (iii) the date upon which Employee’s
      employment terminates by reason of Employee’s death or Disability, and, in the
      case of termination of employment due to Disability, the termination is deemed
      to be a “separation from service” as defined in Section 409A of the Internal
      Revenue Code and the regulations promulgated thereunder.

    

    (b)                     
      Notwithstanding Section 5(a), if, during such one (1) year period following
      any
      such Change of Control, Employee’s employment is terminated by Employee
      voluntarily or by the Company for Cause, the full amount of the Cash Award
      shall
      thereupon be forfeited to the Company and Employee shall have no further rights
      to such Cash Award.

    

    (c)                      A
      Cash Award payable in accordance with this Section 5 shall be paid as soon
      as
      administratively feasible following the date such Cash Award becomes payable,
      but in no event later than the later of (i) the end of the calendar year in
      which the Cash Award becomes payable; and (ii) the 15th
      day of
      the third calendar month following the date the amount becomes
      payable.

    

    Section
      6.                          Limitations on
      Transfer.  Subject to Section 8 (concerning tax withholding),
      no portion of the Cash Award may be assigned, transferred, exchanged, pledged,
      hypothecated, or otherwise encumbered until such time as it has been earned
      and
      paid and no such assignment, transfer, exchange, pledge, hypothecation, or
      encumbrance, whether made or created by voluntary act of Employee or of any
      agent of such Employee or by operation of law, shall be recognized by, or be
      binding upon, or shall in any manner affect the rights of, the
      Company.

    

    Section
      7.                          Amendment.  This
      Agreement may be amended by mutual consent of the parties hereto by written
      agreement.

    

    Section
      8.                          Withholding.  The
      Company shall have the right to withhold from or require Employee to pay to
      the
      Company any amounts required to be withheld by the Company in respect of any
      federal, state or local taxes in respect of the Cash Award under this
      Agreement.

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    Section
      9.                          Governing
      Law.  This Agreement shall be construed and administered in
      accordance with the laws of the State of Missouri.

    

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

    

    

    
      

      
        	 	ANGELICA
                CORPORATION
	 	 	 
	 	 	 
	 	 	 
	 	
                By:

              	
                 

              
	 	 	
                Stephen
                  M. O’Hara

              
	 	 	
                President
                  and Chief Executive Officer

              
	 	 	
                 

              
	 	 	 
	 	 	 
	 	 	 
	 	EMPLOYEE
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	Printed
                Name:	 
	 	 	 

      

      
        	
                 

              	
                 
                  

              

      

    

     

    

    
      
        
        

      

      
        -4-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]