Document:

<PAGE>   1
                                                                   EXHIBIT 4.5

                                                        Draft of August 29, 2001

                          COMMON SHARE OPTION AGREEMENT

         THIS COMMON SHARE OPTION AGREEMENT (this "Agreement"), dated August 30,
2001, between Global Election Systems Inc., a company amalgamated under the Laws
of British Columbia (the "Company"), and Diebold, Incorporated, an Ohio
corporation ("Diebold").

                                    RECITALS

         A. The Company, Diebold and Diebold Acquisition Ltd., a company
incorporated under the Laws of British Columbia and a wholly-owned Subsidiary of
Diebold ("Sub"), are entering into an Arrangement Agreement and corresponding
Plan of Arrangement of even date herewith (the "Arrangement Agreement"), which
provides, among other things, for the exchange of all of the Company's Common
Shares for the Exchange Consideration upon the terms and subject to the
conditions contained therein; and

         B. The Company has agreed, in order to induce Diebold to enter into the
Arrangement Agreement, to grant the Option.

         NOW THEREFORE, in consideration of the premises and the
representations, warranties, mutual covenants and agreements set forth herein
and in the Arrangement Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:

         1. Grant of Option. The Company hereby grants Diebold an irrevocable
option (the "Option") to purchase, subject to the terms and conditions set forth
herein, up to such number of common shares of the Company, no par value per
share (the "Common Shares"), as represents 10% of the total number of issued and
outstanding Common Shares on the date of mailing of an Exercise Notice to the
Company by Diebold, in the manner set forth below at a price per Common Share
equal to the sum of (i) the Cash Consideration and (ii) that number of shares of
Buyer Common Stock equal to the Exchange Ratio (calculated as of the ten
consecutive trading day period ending on the trading day immediately preceding
the date of Diebold's mailing of an Exercise Notice; provided, that in no event
shall the Exchange Ratio be less than 0.02421 or greater than 0.03027 (such
range, the "Collar")) (as adjusted pursuant to Section 10, the "Exercise
Price"). The Exercise Price shall be deemed to have a value of $1.135 per Common
Share for all purposes of this Agreement subject to adjustment as provided in
Section 10. In connection with any adjustment to the Exercise Price pursuant to
Section 10, the Collar shall be proportionally adjusted.

         2. Exercise of Option. (a) Subject to the provisions of Section 2(b),
the Option may only be exercised by Diebold, in whole or in part, simultaneously
with the closing of, an Alternative Proposal (the "Alternative Transaction").
The Company will provide Diebold notice in writing at least ten Business Days
prior to the anticipated closing date of the transactions contemplated by an
Alternative Proposal.

<PAGE>   2

         (b) In the event Diebold wishes to exercise the Option, Diebold shall
deliver to the Company a written notice (an "Exercise Notice") specifying the
total number of the Common Shares it wishes to purchase. The Option shall
terminate upon the earlier of: (i) the Effective Time; and (ii) 5:00 p.m., New
York City time, on the date that is the 18-month anniversary of the termination
of the Arrangement Agreement or if, prior to the expiration of such 18-month
period, the Closing (as defined below) shall have occurred and the Option cannot
be exercised by reason of any applicable Order or Law, ten Business Days after
such impediment to exercise shall have been removed or shall have become final
and not subject to appeal.

         3. Conditions to Closing. The obligation of the Company to issue the
Common Shares to Diebold hereunder is subject to the condition that no Law shall
be in effect, and no Order entered by any Governmental Authority in the United
States or Canada shall be in effect, that prohibits or restrains the exercise of
the Option pursuant to the terms of this Agreement.

         4. Closing. The closing of the sale of some or all of the Common Shares
underlying the Option (a "Closing") shall take place within ten Business Days
following Diebold's delivery of an Exercise Notice or, if earlier, immediately
prior to the closing of the Alternative Transaction. At any Closing, (a) upon
receipt of the payment provided for by this Section 4, the Company will deliver
to Diebold a single certificate in definitive form representing the number of
the Common Shares designated by Diebold in its Exercise Notice, such certificate
to be registered in the name of Diebold and to bear the legend set forth in
Section 11 of this Agreement, and (b) Diebold will deliver to the Company the
aggregate price for the Common Shares so designated in an amount equal to the
product obtained by multiplying the Exercise Price by the number of Common
Shares to be purchased by wire transfer of immediately available funds payable
to the Company pursuant to the Company's instructions. At any Closing at which
Diebold is exercising the Option in part, Diebold shall present and surrender
this Agreement to the Company.

         5. Representations and Warranties of the Company. The Company
represents and warrants to Diebold, as of the date hereof and as of the date of
each Closing, that (a) the Company is a company duly amalgamated, validly
existing and in good standing under the Laws of the Province of British Columbia
and has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder, (b) the execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and delivered by
the Company, constitutes a valid and binding obligation of the Company and,
assuming this Agreement constitutes a valid and binding obligation of Diebold,
is enforceable against the Company in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar Laws affecting the enforcement of creditors' rights generally,
the availability of injunctive relief and other equitable remedies, and
limitations imposed by Law on indemnification for liability under securities
Laws, (d) the Company has taken all necessary corporate action to authorize and
reserve for issuance and to permit it to issue, upon exercise of the Option, and
at all times from the date hereof through the expiration of the Option will have
reserved sufficient unissued Common Shares and such other shares or other
securities which may be issued pursuant to Section 10 of this Agreement, all of
which, upon their issuance, payment and delivery in

                                       2
<PAGE>   3

accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable, and free and clear of all Encumbrances of any nature
whatsoever (other than those (i) created by or through Diebold or any of its
Affiliates, (ii) which arise under this Agreement, or (iii) which arise under
the Securities Act of 1933, as amended (the "Securities Act") or any applicable
securities Laws, (e) the execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of an Encumbrance on its Properties or assets pursuant to (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation"), (A) any provision of the
Constituent Documents of the Company, (B) any provisions of any Contractual
Obligation or loan or credit agreement, note, mortgage, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit, concession,
franchise, license of or applicable to the Company, its Properties or assets, or
(C) any Order or to its Knowledge, any Law applicable to the Company or its
Properties or assets, which Violation, in the case of each of clauses (B) and
(C), individually or in the aggregate, and (f) except as described in this
Agreement and, with respect to Section 9 hereof, compliance with the provisions
of the Securities Act and any applicable, securities Laws, the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental Authority.

         6. Representations and Warranties of Diebold. Diebold represents and
warrants to the Company that (a) Diebold is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Ohio, and
has the corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder, (b) the execution and delivery of this Agreement
by Diebold and the consummation by Diebold of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Diebold and no other corporate proceedings on the part of Diebold are
necessary to authorize this Agreement or any of the transactions contemplated
hereby, (c) this Agreement has been duly executed and delivered by Diebold and
constitutes a valid and binding obligation of Diebold, and, assuming this
Agreement constitutes a valid and binding obligation of the Company, is
enforceable against Diebold in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforcement of creditors' rights generally and the
availability of injunctive relief and other equitable remedies and limitations
imposed by Law on indemnification for liability under applicable securities
Laws, (d) the execution and delivery of this Agreement by Diebold does not, and
the performance of this Agreement by Diebold will not, result in any Violation
pursuant to (A) any provision of the Constituent Documents of Diebold, (B) any
provisions of any Contractual Obligation or loan or credit agreement, note,
mortgage, indenture, lease, or other agreement, obligation, instrument, permit,
concession, franchise, license of or applicable to Diebold, its Properties or
assets, or (C) any Order or to its Knowledge, any Law applicable to Diebold or
its Properties or assets, (e) the execution and delivery of this Agreement by
Diebold do not, and the performance of this Agreement by Diebold will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority and (f) any Common Shares acquired
upon exercise of the Option will not be, and the Option is not being, acquired
by

                                       3
<PAGE>   4

Diebold with a view to public distribution or resale in any manner which would
be in violation of U.S. or Canadian federal, state or provincial securities
Laws.

         7. Put/Call Right. (a) Exercise of Put/Call. At any time during
which the Option is exercisable pursuant to Section 2, upon demand by either
Diebold or the Company and simultaneously with the consummation of the
Alternative Transaction, Diebold shall sell to the Company (or any successor
entity thereof) and the Company (or such successor entity) shall be obligated to
repurchase from Diebold (the "Put/Call"), all or any portion of the Option, at
the price equal to the product of multiplying (A) the difference between (1) the
highest price per share to be paid for Common Shares in the Alternative
Transaction (the "Offer Price") and (2) the Exercise Price, by (B) the number of
Common Shares purchasable pursuant to the Option (or portion thereof that is
subject to the Put/Call under this Section 7). In determining the Offer Price,
the value of consideration other than cash or stock as provided above shall be
determined by a nationally recognized investment banking firm selected by
Diebold and reasonably acceptable to the Company.

         (b) Payment and Redelivery of Option. In the event the Put/Call is
exercised under this Section 7, the Company shall, at and subject to
consummation of the Closing, pay the required amount to Diebold by wire transfer
in immediately available funds to an account specified by Diebold two Business
Days prior to the date that payment is due and Diebold shall surrender to the
Company the Option, and Diebold shall warrant that it owns such Option free and
clear of all Encumbrances of any kind or nature whatsoever.

         8. Restrictions on Certain Actions. The Company shall not adopt any
rights agreement or shareholder rights plan or any amendment thereto in any
manner which would cause Diebold, if Diebold has complied with its obligations
under this Agreement, to become an "Acquiring Person" under such rights
agreement or shareholder rights plan or otherwise cause a "trigger event" to
have occurred solely by reason of the beneficial ownership of the Common Shares
acquired pursuant to this Agreement.

         9. Registration Rights. (a) Demand. The Company (or its successors)
will, if requested in writing (a "Registration Notice") by Diebold at any time
and from time to time within two years of the exercise of the Option, as
expeditiously as possible prepare and file registration statements under the
Securities Act or any applicable Canadian provincial securities Laws if such
registration or the obtaining of a receipt for a prospectus is necessary in
order to permit the sale or other disposition of any or all shares or other
securities that have been acquired by or are issuable to Diebold upon exercise
of the Option ("Registrable Securities") in accordance with the intended method
of sale or other disposition stated by Diebold. Any such Registration Notice
must relate to a number of Registrable Securities equal to at least 3% of the
total number of Common Shares then outstanding, unless the remaining number of
Registrable Securities is less than such amount, in which case Diebold shall be
entitled to exercise its rights hereunder but only for all of the remaining
Registrable Securities (a "Permitted Offering"). Diebold's rights hereunder
shall terminate at such time as Diebold shall be entitled to sell all of the
remaining Registrable Securities pursuant to Rule 144(k) under the Securities
Act and there are no restrictions on the disposition of such securities under
applicable Canadian securities Laws. The Company will use its reasonable best
efforts to qualify such shares or other securities under any applicable state
securities Laws; provided, however, that the Company shall not be required to

                                       4
<PAGE>   5

qualify to do business, consent to general service of process or submit to
taxation in any jurisdiction by reason of this provision. The Company will use
reasonable best efforts to cause each such registration statement to become
effective and to obtain a (final) receipt for each such prospectus, to obtain
all consents or waivers of other parties which are required therefor, and to
keep such registration statement or prospectus effective for such period not in
excess of 180 calendar days from the day such registration statement first
becomes effective or the date of the (final) receipt for such prospectus as may
be reasonably necessary to effect such sale or other disposition. The
obligations of the Company hereunder to file a registration statement or
prospectus and to maintain its effectiveness may be suspended for up to 60
calendar days if the Board of Directors of the Company shall have determined
that the filing of such registration statement or prospectus or the maintenance
of its effectiveness would require premature disclosure of nonpublic information
that would materially and adversely affect the Company or otherwise interfere
with or adversely affect any pending or proposed offering of securities of the
Company or any other material transaction involving the Company. Subject to
applicable Law, the expenses associated with the preparation and filing any
registration statement or prospectus prepared and filed under this Section 9,
and any sale covered thereby ("Registration Expenses"), will be paid by the
Company. In connection with any registration statement or prospectus pursuant to
this Section 9, Diebold shall furnish, or cause any holder of the Option or
Common Shares (a "Holder") to furnish, the Company with such information
concerning itself and the proposed sale or distribution as shall reasonably be
required in order to ensure compliance with the requirements of the Securities
Act and to provide representations and warranties customary for selling
shareholders who are unaffiliated with the Company. The Company shall indemnify
and hold Diebold, its underwriters and each of their respective Affiliates
harmless against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, investigation expenses and fees and disbursement
of counsel and accountants), joint or several, to which Diebold, its
underwriters and each of their respective Affiliates may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in written information furnished by to the Company expressly for use
in such registration statement.

         (b) Piggyback. If, during the time periods referred to in the first
sentence of subsection (a), the Company effects a registration under the
Securities Act or any applicable Canadian provincial securities Laws of the
Common Shares for its own account or for any other shareholders of the Company
pursuant to a firm commitment underwriting (other than on Form S-4 or Form S-8,
or any successor form), it will allow Diebold the right to participate in such
registration or qualification as long as Diebold participates in such
underwriting on terms reasonably satisfactory to the managing underwriters of
such offering, and such participation will not affect the obligation of the
Company to effect demand registration statements or prospectuses for Diebold
under this Section 9; provided, that, if the managing underwriters of such
offering advise the Company in writing that in their opinion the number of
shares of the Common Shares requested to be included in such registration or
qualification exceeds the number that it would be in the best interests of the
Company to sell in such offering, the Company will, after fully including
therein all Common Shares to be sold by the Company, include the Common Shares
requested to be included therein by Diebold pro rata (based on the number of
Common Shares requested to be included therein) with the Common Shares requested
to be included therein by persons other than the Company and persons to whom the
Company owes a Contractual

                                       5
<PAGE>   6

Obligation (other than any director, officer or employee of the Company to the
extent any such person is not currently owed such Contractual Obligation).

         (c) In connection with any registration or qualification pursuant to
this Section 9, the Company and Diebold will provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification and contribution in connection with such registration
or qualification. The Company shall provide to any underwriters such
documentation (including certificates, opinions of counsel and "comfort" letters
from auditors) as are customary in connection with underwritten public offerings
as such underwriters may reasonably require.

         10. Adjustment Upon Changes in Capitalization. (a) In the event of any
change in the Common Shares by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, exchange of shares or the like, the percentage
and class of shares or securities subject to the Option, and the Exercise Price
per share provided in Section 1 of this Agreement, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Diebold shall receive and accept, upon exercise of the
Option, the percentage and class of shares or other securities or property that
Diebold would have received in respect of the Common Shares if the Option had
been exercised immediately prior to such event or the record date therefor, as
applicable.

         (b) In the event that the Company shall enter in an agreement: (i) to
consolidate with or merge into any Person, other than Diebold or another direct
or indirect wholly-owned subsidiary of Diebold, and shall not be the continuing
or surviving corporation of such consolidation or merger; (ii) to permit any
Person, other than Diebold or another direct or indirect wholly-owned subsidiary
of Diebold, to merge into the Company and the Company shall be the continuing or
surviving corporation, but, in connection with such merger, the then-outstanding
Common Shares shall be changed into or exchanged for stock or other securities
of the Company or any other Person or cash or any other Property or the
outstanding Common Shares immediately prior to such merger shall after such
merger represent less than 50% of the outstanding shares and share equivalents
of the merged company; or (iii) to sell or otherwise transfer all or
substantially all of its assets to any Person, other than Diebold or another
direct or indirect wholly-owned subsidiary of Diebold, then, and in each such
case, the Company shall immediately so notify Diebold, and the agreement
governing such transaction shall make proper provisions so that upon the
consummation of any such transaction and upon the terms and conditions set forth
herein Diebold shall, upon exercise of the Option, receive for each Company
Share with respect to which the Option has not been exercised an amount of
consideration in the form of and equal to the per share amount of consideration
that would be received by the holder of a Common Share less the Exercise Price
(and, in the event of an election or similar arrangement with respect to the
type of consideration to be received by the holders of Common Shares, subject to
the foregoing, proper provision shall be made so that the holder of the Option
would have the same election or similar rights as would the holder of the number
of Common Shares for which the Option is then exercisable).

         11. Restrictive Legends. Each certificate representing Common Shares
issued to Diebold hereunder shall include a legend in substantially the
following form:

                                        6
<PAGE>   7

                  "The transfer of the shares represented by this certificate is
                  subject to certain provisions of an agreement between the
                  registered holder hereof and the Company and to resale
                  restrictions arising under the Securities Act of 1933, as
                  amended. A copy of such agreement is on file at the principal
                  office of the Company and will be provided to the holder
                  hereof without charge upon receipt by the company of a written
                  request therefor."

The Company shall, upon written request of the holder thereof, issue such holder
a new certificate evidencing such Common Shares without such legend in the event
(i) the sale of such Common Shares has been registered pursuant to the
Securities Act or (ii) such holder shall have delivered to the Company an
opinion of counsel to the effect that subsequent transfers of such Common Shares
may be effected without registration under the Securities Act.

         12. Listing. The Company, upon request of Diebold, shall as promptly as
practicable file an application to list Common Shares to be acquired upon
exercise of the Option for listing or quotation on the TSE and on the American
Stock Exchange (the "AMEX") and shall use its reasonable best efforts to obtain
approvals for such quotations as promptly as practicable and exercise of the
Option will remain subject to such approvals.

         13. Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Except as expressly provided for in this Agreement and
except for any assignment by Diebold, in whole or in part, to a wholly-owned,
direct or indirect, Subsidiary of Diebold (provided that any such subsidiary
agrees in writing to be bound by and liable for all of the terms, conditions and
provisions contained herein that would otherwise be applicable to Diebold and
provided further that Diebold shall remain liable for all of its duties and
obligations hereunder in the event such subsidiary shall fail to perform
hereunder), neither this Agreement nor the rights or the obligations of either
party hereto are assignable in whole or in part (whether by operation of Law or
otherwise), without the written consent of the other party and any attempt to do
so in contravention of this Section 13 will be void. Nothing contained in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective permitted assigns any rights or remedies
of any nature whatsoever by reason of this Agreement.

         14. Specific Performance. The parties recognize and agree that if for
any reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to other
remedies, the other party shall be entitled to an injunction or injunctions
restraining any violation or threatened violation of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof. In the
event that any action should be brought in equity to enforce the provisions of
this Agreement, neither party will allege, and each party hereby waives the
defense, that there is adequate remedy at Law.

         15. Entire Agreement. This Agreement and the Arrangement Agreement
(including the Exhibits and Schedules thereto) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
other prior discussions, representations and

                                       7
<PAGE>   8

warranties, agreements and understandings, both written and oral, among the
parties or any of them with respect to the subject matter hereof. No prior
drafts of this Agreement and no words or phrases from any such prior drafts
shall be admissible into evidence in any action, suit or other proceeding
involving this Agreement.

         16. Further Assurances. Promptly after the date hereof, each party will
execute and deliver all such further documents and instruments and take all such
further action, including, without limitation, obtaining all necessary
regulatory approvals and making all necessary filings (including, without
limitation, with the TSE and the AMEX) as may be necessary in order to
consummate the transactions contemplated hereby (including the issuance,
registration and listing of the Common Shares issuable upon exercise of the
Option). The Company will not take any actions which would frustrate the
exercise of the Option.

         17. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meaning contained herein
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the gender and neuter genders of such term. Any
agreement or instrument defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement or instrument as from
time to time amended, modified or supplemented and attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or Law shall be deemed to also to refer to any amendments
thereto and all rules and regulations promulgated thereunder, unless the context
requires otherwise.

         18. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect. In
the event any court or other competent authority holds any provision of this
Agreement to be null, void or unenforceable, under any present or future Law,
public policy or order, and if the rights or obligations of any party hereto
under this Agreement or the Arrangement Agreement, and the economic or legal
substance of the transactions contemplated hereby and thereby, will not be
materially and adversely affected thereby, (i) such provision will be fully
severable and (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
the execution and delivery of an amendment to this Agreement in order to the
maximum extent possible to effectuate, to the

                                       8
<PAGE>   9

extent permitted by Law, the intent of the parties hereto with respect to such
provision. Each party agrees that, should any court or other competent authority
hold any provision of this Agreement or part hereof to be null, void or
unenforceable, or order any party to take any action inconsistent herewith, or
not take any action required herein, the other party shall not be entitled to
specific performance of such provision or part hereof or to any other remedy,
including but not limited to money damages, for breach hereof or of any other
provision of this Agreement or part hereof as the result of such holding or
order.

         19. Notices. Any notice, request, claim, demand or communication
required or permitted hereunder shall be in writing and either delivered
personally, telecopied or sent by certified or registered mail, postage prepaid,
and shall be deemed to be given, dated and received (a) on the date of delivery
if delivered personally, including by courier, (b) upon receipt if delivered by
registered or certified mail, return receipt requested, postage prepaid or (c)
upon receipt if sent by facsimile transmission, provided that any notice
received by telecopy or otherwise at the addressee's location on any Business
Day after 5:00 p.m. (addressee's local time) shall be deemed to have been
received at 9:00 a.m. (addressee's local time) on the next Business Day. Any
party to this Agreement may notify any other party of any changes to the address
or any of the other details specified in this paragraph, provided that such
notification shall only be effective on the date specified in such notice or
five Business Days after the notice is given, whichever is later. Rejection or
other refusal to accept or the inability to deliver because of changed address
of which no notice was given shall be deemed to be receipt of the notice as of
the date of such rejection, refusal or inability to deliver. All notices
hereunder shall be delivered to the parties to the addresses or facsimile
numbers set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:

         If to the Company to:

         c/o Global Election Systems, Inc.
         1611 Wilmeth Road
         McKinney, Texas 75069
         Facsimile No.: (972) 542-6044
         Attention:  Michael Rasmussen

         with copies to (which shall not constitute notice):

         Winstead Sechrest & Minick P.C.
         5400 Renaissance Tower
         1201 Elm Street
         Dallas, Texas 75270
         Facsimile No.: (214) 745-5390
         Attention:  Brice E. Tarzwell

                                       9
<PAGE>   10

         and

         Gowling Lafleur Henderson LLP
         P.O. Box 49122, Suite 2300
         1055 Dunsmuir Street
         Vancouver, British Columbia
         Canada V7X 1J1
         Facsimile No.: (604) 689-8610
         Attention:  Rod C. McKeen

         If to Diebold to:

         Diebold, Incorporated
         5995 Mayfair Road
         P.O. Box 3077
         North Canton, Ohio 44720-8077
         Facsimile No.: (330) 490-4555
         Attention:   Gregory T. Geswein,
                           Senior Vice President and
                           Chief Financial Officer

         and

         Diebold, Incorporated
         5995 Mayfair Road
         P.O. Box 3077
         North Canton, Ohio 44720-8077
         Facsimile No.: (330) 490-4450
         Attention:   Warren W. Dettinger,
                           Vice President and General Counsel

         with copies to (which shall not constitute notice):

         Jones, Day, Reavis & Pogue
         599 Lexington Avenue
         New York, New York 10022
         Facsimile No.: (212) 755-7306
         Attention:  Thomas W. Bark

         and

         Fasken Martineau DuMoulin LLP
         2100-1075 West Georgia Street
         Vancouver, British Columbia
         Canada V6E 3G2
         Facsimile No.: (604) 631-3232
         Attention:  Lata Casciano

                                       10

<PAGE>   11

         20. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         21. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties. A facsimile copy of a signature
page shall be deemed to be an original signature page.

         22. Expenses. Except as otherwise expressly provided herein or in the
Arrangement Agreement, all costs and expenses incurred by a party in connection
with the transactions contemplated by this Agreement, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel, shall be paid by the party incurring such expenses.

         23. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument in writing signed on behalf of the party waiving
compliance.

         24. Governing Law; Jurisdiction; Consent to Service of Process. (a)
This Agreement and the legal relations among the parties hereto will be governed
by and construed in accordance with the substantive Laws of the State of
Delaware, without giving effect to the principles of conflict of Laws thereof.

         (b) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of any state or federal
court located in the State of Delaware (each, a "Delaware Court"), and any
appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Agreement or any Transaction Document, or for
recognition or enforcement of any judgment resulting from any such suit, action
or proceeding, and each party hereby irrevocably and unconditionally agrees that
all claims in respect of any such suit, action or proceeding may be heard and
determined in a Delaware Court.

         (c) It will be a condition precedent to each party's right to bring any
such suit, action or proceeding that such suit, action or proceeding, in the
first instance, be brought in a Delaware Court (unless such suit, action or
proceeding is brought solely to obtain discovery or to enforce a judgment), and
if each such court refuses to accept jurisdiction with respect thereto, such
suit, action or proceeding may be brought in any other court with jurisdiction.

         (d) No party may move to (i) transfer any such suit, action or
proceeding from a Delaware Court to another jurisdiction, (ii) consolidate any
such suit, action or proceeding brought in a Delaware Court with a suit, action
or proceeding in another jurisdiction unless such motion seeks solely and
exclusively to consolidate such suit, action or proceeding in a Delaware Court,
or (iii) dismiss any such suit, action or proceeding brought in a Delaware Court
for the purpose of bringing or defending the same in another jurisdiction.

         (e) Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, (i) any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in a Delaware Court,
(ii) the defense of an inconvenient forum to the maintenance of such suit,
action

                                       11
<PAGE>   12

or proceeding in a Delaware Court, and (iii) the right to object, with respect
to such suit, action or proceeding, that such court does not have jurisdiction
over such party. Each party irrevocably consents to service of process in any
manner permitted by Law. Notwithstanding the foregoing, this Section 24 will not
apply to (x) any suit, action or proceeding by a party seeking indemnification
or contribution pursuant to this Agreement or otherwise in respect of a suit,
action or proceeding against such party by a third party if such suit, action or
proceeding by such party seeking indemnification or contribution is brought in
the same court as the suit, action or proceeding against such party or (y) any
suit, action or proceeding by a party seeking to enforce an Order of a Delaware
Court.

         25. Remedies Cumulative. Except as otherwise herein provided, the
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by applicable Law.

         26. Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and except as otherwise expressly provided for
herein, it is not the intention of the parties to confer third-party beneficiary
rights upon any other person.

         27. Date for Any Action. In the event that any date on which any action
is required to be taken hereunder by any of the parties hereto is not a Business
Day, such action shall be required to be taken on the next succeeding day which
is a Business Day.

         28. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

         29. Capitalized Terms. Terms used herein and not defined otherwise
defined herein will have the same meanings as used in the Arrangement Agreement.

                            (Signature page follows)

                                       12
<PAGE>   13

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.

                                        GLOBAL ELECTION SYSTEMS INC.

                                        By: /s/ BRIAN COURTNEY
                                           ------------------------------------
                                            Brian Courtney
                                            Chief Executive Officer

                                        DIEBOLD, INCORPORATED

                                        By: /s/ GREGORY T. GESWEIN
                                           ------------------------------------
                                            Gregory T. Geswein
                                            Senior Vice President and
                                            Chief Financial Officer

                                       13<PAGE>   1
                                                                   EXHIBIT 10.16

                              ARRANGEMENT AGREEMENT

         THIS ARRANGEMENT AGREEMENT made this 10th day of September, 2001

AMONG:

                  DIEBOLD, INCORPORATED, a corporation incorporated under the
Laws of Ohio ("Buyer")

AND:

                  DIEBOLD ACQUISITION LTD., a company incorporated under the
Laws of British Columbia and a wholly owned subsidiary of Buyer ("Sub")

AND:

                  GLOBAL ELECTION SYSTEMS INC., a company amalgamated under the
Laws of British Columbia ("Target").

WHEREAS:

         A. The respective Boards of Directors of Buyer, Sub and Target have
approved this Agreement and the Arrangement, upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
Target Common Share, other than any Subject Shares, will be exchanged for Buyer
Common Stock at the Exchange Ratio and the Cash Consideration in accordance with
the Plan of Arrangement;

         B. Buyer and Target desire to make certain representations, warranties,
covenants and agreements in connection with the Arrangement and also to
prescribe various conditions to the Arrangement; and

         C. The Board of Directors of Target, after receiving advice from the
Financial Advisor and legal advice and after considering other factors, has
determined that it would be advisable and in the best interests of Target and
the Target Common Shareholders for Target to enter into this Agreement and to
effect the Arrangement.

         NOW THEREFORE in consideration of the mutual representations,
warranties, covenants and agreements set out in this Agreement and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the Parties agree that:

1. THE ARRANGEMENT

         1.1 Process. Subject to the terms and conditions of this Agreement:

         (a)      As soon as reasonably practicable after the execution of this
                  Agreement, and in any event before September 14, 2001, Target
                  shall file, proceed with and diligently prosecute an
                  application to the Court pursuant to subsection 252(2) of the
                  Company Act for the Interim Order;

<PAGE>   2

         (b)      Target shall call and hold the Extraordinary General Meeting
                  as soon as reasonably practicable after obtaining the Interim
                  Order, and in any event shall hold the Extraordinary General
                  Meeting before October 19, 2001;

         (c)      In connection with the Extraordinary General Meeting, Target,
                  in consultation with Buyer, shall prepare, file and
                  distribute, in accordance with the applicable Legislation, to
                  the Target Common Shareholders, in a timely manner, the
                  Circular (and any amendments or supplements thereto) and such
                  other documents as may be necessary or desirable to permit the
                  Target Common Shareholders to vote on whether to approve (i)
                  the Arrangement and (ii) the issuance of Target Common Shares
                  pursuant to the Loan Documents and the Contract Manufacturing
                  Agreement, dated June 21, 2001 (the "Contract Manufacturing
                  Agreement"), between Buyer and Target, as amended by Amendment
                  No. 1 on August 3, 2001 (together, the "Share Issuance"), and
                  Buyer and Target jointly shall prepare the form of Letter of
                  Transmittal and such other documents as may be necessary or
                  desirable to effect the Arrangement;

         (d)      Target shall solicit proxies to be voted at the Extraordinary
                  General Meeting in favour of the resolution approving the
                  Arrangement and the Share Issuance;

         (e)      Target shall conduct the Extraordinary General Meeting in
                  accordance with the Interim Order, the Constituent Documents
                  of Target and as otherwise required by the Legislation;

         (f)      If the Arrangement is approved at the Extraordinary General
                  Meeting as set out in the Interim Order, as soon as reasonably
                  practicable thereafter, Target shall take the necessary steps
                  to submit the Arrangement to the Court and proceed with and
                  diligently prosecute an application for the Final Order; and

         (g)      If the Final Order is obtained, as soon as reasonably
                  practicable thereafter and subject to the fulfillment or the
                  waiver of each of the conditions referred to in Article 2 of
                  this Agreement, (i) Buyer shall provide the Transfer Agent (as
                  defined in the Plan of Arrangement) with sufficient funds and
                  shares of Buyer Common Stock to complete the transactions
                  contemplated by the Plan of Arrangement and (ii) Target shall
                  file a certified copy of the Final Order with the Plan of
                  Arrangement and such other documents as are required to be
                  filed under the Company Act to give effect to the Arrangement
                  pursuant to the Company Act and forthwith carry out the terms
                  of the Plan of Arrangement.

         1.2 Arrangement Circular. Buyer shall in a timely and expeditious
manner furnish to Target all information regarding itself and Sub as may
reasonably be required to be included in the Circular pursuant to the
Legislation and any other filings required to be made under the Legislation in
connection with the transactions contemplated herein. Each of Target and Buyer
shall ensure that the information relating to it (and its respective
Subsidiaries) that is contained in the Circular does not contain any
"misrepresentation", as that term is construed under the applicable Legislation.

                                       2
<PAGE>   3

2. CONDITIONS TO THE ARRANGEMENT

         2.1 Conditions in Favour of Buyer. The obligations of Buyer to complete
the transactions contemplated by the Arrangement shall be subject to the
fulfillment, or the waiver by Buyer, of the conditions set out in Schedule C,
each of which is for the exclusive benefit of Buyer and may be waived by Buyer
at any time, in whole or in part, in its sole discretion without prejudice to
any other rights that it may have.

         2.2 Conditions in Favour of Target. The obligations of Target to
complete the transactions contemplated by the Arrangement shall be subject to
the fulfillment, or the waiver by Target, of the conditions set out in Schedule
D, each of which is for the exclusive benefit of Target and may be waived by
Target at any time, in whole or in part, in its sole discretion without
prejudice to any other rights that it may have.

         2.3 Conditions in Favour of Buyer and Target. The respective
obligations of Buyer and Target to complete the transactions contemplated by the
Arrangement shall be subject to the fulfillment, or the waiver on the part of
each of Buyer and Target, of the conditions set out in Schedule E, each of which
may be waived by Buyer or Target at any time, in whole or in part, in its sole
discretion without prejudice to any other rights that it may have.

         2.4 Satisfaction, Waiver and Release of Conditions. The conditions
provided for in this Section shall be deemed conclusively to have been
satisfied, waived or released when a certified copy of the Final Order with the
Plan of Arrangement and such other documents as are required to be filed under
the Company Act to give effect to the Arrangement are filed in compliance with
Section 1.1(g) hereof.

3. REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of Target. Except as expressly
disclosed in the section of the Target Disclosure Letter corresponding to the
paragraph to which such disclosure relates, Target represents and warrants to
Buyer as to those matters set forth in Schedule F.

         3.2 Representations and Warranties of Buyer. Buyer represents and
warrants to Target as to those matters set forth in Schedule G.

         3.3 Survival of Representations, Warranties and Covenants. No
investigation by or on behalf of any Party shall mitigate, diminish or affect
the representations and warranties made by any other Party. The representations
and warranties of the Parties contained in this Agreement shall terminate upon,
and shall not survive, the Effective Time. This Section 3.3 shall not limit any
covenant or agreement of the Parties which by its terms contemplates performance
after the Effective Time.

4. COVENANTS

         4.1 General. Each of Buyer and Target shall use its reasonable best
efforts to satisfy each of the conditions precedent to be satisfied by it and to
take, or cause to be taken, all other action and to do, or cause to be done, all
other things necessary, proper or advisable to permit the

                                       3
<PAGE>   4

completion of the Arrangement in accordance with this Agreement and the
Legislation and to cooperate with each other in connection therewith.

         4.2 General Covenant of Target. Target shall use its reasonable best
efforts to:

         (a)      Provide notice to, and obtain all Required Consents from,
                  other parties to each Material Contract to which it is a party
                  or by which it or its Properties is bound or affected
                  (including, without limitation, loan agreements, leases,
                  pledges, guarantees and security) and any applicable
                  Governmental Authority; provided that in connection therewith,
                  neither Target nor its Subsidiaries shall make any expenditure
                  and no Material Contract shall be amended to increase the
                  amount payable thereunder or otherwise be more burdensome to
                  Target or its Subsidiaries, as the case may be, than the terms
                  existing at the date of this Agreement, without the prior
                  written approval of Buyer;

         (b)      Obtain the Interim Order, the Final Order and the approval of
                  the Arrangement and the Share Issuance at the Extraordinary
                  General Meeting of the Target Common Shareholders in
                  accordance with the Interim Order; and

         (c)      If any state or provincial takeover statute or securities or
                  similar statute becomes applicable to this Agreement, the
                  Share Issuance or the Arrangement, take all action reasonably
                  necessary to ensure that the Arrangement may be consummated as
                  promptly as practicable on the terms contemplated hereby and
                  otherwise to minimize the effect of such statute or regulation
                  on this Agreement, the Share Issuance or the Arrangement.

         4.3 Defence of Proceedings. Target shall use its reasonable best
efforts to vigorously defend, or cause to be defended, any lawsuit or other
legal proceeding brought against it or any of its Affiliates challenging this
Agreement or the completion of the Arrangement. Target shall not settle or
compromise any claim brought in connection with the Arrangement or this
Agreement prior to the Effective Date without the prior written consent of
Buyer.

         4.4 Transfer Agent. Target shall permit its registrar and transfer
agent to act as depositary or Transfer Agent (as defined in the Plan of
Arrangement) in connection with the Arrangement. Buyer shall make arrangements
for all payments required to be made by it as contemplated pursuant to Section
2.1(b) of the Plan of Arrangement to be made at the time of completion of the
transactions contemplated in the Plan of Arrangement.

         4.5 Business in the Ordinary Course. During the period from the date of
this Agreement to the Effective Time, Target shall, and shall cause its
Subsidiaries to, carry on their respective businesses in the ordinary course
consistent with past practice and, to the extent consistent therewith, use all
commercially reasonable efforts to preserve intact their current business
organizations, keep available the services of their current officers and
employees and preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them to the end
that its goodwill and ongoing businesses shall be unimpaired at the Effective
Time. Without limiting the generality of the foregoing, except as

                                       4
<PAGE>   5

otherwise consented to or approved by Buyer in writing or as expressly
contemplated or permitted by this Agreement, Target shall not, and shall not
permit any of its Subsidiaries to:

         (a)      Alter any of the provisions of the Constituent Documents of
                  Target or any of its Subsidiaries;

         (b)      Split, combine or reclassify any shares of its or its
                  Subsidiaries' capital stock or issue or authorize the issuance
                  of any other securities in respect of, in lieu of or in
                  substitution for, its or its Subsidiaries' shares of capital
                  stock;

         (c)      Purchase, redeem or otherwise acquire any shares of its
                  capital or any shares of capital stock of its Subsidiaries or
                  any other securities thereof or any rights, warrants or
                  options to acquire any such shares or other securities;

         (d)      Issue, deliver, sell, grant, pledge or otherwise encumber or
                  subject to any Encumbrance any of its or its Subsidiaries'
                  shares of capital stock or other securities or any securities
                  convertible into, or any rights, warrants or options to
                  acquire, any such shares, securities or convertible
                  securities;

         (e)      Authorize or make any capital expenditures other than as set
                  forth in Target's capital expenditures budget for 2001
                  previously delivered to Buyer;

         (f)      Purchase, sell or transfer any assets or Properties, other
                  than in the ordinary course of business consistent with past
                  practice;

         (g)      Acquire or sell any business;

         (h)      Enter into or amend any agreement with respect to any Target
                  Stock Option;

         (i)      Enter into, modify or amend any Material Contract of which
                  Target or any of its Subsidiaries has the benefit, other than
                  in the ordinary course of business consistent with past
                  practice;

         (j)      Incur or become liable for any indebtedness for or in respect
                  of borrowed money or guarantee or become liable in respect of
                  any indebtedness of any other Person for or in respect of
                  borrowed money;

         (k)      Enter into any swap or other derivative transaction;

         (l)      Make any loans, advances or capital contributions to, or
                  investments in, any other Person, other than to the Company or
                  any wholly owned Subsidiary of the Company or to officers and
                  employees of the Company or any of its Subsidiaries for
                  travel, business or relocation expenses in the ordinary course
                  of business;

         (m)      Lease, license, mortgage, charge or otherwise encumber or
                  subject to any Encumbrance any of its Property or assets,
                  including, without limitation, any Intellectual Property of
                  Target;

                                       5
<PAGE>   6

         (n)      Declare, set aside or pay any dividends, including for the
                  purpose of effecting a share subdivision, or make any payment
                  or distribution to its shareholders;

         (o)      Establish, adopt, enter into, make or amend any collective
                  bargaining, bonus, profit sharing, compensation, stock option,
                  stock ownership, stock compensation, pension, retirement,
                  deferred compensation, employment, termination, severance or
                  other plan, agreement, trust, fund, policy or arrangement for
                  the benefit of any director, officer or employee of Target or
                  any of its Subsidiaries;

         (p)      Except (i) as required by Law or (ii) by the terms of any
                  collective bargaining agreement or other agreement currently
                  in effect to which Target or any of its Subsidiaries is a
                  party (A) increase the amount of compensation or benefits of,
                  or pay any severance to, or grant or agree to grant any
                  further compensation, additional benefits or pay any severance
                  to, any (x) director, (y) officer or (z) employee of Target or
                  any of its Subsidiaries with a base annual salary in excess of
                  $100,000 or (B) increase the amount of compensation or
                  benefits of, or pay severance to, any other employee of Target
                  or any of its Subsidiaries, other than in the case of this
                  clause (B) in the ordinary course of business consistent with
                  past practice;

         (q)      Cause the current insurance (or re-insurance) policies of
                  Target and its Subsidiaries to be cancelled or terminated or
                  any other coverage thereunder to lapse, unless simultaneously
                  with such termination, cancellation or lapse, replacement
                  policies underwritten by insurance and re-insurance companies
                  of nationally recognized standing providing coverage equal to
                  or greater than the coverage under the cancelled, terminated
                  or lapsed policies for substantially similar premiums are in
                  full force and effect;

         (r)      Pay, discharge or settle any claim or litigation that would
                  result in a liability to Target or its Subsidiaries in excess
                  of $25,000;

         (s)      Implement any material change in the present business,
                  affairs, capitalization or financial condition of Target and
                  its Subsidiaries, taken as a whole;

         (t)      Make any change to its accounting methods, principles or
                  practices, except as may be required by GAAP, or make or
                  change any Tax election or settle or compromise any material
                  tax liability or refund;

         (u)      Make any Tax election or take any action that, individually or
                  in the aggregate, is reasonably likely to increase its Tax
                  liability or adversely effect its Tax attributes;

         (v)      Resolve that it be wound up;

         (w)      Appoint or permit the appointment of a liquidator, receiver or
                  trustee in bankruptcy for Target or any of its Subsidiaries or
                  in respect of the Properties or assets of Target or any of its
                  Subsidiaries;

                                       6
<PAGE>   7

         (x)      Permit the making of an Order for the winding-up or
                  dissolution of Target or any of its Subsidiaries;

         (y)      Enter into or modify any Contractual Obligation with respect
                  to any of the matters set forth in this Section 4.5; or

         (z)      Take any action that would, or could reasonably be expected
                  to, render any representation or warranty made by Target in
                  this Agreement untrue.

         4.6 Advice of Changes. Target and Buyer shall promptly advise the other
orally and in writing to the extent it has Knowledge of (i) any representation
or warranty made by it contained in this Agreement or the Option Agreement
becoming untrue or inaccurate in any respect, (ii) the failure of it (and, in
the case of Buyer, by Sub) to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement, the Option Agreement or any other Transaction Document, and
(iii) any change or event having, or which is reasonably likely to have, a
Material Adverse Effect on such Party or on the truth of their respective
representations and warranties or the ability of the conditions set forth herein
to be satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the Parties (or remedies
with respect thereto) or the conditions to the obligations of the Parties under
this Agreement.

         4.7 Access to Information. Target shall, and shall cause its
Subsidiaries and the officers, directors, employees and agents of it and its
Subsidiaries to, afford to Buyer and its representatives and their officers,
employees and agents access at all reasonable times to Target's and its
Subsidiaries' businesses, Properties, assets, officers, employees, agents, books
and records (including all financial, operating, personnel, compensation, tax
and other data and information as Buyer through its officers, employees or
agents may reasonably request), subject, however, to such access not materially
interfering with the ordinary conduct of the businesses of Target and its
Subsidiaries.

         4.8 Disclosure. The Parties shall consult with each other in good faith
with respect to any press release or similar public announcement (i) with
respect to this Agreement or any Transaction Document or the transactions
contemplated hereby or thereby or (ii) that names another Party or relates to a
business or commercial opportunity involving Target or its Subsidiaries;
provided, however, that nothing herein will prohibit any Party from issuing or
causing publication of any such press release or public announcement to the
extent that such Party determines such action to be required by Law or the rules
of any stock exchange on which its securities are listed for trading.

         4.9 Target Directors' and Officers' Indemnification, Exculpation and
Insurance. (a) Buyer and Sub agree that all rights to indemnification and
exculpation from liabilities for acts or omissions occurring at or prior to the
Effective Time (and rights for advancement of expenses) now existing in favor of
the current or former directors or officers of Target and its Subsidiaries as
provided in their respective Constituent Documents and any indemnification or
other agreements of Target as in effect on the date hereof shall survive the
Arrangement and shall continue in full force and effect in accordance with their
terms.

                                       7
<PAGE>   8

                  (b) For three years after the Effective Time, Buyer shall
maintain in effect Target's current directors' and officers' liability insurance
covering acts or omissions occurring prior to the Effective Time covering each
Person currently covered by Target's directors' and officers' liability
insurance policy on terms with respect to such coverage and amounts no less
favorable than those of such policy in effect on the date hereof; provided that
Buyer may substitute therefor policies of Buyer with respect to coverage and
amount no less favorable to such directors and officers; provided however, that
in no event shall Buyer be required to pay aggregate premiums for insurance
under this Section 4.9(b) in excess of the amount of the aggregate premiums paid
by Target in 2001 on an annualized basis for such purpose plus ten percent.

                  (c) The provisions of this Section 4.9 (i) are intended to be
for the benefit of, and will be enforceable by, the indemnified party and (ii)
are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such Person may have by contract or
otherwise.

         4.10 Sub. Buyer shall take all necessary action to cause Sub to perform
its obligations under this Agreement and to consummate the Arrangement on the
terms and conditions set forth in this Agreement.

         4.11 New York Stock Exchange Listing. Buyer shall use all commercially
reasonable efforts to cause the shares of Buyer Common Stock to be issued in the
Arrangement to be approved for listing (subject to official notice of issuance)
on the New York Stock Exchange prior to the Effective Time. To the Knowledge of
Buyer, there are no facts and circumstances that could reasonably be expected to
preclude the Buyer Common Stock to be issued in the Arrangement from being
approved for listing on the New York Stock Exchange.

         4.12 Registration Statement. Unless an exemption from the registration
requirements of the Securities Act is available, as promptly as practicable
after the execution of this Agreement, Buyer shall prepare and file with the SEC
the Form S-4 in connection with the registration under the Securities Act of the
offer, sale and delivery of Buyer Common Stock to be issued in the Arrangement
pursuant to this Agreement. Buyer will use all commercially reasonable efforts
to have or cause the Form S-4 to become effective as promptly as practicable and
shall take any action required to be taken under any applicable federal or state
securities Laws in connection with the issuance of shares of Buyer Common Stock
in the Arrangement.

         4.13 Affiliates. Not less than 45 days prior to the date of the
Extraordinary General Meeting, Target shall deliver to Buyer a letter
identifying all persons who, in the judgment of Target, may be deemed at the
time this Agreement is submitted for adoption by the Target Common Shareholders,
"affiliates" of Target for purposes of Rule 145 under the Securities Act and
applicable SEC rules and regulations, and such list shall be updated as
necessary to reflect changes from the date thereof. Target shall use reasonable
best efforts to cause each person identified on such list to deliver to Buyer
not later than ten days prior to the Effective Time, a written agreement in the
form attached as Schedule 4.13 hereto.

                                       8
<PAGE>   9

         4.14 Fairness Opinion. No later than five business days following the
execution of this Agreement, Target shall deliver to Buyer a fully executed copy
of the Fairness Opinion delivered to the Board of Directors of Target .

5. OTHER ACQUISITION PROPOSALS

         5.1 No Fettering of Discretion. Nothing in Section 5.2 shall be
interpreted to extend to the acts or omissions of any Person acting in his
capacity as a director of Target or otherwise to fetter the proper exercise of
discretion by such Person.

         5.2 Non-Solicitation. (a) Target agrees with Buyer that (except to the
extent Buyer has otherwise consented in writing) until this Agreement is
terminated:

                  (i) Target shall immediately cease and cause to be terminated
         and shall cause its Subsidiaries to immediately cease and cause to be
         terminated any existing discussions or negotiations with any Person
         (other than Buyer) with respect to any Alternative Proposal;

                  (ii) Target shall not waive or vary any terms or conditions of
         any confidentiality or standstill agreements that it entered into with
         any Persons that were considering any Alternative Proposal;

                  (iii) Target shall close all data or information rooms
         previously maintained regarding Target in order to solicit bids or
         expressions of interest in relation to Target or its Properties or
         assets and request the return or destruction of all confidential
         information from such parties; and

                  (iv) None of Target or its Subsidiaries shall (directly or
         indirectly, through investment bankers or otherwise) solicit, initiate
         or encourage submission of proposals or offers from any Person relating
         to, or that could reasonably be expected to lead to, or facilitating or
         encouraging any effort or attempt with respect to, any Alternative
         Proposal or participate in any negotiations regarding, or furnish to
         any other Person any information with respect to, or otherwise
         cooperate in any way with, or assist or participate in or enter into
         any agreement relating to, any Alternative Proposal; provided, however,
         that, prior to the Extraordinary General Meeting, Target may, in
         response to an unsolicited written proposal with respect to an
         Alternative Proposal from a third party that did not result from a
         breach of this Section 5.2 and that the Board of Directors of Target
         determines, in its good faith and reasonable judgment, and after
         consultation with and the receipt of a written opinion of the Financial
         Advisor, that such proposal is a Superior Proposal, enter into a
         customary confidentiality agreement, furnish information to, and
         negotiate, explore or otherwise engage in substantive discussions with,
         such third party, but only if the Board of Directors of Target
         determines, in its good faith and reasonable judgment after
         consultation with and the receipt of a written opinion from its outside
         legal counsel, that taking such action is required to comply with the
         fiduciary duties of the Board of Directors of Target under applicable
         Law.

                  (b) Except as expressly permitted by this Section 5.2, neither
the Board of Directors of Target nor any committee thereof shall (i) withdraw or
modify, or propose publicly

                                       9
<PAGE>   10

to withdraw or modify, in a manner adverse to Buyer, the approval or
recommendation by such Board of Directors or such committee of the Arrangement
or this Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Alternative Proposal, or (iii) cause Target to enter into any
Acquisition Agreement. Notwithstanding the foregoing, prior to the Extraordinary
General Meeting, in response to an unsolicited written proposal with respect to
an Alternative Proposal from a third party that did not result from a breach of
this Section 5.2 and that the Board of Directors of Target determines, in its
good faith and reasonable judgment, (1) after consultation with and the receipt
of a written opinion of the Financial Advisor, that such proposal is a Superior
Proposal, and (2) after consultation with and the receipt of a written legal
opinion from its outside legal counsel, that taking any of the actions set forth
in clauses (i) or (ii) above is required to comply with the fiduciary duties of
the Board of Directors of Target under applicable Law, the Board of Directors of
Target may withdraw or modify its approval or recommendation of the Arrangement
or this Agreement or approve or recommend such Superior Proposal; provided,
however, that Target gives Buyer at least ten business days' prior written
notice of its Board of Directors' intention to take such action so that Buyer
can make a counterproposal as contemplated by Section 6.1(h) (provided, further,
that the foregoing will in no way limit or otherwise affect Buyer's right to
terminate this Agreement pursuant to Section 6.1(g) or Section 6.1(h) at such
time as the requirements of such subsection have been met). Any such withdrawal
or modification of the recommendation of the Board of Directors of Target of the
Arrangement or this Agreement or any such approval or recommendation of such
Superior Proposal will not change the approval of the Board of Directors of
Target for purposes of causing any antitakeover statute or other Law to be
inapplicable to the Arrangement. Nothing in this Section 5.2(b) shall be
construed to (i) permit Target to terminate this Agreement (except as provided
in Section 6.1 of this Agreement), (ii) permit Target to enter into any
agreement with respect to any Alternative Proposal, or (iii) affect any other
obligation of Target under this Agreement.

                  (c) Target shall (i) immediately (and in any event, no later
than one business day after receipt) advise Buyer orally and in writing of any
request for information or any inquiries or proposals relating to an Alternative
Proposal, the material terms and conditions of such request or Alternative
Proposal and the identity of the Person making such request or Alternative
Proposal and (ii) promptly deliver to Buyer a copy of such written inquiry or
proposal and copies of information provided to or by any third party relating
thereto. Target will keep Buyer informed of the status and material details
(including amendments or proposed amendments) of any such request or Alternative
Proposal.

         5.3 Notice to Representatives. Target shall ensure that its respective
officers and directors (and those of its Subsidiaries) and any investment
bankers or other advisors that it has retained are aware of the provisions of
this Agreement, and Target shall be responsible for any breach of those
provisions by any such Person.

6. TERMINATION AND AMENDMENT OF AGREEMENT

         6.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time (or, in the case of Section 6.1(g) or Section 6.1(h), at any
time prior to the Extraordinary General Meeting), by action taken or authorized
by the Board of Directors of the terminating party or parties:

                                       10
<PAGE>   11

         (a)      By mutual written consent of Buyer and Target; or

         (b)      By either Buyer or Target, if the Effective Time shall not
                  have occurred on or before the Termination Date; provided,
                  however, that the right to terminate this Agreement under this
                  Section 6.1(b) shall not be available to any Party whose
                  failure to fulfill any obligation under this Agreement has
                  been the primary cause of, or resulted in, the failure of the
                  Effective Time to occur on or before the Termination Date; or

         (c)      By either Buyer or Target, if any Governmental Authority shall
                  have issued an Order, or taken any other action (which the
                  Parties shall have used their reasonable best efforts to
                  resist, resolve or lift, as applicable) permanently
                  restraining, enjoining or otherwise prohibiting the
                  transactions contemplated by this Agreement, and such Order or
                  other action shall have become final and nonappealable; or

         (d)      By either Buyer or Target, if the Target Shareholder Approval
                  has not been obtained by reason of the failure to obtain such
                  approval at the Extraordinary General Meeting; or

         (e)      By Target, if Buyer shall have breached or failed to perform
                  any of its representations, warranties, covenants or other
                  agreements contained in this Agreement, such that the
                  conditions set forth on Schedule D have not been satisfied on
                  the Termination Date or are not capable of being satisfied on
                  or before the Termination Date; or

         (f)      By Buyer, if Target shall have breached or failed to perform
                  any of its representations, warranties, covenants or other
                  agreements contained in this Agreement, such that the
                  conditions set forth on Schedule C have not been satisfied on
                  the Termination Date or are not capable of being satisfied on
                  or before the Termination Date; or

         (g)      By Buyer, if (i) the Board of Directors of Target shall have
                  withdrawn, modified or changed its recommendation or approval
                  in respect of the Arrangement or the Share Issuance in a
                  manner adverse to Buyer; (ii) the Board of Directors of Target
                  shall have recommended any proposal other than by Buyer in
                  respect of an Alternative Proposal; or (iii) in the case of
                  clauses (i) and (ii), the Board of Directors of Target shall
                  have resolved to take any such action; or

         (h)      By Target, if the Board of Directors of Target has provided
                  written notice to Buyer that Target intends to terminate the
                  Agreement and enter into an Acquisition Agreement with respect
                  to a Superior Proposal pursuant to Section 5.2(b) (with such
                  termination becoming effective, if Buyer does not make the
                  offer contemplated by clause (iii) below, on the Business Day
                  immediately following the ten Business Day period contemplated
                  thereby, or, if later, upon Target thereafter entering into
                  such Acquisition Agreement); provided, however, that (i)
                  Target shall have complied with Section 5.2 hereof in all
                  material respects;

                                       11
<PAGE>   12

                  (ii) Target shall have attached the most current written
                  version of such Superior Proposal (or a summary containing all
                  material terms and conditions of such Superior Proposal) to
                  such notice; (iii) Buyer does not make, within ten Business
                  Days after receipt of Target's written notice pursuant to this
                  Section 6.1(h), an offer that the Board of Directors of Target
                  shall have reasonably concluded in good faith (following
                  consultation with its Financial Advisor and outside counsel)
                  is as favorable to the Target Common Shareholders as such
                  Superior Proposal; and (iv) Target pays the Buyer Termination
                  Fee in accordance with Section 6.2(b) concurrently with such
                  termination; or

         (i)      By Buyer, if Target shall have materially breached its
                  obligations under Section 1.1 or Section 5.2 of this
                  Agreement; or

         (j)      By Buyer, if the Effective Time shall not have occurred on or
                  before the Termination Date because any of the conditions for
                  the benefit of Buyer set forth in Schedule C shall not have
                  been satisfied on or before the Termination Date; or

         (k)      By Buyer, if Buyer determines in its reasonable judgment that
                  (i) Target does not own or have licenses to use all of the
                  Intellectual Property necessary to conduct Target's business
                  as it has been conducted, (ii) Target cannot remedy any
                  environmental problem within 30 days at a cost not to exceed
                  $250,000 in the aggregate, or (iii) there has occurred any
                  material adverse change in the business or assets of Target
                  since December 31, 2000 that has not been disclosed by Target
                  to Buyer in writing on or prior to June 19, 2001 or any other
                  material adverse change in the business or assets of Target
                  prior to the Effective Time.

         6.2 Effect of Termination. (a) In the event of termination of this
Agreement by either Buyer or Target as provided in Section 6.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of any Party to this Agreement or their respective officers, directors or
Affiliates, except with respect to Article 7 and this Section 6.2, which
provisions shall survive such termination; provided that, notwithstanding
anything to the contrary contained in this Agreement, neither Target nor Buyer
shall be relieved or released from any liabilities or damages arising out of any
breach of this Agreement prior to such termination.

                  (b) Target will pay to Buyer an amount equal to the Buyer
Termination Fee if this Agreement is terminated pursuant to Section 6.1(d),
6.1(f), 6.1(g), 6.1(h), 6.1(i), 6.1(j) or 6.1(k).

                  (c) The Parties hereto acknowledge that the agreements
contained in this Section 6.2 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, no Party
would enter into this Agreement; accordingly, if any Party fails promptly to pay
any amount due (or if Target fails to execute any documents in relation to the
Buyer Termination Fee) pursuant to this Section 6.2, and, in order to obtain
such payment, a Party commences a suit which results in a judgment against
another Party for any amounts set forth in this Section 6.2, such Party shall
pay to the other Party its costs and expenses (including attorney's fees and
expenses) in connection with such suit, together with interest on any amounts
adjudged to be due and owing at the prime rate of Citibank, N.A. in effect on
the date such payment was required to be made. The Parties hereto agree that any
remedy or amount payable

                                       12
<PAGE>   13

pursuant to this Section 6.2 shall not preclude any other remedy or amount
payable hereunder, and shall not be an exclusive remedy for any breach of any
representation, warranty, covenant or agreement contained in this Agreement.

7. GENERAL

         7.1 Time. Time shall be of the essence of this Agreement in each and
every matter or thing herein provided.

         7.2 Notices. All notices and other communications required or permitted
hereunder will be in writing and, unless otherwise provided in this Agreement,
will be deemed to have been duly given when delivered in person or when
dispatched by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) (if so delivered or dispatched prior to 5:00 p.m.,
local time, on a Business Day in the place of receipt; otherwise such notice
will be deemed delivered or dispatched on the next Business Day) or one Business
Day after having been dispatched by a nationally recognized overnight courier
service to the appropriate party at the address specified below or to such other
address or addresses as any Party may from time to time designate as to itself
by like notice:

         If to Target to:

         c/o Global Election Systems, Inc.
         1611 Wilmeth Road
         McKinney, Texas 75069
         Facsimile No.: (972) 542-6044
         Attention:  Michael Rasmussen

         with copies to (which shall not constitute notice):

         Winstead Sechrest & Minick P.C.
         5400 Renaissance Tower
         1201 Elm Street
         Dallas, Texas 75270
         Facsimile No.: (214) 745-5390
         Attention:  Brice E. Tarzwell

         and

         Gowling Lafleur Henderson LLP
         P.O. Box 49122, Suite 2300
         1055 Dunsmuir Street
         Vancouver, British Columbia
         Canada V7X 1J1
         Facsimile No.: (604) 689-8610
         Attention:  Rod C. McKeen

                                       13
<PAGE>   14

         If to Buyer or Sub to:

         Diebold, Incorporated
         5995 Mayfair Road
         P.O. Box 3077
         North Canton, Ohio 44720-8077
         Facsimile No.: (330) 490-4555
         Attention:   Gregory T. Geswein,
                           Senior Vice President and
                           Chief Financial Officer

         and

         Diebold, Incorporated
         5995 Mayfair Road
         P.O. Box 3077
         North Canton, Ohio 44720-8077
         Facsimile No.: (330) 490-4450
         Attention:   Warren W. Dettinger,
                           Vice President and General Counsel

         with copies to (which shall not constitute notice):

         Jones, Day, Reavis & Pogue
         599 Lexington Avenue
         New York, New York 10022
         Facsimile No.: (212) 755-7306
         Attention:  Thomas W. Bark

         and

         Fasken Martineau DuMoulin LLP
         2100-1075 West Georgia Street
         Vancouver, British Columbia
         Canada V6E 3G2
         Facsimile No.: (604) 631-3232
         Attention:  Lata Casciano

         7.3 Expenses. Except as otherwise expressly provided herein, each of
the Parties hereto will pay its own expenses relating to the transactions
contemplated by this Agreement and the Transaction Documents, including, without
limitation, the fees and expenses of its respective counsel, financial advisors
and accountants.

         7.4 Assignment Successors and Assigns. This Agreement will be binding
upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns, but will not be assignable or delegable by any
Party (including an assignment by operation of Law) without the prior written
consent of Buyer and Target; provided that Buyer and Sub may assign its and/or
their rights and obligations under this Agreement to Buyer or any Affiliate of

                                       14
<PAGE>   15

Buyer provided that no such assignment will relieve Buyer of any of its
obligations under this Agreement.

         7.5 Waiver. Either Buyer (on behalf of itself and Sub) or Target, by
written notice to the other may (a) extend the time for performance of any of
the obligations or other actions of the other under this Agreement, (b) waive
any inaccuracies in the representations or warranties of the other contained in
this Agreement, (c) waive compliance with any of the conditions or covenants of
the other contained in this Agreement, or (d) waive or modify performance of any
of the obligations of the other under this Agreement. Except as provided in the
immediately preceding sentence, no action taken pursuant to this Agreement will
be deemed to constitute a waiver of compliance with any representations,
warranties or covenants contained in this Agreement. Any waiver of any term or
condition will not be construed as a subsequent waiver of the same term or
condition, or a waiver of any other term or condition of this Agreement. No
failure or delay of any Party in asserting any of its rights hereunder will
constitute a waiver of any such rights.

         7.6 Entire Agreement. This Agreement (including the Schedules hereto)
and the Transaction Documents supersede any other agreement, whether written or
oral, that may have been made or entered into by any Party or any of their
respective Affiliates (or by any director, officer or representative thereof)
prior to the date hereof relating to the subject matter of this Agreement,
including, without limitation, the letter agreement between Buyer and Target
dated June 19, 2001 and the amendment thereof dated as of August 3, 2001. This
Agreement (together with the Schedules hereto) and the Transaction Documents
constitute the entire agreement with respect to the subject matter of this
Agreement by and among the Parties hereto and there are no agreements or
commitments by or among such Parties or their Affiliates with respect to the
subject matter of this Agreement except as expressly set forth herein and
therein.

         7.7 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time by additional written agreements as may mutually be
determined by Buyer (without the joinder of Sub) and Target to be necessary,
desirable or expedient to further the purposes of this Agreement or to clarify
the intention of the parties hereto.

         7.8 Rights of the Parties. Except as provided in Section 4.9, nothing
expressed or implied in this Agreement is intended or will be construed to
confer upon or give any Person other than the Parties hereto and their
respective Affiliates any rights or remedies under or by reason of this
Agreement or any transaction contemplated hereby.

         7.9 Governing Law; Jurisdiction; Consent to Service of Process. (a)
This Agreement and the legal relations among the Parties hereto will be governed
by and construed in accordance with the substantive Laws of the State of
Delaware applicable thereto, without giving effect to the principles of conflict
of Laws thereof; except that, any application made in respect of the Interim
Order, the Final Order and any appeals related thereto are subject to the Laws
of the Province of British Columbia and the Laws of Canada.

                  (b) Except as otherwise set forth in this Agreement, each
Party hereby irrevocably and unconditionally submits, for itself and its
Property, to the exclusive jurisdiction of any state or federal court located in
the State of Delaware (each, a "Delaware Court"), and any

                                       15
<PAGE>   16

appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Agreement, the Option Agreement or any other
Transaction Document, or for recognition or enforcement of any judgment
resulting from any such suit, action or proceeding, and each Party hereby
irrevocably and unconditionally agrees that all claims in respect of any such
suit, action or proceeding may be heard and determined in a Delaware Court.

                  (c) It will be a condition precedent to each Party's right to
bring any such suit, action or proceeding that such suit, action or proceeding,
in the first instance, be brought in a Delaware Court (unless such suit, action
or proceeding is brought solely to obtain discovery or to enforce a judgment),
and if each such court refuses to accept jurisdiction with respect thereto, such
suit, action or proceeding may be brought in any other court with jurisdiction.

                  (d) No Party may move to (i) transfer any such suit, action or
proceeding from a Delaware Court to another jurisdiction, (ii) consolidate any
such suit, action or proceeding brought in a Delaware Court with a suit, action
or proceeding in another jurisdiction unless such motion seeks solely and
exclusively to consolidate such suit, action or proceeding in a Delaware Court,
or (iii) dismiss any such suit, action or proceeding brought in a Delaware Court
for the purpose of bringing or defending the same in another jurisdiction.

                  (e) Each Party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, (i) any objection
which it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in a Delaware Court,
(ii) the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in a Delaware Court, and (iii) the right to object, with
respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party. Each Party irrevocably consents to service of
process in any manner permitted by Law. Notwithstanding the foregoing, this
Section 7.9 will not apply to (x) any suit, action or proceeding by a Party
seeking indemnification or contribution pursuant to this Agreement or otherwise
in respect of a suit, action or proceeding against such Party by a third party
if such suit, action or proceeding by such Party seeking indemnification or
contribution is brought in the same court as the suit, action or proceeding
against such Party or (y) any suit, action or proceeding to enforce a judgment
of a Delaware Court.

         7.10 Titles and Headings. Titles and headings to Articles and Sections
herein are inserted for convenience of reference only, and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement.

         7.11 Certain Interpretive Matters and Definitions. (a) Unless the
context otherwise requires, (i) all references to Articles, Sections or
Schedules are to Articles, Sections or Schedules of or to this Agreement, (ii)
each term defined in this Agreement has the meaning assigned to it, (iii) each
accounting term not otherwise defined in this Agreement has the meaning assigned
to it in accordance with generally accepted accounting principles, (iv) "or" is
disjunctive but not necessarily exclusive, (v) words in the singular include the
plural and vice versa, (vi) all references to "$" or dollar amounts will be to
lawful currency of the United States of America, and (vii) the use in this
Agreement of the masculine pronoun in reference to a Party hereto shall be
deemed to include the feminine or neuter, and vice versa, as the context may
require.

                                       16
<PAGE>   17

                  (b) No provision of this Agreement will be interpreted in
favor of, or against, any of the Parties hereto by reason of the extent to which
any such Party or its counsel participated in the drafting thereof or by reason
of the extent to which any such provision is inconsistent with any prior draft
hereof.

         7.12 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by Buyer, Target and Sub to express their
mutual intent, and no rule of strict construction will be applied against any
Party hereto.

         7.13 Counterparts. This document may be executed in one or more
separate counterparts, each of which, when so executed, will be deemed to be an
original. Such counterparts will together constitute one and the same
instrument. This Agreement may be executed by facsimile signatures.

         7.14 Remedies; Severability. It is specifically understood and agreed
that any breach of the provisions of this Agreement by any Person subject hereto
will result in irreparable injury to the other Parties hereto, that the remedy
at Law alone will be an inadequate remedy for such breach and that, in addition
to any other remedies which they may have, such other Parties may enforce their
respective rights by actions for specific performance (to the extent permitted
by Law). Whenever possible, each provision of this Agreement will be interpreted
in such a manner as to be effective and valid under applicable Law, but if any
provision of this Agreement is deemed prohibited or invalid under such
applicable Law, such provision will be ineffective to the extent of such
prohibition or invalidity, and such prohibition or invalidity will not
invalidate the remainder of such provision or the other provisions of this
Agreement.

         7.15 Definitions. For the purposes of this Agreement, those terms
defined in Schedule A shall have the meanings attributed to them in that
Schedule.

         7.16 Date for any Action. If the date on which any action is required
to be taken hereunder is not a Business Day in the place where the action is
required to be taken, such action shall be required to be taken on the next
succeeding day which is a Business Day in such place.

         7.17 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF
OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

         7.18 Schedules. The following are the Schedules to this Agreement,
which form an integral part hereof.

             Schedule A - Definitions
             Schedule B - Plan of Arrangement
             Schedule C - Conditions for the Benefit of Buyer
             Schedule C-7 - Form of Gowlings Opinion
             Schedule C-9 - Intellectual Property Agreements
             Schedule D - Conditions for the Benefit of Target
             Schedule D-4 - Form of Jones, Day Opinion

                                       17
<PAGE>   18

             Schedule E - Conditions for the Benefit of Buyer, Target and Sub
             Schedule F - Representations and Warranties of Target
             Schedule G - Representations and Warranties of Buyer
             Schedule 2(c) - Form of Agreement with Optionholders

                                       18
<PAGE>   19

         IN WITNESS WHEREOF the Parties hereto have signed this Agreement as of
the date first set out above.

                                          DIEBOLD, INCORPORATED

                                          By: /s/ GREGORY T. GESWEIN
                                              ----------------------------------
                                              Gregory T. Geswein
                                              Senior Vice President and
                                              Chief Financial Officer

                                          DIEBOLD ACQUISITION LTD.

                                          By: /s/ GREGORY T. GESWEIN
                                              ----------------------------------
                                              Gregory T. Geswein
                                              President

                                          GLOBAL ELECTION SYSTEMS INC.

                                          By: /s/ BRIAN COURTNEY
                                              ----------------------------------
                                              Brian Courtney
                                              Chief Executive Officer

                                       19
<PAGE>   20

                                   SCHEDULE A

                                   DEFINITIONS

"ACCOUNTING RULES" means all applicable accounting requirements and the
published rules and regulations of the SEC with respect to the preparation of
financial statements contained in any report, form or filing with the SEC.

"ACQUISITION AGREEMENT" means any letter of intent, agreement in principle,
plan, arrangement or agreement relating to an Alternative Proposal.

"AFFILIATE" shall have the meaning attributed to it under the Exchange Act.

"AGREEMENT" means the Arrangement Agreement, together with the Schedules
attached thereto.

"ALTERNATIVE PROPOSAL" means any inquiry, proposal or offer from any Person
relating to any (i) direct or indirect acquisition or purchase of a business
that constitutes 15% or more of the net revenues, net income, Properties or
assets of Target and its Subsidiaries, taken as a whole, or 15% or more of any
class of equity securities of Target or any of its Subsidiaries, (ii) tender
offer or exchange offer that if consummated would result in any Person
beneficially owning 15% or more of any class of equity securities of Target or
any of its Subsidiaries, or (iii) merger, consolidation, business combination,
share exchange, recapitalization, liquidation, dissolution or similar
transaction involving Target or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.

"ARRANGEMENT" means the arrangement to be undertaken in accordance with the Plan
of Arrangement set forth on Schedule B, subject to any amendment or variation
made in accordance with that Schedule.

"BUSINESS DAY" means any day other than a Saturday, Sunday or Canadian or U.S.
federal or British Columbia provincial holiday or a day on which banks are not
open for business in Vancouver, British Columbia or New York, New York.

"BUYER COMMON STOCK" means the common stock, par value US$.01 per share, of the
Buyer.

"BUYER DISCLOSURE LETTER" means the disclosure letter delivered by Buyer to
Target prior to the execution by Target of the Agreement.

"BUYER EXPENSES" means an amount equal to all out-of-pocket costs and expenses
of Buyer incurred in connection with this Agreement, the Option Agreement and
the transactions contemplated hereby and thereby and any litigation associated
therewith (including, without limitation, all SEC filing fees and all fees and
expenses payable to accountants, counsel, consultants and due diligence
expenses).

"BUYER SEC DOCUMENTS" means, collectively, all required reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) filed by the Buyer with the SEC since January
1, 2000 and prior to the date hereof.

                                      A-1
<PAGE>   21

"BUYER TERMINATION FEE" means an amount in cash equal to the sum of $1,000,000
and the Buyer Expenses.

"CIRCULAR" means the information circular of Target to be sent by Target to the
Target Common Shareholders in connection with the Extraordinary General Meeting.

"CODE" means the U.S. Internal Revenue Code of 1986, as amended.

"COMPANY ACT" means the Company Act (British Columbia), as the same may be
amended or re-enacted or any successor legislation thereto.

"CONSTITUENT DOCUMENTS" of a Person means the certificate of incorporation,
by-laws, memorandum and articles of incorporation, or other similar governing
documents of such Person.

"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any security
issued by such Person or any agreement, contract, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.

"COURT" means the Supreme Court of British Columbia.

"EFFECTIVE DATE" means the date on which a certified copy of the Final Order
with the Plan of Arrangement and such other documents as are required to be
filed under the Company Act to give effect to the Arrangement have been accepted
for filing under Section 252 of the Company Act by the Registrar appointed under
the Company Act, which shall, at Buyer's option, be following the expiration of
any appeal period with respect to the Final Order or the Interim Order under the
Company Act.

"EFFECTIVE TIME" means the time on the Effective Date when the Arrangement will
become effective according to its terms.

"ENCUMBRANCE" means any lien, charge, encumbrance, title retention right,
security interest, pledge, hypothecation or right of others of any nature or
kind whatsoever.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and its Canadian equivalent.

"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.

"EXCHANGE RATIO" means the ratio of a share of Buyer Common Stock to be
exchanged for each whole Target Common Share equal to the quotient (rounded to
the nearest 1/100,000) determined by dividing (x) 0.908 by (y) the average of
the daily volume weighted average prices (based on a trading day from 9:30 a.m.
to 4:00 p.m. (New York City time)) of the Buyer Common Stock on the New York
Stock Exchange as reported by Bloomberg Financial LP using the AQR function for
the ten consecutive trading days ending with the trading day immediately
preceding the Effective Time; provided, that the Exchange Ratio shall not be
less than 0.02421 or greater than 0.03027.

                                      A-2
<PAGE>   22

"EXTRAORDINARY GENERAL MEETING" means the meeting (including any adjournment
thereof) of the Target Common Shareholders to approve the Arrangement.

"FAIRNESS OPINION" means the opinion of the Financial Advisor to the effect that
the consideration to be received under the Arrangement is fair to the Target
Common Shareholders from a financial point of view.

"FINAL ORDER" means the order of the Court approving the Arrangement.

"FINANCIAL ADVISOR" means J.J.B. Hilliard, W.L. Lyons, Inc.

"FORM S-4" means, if required, the registration statement filed by Buyer with
the SEC to register the Buyer Common Stock to be issued as part of the Exchange
Consideration (as defined in the Plan of Arrangement).

"GAAP" means Canadian generally accepted accounting principles.

"GOVERNMENTAL AUTHORITY" means any nation or government, any state, provincial
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or pertaining
to government, including, without limitation, any quasi-governmental,
supranational, statutory, environmental or securities regulatory entity and any
stock exchange, court or arbitral body.

"HAZARDOUS SUBSTANCES" means: (A) those materials, pollutants and/or substances
defined in or regulated under any environmental Law, including the following
national Canadian statutes and their provincial counterparts, as each may be
amended from time to time, and all rules regulations and policies promulgated
thereunder: Canadian Environmental Protection Act, 1999, the Fisheries Act, the
Transportation of Dangerous Goods Act, 1992, the British Columbia Drinking Water
Protection Act, the British Columbia Health Act, the British Columbia Pesticide
Control Act and the British Columbia Waste Management Act; (B) those materials,
pollutants and/or substances defined in or regulated under the following United
States federal statutes and their state counterparts, as each may be amended
from time to time, and all rules, regulations and policies promulgated
thereunder: the Hazardous Materials Transportation Act of 1980, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide and Rodenticide
Act, the Toxic Substances Control Act and the Clean Air Act; (C) petroleum and
petroleum products including crude oil and any fractions thereof; (D) natural
gas, synthetic gas and any mixtures thereof; (E) radon; (F) asbestos; (G) any
other contaminant; and (H) any materials, pollutants and/or substance with
respect to which any Governmental Authority requires environmental
investigation, monitoring, reporting or remediation.

"INTELLECTUAL PROPERTY" means without limitation any or all of the following and
all rights associated therewith: (A) all domestic and foreign patents and
applications therefor and all reissues, divisions, renewals, extensions,
continuations and continuations-in-part thereof; (B) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data, customer lists,
rights of privacy and publicity, and all documentation relating to any of the
foregoing; (C) all copyrights,

                                      A-3
<PAGE>   23

copyright registrations and applications therefor, and all other rights
corresponding thereto throughout the world; (D) all mask works, mask work
registrations and applications therefor; (E) all industrial designs and any
registrations and applications therefor; (F) all trade names, logos, common law
trademarks and service marks, trademark and service mark registrations and
applications therefor and all goodwill associated therewith; and (G) all
computer software including all source code, object code, firmware, development
tools, files, records and data, all media on which any of the foregoing is
recorded, and all documentation related to any of the foregoing.

"INTELLECTUAL PROPERTY OF TARGET" means any Intellectual Property that: (A) is
owned by or licensed to Target or any Subsidiary; (B) is used in the operation
of the businesses of Target or any Subsidiary; (C) is currently included in or
provided with products of Target or any Subsidiary which Target or any
Subsidiary makes available for use by others, including the design and use of
the products of Target or any Subsidiary; (D) was in the past included in, or
provided with, products of Target or any Subsidiary which were made available
for use by others, and for which any product recipients still hold an
unterminated license.

"INTERIM ORDER" means an order of the Court providing for, among other things,
the calling and holding of the Extraordinary General Meeting.

"ITA" means Income Tax Act (Canada), as the same may be amended or re-enacted,
or any successor legislation thereto.

"KNOWLEDGE" means the actual Knowledge of any director or officer of Target, any
of Target's Subsidiaries or Buyer, as the case may be, in each case after due
inquiry.

"LAW" means any federal, foreign, state, provincial or local statute, law, rule,
regulation, ordinance, code, permit, bylaw, license, policy or rule of common
law or any rules, regulations and policies promulgated by a Governmental
Authority having jurisdiction.

"LEASED PROPERTIES" of any Person means all real properties (collectively with
all buildings, structures and other improvements thereon) leased by such Person.

"LEGISLATION" means the Company Act, the securities legislation of each province
and territory of Canada, the rules, regulations and forms made or promulgated
under that legislation, and the policies, bulletins and notices of the
regulatory authorities administering that legislation and the rules,
regulations, bylaws and policies of The Toronto Stock Exchange, as any of the
foregoing may be amended from time to time.

"LETTER OF TRANSMITTAL" means the letter of acceptance and transmittal to be
forwarded by Target to the Target Common Shareholders, together with the
Circular, in form and substance acceptable to Buyer.

"LOAN DOCUMENTS" means, collectively, the Bridge Loan Agreement, dated as of
June 29, 2001, as amended by Amendment No. 1 dated August 3, 2001, the
Collateral and Guarantee Agreement, dated as of June 29, 2001 and the Warrant to
Purchase Common Shares dated as of August 3, 2001, each executed by Buyer and
Target.

                                      A-4
<PAGE>   24

"MATERIAL ADVERSE EFFECT" means any change, effect, violation, inaccuracy, event
or condition (other than a change in general economic conditions) that,
individually or together with all such changes, effects, violations,
inaccuracies, events or conditions, has had or could reasonably be expected to
(a) have a material adverse effect on the business, prospects, operations,
Properties, assets or condition (financial or otherwise) of a Party and its
Subsidiaries, taken as a whole, (b) have a material adverse effect on the
validity or enforceability of this Agreement, the Option Agreement or any of the
other Transaction Documents or the rights or remedies, taken as a whole, of a
Party hereunder or thereunder, or (c) prevent or materially delay any Party's
ability to consummate the transactions contemplated by this Agreement, the
Option Agreement or in any other Transaction Document.

 "MATERIAL CONTRACT" means any material contract, commitment or understanding
(including any lease, license, loan agreement, note, guarantee, indemnity,
indenture, security agreement, reseller or distribution or other instrument),
whether written or oral, including without limitation, the agreements described
in paragraph 14(a) on Schedule F.

"MULTIEMPLOYER PLAN" means a "multiemployer plan" within the meaning of Section
3(37) of ERISA or a "multiple employer plan" within the meaning of Section 3(40)
of ERISA or their Canadian equivalents.

"OPTION AGREEMENT" means the Common Share Option Agreement between Target and
Buyer, dated as of the date hereof.

"ORDER" means any judgment, injunction, judicial or administrative order or
decree.

"PARTIES" or "PARTY" means, collectively, Buyer, Sub and Target or individually,
Buyer, Sub or Target, as applicable.

"PERMITS" means licenses, permits, orders, registrations and other
authorizations.

"PERMITTED ENCUMBRANCES" means (a) mechanics', workmen's, carriers', repairmen's
or other like Encumbrances incurred in the ordinary course of business in
respect of obligations that are not overdue, (b) statutory liens for Taxes,
assessments and other similar Governmental Authority charges that are not
overdue, (c) Encumbrances that arise under zoning, land use and other similar
imperfections of title that arise in the ordinary course of business and that,
individually and in the aggregate, do not materially affect the value, use or
marketability of the property subject thereto, (d) Encumbrances arising out of
indebtedness to Hibernia National Bank, Compass Bank and Jones, Gable & Company
existing as of the date of execution of the Agreement, or (e) Encumbrances
arising out of capital lease obligations identified in the Target Disclosure
Letter.

"PERMITTED RIGHTS" means (A) non-exclusive rights granted for a limited period
of time by Target or a Subsidiary to a licensee or sublicensee to use
Intellectual Property of Target as part of, or with, a product Target or such
Subsidiary has sold or licensed to such licensee or sublicensee; or (B) rights
retained by the joint owner of Intellectual Property of Target, who was
identified as a joint owner in the Target Disclosure Letter, and such retained
rights do not interfere with Target or any Subsidiary using, sublicensing or
transferring its rights to or ownership of the Intellectual Property of Target.

                                      A-5
<PAGE>   25

"PERSON" includes an individual, corporation, incorporated or unincorporated
association, syndicate or organization, partnership, limited liability company,
joint venture, association, joint stock company, trust, trustee, executor,
administrator or other legal representative or other entity.

"PLAN OF ARRANGEMENT" means the Plan of Arrangement set forth as Schedule B,
subject to any amendment or variation made in accordance with that Schedule.

"PROPERTY" means any right or interest in or to property, of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including, without limitation, equity interests.

"REQUIRED CONSENTS" means (i) all required waivers, consents and approvals or
releases from other parties to each Material Contract and (ii) all licenses,
registrations, consents, approvals, authorizations and orders of each applicable
Governmental Authority necessary or appropriate for the consummation of the
Arrangement.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SEDAR" means the System for the Electronic Document Analysis and Retrieval of
the Canadian Securities Administration.

"SEC" means the United States Securities and Exchange Commission.

"SUBJECT SHARES" means Target Common Shares which, at the date of this
Agreement, are held, directly or indirectly, by Target or Buyer, and which,
immediately prior to the implementation of the Arrangement, will be held,
directly or indirectly, by Target or Buyer.

"SUBSIDIARY" means with respect to any Person, (i) any corporation, association
or other business entity of which more than 50% of the total voting power of
shares of capital stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person and
(ii) any partnership, one or more of the general partners or managing general
partners of which is such Person or an entity described in clause (i) and
related to such Person.

"SUPERIOR PROPOSAL" means any Alternative Proposal in respect of all or
substantially all of the Target Common Shares not solicited by Target and which
did not otherwise result from a breach of Section 5.2 that meets each of the
following conditions: (i) any required financing in connection with such
Alternative Proposal shall have been demonstrated to the satisfaction of the
Board of Directors of Target, acting in good faith, to be reasonably likely to
be obtained, (ii) such Alternative Proposal is not subject to a due diligence
condition following execution of the Acquisition Agreement, (iii) such
Alternative Proposal includes take-out financing that would permit the Company
to satisfy all of its obligations under the Loan Documents immediately following
the execution of the Acquisition Agreement related thereto, and (iv) such
Alternative Proposal, if consummated in accordance with its terms, would result
in a transaction (a) more favorable to the Target Common Shareholders than the
Plan of Arrangement and the transactions contemplated by the Loan Documents and
the Contract Manufacturing Agreement, taken as a whole, and (b) having a value
per Target Common Share greater than the value per Common

                                      A-6
<PAGE>   26

Share provided by the Plan of Arrangement as determined in good faith by the
Board of Directors of Target.

"TARGET BALANCE SHEET" means the most recent balance sheet contained in the
Target SEC Documents.

"TARGET BENEFIT PLANS" means any compensation, bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option or other stock related rights, fringe benefit, retirement,
vacation, disability, death benefit, supplemental unemployment benefits,
hospitalization, medical, dental, life, severance, post-employment benefits or
other plan, agreement, arrangement, policies or understanding, or employment
severance, retention, consulting, change of control or similar agreement,
whether formal or informal, oral or written, providing benefits to any current
or former employee, officer, director or shareholder of Target or any of its
Subsidiaries or to which Target or any of its Subsidiaries contributes or is or
was obligated to contribute, which will include each "employee benefit plan"
(within the meaning of Section 3(3) of ERISA or its Canadian equivalent),
whether or not subject to ERISA, but shall not include any Multiemployer Plan).

"TARGET COMMON SHARES" means the common shares, without par value, of Target.

"TARGET COMMON SHAREHOLDERS" means registered holders of Target Common Shares.

"TARGET DISCLOSURE LETTER" means the disclosure letter delivered by Target to
Buyer prior to the execution by Buyer of this Agreement.

"TARGET SEC DOCUMENTS" means, collectively, all required reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) filed by Target with the SEC and on SEDAR
since January 1, 2000 and prior to the date hereof.

"TARGET SHAREHOLDER APPROVAL" means an affirmative vote for the Arrangement of
not less than 75% of the votes cast by the holders of Target Common Shares,
being entitled to do so in person or by proxy, at the Extraordinary General
Meeting and, if required under the Company Act, the approval of Target Common
Shares in accordance with Section 252(8) of the Company Act.

"TARGET STOCK OPTIONS" means any options, warrants or other rights to acquire
equity interests of Target, including, without limitation, pursuant to the
agreements listed in paragraph 2 of the Target Disclosure Letter.

"TAX AUTHORITY" means the Internal Revenue Service, the Canada Customs and
Revenue Governmental Authority and any other domestic or foreign bureau,
department, entity or other Governmental Authority responsible for the
administration of any Tax.

"TAX RETURN" means any return, report, information return or other document
(including any related or supporting information and, where applicable, profit
and loss accounts and balance sheets) with respect to Taxes.

                                      A-7
<PAGE>   27

"TAXES" means all taxes, charges, fees, levies or other assessments imposed by
any federal, state, provincial or local taxing authority, including, but not
limited to, income, gross receipts, excise, property, sales, use, transfer,
payroll, license, ad valorem, value added, withholding, social security,
national insurance (or other similar contributions or payments), franchise,
estimated, severance, stamp, and other taxes (including any interest, fines,
penalties or additions attributable to or imposed on or with respect to any such
taxes, charges, fees, levies or other assessments).

"TERMINATION DATE" means March 31, 2002.

"TRANSACTION DOCUMENTS" means, collectively, the Agreement, the Option Agreement
and each other agreement, consent or certificate delivered or obtained in
connection with the transactions contemplated by this Agreement or the Option
Agreement.

                                      A-8
<PAGE>   28

                                   SCHEDULE B

                      PLAN OF ARRANGEMENT UNDER SECTION 252
                      OF THE COMPANY ACT (BRITISH COLUMBIA)

1. INTERPRETATION

         1.1 Definitions. In this Plan of Arrangement defined terms used but not
defined have the meanings ascribed to those terms in the Arrangement Agreement:

"ARRANGEMENT" means the arrangement undertaken in accordance with of Section 252
of the Company Act and following the expiration of any appeal period in
accordance with the Company Act, on the terms and conditions set forth in this
Plan of Arrangement and any amendment or variation thereto made in accordance
with Section 5 hereof.

"ARRANGEMENT AGREEMENT" means the agreement made August 30, 2001 among Buyer,
Sub and Target.

"CASH CONSIDERATION" means for each Target Common Share, US$0.227, payable in
accordance with Section 4.1.

"CERTIFICATES" means certificates which immediately prior to the Effective Time
represented outstanding Target Common Shares.

"DISSENTING SHAREHOLDER" means a Registered Holder who properly gives a Notice
of Dissent in accordance with Section 207 of the Company Act as modified by the
Interim Order.

"EXCHANGE CONSIDERATION" means, for each Target Common Share, a number of fully
paid and nonassessable shares of Buyer Common Stock equal to the Exchange Ratio
and the Cash Consideration.

"NOTICE OF DISSENT" means a notice of dissent contemplated by Section 207(l)(a)
of the Company Act which is given in the manner set forth in Section 207 of the
Company Act as modified by the Interim Order.

"PLAN OF ARRANGEMENT", "HEREOF", "HEREIN", "HEREUNDER" and similar expressions
refer to this Plan of Arrangement, and not to any particular article, section or
other portion hereof.

"REGISTERED HOLDERS" means registered holders of Target Common Shares, other
than the Subject Shares.

"REGISTRAR" means the Registrar appointed under the Company Act;

"SUB COMMON SHARES" means the common shares, without par value, of Sub; and

"TRANSFER AGENT" means Pacific Corporate Trust Company.

         1.2 Headings and References. The division of this Plan of Arrangement
into sections and the insertion of headings are for convenience of reference
only and do not affect the

                                      B-1
<PAGE>   29

construction or interpretation of this Plan of Arrangement. Unless otherwise
specified, references to sections are to sections of this Plan of Arrangement

         1.3 Currency. Except as expressly indicated otherwise, all sums of
money referred to in this Plan of Arrangement are expressed and shall be payable
in United States dollars.

         1.4 Time. Time shall be of the essence in each and every matter or
thing herein provided. Unless otherwise indicated, all times expressed herein
are local time, Vancouver, British Columbia.

         1.5 Number, Gender and Persons. In this Plan of Arrangement, unless the
contrary intention appears, words importing the singular include the plural and
vice versa; words importing gender shall include all genders; and words
importing Persons shall include a natural Person, firm, trust, partnership,
association, corporation, joint venture or government (including any
governmental board, Governmental Authority or instrumentality thereof).

         1.6 Date for any Action. If the date on which any action is required to
be taken hereunder is not a Business Day in the place where the action is
required to be taken, such action shall be required to be taken on the next
succeeding day which is a Business Day in such place.

         1.7 Objectives of the Arrangement. Subject to the terms and conditions
set forth herein, Buyer, acting directly or through Sub, shall acquire all of
the outstanding Target Common Shares such that at the Effective Time, Target
will be a direct or indirect wholly-owned subsidiary of Buyer in such a manner
that achieves the following objectives: (i) Registered Holders at the Effective
Time (other than holders of Subject Shares) shall receive the Exchange
Consideration in exchange for their Common Shares; (ii) all Target Common Shares
shall be owned by Buyer or Sub at the Effective Time; (iii) receipt of the
Exchange Consideration shall be a taxable transaction to those Registered
Holders who are liable for Taxes under the ITA and to those Registered Holders
who are liable for Taxes under United States federal income Tax; and (iv) the
Arrangement shall not constitute a reorganization within the meaning of Section
368 of the Code.

2. EFFECT AND MECHANICS OF THE ARRANGEMENT

         2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Arrangement and without any action on the part of the Registered Holder or
Buyer:

                  (a) Sub Common Shares. Each issued and outstanding Sub Common
Share shall remain issued, outstanding and unchanged as a validly issued, fully
paid and nonassessable common share of Sub.

                  (b) Exchange of Target Common Shares. On the Effective Date
the following shall occur and shall be deemed to occur in the following order
without any further act or formality, except as otherwise provided:

                           (i) Each issued and outstanding Target Common Share
                  other than:

                                    (A) the Subject Shares; and

                                      B-2
<PAGE>   30

                                    (B) Target Common Shares in respect of which
                           a Notice of Dissent has been given in accordance with
                           Section 3 hereof;

shall be and shall deemed to be transferred to Buyer or Sub in exchange for the
Exchange Consideration;

                           (ii) Each issued and outstanding Target Common Share
                  in respect of which a Notice of Dissent has been given shall
                  be and shall be deemed to be transferred to Target with Target
                  being obligated to pay therefor the amount determined in
                  accordance with Section 3 of this Plan of Arrangement;

                           (iii) With respect to each Target Common Share
                  transferred in accordance with paragraph (i) above:

                                    (A) The holder thereof shall cease to be the
                           holder of such Target Common Shares, the name of the
                           Registered Holder thereof shall be removed from the
                           register of members of Target, and such holder shall
                           cease to have any rights with respect to such Target
                           Common Shares other than the payments contemplated
                           under Sections 2.2(b) and 3, as applicable;

                                    (B) The certificate representing such Target
                           Common Shares shall be deemed to have been cancelled
                           as of the Effective Date;

                                    (C) The Registered Holder thereof shall be
                           deemed to have executed and delivered all consents,
                           releases, assignments and waivers, statutory or
                           otherwise, required to transfer such share in
                           accordance with paragraph (i) or (ii) above;

                                    (D) Buyer or Sub shall be and shall be
                           deemed to be the transferee of such Target Common
                           Shares if transferred in accordance with paragraph
                           (i) or (ii) and shall be entered in the register of
                           members of Target as the holder of such shares; and

                                    (E) Buyer shall be entitled to make such
                           deductions, withholdings and remittances of Taxes in
                           respect of the Exchange Consideration as and when
                           required under the ITA or under the Code.

         (c) Treatment of Target Stock Options.

                  (i) Target shall take all actions necessary to provide that,
     at the Effective Time, each then-outstanding Target Stock Option will be
     canceled by Target in exchange for payment to the holders of such Options
     of an amount in respect thereof (x) in cash equal to the product of (1) the
     Cash Consideration and (2) the number of Target Common Shares subject to
     such Target Stock Option and (y) in shares of Buyer Common Stock equal to
     the product of (1) the Exchange Ratio and (2) the number of Target Common
     Shares subject to such Target Stock Option (such payment to be made net of
     applicable withholding Taxes and the aggregate exercise price payable upon
     exercise of

                                      B-3
<PAGE>   31

     such Target Stock Option or, if the aggregate exercise price of such Target
     Stock Options exceeds the aggregate Cash Consideration payable in respect
     thereof, subject to the payment by the holder of such Target Stock Options
     to Target of such positive difference). Any Target Stock Options not
     canceled, exercised or converted prior to the Effective Time will, by
     reason of the Arrangement, thereafter represent the right to receive during
     the term of such Target Stock Option only the consideration described in
     the immediately preceding sentence.

                  (ii) Target shall use its reasonable best efforts to obtain
     consents from holders of Target Stock Options in the form attached hereto
     as Schedule 2(c) so that following the Effective Time, all Target Stock
     Options not exercised or converted prior to the Effective Time will
     terminate.

                  (iii) Prior to the Effective Time, Target shall, at the
     request of Buyer, (A) obtain any consents from holders of Target Stock
     Options and (B) make any amendments to the terms of the agreements
     evidencing Target Stock Options that Buyer deems necessary to give effect
     to the actions contemplated by subsections (i) and (ii) of this Section
     2.1(c). Notwithstanding any other provision of this Section 2.1(c), payment
     may be withheld in respect of any Target Stock Option until the necessary
     consents and amendments are obtained.

                  (d) Anti-Dilution Provisions. In the event Buyer changes (or
establishes a record date for changing) the number of shares of Buyer Common
Stock issued and outstanding prior to the Effective Time as a result of a stock
split, stock dividend, recapitalization, subdivision, reclassification,
combination, exchange of shares or similar transaction with respect to the
outstanding Buyer Common Stock and the record date therefor shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted to
reflect such stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar transaction. In
addition, in the event Buyer pays (or establishes a record date for payment) an
extraordinary dividend on, or makes any other extraordinary distribution in
respect of, Buyer Common Stock, the Exchange Ratio shall be appropriately
adjusted to reflect such dividend or distribution.

         2.2 Exchange of Certificates. (a) Transfer Agent. Prior to the
Effective Time, Buyer shall deposit with the Transfer Agent, for the benefit of
the Registered Holders, for exchange in accordance with this Article 2, cash in
an amount equal to the aggregate Cash Consideration and certificates
representing the shares of Buyer Common Stock issuable pursuant to Section 2.1
in exchange for outstanding Target Common Shares other than Subject Shares.

                  (b) Exchange Procedures. Promptly after the Effective Time,
the Transfer Agent shall mail to each Registered Holder of a Certificate whose
shares were exchanged for the right to receive the Exchange Consideration
pursuant to Section 2.1, (i) the Letter of Transmittal and (ii) instructions for
use in surrendering the Certificates in exchange for the Exchange Consideration.
The Letter of Transmittal will specify that (i) delivery of the Certificates and
risk of loss and title to the Certificates shall pass only upon delivery of the
Certificates to the Transfer Agent and (ii) upon return of the Letter of
Transmittal and Certificates, the Registered Holder waives his rights of dissent
under Section 3.1 hereof in respect of the Target Common Shares to

                                      B-4
<PAGE>   32

which the Letter of Transmittal relates. Upon surrender of a Certificate for
cancellation to the Transfer Agent, together with the Letter of Transmittal,
duly executed, and such other documents as may reasonably be required by the
Transfer Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the Cash Consideration, a certificate representing that number
of whole shares of Buyer Common Stock that such Registered Holder has the right
to receive pursuant to the provisions of this Article 2 in respect of all of
such Registered Holder's Target Common Shares, certain dividends or other
distributions in accordance with Section 2.2(c), and cash in lieu of any
fractional share of Buyer Common Stock in accordance with Section 2.2(e), and
the Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Target Common Shares that is not registered in the
transfer records of Target, a certificate representing the proper number of
shares of Buyer Common Stock may be issued to a Person other than the Registered
Holder in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer, satisfactory evidence is provided that such Person is the beneficial
owner of such Target Common Shares and the Person requesting such issuance shall
pay any transfer or other taxes required by reason of the issuance of shares of
Buyer Common Stock to a Person other than the Registered Holder of such
Certificate or establish to the satisfaction of Buyer that such tax has been
paid or is not applicable. Until surrendered as contemplated by this Section
2.2(b), each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Exchange
Consideration that the Registered Holder thereof has the right to receive
pursuant to the provisions of this Article 2, certain dividends or other
distributions in accordance with Section 2.2(c), and cash in lieu of any
fractional share of Buyer Common Stock in accordance with Section 2.2(e). No
interest shall be paid or will accrue on any cash payable to holders of
Certificates pursuant to the provisions of this Article 2.

                  (c) Distributions with Respect to Unsurrendered Certificates.
No dividends or other distributions with respect to Buyer Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Buyer Common Stock
represented thereby, and no cash payment in lieu of fractional shares of Common
Stock shall be paid to any such holder pursuant to Section 2.2(e) until the
holder of record of such Certificate shall surrender such Certificate in
accordance with this Article 2. Subject to the effect of applicable escheat or
similar Laws, following surrender of any such Certificate there shall be paid to
the holder of the certificate representing whole shares of Buyer Common Stock,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Buyer Common Stock and the amount of any
cash payable in lieu of a fractional share of Buyer Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares of Buyer
Common Stock.

                  (d) No Further Ownership Rights in Target Common Shares. All
shares of Buyer Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article 2 (including any cash
paid pursuant to this Article 2) shall be deemed to have been issued (and paid)
in full satisfaction of all rights pertaining to the Target Common Shares,
subject, however, to the Target's obligation to pay any dividends or make any
other

                                      B-5
<PAGE>   33

distributions with a record date prior to the Effective Time which may have been
declared or made by Target on such Target Common Shares which remain unpaid at
the Effective Time, and there shall be no further registration of transfers on
the stock transfer books of the Target of the Target Common Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Buyer or the Transfer Agent for any
reason, they shall be canceled and exchanged as provided in this Article 2.

                  (e) No Fractional Shares.

                           (i) No certificates or scrip representing fractional
          shares of Buyer Common Stock shall be issued upon the surrender for
          exchange of Certificates formerly representing Target Common Shares,
          no dividend or distribution of Buyer shall relate to such fractional
          share interests and such fractional share interests will not entitle
          the owner thereof to vote or to any rights of a stockholder of Buyer.

                           (ii) Notwithstanding any other provision of this Plan
          of Arrangement, each Registered Holder of Target Common Shares
          exchanged pursuant to the Arrangement who would otherwise have been
          entitled to receive a fraction of a share of Buyer Common Stock (after
          taking into account all Certificates delivered by such holder) shall
          receive, in lieu thereof, cash (without interest) in an amount, less
          the amount of any withholding taxes that may be required thereon,
          equal to such fractional part of a share of Buyer Common Stock
          multiplied by the closing trading price of the Buyer Common Stock on
          the New York Stock Exchange on the trading day immediately preceding
          the Effective Time.

                  (f) No Liability. None of Buyer, Sub, Target or the Transfer
Agent shall be liable to any Person in respect of any Exchange Consideration,
any dividends or distributions with respect thereto, or any cash in lieu of
fractional shares of Buyer Common Stock, in each case delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
If any Certificate shall not have been surrendered prior to three years after
the Effective Time (or immediately prior to such earlier date on which any
Exchange Consideration, any dividends or distributions payable to the holder of
such Certificate or any cash payable in lieu of fractional shares of Buyer
Common Stock pursuant to this Article 2, would otherwise escheat to or become
the property of any Governmental Authority), any such Exchange Consideration,
dividends or distributions in respect thereof or such cash shall, to the extent
permitted by applicable Law, become the property of the applicable Governmental
Authority, free and clear of all claims or interest of any Person previously
entitled thereto.

                  (g) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Buyer, the posting by such Person of a bond in such reasonable
amount as Buyer may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Transfer Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the Exchange
Consideration and any unpaid dividends and distributions in respect thereof and
any cash in lieu of fractional shares of Buyer Common Stock, in each case
pursuant to the Agreement.

                                      B-6
<PAGE>   34

3. RIGHTS OF DISSENT

         3.1 Rights of Dissent. Any Registered Holder (other than holders of
Subject Shares) may exercise rights of dissent conferred by the Interim Order in
connection with the Arrangement in the manner set out in Section 207 of the
Company Act, as modified by the Interim Order within the time limits imposed
under Section 207 of the Company Act. Without limiting the generality of the
foregoing or Section 207(7)(a) of the Company Act, any Registered Holder which
has given a Notice of Dissent shall cease to be entitled to the rights of a
Dissenting Shareholder in respect of Target Common Shares in respect of which
the Notice of Dissent was given if such Registered Holder completes and delivers
to the Transfer Agent his surrendered Certificate together with the Letter of
Transmittal, duly executed, and such other documents as reasonably required by
the Transfer Agent in accordance with Section 2.2(b) in respect of such Target
Common Shares. The rights of dissent granted hereunder are governed by, and
subject to, the restrictions contained in Section 207 of the Company Act.

         3.2 Rights of Dissenting Shareholders. In the event a Registered Holder
gives a Notice of Dissent but is not entitled, for any reason, to be paid the
fair value of the Target Common Shares in respect of which the Notice of Dissent
was given pursuant to Section 207 of the Company Act, such Registered Holder
will be entitled to receive only the Exchange Consideration contemplated by
Section 2.1(b) which such Registered Holder would have received if such
Registered Holder had not given a Notice of Dissent.

4. PAYMENT OF EXCHANGE CONSIDERATION

         4.1 Right to Payment.

                  (a) Subject to Section 2.2(b), promptly after the Effective
Time, where a Registered Holder has delivered to the Transfer Agent a duly
executed Letter of Transmittal, the Certificates representing such Registered
Holder's Target Common Shares and any other documents in accordance with Section
2.2(b), Buyer shall cause the Transfer Agent either:

                           (i) to forward or cause to be forwarded by first
         class mail to the Registered Holder at the address specified in the
         Letter of Transmittal;

                           (ii) if requested by the Registered Holder in the
         Letter of Transmittal, to make available at the offices of the Transfer
         Agent for pick-up by the Registered Holder; or

                           (iii) if the Letter of Transmittal neither specifies
         an address nor contains a request as described in (ii), to forward or
         cause to be forwarded to the Registered Holder at the address of the
         holder as shown on the share register maintained by Target or its
         Transfer Agent a cheque in United States currency representing the Cash
         Consideration required to be made to such Registered Holder pursuant to
         the provisions hereof and in respect of fractional shares and a
         certificate representing that number of whole shares of Buyer Common
         Stock that such Registered Holder has the right to receive pursuant to
         the provisions of Article 2 of this Agreement in respect of all of such
         Registered Holder's Target Common Shares.

                                      B-7
<PAGE>   35

                           (b) (i) Promptly following the Effective Time, where
         a Registered Holder whose Target Common Shares have been transferred to
         Sub pursuant to Article 2 has not delivered the Letter of Transmittal
         and Certificates contemplated by Section 4.1(a) and has not exercised
         his or her rights of dissent in accordance with Section 3.1, Buyer
         shall cause the Transfer Agent to make available at the principal
         office of the Transfer Agent a cheque in United States currency
         representing the Cash Consideration to such Registered Holder pursuant
         to the provisions hereof upon presentation of a duly executed Letter of
         Transmittal and the Certificates evidencing such Target Common Shares
         and any other documents in accordance with Section 2.2(b).

                           (ii) Buyer shall have provided the Transfer Agent
         with sufficient funds for this purpose, prior to the filing of the
         Final Order with the Registrar, with funds to be provided in accordance
         with Buyer's agreement with the Transfer Agent.

                  (c) Payment Registration. Unless otherwise directed by the
Letter of Transmittal, the payment referred to in Sections 2.2(b) and 4.1(a)
shall be issued in the name of the Registered Holder of the Target Common Shares
acquired.

                  (d) Payments held in Trust. All amounts payable to a
Registered Holder shall be paid or made to the Transfer Agent to be held in
trust for such Registered Holder. All monies so held in trust by the Transfer
Agent shall be invested by it in interest bearing trust accounts (which may be
in deposits at, or other interest-bearing obligations of, the Transfer Agent)
upon such terms as Buyer may deem appropriate.

                  (e) Unclaimed Payments. If any Registered Holder fails for any
reason to deliver to the Transfer Agent for cancellation the Certificates
formerly representing Target Common Shares, together with all other required
documents in accordance with Section 2.2(b) on or before the third anniversary
of the Effective Time, such Registered Holder shall be deemed to acknowledge
that the Transfer Agent shall hold and disburse the Exchange Consideration in
respect thereof in accordance with applicable Law.

5. AMENDMENT

         5.1 Amendment. This Plan of Arrangement may be amended, modified and/or
supplemented at any time and from time to time, if consented to in writing by
Buyer and Target and filed with the Court and, if such amendment is made
following the Extraordinary General Meeting, as approved by the Court and
communicated to Registered Holders in the manner required by the Court (if so
required).

                                      B-8
<PAGE>   36

                                   SCHEDULE C

                       CONDITIONS FOR THE BENEFIT OF BUYER

         The obligations of Buyer to complete the transactions contemplated by
the Arrangement shall be subject to the fulfillment, or the waiver by Buyer, of
the following conditions at or prior to the Effective Time, each of which is for
the exclusive benefit of Buyer and may be waived by Buyer at any time, in whole
or in part, in its sole discretion without prejudice to any other rights that it
may have:

1.       The Arrangement shall not have been amended, modified and/or
         supplemented by direction of the Court or any other Governmental
         Authority in a manner unacceptable to Buyer;

2.       Target shall have performed in all material respects the obligations to
         be performed by it under this Agreement on or before the Effective
         Time;

3.       The representations and warranties of Target set forth in Schedule F
         shall be true and correct in all material respects at and as of the
         Effective Time (as if made at and as of that time), except to the
         extent that any such representation or warranty is made as of a
         specified date, in which case such representation or warranty shall
         have been true and correct in all material respects as of such date;

4.       No action, suit or proceeding shall have been commenced or threatened
         in writing by or before any court or other Governmental Authority
         against Buyer, Target or any of their respective Affiliates with
         respect to the transactions contemplated by this Agreement, the Option
         Agreement or any of the other Transaction Documents that could
         reasonably be expected to have a Material Adverse Effect on either
         Buyer or Target;

5.       No Order shall have been issued by any Governmental Authority, no
         action, suit or proceeding shall have been threatened or taken by any
         Governmental Authority, and no Law, regulation or policy shall have
         been proposed, enacted, or promulgated or applied which directly or
         indirectly imposes material limitations or conditions on the
         acquisition by, or the disposition to, Buyer of the Target Common
         Shares or the completion of the Arrangement or the right of Buyer to
         own or exercise full rights of ownership of the Target Common Shares,
         including the right to vote or dispose of any such Target Common
         Shares, or compels Buyer to dispose of or hold separately such Target
         Common Shares or any material assets of Target or its Subsidiaries;

6.       No more than 10% of the issued and outstanding Target Common Shares
         shall be the subject of the exercise of any rights of dissent by
         Registered Holders (as defined in the Plan of Arrangement) in relation
         to the Plan of Arrangement;

7.       Gowling Lafleur Henderson LLP shall have delivered a legal opinion to
         Buyer in substantially the form attached hereto as Schedule C-7;

8.       The period during which the Interim Order or the Final Order shall be
         subject to appeal shall have expired; and

                                      C-1
<PAGE>   37

9.       The persons identified on Schedule C-9 shall have entered into the
         intellectual property agreements in the form attached hereto as
         Schedule C-9.

                                      C-2
<PAGE>   38

                                   SCHEDULE D

                      CONDITIONS FOR THE BENEFIT OF TARGET

         The obligations of Target to complete the transactions contemplated by
the Arrangement shall be subject to the fulfillment, or the waiver by Target, of
the following conditions at or prior to the Effective Time, each of which is for
the exclusive benefit of Target and may be waived by Target at any time, in
whole or in part, in its sole discretion without prejudice to any other rights
that it may have:

1.       Buyer shall have performed in all material respects the obligations to
         be performed by it under this Agreement on or before the Effective
         Time;

2.       The representations and warranties of Buyer set forth in Schedule G
         shall be true and correct in all material respects at and as of the
         Effective Time (as if made at and as of such time), except to the
         extent that any such representation or warranty is made as of a
         specified date, in which case such representation or warranty shall
         have been true and correct in all material respects as of such date;

3.       The shares of Buyer Common Stock to be issued pursuant to the
         Arrangement shall have been approved for listing, subject to official
         notice of issuance, on the New York Stock Exchange; and

4.       Jones, Day, Reavis & Pogue shall have delivered a legal opinion to
         Target in substantially the form attached hereto as Schedule D-4.

                                      D-1
<PAGE>   39

                                   SCHEDULE E

                CONDITIONS FOR THE BENEFIT OF EACH OF THE PARTIES

         The respective obligations of each of the parties hereto to complete
the transactions contemplated by the Arrangement shall be subject to the
fulfillment, or the waiver by each of them, of each of the following conditions
at or prior to the Effective Time:

1.       The Interim Order shall have been obtained in form and substance
         reasonably satisfactory to Buyer and shall not have been set aside or
         modified in a manner unacceptable to Buyer, on appeal or otherwise;

2.       The Arrangement, with or without amendment, shall have been approved at
         the Extraordinary General Meeting in accordance with the Interim Order
         and all requirements of the Legislation;

3.       The Final Order shall have been obtained in form and substance
         reasonably satisfactory to Buyer and shall not have been set aside or
         modified in a manner unacceptable to Buyer, on appeal or otherwise;

4.       No Order shall have been issued by any Governmental Authority, no
         action, suit or proceeding shall have been threatened or taken by any
         Governmental Authority, and no Law, regulation or policy shall have
         been proposed, enacted, or promulgated or applied which makes illegal
         or otherwise directly or indirectly enjoins or prohibits the ownership
         by Buyer of the Target Common Shares or the completion of the
         Arrangement; and

5.       (a) The Form S-4 shall have been declared effective by the SEC under
         the Securities Act and no stop order suspending the effectiveness of
         the Form S-4 shall have been issued by the SEC and no proceedings for
         that purpose shall have been initiated or threatened by the SEC; or (b)
         the Buyer Common Stock shall have been issued pursuant to an exemption
         from the registration requirements of the Securities Act and such
         shares shall be freely tradable in the United States on the New York
         Stock Exchange, subject to the requirements of Rule 145 of the
         Securities Act.

                                      E-1
<PAGE>   40

                                   SCHEDULE F

                    REPRESENTATIONS AND WARRANTIES OF TARGET

1.       Organization, Standing and Corporate Power. Each of Target and its
         Subsidiaries is a corporation or other legal entity duly organized,
         validly existing and in good standing under the Laws of the
         jurisdiction in which it is organized and has the requisite corporate
         or other power, as the case may be, and authority to carry on its
         business as now being conducted. Each of Target and its Subsidiaries is
         duly qualified or licensed to do business and is in good standing in
         each jurisdiction in which the nature of its business or the ownership,
         leasing or operation of its properties makes such qualification or
         licensing necessary, except for those jurisdictions in which the
         failure to be so qualified or licensed or to be in good standing could
         not reasonably be expected to have a Material Adverse Effect on Target.
         Target has made available to Buyer prior to the execution of this
         Agreement complete and correct copies of the Constituent Document of
         Target and each of its Subsidiaries.

2.       Capitalization. The authorized and issued share capital of Target is
         described in the Target Disclosure Letter. Except as described in the
         Target Disclosure Letter, and except for the rights of Buyer under this
         Agreement and the Option Agreement, there are no Target Stock Options,
         conversion privileges, calls or other rights, agreements, arrangements,
         commitments or obligations of Target to issue, sell or acquire any
         securities of Target or securities or obligations of any kind
         convertible into or exchangeable for any securities of Target or any
         other Person, nor are there outstanding any stock appreciation rights,
         phantom equity or similar rights, agreements, arrangements or
         commitments based upon the share price, book value, income or any other
         attribute of Target. All of the outstanding shares of capital stock of
         Target are validly issued, fully paid and non-assessable and were
         issued in material compliance with all applicable securities Laws and
         free of preemptive rights.

3.       Subsidiaries. Global Election Systems, Inc., a Delaware corporation,
         Spectrum Print & Mail Services, Ltd., a Delaware corporation, and
         Global Systems Caribbean, Inc., a Puerto Rico corporation, are the only
         Subsidiaries of Target. All of the outstanding shares of capital stock
         and other ownership interests of Target's Subsidiaries are owned by
         Target, free and clear of all Encumbrances, and are validly issued,
         fully paid and non-assessable and were issued in material compliance
         with all applicable securities Laws and free of preemptive rights. All
         securities and other ownership interests owned directly or indirectly
         by Target are owned free and clear of all Encumbrances. There are no
         options, warrants, conversion privileges or other rights, agreements,
         arrangements, commitments or obligations of Target or any of its
         Subsidiaries to issue, sell or acquire any securities of any of those
         Subsidiaries or securities or obligations of any kind convertible into
         or exchangeable for securities or other ownership interests of any of
         those Subsidiaries. There are no outstanding stock appreciation rights,
         equity or similar rights, agreements, arrangements or commitments based
         on the book value, income or any other attribute of any of the
         Subsidiaries of Target.

                                      F-1
<PAGE>   41

4.       Authority Relative to this Agreement. Target has the requisite
         corporate power and authority to enter into this Agreement, the Option
         Agreement and each other Transaction Document to which it is or will be
         a party and to perform its obligations hereunder and thereunder. The
         execution, delivery and performance of this Agreement, the Option
         Agreement and each such Transaction Document by Target have been duly
         authorized by the board of directors of Target and no other corporate
         proceedings on the part of Target are necessary, other than the Target
         Shareholder Approval. This Agreement and the Option Agreement have been
         duly executed and delivered by Target and constitute the legal, valid
         and binding obligation of Target, enforceable by Buyer against Target
         in accordance with their respective terms, subject to applicable
         bankruptcy, insolvency, reorganization, moratorium and similar Laws
         affecting creditors' rights and remedies generally and to general
         principles of equity (regardless of whether enforcement is sought in a
         proceeding at Law or in equity). The execution and delivery by Target
         of this Agreement and each Transaction Document to which Buyer is or
         will be a party and performance by it of its obligations hereunder and
         thereunder will not result in:

         (a)      a violation or breach of any provision of or constitute a
                  default (or an event that with notice or lapse of time or both
                  would become a default) under, or give to others any rights of
                  termination, amendment, acceleration or cancellation of or
                  under,

                           (i) its Constituent Documents or any resolution of
                  its directors or the Target Common Shareholders or the
                  stockholders of any of its Subsidiaries,

                           (ii) any applicable Law, any Order of any
                  Governmental Authority (subject to obtaining the
                  authorizations, consents and approvals referred to in
                  paragraph (5)), or

                           (iii) any agreement, arrangement or understanding to
                  which it or any of its Subsidiaries is a party or by which any
                  of them or their Properties is bound or affected that could
                  reasonably be expected to have a Material Adverse Effect on
                  Target, or

         (b)      the imposition of any Encumbrance upon any of its Properties
                  or assets or the Properties or assets of any of its
                  Subsidiaries.

5.       Approval. Other than in connection with or in compliance with the
         provisions of the Competition Act (Canada), the Investment Canada Act
         (Canada), no authorization, consent, license or approval of, or
         registration or filing with, any Governmental Authority is necessary
         for the consummation by Target of its obligations under this Agreement,
         the Option Agreement or any of the Transaction Documents to which it is
         or will be a party, except for such authorizations, consents, licenses,
         approvals, registrations and filings the failure by Target to obtain or
         make could not, individually or in the aggregate, prevent or materially
         delay the consummation of the Arrangement.

6.       Target SEC Documents; No Undisclosed Liabilities. (a) Target has filed
         all Target SEC Documents. As of their respective dates, the Target SEC
         Documents complied in all

                                      F-2
<PAGE>   42

         material respects with the requirements of the Securities Act, the
         Exchange Act and the Legislation, as the case may be, and none of the
         Target SEC Documents when filed contained any untrue statement of a
         material fact or omitted to state a material fact required to be stated
         therein or necessary in order to make the statements therein, in light
         of the circumstances under which they were made, not misleading. Except
         to the extent that information contained in any Target SEC Document has
         been revised or superseded by a later filed Target SEC Document, none
         of the Target SEC Documents contains any untrue statement of a material
         fact or omits to state any material fact required to be stated therein
         or necessary in order to make the statements therein, in light of the
         circumstances under which they were made, not misleading. The financial
         statements of Target included in the Target SEC Documents (i) comply as
         to form as of their respective filing dates with the SEC in all
         material respects with the Accounting Rules, (ii) have been prepared in
         accordance with GAAP (except, in the case of unaudited statements, as
         permitted by the Accounting Rules) applied on a consistent basis during
         the periods involved (except as may be indicated in the notes thereto),
         and (iii) fairly and accurately present in all material respects the
         consolidated financial position of Target and its consolidated
         Subsidiaries as of the dates thereof and the consolidated results of
         their operations and cash flows for the periods then ended (subject, in
         the case of unaudited statements, to normal recurring year-end audit
         adjustments).

                  (b) Except (i) as reflected in the Target Balance Sheet, (ii)
         for liabilities incurred in connection with this Agreement or the
         transactions contemplated hereby, or (iii) liabilities disclosed in the
         Target Disclosure Letter, neither Target nor any of its Subsidiaries
         has any liabilities or obligations of any nature which, individually or
         in the aggregate, could reasonably be likely to have a Material Adverse
         Effect on Target.

7.       Absence of Certain Changes or Events. Since January 1, 2001, (a) Target
         and its Subsidiaries have conducted their business only in the ordinary
         course consistent with past practice, (b) there has not been any fact,
         circumstance, event, change or condition that could reasonably be
         expected to have a Material Adverse Effect on Target that has not been
         previously disclosed to Buyer in writing, and (c) Target has not taken
         any action that, if taken after the date hereof, would require the
         approval of Buyer pursuant to Section 4.5.

8.       Litigation. There is no suit, action, proceeding, claim, grievance or
         investigation pending or, to the Knowledge of Target, threatened
         against or affecting Target or any of its Subsidiaries, nor is there
         any judgment, decree, injunction, rule or Order of any Governmental
         Authority outstanding against Target or any of its Subsidiaries.

9.       Compliance. Neither Target nor any of its Subsidiaries is in conflict
         with, or in default or violation of, in any material respect, (a) any
         Law (including, without limitation, the U.S. Foreign Corrupt Practices
         Act of 1977, as amended, irrespective of whether any such Person is
         subject thereto) or Order applicable to Target or any of its
         Subsidiaries or by which any Property or asset of Target or any of its
         Subsidiaries is bound or affected or (b) any note, bond, mortgage,
         indenture, contract, agreement, lease, license, permit, franchise or
         other instrument or Contractual Obligation to which Target or any of
         its Subsidiaries is a party or by which Target or any of its
         Subsidiaries or any property or

                                      F-3
<PAGE>   43
         asset of Target or any of its Subsidiaries is bound or affected. To the
         Knowledge of Target, neither Target nor any of its Subsidiaries is
         under review or investigation with respect to, or has been threatened
         to be charged with or given notice of, any violation of any Law or
         Order. Target and its Subsidiaries hold all material Permits and have
         taken all actions required by applicable Law or regulations of any
         Governmental Authority in connection with their respective business as
         now conducted.

10.      Property. (a) Each of Target and its Subsidiaries has good and
         marketable title to or is entitled to the benefits of all of its real
         and personal Property and assets reflected in the Target Balance Sheet,
         together with all additions thereto and less all dispositions thereof
         in the ordinary course of business, and such Properties and assets are
         not subject to any Encumbrance of any kind, other than Permitted
         Encumbrances.

                   (b) Neither Target nor any of its Subsidiaries owns any real
         property. Target or one of its Subsidiaries has a valid leasehold
         interest in the Leased Properties, which are all of the real properties
         that are leased by Target and its Subsidiaries as of the date hereof.
         None of the Leased Properties is subject to any rights of way, written
         agreements, Laws, ordinances or regulations affecting building use or
         occupancy or reservations of an interest in title that could,
         individually or in the aggregate, materially interfere with the present
         use of any of the Leased Properties subject thereto or affected thereby
         or otherwise materially impair business operations conducted by Target
         and its Subsidiaries. Neither Target nor any of its Subsidiaries has
         received written notice of any violation of any Law with respect to any
         of the Leased Properties. Neither Target nor any of its Subsidiaries
         has received any written notice with respect to any the Leased
         Properties to the effect that any condemnation or rezoning proceedings
         are pending or threatened.

11.      Related Party Transactions. Except as described in the Target SEC
         Documents, there are no arrangements, agreements and contracts entered
         into by Target or any of its Subsidiaries with any Person who is an
         officer, director or Affiliate of Target, or any lineal descendent of
         any of the foregoing, or any entity in which any of the foregoing has
         an economic interest (excluding ownership of stock of publicly owned
         companies), except those of a type described in paragraph 15 of this
         Schedule F.

12.      Tax Matters. Each of Target and its Subsidiaries and any consolidated,
         combined, unitary or aggregate group for Tax purposes of which Target
         or any Subsidiary of Target is or has been a member has timely filed
         all Tax Returns required to be filed by it (after giving effect to any
         extension properly granted by a Tax Authority having authority to do
         so) and has timely paid (or Target has timely paid on its behalf) all
         Taxes required to be paid by it (whether or not shown on such Tax
         Returns), except Taxes that are being contested in good faith by
         appropriate proceedings and for which Target or the applicable
         Subsidiary of Target have set aside adequate reserves on the Target
         Balance Sheet. Each such Tax Return is complete and accurate in all
         material respects. The Target Balance Sheet reflects an adequate
         reserve for all material Taxes payable by Target and its Subsidiaries
         for all taxable periods and portions thereof through the date of such
         balance sheet. Neither Target nor any of its Subsidiaries has incurred
         any material liability for Taxes other than in the ordinary course of
         business. No event has occurred, and no

                                      F-4
<PAGE>   44

         condition or circumstance exists, which would present a risk that any
         material Tax described in the preceding sentence will be imposed upon
         Target or any Subsidiary of Target. No material deficiencies for any
         Taxes have been proposed, asserted or assessed against Target or any
         Subsidiary of Target, and no requests for waivers of the time to assess
         any such Taxes are pending and no extensions of time to assess any such
         Taxes are in effect and no Tax Returns of Target or any of its
         Subsidiaries are currently being audited by any applicable Tax
         Authority or are threatened with any such audit. All material Taxes
         required to be withheld, collected and paid over to any Tax Authority
         by Target and any Subsidiary of Target have been timely withheld,
         collected and paid over to the proper Tax Authority. No Tax Authority
         has imposed an Encumbrance against Target or any of its Subsidiaries or
         any of their respective properties for any Taxes payable pending
         actions or proceedings by any Tax Authority for assessment or
         collection of any Tax. No written claim has been made by a Tax
         Authority in a jurisdiction where Target or any Subsidiary of Target
         does not file Tax Returns that it is or may be subject to taxation by
         the jurisdiction. Neither Target nor any Subsidiary of Target is party
         to, nor has any liability under (including liability with respect to
         any predecessor entity), any indemnification, allocation or sharing
         agreement with respect to Taxes. No shareholder of Target, acting alone
         or as part of a group, currently owns, or owned at any time in the last
         five years, 25% or more of the issued shares of any class of capital
         stock of Target.

13.      Environmental Matters. To the Knowledge of Target, there are no
         Hazardous Substances on any of the Leased Properties that could result
         in any material liability to Target or any of its Subsidiaries. Target
         and its Subsidiaries have complied in all material respects with all
         applicable Environmental Laws, including all regulations, ordinances
         and administrative and judicial orders relating to the generation,
         recycling, reuse, sale, storage, handling, transport and disposal of
         any Hazardous Substances. Target and its Subsidiaries have obtained,
         currently maintain and, as currently operating are in compliance in all
         material respects with, all Environmental Permits for the conduct of
         the business and operations of Target and its Subsidiaries in the
         manner now conducted. Target is not responsible for the remediation of
         any Hazardous Substances for a cost exceeding $250,000 in the
         aggregate. To the Knowledge of Target, there are no actions or
         proceedings pending or threatened to revoke or materially modify such
         Environmental Permits. No Hazardous Substances have been used, stored,
         manufactured, treated, processed or transported to or from any such
         Leased Property by Target and its Subsidiaries or released, discharged
         or disposed of, on or from the Leased Property by Target or its
         Subsidiaries, except in compliance in all material respects with
         Environmental Laws and in a manner that does not result in material
         liability under applicable Environmental Laws. None of Target or any of
         its Subsidiaries has received any written notice of potential
         responsibility, letter of inquiry or written notice of alleged
         liability from any Person regarding such Leased Property or the
         business conducted thereon. No investigation, action or review is
         pending or, to the Knowledge of Target, threatened by any Governmental
         Authority or other Person against Target or any of its Subsidiaries
         under any Environmental Law. For the purposes of this paragraph 13
         only, "Leased Properties" shall be deemed to include all real property
         formerly owned, operated or leased by Target or its current or former
         Subsidiaries, solely, however, as to the period of time when such
         property was so owned, operated or leased by Target or its

                                      F-5
<PAGE>   45

         current or former Subsidiaries. Target has previously delivered to
         Buyer complete copies of all final versions of environmental
         investigations and testing or analysis that are in the possession,
         custody or control of any of Target or any of its Subsidiaries with
         respect to the environmental condition of the Leased Properties.

14.      Contracts; Debt Instruments. (a) There have been delivered to Buyer
         true, correct and complete copies of all of the following Material
         Contracts to which Target or any of its Subsidiaries is a party or by
         which any of them or their respective Properties is bound: (i)
         agreements pursuant to which Target or its Subsidiaries holds or grants
         a leasehold interest in or otherwise has an economic interest in any
         real property; (ii) contracts with any current or former officer or
         director of Target or any of its Subsidiaries; (iii) contracts (A) for
         the sale of any of the material Properties or assets of Target or any
         of its Subsidiaries or the acquisition of any material amount of assets
         by Target or any of its Subsidiaries or (B) for the grant to any Person
         of any rights to purchase any of its material assets; (iv) contracts
         which restrict Target or any of its Subsidiaries from competing in any
         line of business or with any Person in any geographical area in any
         material manner or which restrict any other Person from competing with
         Target or any of its Subsidiaries in any line of business or in any
         geographical area in any material manner; (v) loan commitments,
         indentures, credit agreements, security agreements, guarantees,
         promissory notes, letters of credit, hedging obligations, capitalized
         lease obligations, take or pay contracts and other contracts relating
         to Indebtedness (whether owed by or held by Target or any Subsidiary);
         (vi) joint venture agreements; (vii) sales agreements with any
         Governmental Authority; (viii) reseller agreements; and (ix) any
         contract not made in the ordinary course of business.

                  (b) All of the Material Contracts are in full force and effect
         and are the legal, valid and binding obligations of Target and/or its
         Subsidiaries, enforceable against them in accordance with their
         respective terms, subject to applicable bankruptcy, insolvency,
         reorganization, moratorium and similar Laws affecting creditors' rights
         and remedies generally and to general principles of equity (regardless
         of whether enforcement is sought in a proceeding at Law or in equity).
         Neither Target nor any of its Subsidiaries is in material breach or
         default under any Material Contract nor, to the Knowledge of Target, is
         any other party to any Material Contract in material breach or default
         thereunder.

15.      Target Benefit Plans; ERISA Compliance. (a) Except for Target's
         mandatory participation in the Canada Pension Plan or Quebec Pension
         Plan, Employment Insurance Program and applicable provincial workers'
         compensation programs, there are no Target Benefit Plans. The Target
         Disclosure Letter contains a true and complete list of all agreements
         or plans providing for termination or severance pay to any officer,
         director or employee of Target.

                  (b) Each Target Benefit Plan has been administered in all
         material respects in accordance with its terms and all applicable Laws,
         including ERISA, the Code, and their respective Canadian equivalents.
         Each Target Benefit Plan is in compliance with all applicable Laws,
         including the applicable provisions of ERISA, the Code and any similar
         Canadian statute. Each Target Benefit Plan that is intended to be
         qualified under Section 401(a) or 401(k), of the Code (or its Canadian
         equivalent) is so qualified and each trust

                                      F-6
<PAGE>   46

         established in connection with any Target Benefit Plan that is intended
         to be exempt from federal income taxation under Section 501(a) of the
         Code (or its Canadian counterpart) is so exempt. No fact or event has
         occurred which is reasonably likely to affect adversely the qualified
         status of any such Target Benefit Plan or the exempt status of any such
         trust. All contributions to, and payments from, each Target Benefit
         Plan and Multiemployer Plan that are required to be made in accordance
         with such Plans and applicable Laws (including ERISA, the Code and
         their respective Canadian equivalents) have been timely made.

                  (c) No Target Benefit Plan is or at any time was (i) subject
         to Title IV of ERISA (or its Canadian equivalent) or (ii) subject to
         the minimum funding standards of Section 302 of ERISA or Section 412 of
         the Code (or their respective Canadian equivalents). Neither Buyer nor
         any of its Subsidiaries contributes to any Multiemployer Plan.

                  (d) No Target Benefit Plan provides medical benefits (whether
         or not insured) with respect to current or former employees, officers
         or directors after retirement or other termination of service.

                  (e) The consummation of the transactions contemplated by this
         Agreement will not, either alone or in combination with another event,
         (i) entitle any current or former employee, officer or director of
         Target to severance pay, unemployment compensation or any other payment
         or (ii) accelerate the time of payment or vesting, or increase the
         amount of compensation, equity rights or benefits due any such
         employee, officer or director.

                  (f) With respect to each Target Benefit Plan, Target has
         delivered to Buyer a true and complete copy of: (A) each writing
         constituting a part of such Target Benefit Plan, including without
         limitation all Target Benefit Plan documents and trust agreements; (B)
         the most recent Annual Report (Form 5500 Series) and accompanying
         schedule (and Canadian equivalents), if any; (C) the most recent annual
         financial report, if any; (D) the most recent actuarial report, if any;
         (E) the most recent determination letter from the IRS (and Canadian
         equivalent), if any.

                  (g) With respect to each Target Benefit Plan, there have been
         no prohibited transactions or breaches of any of the duties imposed on
         "fiduciaries" (within the meaning of Section 3(21) of ERISA or its
         Canadian equivalent) by ERISA (or its Canadian equivalent) with respect
         to Target Benefit Plans that would result in any liability or excise
         tax under ERISA, the Code or their respective Canadian equivalents.

                  (h) There has been no amendment to, written interpretation of
         or announcement (whether or not written) by Target or any of its
         Subsidiaries relating to, or change in employee participation or
         coverage under, any Target Benefit Plan which would increase materially
         the expense of maintaining such Target Benefit Plan above the level of
         the expense incurred in respect thereof for the 12 months ended on the
         date of the most recent balance sheet for Target and its Subsidiaries.

                                      F-7
<PAGE>   47

                  (i) All contributions and payments due under each Target
         Benefit Plan have either been discharged and paid or are adequately
         reflected as a liability on the Target Balance Sheet in accordance with
         GAAP.

                  (j) Neither Target nor any of its Subsidiaries is a party to
         or subject to any organizing drive, certification, union contract or
         collective bargaining agreement, (ii) Target and its Subsidiaries are
         in compliance in all material respects with all currently applicable
         U.S. or Canadian national or provincial Laws respecting employment and
         employment practices, terms and conditions of employment and wages and
         hours, and are not engaged in any unfair labor practice that would
         affect Target in any material respect, and (iii) there is no unfair
         labor practice complaint pending or, to the Knowledge of Target,
         threatened against Target or any of its Subsidiaries before the
         National Labor Relations Board (or its Canadian national or provincial
         counterpart) that would affect Target in any material respect.

16.      Intellectual Property.

                  (a) The Target Disclosure Letter lists all grants and/or
         registrations of Intellectual Property of Target with any Governmental
         Authority and all applications for registration of Intellectual
         Property of Target. Such grants and/or registrations, to the extent
         completed and fully granted and/or registered, are subsisting, all
         necessary registration and renewal fees in connection with such grants
         and/or registrations have been made and all necessary documents and
         certificates in connection with such grants and/or registrations have
         been filed with the relevant patent, copyrights and trademark
         authorities in the United States or other foreign jurisdiction for the
         purposes of maintaining such Intellectual Property grants and/or
         registrations. Target is diligently pursuing any applications for grant
         and/or registration pending before the relevant patent, copyrights and
         trademark Governmental Authorities in the United States or other
         foreign jurisdictions.

                  (b) Target has good and exclusive title to each item of
         Intellectual Property of Target which it owns, free and clear of any
         Encumbrance, with the exception of Intellectual Property of Target
         which the Target Disclosure Letter describes as jointly owned. As to
         jointly owned Intellectual Property of Target, Target has the right to
         use, license, and transfer ownership of such Intellectual Property of
         Target without restriction, including but not limited to, without any
         obligation to make payment or give notice to any co-owner. Target has
         the right pursuant to a valid contract or license agreement to use or
         operate all other Intellectual Property of Target in which it has no
         ownership interest, and to sublicense the use of such Intellectual
         Property of Target to others, where such Intellectual Property of
         Target is provided to others as part of, or with, a product of Target
         or any Subsidiary.

                  (c) The operation of the businesses of Target or any
         Subsidiary as they currently are conducted does not infringe the
         Intellectual Property rights of any other Person, and neither Target
         nor any Subsidiary has received notice from any Person that the
         operation of its respective businesses infringes the Intellectual
         Property rights of any Person. There are no contracts between Target or
         any other Subsidiary and any other Person with respect to the
         Intellectual Property of Target in respect of which there is any
         dispute known to Target or any Subsidiary regarding the scope of such
         agreement, or

                                      F-8
<PAGE>   48

         performance under such contract, including with respect to any payments
         to be made or received by Target or any Subsidiary.

                  (d) Neither Target nor any Subsidiary has granted to any
         Person, nor authorized any Person to retain, any rights in the
         Intellectual Property of Target, other than Permitted Rights. To the
         Knowledge of Target, no Person is infringing or misappropriating any of
         the Intellectual Property of Target.

17.      Determinations by the Board. The Board of Directors of Target (after
         receiving advice from its legal advisors and the Financial Advisor) has
         determined at it meeting held on August 30, 2001:

         that the consideration to be received in exchange for the Target Common
         Shares pursuant to the Arrangement is fair to the Target Common
         Shareholders, from a financial point of view,

         (a)      that the Arrangement and the performance by Target of its
                  obligations under the Arrangement are in the best interests of
                  Target and the Target Common Shareholders; and

         (b)      to authorize the execution and delivery of this Agreement, the
                  Option Agreement and each of the other Transaction Documents
                  to which Target is or will be a party.

18.      Opinion of Financial Advisor. Target has received the opinion of the
         Financial Advisor to the effect that the Exchange Consideration to be
         received by the Target Common Shareholders is fair to such Persons from
         a financial point of view.

19.      Brokers. Target and its Subsidiaries will not be liable, directly or
         indirectly for the fees, commissions or expenses of any broker, finder,
         investment banker or other agent or intermediary in connection with the
         Arrangement, other than to (A) the Financial Advisor solely in respect
         of the Arrangement pursuant to agreements in effect on the date hereof,
         complete copies of which have been provided to Buyer prior to the date
         of this Agreement, and (B) soliciting dealers that may be engaged by
         Target in connection with the Arrangement on usual commercial terms.

                                      F-9
<PAGE>   49

                                   SCHEDULE G

                     REPRESENTATIONS AND WARRANTIES OF BUYER

1.       Organization, Standing and Corporate Power. Each of Buyer and Sub is a
         corporation or other legal entity duly organized, validly existing and
         in good standing under the Laws of the jurisdiction in which it is
         organized and has the requisite corporate or other power, as the case
         may be, and authority to carry on its business as now being conducted.
         Each of Buyer and Sub is duly qualified or licensed to do business and
         is in good standing in each jurisdiction in which the nature of its
         business or the ownership, leasing or operation of its properties makes
         such qualification or licensing necessary, except for those
         jurisdictions in which the failure to be so qualified or licensed or to
         be in good standing could not reasonably be expected to have a Material
         Adverse Effect on Buyer.

2.       Authority Relative to this Agreement. Buyer has the requisite corporate
         power and authority to enter into this Agreement, the Option Agreement
         and each Transaction Document to which it is or will be a party and to
         perform its obligations hereunder and thereunder. The execution,
         delivery and performance of this Agreement, the Option Agreement and
         each such Transaction Document by Buyer have been duly authorized by
         the board of directors of Buyer and no other corporate proceedings on
         the part of Buyer are necessary. This Agreement and the Option
         Agreement have been duly executed and delivered by Buyer and constitute
         the legal, valid and binding obligation of Buyer, enforceable by Target
         against Buyer in accordance with their respective terms, subject to
         applicable bankruptcy, insolvency, reorganization, moratorium and
         similar Laws affecting creditors' rights and remedies generally and to
         general principles of equity (regardless of whether enforcement is
         sought in a proceeding at Law or in equity). The execution and delivery
         by Buyer of this Agreement and each Transaction Document to which Buyer
         is or will be a party and performance by it of its obligations
         hereunder and thereunder will not result in:

         (a)      a violation or breach of any provision of or constitute a
                  default (or an event that with notice or lapse of time or both
                  would become a default) under, or give to others any rights of
                  termination, amendment, acceleration or cancellation of or
                  under,

                           (i) its Constituent Documents or any resolution of
                  its directors or shareholders or those of any of its
                  Subsidiaries,

                           (ii) any applicable Law, any regulation, order,
                  judgment or decree of any Governmental Authority (subject to
                  obtaining the authorizations, consents and approvals referred
                  to in paragraph (3)), or

                           (iii) any agreement, arrangement or understanding to
                  which it or any of its Subsidiaries is a party or by which any
                  of them or their properties is bound or affected that could
                  reasonably be expected to have a Material Adverse Effect on
                  Buyer, or

                                      G-1
<PAGE>   50

         (b)      the imposition of any Encumbrance upon any of its assets or
                  the assets of any of its Subsidiaries.

3.       Approval. Other than in connection with or in compliance with the
         provisions of the Competition Act (Canada), the Investment Canada Act
         (Canada), the Legislation, the Securities Act and the Exchange Act, no
         authorization, consent or approval of, or filing with, any Governmental
         Authority is necessary for the consummation by Buyer of its obligations
         under this Agreement, the Option Agreement or any of the Transaction
         Documents to which it is or will be a party, except for such
         authorizations, consents, approvals and filings the failure by Target
         to obtain or make could not, individually or in the aggregate, prevent
         or materially delay the consummation of the Arrangement.

4.       Buyer SEC Documents. Buyer has filed all Buyer SEC Documents. As of
         their respective dates, the Buyer SEC Documents complied in all
         material respects with the requirements of the Securities Act and the
         Exchange Act, as the case may be, and none of the Buyer SEC Documents
         when filed contained any untrue statement of a material fact or omitted
         to state a material fact required to be stated therein or necessary in
         order to make the statements therein, in light of the circumstances
         under which they were made, not misleading. Except to the extent that
         information contained in any Buyer SEC Document has been revised or
         superseded by a later filed Buyer SEC Document, none of the Buyer SEC
         Documents contains any untrue statement of a material fact or omits to
         state any material fact required to be stated therein or necessary in
         order to make the statements therein, in light of the circumstances
         under which they were made, not misleading. The financial statements of
         Buyer included in the Buyer SEC Documents as of and for the period
         ended December 31, 2000 and June 30, 2001 (i) comply as to form, as of
         their respective dates of filing with the SEC, in all material respects
         with the Accounting Rules, (ii) have been prepared in accordance with
         United States generally accepted accounting principles (except, in the
         case of unaudited statements, as permitted by the Accounting Rules)
         applied on a consistent basis during the periods involved (except as
         may be indicated in the notes thereto), and (iii) fairly present in all
         material respects the consolidated financial position of Buyer and its
         consolidated Subsidiaries as of the dates thereof and the consolidated
         results of their operations and cash flows for the periods then ended
         (subject, in the case of unaudited statements, to normal recurring
         year-end audit adjustments).

5.       No Acquisition Proposal. As of the date of this Agreement, there is not
         pending any bonafide proposal received by Buyer regarding any merger,
         consolidation or reorganization of Buyer with any other Person as a
         result of which less than a majority of the combined voting power of
         the securities of the Person surviving such transaction would be held
         immediately after such transaction by all the holders of Buyer Common
         Stock immediately prior to such transaction and for which transaction
         financing, to the extent required, is then committed.

6.       Litigation. Except as set forth in the Buyer SEC Documents, there is no
         suit, action, proceeding, claim, grievance or investigation pending or,
         to the Knowledge of Buyer, threatened against or affecting Buyer or any
         of its Subsidiaries, nor is there any judgment, decree, injunction,
         rule or Order of any Governmental Authority outstanding against

                                      G-2
<PAGE>   51

         Buyer or any of its Subsidiaries that, in any such case, could
         reasonably be expected to have a Material Adverse Effect on Buyer.

7.       Compliance. Except as set forth in the Buyer SEC Documents, neither
         Buyer nor any of its Subsidiaries is in conflict with, or in default or
         violation of, in any material respect, (a) any Law (including, without
         limitation, the Foreign Corrupt Practices Act of 1977, as amended) or
         Order applicable to Buyer or any of its Subsidiaries or by which any
         Property or asset of Buyer or any of its Subsidiaries is bound or
         affected or (b) any note, bond, mortgage, indenture, contract,
         agreement, lease, license, permit, franchise or other instrument or
         Contractual Obligation to which Buyer or any of its Subsidiaries is a
         party or by which Buyer or any of its Subsidiaries or any property or
         asset of Buyer or any of its Subsidiaries is bound or affected that,
         with respect to any of the matters described in clauses (a) or (b),
         could reasonably be expected to have a Material Adverse Effect on
         Buyer.

8.       No Material Adverse Change. Since June 30, 2001, there has not been any
         fact, circumstance, event or condition (other than general economic and
         stock market conditions) that could reasonably be expected to have a
         material adverse effect on the financial condition or results of
         operations of Buyer that has not previously been disclosed in the Buyer
         SEC Documents.

                                      G-3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00029-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00029-of-00352.parquet"}]]