Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Sonic Environmental Solutions Inc. - Exhibit

AGREEMENT AND PLAN OF MERGER 

Dated the 26th day of September, 2005 

PARTIES: 

  
    
      
        ALAN CASH, an individual resident at 5033 Seachase
          Street, San Diego, California, 92130 

        (the “Seller”) 

      

    

  

AND: 

  
    
      
        TERRA-KLEEN RESPONSE GROUP, INC., a corporation
          incorporated under the laws of Oklahoma 

        (the “Company”) 

      

    

  

AND: 

  
    
      
        SONIC ENVIRONMENTAL SOLUTIONS INC., a corporation
          incorporated under the laws of British Columbia 

        (the “Sonic”) 

      

    

  

AND: 

  
    
      
        SONIC ENVIRONMENTAL SOLUTIONS (USA) INC., a
          corporation incorporated under the laws of California 

        (“Merger Sub”) 

      

    

  

BACKGROUND: 

(A)      The Seller is the registered
owner of record and sole beneficial owner of all of the issued and outstanding
common stock in the capital of the Company, being 2,500,000 shares of common
stock, par value $0.01. 

(B)      Merger Sub is a wholly-owned
Subsidiary of Sonic. 

(C)      The Seller has agreed to a
merger of the Company with and into Merger Sub in which the Merger Sub will
continue as the surviving entity and as a wholly-owned Subsidiary of Sonic in
which the Seller will receive the consideration set forth herein. 

AGREEMENTS: 

          For good
and valuable consideration, the receipt and sufficiency of which each party
acknowledges, the parties agree as follows: 

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PART 1 
DEFINITIONS AND INTERPRETATION 

1.1    Definitions.

          In this
Agreement: 

	 	(a) 	
      “Adjustment Amount” has the meaning set forth in Section
      3.3;

	 	 	 
	 	(b) 	
      “Affiliate” means, with respect to any Person, any other
      Person controlling, controlled by or under common control with such first
      Person.

	 	 	 
	 	(c) 	
      “Annual Financial Statements” means the audited annual
      financial statements for the year ended June 30, 2005 with a comparative
      unaudited column for June 30, 2004, including balance sheet, statement of
      stockholders equity, income statement and statement of cash flows, audited
      by Staley Oakada, auditors to Sonic, or an auditor acceptable to
    them;

	 	 	 
	 	(d) 	
      “Applicable Contract” means any contract (a) under which
      any TK Company has or may acquire any material rights, (b) under which any
      TK Company has or may become subject to any material obligation or
      liability, or (c) which is otherwise material and by which any TK Company
      or any of the assets owned or used by it is or may become bound;

	 	 	 
	 	(e) 	
      “Articles of Merger” means the Short-Form Merger
      Agreement and such other certificates or instruments as are required to be
      filed with the Secretaries of State of the States of California and
      Oklahoma to effect the Merger;

	 	 	 
	 	(f) 	
      “Assets” means all material real and personal property in
      which the TK Companies hold an interest, including leasehold interests and
      intangible personal property listed in Schedule 4.1(g);

	 	 	 
	 	(g) 	
      “Best Efforts” means the efforts that a prudent Person
      desirous of achieving a result would use in similar circumstances to
      ensure that such result is achieved as expeditiously as
possible;

	 	 	 
	 	(h) 	
      “Breach” means, with respect to any representation,
      warranty, covenant, obligation, or other provision of this Agreement or
      any instrument delivered pursuant to this Agreement any inaccuracy in or
      breach of, or any failure to perform or comply with, such representation,
      warranty, covenant, obligation, or other provision, and the term “Breach”
      means any such inaccuracy, breach or failure;

	 	 	 
	 	(i) 	
      “Business” means the business of remediating soil and ash
      containing PCBs, dioxins and pesticides, using the Company’s solvent-based
      proprietary process, and the business of licensing the use of such process
      to third parties;

	 	 	 
	 	(j) 	
      “Business Day” means a day which is not a Saturday or
      Sunday nor defined as a “holiday” in the State of
  California;

- 3 - 

	 	(k) 	
      “Closing” means the closing of the Contemplated
      Transactions, as further described in Part 11 of this Agreement;

	 	 	 	 
	 	(l) 	
      “Closing Date” has the meaning set forth in Section
      11.1;

	 	 	 	 
	 	(m) 	
      “Company” has the meaning set forth in the first
      paragraph of this Agreement;

	 	 	 	 
	 	(n) 	
      “Contaminants” means any contaminant, or pollutant under
      or pursuant to any applicable Environmental Laws, including, without
      limitation, Hazardous Materials;

	 	 	 	 
	 	(o) 	
      “Consent” means any approval, consent, ratification,
      waiver, or other authorization (including any Governmental
      Authorization);

	 	 	 	 
	 	(p) 	
      “Contemplated Transaction” means all of the transactions
      contemplated by this Agreement, including:

	 	 	 	 
	 		(i) 	
      the merger of the Company with Merger Sub;

	 	 	 	 
	 		(ii) 	
      the execution, delivery, and performance of the
      Employment Agreement, the Seller’s Releases and the Escrow
    Agreement;

	 	 	 	 
	 		(iii) 	
      the performance by Sonic and Seller of their respective
      covenants and obligations under this Agreement; and

	 	 	 	 
	 		(iv) 	
      payment of the Purchase Price to the Seller;

	 	 	 	 
	 	(q) 	
      “Contract” means any agreement, contract, obligation,
      promise, or undertaking (whether written or oral and whether express or
      implied) that is legally binding;

	 	 	 	 
	 	(r) 	
      “Costs” means costs and expenses of the Business
      generated by Sonic and its Subsidiaries for a given period, including the
      cash compensation paid to Seller pursuant to the Employment Agreement
      (allocated pro rata to reflect the percentage of Seller’s efforts devoted
      to managing the Business as opposed to other parts of Sonic’s businesses)
      general administrative expenses and overhead of the Surviving Corporation,
      but excluding for this purpose any Sonic overhead allocable to the
      Business and the Surviving Corporation, and otherwise as would be recorded
      on an income statement consistent with U.S. GAAP;

	 	 	 	 
	 	(s)	
      “Disqualifying Event” means, recognizing that the
      Seller’s personal contributions to the Business after the Closing Date
      constitute part of the value of the Business that Sonic is acquiring, the
      effective date of the termination of Seller’s personal contribution to the
      Business through his own volition after the Closing Date. For convenience
      of interpretation, such event shall be deemed to have occurred upon the
      effective date of Seller’s termination by the Surviving Corporation for
      “cause” or resignation by the Seller from the Surviving Corporation
      without “Good Reason,” as defined in the Employment Agreement.

	 	 	 	 
	 	(t) 	
      “Effective Time” has the meaning set forth in Section
      2.2;

- 4 - 

	 	(u) 	
      “Employment Agreement” has the meaning set forth in
      Section 8.1;

	 	 	 
	 	(v) 	
      “Encumbrance” means any mortgage, charge, pledge,
      hypothecation, lien, security interest, assignment, option, equity,
      execution, claim or any other title defect or other encumbrance of any
      kind or nature whatsoever (including any agreement to give any of the
      foregoing), whether or not registered or registrable or whether consensual
      or arising by operation of law (statutory or otherwise);

	 	 	 
	 	(w) 	
      “Environment” means soil, land surface or subsurface
      strata, surface waters (including navigable waters, ocean waters, streams,
      ponds, drainage basins, and wetlands), groundwaters, drinking water
      supply, stream sediments, ambient air (including indoor air), plant and
      animal life, and any other environmental medium or natural
  resource;

	 	 	 
	 	(x) 	
      “Environment, Health, and Safety Liabilities” means any
      cost, damages, expense, liability, obligation, or other responsibility
      arising from or under Environmental Law or Occupational Safety and Health
      Law and consisting of or relating to:

	 	(i) 	
      any environmental, health, or safety matters or
      conditions (including on- site or off-site contamination, occupational
      safety and health, and regulation of chemical substances or
    products);

	 	(ii) 	
      fines, penalties, judgments, awards, settlements, legal
      or administrative proceedings, damages, losses, claims, demands and
      response, investigative, remedial, or inspection costs and expenses
      arising under Environmental Law or Occupational Safety and Health
    Law;

	 	(iii) 	
      financial responsibility under Environmental Law or
      Occupational Safety and Health Law for cleanup costs or corrective action,
      including any investigation, cleanup, removal, containment, or other
      remediation or response actions (“Cleanup”) required by applicable
      Environmental Law or Occupational Safety and Health Law (whether or not
      such Cleanup has been required or requested by any Governmental Body or
      any other Person) and for any natural resource damages; or

	 	 	 
	 	(iv) 	
      any other compliance, corrective, investigative, or
      remedial measures required under Environmental Law or Occupational Safety
      and Health Law;

The terms “removal,” “remedial,” and
“response action,” include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
§ 9601 et seq., as amended (“CERCLA”); 

	 	(y) 	
      “Environmental Law” means all applicable laws relating to
      the contamination or protection of the Environment, including but not
      limited to laws relating to the storage, generation, use, handling,
      processing, labelling, transportation, treatment, release and disposal of
      Contaminants;

- 5 - 

	 	(z) 	
      “ERISA” means the Employee Retirement Income Security Act
      of 1974 or any successor law, and regulations and rules issued pursuant to
      that Act or any successor law;

	 	 	 	 
	 	(aa) 	
      “Escrow Agreement” has the meaning set forth in paragraph
      6.1(c);

	 	 	 	 
	 	(bb) 	
      “Exchange” means the TSX Venture Exchange, or such other
      primary stock exchange or stock market upon which Sonic’s common shares
      are listed or quoted at the relevant time;

	 	 	 	 
	 	(cc) 	
      “Facilities” means those items listed under the
      subheading “Facilities” identified in Schedule 4.1(g);

	 	 	 	 
	 	(dd) 	
      “GAAP” means generally accepted accounting principles,
      applied on a consistent basis;

	 	 	 	 
	 	(ee) 	
      “Governmental Authorization” means any approval, consent,
      license, permit, waiver, or other authorization issued, granted, given, or
      otherwise made available by or under the authority of any Governmental
      Body or pursuant to any Legal Requirement;

	 	 	 	 
	 	(ff) 	
      “Governmental Body” means any:

	 	 	 	 
	 		(i) 	
      nation, state, county, city, town, village, district, or
      other jurisdiction of any nature;

	 	 	 	 
	 		(ii) 	
      federal, state, local, municipal, foreign, or other
      government;

	 	 	 	 
	 		(iii) 	
      governmental or quasi-governmental authority of any
      nature (including any governmental agency, branch, department, official,
      or entity and any court or other tribunal);

	 	 	 	 
	 		(iv) 	
      multi-national organization or body; or

	 	 	 	 
	 		(v) 	
      body exercising, or entitled to exercise, any
      administrative, executive, judicial, legislative, police, regulatory, or
      taxing authority or power of any nature;

	 	 	 	 
	 	(gg)	
      “Hazardous Activity” means the remediation, distribution,
      generation, handling, importing, management, manufacturing, processing,
      production, refinement, release, storage, transfer, transportation,
      treatment, or use of Hazardous Materials in, on, under, about, or from the
      Facilities into any part thereof into the Environment or in connection
      with the use of the Remediation Equipment, and any other act, business,
      operation, or thing that increases the danger, or risk of danger, or poses
      an unreasonable risk of harm to persons or property on or off the
      Facilities, or that may affect the value of the Facilities or the TK
      Companies;

	 	 	 	 
	 	(hh) 	
      “Hazardous Materials” means any waste or other substance
      that is listed, defined, designated, or classified as, or otherwise
      determined to be, hazardous, radioactive,

- 6 - 

or toxic or a pollutant or a
contaminant under or pursuant to any Environmental Law, including any admixture
or solution thereof, and specifically including PCB’s and other semi-volatile
compounds, petroleum and all derivatives thereof or synthetic substitutes
therefor; 

	 	(ii) 	
      “Intellectual Property” means (a) all worldwide
      inventions and discoveries (whether patentable or unpatentable and whether
      or not reduced to practice), all improvements thereto, and all patents,
      patent applications and patent disclosures, together with all reissuances,
      continuations, continuations-in-part, revisions, extensions and
      reexaminations thereof, (b) all trademarks, service marks, trade dress,
      logos, trade names and corporate names, together with all translations,
      adaptations, derivations and combinations thereof and including all
      goodwill associated therewith, and all applications, registrations and
      renewals in connections therewith, (c) all copyrightable works, all
      copyrights and all applications, registrations and renewals in connection
      therewith, (d) all know- how, trade secrets and confidential business
      information, whether patentable or unpatentable and whether or not reduced
      to practice (including ideas, research and development, know-how,
      formulas, compositions, manufacturing and production process and
      techniques, technical data, designs, drawings, specifications, customer
      and supplier lists, pricing and cost information and business and
      marketing plans and proposals), (e) all computer software (including data
      and related documentation), (f) all other proprietary rights, (g) all
      copies and tangible embodiments thereof (in whatever form or medium) and
      (h) all licenses and agreements in connection therewith;

	 	 	 
	 	(jj) 	
      “Interim Period” means the division of each financial
      year of the Company into four periods of three months each, with the first
      Interim Period starting on the first day of the Company’s financial year
      and ending three months thereafter, and the subsequent Interim Periods
      following in three month increments until completion of the financial
      year;

	 	 	 
	 	(kk) 	
      “IRC” means the Internal Revenue Code of 1986 or any
      successor law, and regulations issued by the IRS pursuant to the Internal
      Revenue Code or any successor law;

	 	 	 
	 	(ll) 	
      “IRS” means the United States Internal Revenue Service or
      any successor agency, and, to the extent relevant, the United States
      Department of the Treasury;

	 	 	 
	 	(mm) 	
      “Legal Requirement” means any federal, state, local,
      municipal, foreign, international, multinational, or other administrative
      order, constitution, law, ordinance, principle of common law, regulation,
      statute, or treaty;

	 	 	 
	 	(nn) 	
      “March 31 Financial Statements” means the unaudited
      financial statements of the Company for the nine month period ended March
      31, 2005, which were prepared by Company management for its internal use
      and are attached to this Agreement as Schedule
4.1(d);

- 7 - 

	 	(oo) 	
      “Maximum Net Contribution Payment” means US$8,000,000,
      less the Net Contribution Payment Threshold and any Stockton Receivable
      Deficiency;

	 	 	 	 
	 	(pp) 	
      “Merger” has the meaning set forth in Section
  2.1;

	 	 	 	 
	 	(qq) 	
      “Merger Sub” has the meaning set forth in the first
      paragraph of this Agreement;

	 	 	 	 
	 	(rr) 	
      “Net Contribution” means all revenue generated from the
      Business by Sonic and its Subsidiaries for a given period, less all Costs
      incurred over such period;

	 	 	 	 
	 	(ss) 	
      “Net Contribution Payment Threshold” has the meaning set
      forth in paragraph 3.2(d);

	 	 	 	 
	 	(tt) 	
      “Occupational Safety and Health Law” means any Legal
      Requirement designed to provide safe and healthful working conditions and
      to reduce occupational safety and health hazards, and any program, whether
      governmental or private (including those promulgated or sponsored by
      industry associations and insurance companies), designed to provide safe
      and healthful working conditions;

	 	 	 	 
	 	(uu) 	
      “Operating Authorities” means the operating licences and
      permits required from a Governmental Body in connection with the conduct
      of the Business, including any such licences and permits required pursuant
      to Environmental Laws;

	 	 	 	 
	 	(vv) 	
      “Order” means any award, decision, injunction, judgment,
      order, ruling, subpoena, or verdict entered, issued, made, or rendered by
      any court, administrative agency, or other Governmental Body or by any
      arbitrator;

	 	 	 	 
	 	(ww) 	
      “Ordinary Course of Business” means an action taken by
      the Company will be deemed to have been taken in the “Ordinary Course of
      Business” only if:

	 	 	 	 
	 		(i) 	
      such action is consistent with the furtherance of the
      Business, in the good faith judgment of Company management; and

	 	 	 	 
	 		(ii) 	
      such action is not required to be authorized by the board
      of directors of the Company (or by any Person or group of Persons
      exercising similar authority).

	 	 	 	 
	 		
      For greater certainty, the execution of a license
      agreement with respect to the Company's Intellectual Property or the use
      of the Company's proprietary technology or an agreement to conduct
      remediation of soil or ash would not constitute the "Ordinary Course of
      Business";

	 	 	 	 
	 	(xx) 	
      “Organizational Documents” means the articles or
      certificate of incorporation and the bylaws of a corporation and any
      amendment to any of the foregoing;

	 	 	 	 
	 	(yy) 	
      “PCB’s” means polychlorinated biphenyls;

	 	 	 	 
	 	(zz) 	
      “Person” means any individual, corporation (including any
      non-profit corporation), general or limited partnership, limited liability
      company, joint

- 8 - 

venture, estate, trust, association,
organization, labor union, or other entity or Governmental Body; 

	 	(aaa) 	
      “Proceeding” means any action, arbitration, audit,
      hearing, investigation, litigation, or suit (whether civil, criminal,
      administrative, investigative, or informal) commenced, brought, conducted,
      or heard by or before, or otherwise involving, any Governmental Body or
      arbitrator;

	 	 	 
	 	(bbb) 	
      “Related Person” means, with respect to any Person, (i)
      an Affiliate of such first Person, (ii) any Person connected by blood
      relationship, marriage or adoption to such first Person, (iii) any
      director, officer or employee of such first Person, or (iv) any Affiliate
      of any Person described in this paragraph;

	 	 	 
	 	(ccc) 	
      “Remediation Equipment” means the equipment and materials
      used by the TK Companies in the conduct of their Business operations, as
      specifically identified in the subheading “Remediation Equipment” Schedule
      4.1(g);

	 	 	 
	 	(ddd) 	
      “Representative” means, with respect to a particular
      Person, any director, officer, employee, agent, consultant, advisor, or
      other representative of such Person, including legal counsel, accountants,
      and financial advisors;

	 	 	 
	 	(eee) 	
      “Securities Act” means the Securities Act of 1933, as
      amended, or any successor law, and regulations and rules issued pursuant
      to that Act or any successor law;

	 	 	 
	 	(fff) 	
      “Seller” has the meaning set forth in the first paragraph
      of this Agreement;

	 	 	 
	 	(ggg) 	
      “Seller’s Closing Documents” has the meaning set forth in
      paragraph 4.1(b);

	 	 	 
	 	(hhh) 	
      “Seller’s Knowledge” means the knowledge that the Seller
      has as at the date of this Agreement, having made due inquiry;

	 	 	 
	 	(iii) 	
      “Seller’s Releases” has the meaning set forth in
      paragraph 6.1(f);

	 	 	 
	 	(jjj) 	
      “Shares” means 2,500,000 common shares, par value
      US$0.01, being all of the issued and outstanding shares in the capital of
      the Company;

	 	 	 
	 	(kkk) 	
      “Short-Form Merger Agreement” means an agreement of
      merger between the Company and Merger Sub that reflects the terms of the
      Merger set forth herein and meets the statutory requirements of California
      and Oklahoma law, but which excludes as many of the details regarding the
      Contemplated Transactions as is legally permitted.

	 	 	 
	 	(lll) 	
      “Sonic” has the meaning set for in the first paragraph of
      this Agreement;

	 	 	 
	 	(mmm) 	
      “Sonic Shares” means common shares in the capital of
      Sonic;

	 	 	 
	 	(nnn) 	
      “Stockton Receivable” means amounts owing to the Company
      pursuant to a formal claim by the Company against the U.S. Department of
      Defense for work

- 9 - 

already performed by the Company at
the Stockton Naval Communications Station, Stockton, California; 

	 	(ooo) 	
      “Stockton Receivable Deficiency” means US$1,564,186 less
      the amount of funds received by the Company from the Stockton
      Receivable;

	 	 	 
	 	(ppp) 	
      “Subsidiary” means, with respect to any Person (the
      “Owner”), any corporation or other Person of which securities or other
      interests having the power to elect a majority of that corporation’s or
      other Person’s board of directors or similar governing body, are held by
      the Owner or one or more of its Subsidiaries;

	 	 	 
	 	(qqq) 	
      “Surviving Corporation” has the meaning set forth in
      Section 2.1;

	 	 	 
	 	(rrr) 	
      “Taxes” includes all taxes payable to a Governmental
      Authority, including all withholding taxes, payroll taxes and statutory
      deductions relating to employees, franchise taxes, sales taxes and income
      taxes;

	 	 	 
	 	(sss) 	
      “Threatened” means a claim, Proceeding, dispute, action,
      or other matter will be deemed to have been “Threatened” if any demand or
      statement has been made (orally or in writing) or any notice has been
      given (orally or in writing;

	 	 	 
	 	(ttt) 	
      “TK Companies” has the meaning set forth in paragraph
      4.1(a); and

	 	 	 
	 	(uuu) 	
      “TK Subsidiary” means Terra-Kleen Ltd., a North Carolina
      corporation.

1.2     Schedules.

          The
following are the Schedules attached to and incorporated in this Agreement by
reference and are considered to be part of this Agreement: 

	 	Schedule 4.1(a) 	Corporate Information 
	 	Schedule 4.1(d) 	March 31 Financial Statements 
	 	Schedule 4.1(g) 	Assets 
	 	Schedule 4.1(l) 	Operating Authorities 
	 	Schedule 4.1(m) 	Environment 
	 	Schedule 4.1(n) 	Applicable Contracts 
	 	Schedule 4.1(o) 	Employees 
	 	Schedule 4.1(p) 	List of Insurance Policies 
	 	Schedule 4.1(s) 	Intellectual Property 
	 	Schedule 8.1 	Employment Agreement 

PART 2 
THE MERGER 

2.1     Plan
of Merger.

          Upon
the terms of this Agreement and subject to the conditions set forth Part 9 and
10 hereof, at the Effective Time (as defined in Section 2.2), the Company shall
be merged with and into Merger Sub (the “Merger”). As a result of the Merger,
the separate corporate existence of 

- 10 - 

the Company shall cease and the Merger Sub shall continue as
the surviving corporation of the Merger (the “Surviving Corporation”).

2.2     Effective
Time; Closing.

          At
the Closing, the parties hereto shall cause the Merger to be consummated by
filing the Articles of Merger with the Secretaries of State of the States of
California and Oklahoma in such form as is required by, and executed in
accordance with, the relevant provisions of California and Oklahoma Law. The
term “Effective Time” means the date and time of the filing of the Articles of
Merger with the Secretary of the State of California.

2.3     Effect
of the Merger.

          At
the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of California Law. Without limiting the generality of the
foregoing, at the Effective Time, all the property, rights, privileges, powers
and franchises of each of the Company and the Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of each of the Company and the Merger Sub shall become
the debts, liabilities, obligations, restrictions, disabilities and duties of
the Surviving Corporation. 

2.4     Articles
of Organization; By-Laws.

	 	(a) 	
      At the Effective Time, the Articles of Incorporation of
      the Merger Sub, as in effect immediately prior to the Effective Time,
      shall be the articles of organization of the Surviving Corporation until
      thereafter amended as provided by California Law and such Articles of
      Incorporation.

	 	 	 
	 	(b) 	
      At the Effective Time, the by-laws of the Merger Sub, as
      in effect immediately prior to the Effective Time, shall be the by-laws of
      the Surviving Corporation until thereafter amended as provided by
      California law, the articles of organization of the Surviving Corporation
      and such by-laws.

	 	 	 
	 	(c) 	
      The purposes of the Surviving Corporation shall be as set
      forth in the articles of organization of the Company, as in effect
      immediately prior to the Effective Time, until thereafter amended as
      provided by California law and such articles of organization.

	 	 	 
	 	(d) 	
      The total number of shares and the par value, if any, of
      each class of stock which the Surviving Corporation is authorized to issue
      shall be as set forth in the articles of organization of the Company, as
      in effect immediately prior to the Effective Time, until thereafter
      amended as provided by California law and such articles of
      organization.

2.5     Directors
and Officers.

          The
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, each to hold office in accordance with
the Articles of Incorporation and by-laws of the Surviving Corporation, and the
officers of the Merger Sub immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, in 

- 11 - 

each case until their respective successors are duly elected or
appointed and qualified. 

2.6     Additional
Actions.

          If
at any time after the Effective Time, the Surviving Corporation shall reasonably
determine that any further deeds, assignments or assurances or any other acts or
things are necessary to (a) vest, perfect, or record in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company, or (b) otherwise carry out the provisions
of this Agreement, the Company and its officers and directors shall be deemed to
have granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, assignments or assurances and to take all
acts necessary and proper to vest, perfect or confirm title to possession of
such rights, properties or assets in the Surviving Corporation and otherwise to
carry out the provisions of this Agreement, and the officers and directors of
the Surviving Corporation are authorized in the name of the Company or otherwise
to take any and all such actions. 

PART 3 
CONVERSION OF SECURITIES 

3.1     Merger
Consideration.

          Subject
to the terms and conditions of this Agreement and based on the representations
and warranties of the parties set out in this Agreement, at the Effective Time,
by virtue of the Merger and without any action on the part of Sonic, Merger Sub,
Seller or the Company, all of the issued and outstanding Shares of the Company
will be converted into and entitle the holder to receive consideration set forth
in Section 3.2. Such consideration will constitute sole entitlement in respect
of the Shares upon the Merger. 

3.2     Payment
of Merger Consideration.

          In
connection with the Merger, the Shares will be converted into the right in favor
of the Seller, as the registered holder of such Shares, to receive the following
consideration (the “Purchase Price”): 

	 	(a) 	
      at the Closing, Sonic will pay an aggregate of
      U.S.$500,000.00, such amount to be converted to Canadian dollars based on
      the Bank of Canada noon buying rate for U.S. dollars on the business day
      immediately preceding the Closing and satisfied through the issue by Sonic
      to the Seller of Sonic Shares. Such Sonic Shares will be valued at a price
      per share equal to the greater of Cdn.$2.50 and the average closing price
      for Sonic Shares on the Exchange for the ten trading days preceding the
      Closing;

	 	 	 
	 	(b) 	
      six months following the Closing, Sonic will pay an
      additional U.S.$500,000, such amount to be converted to Canadian dollars
      based on the Bank of Canada noon buying rate for U.S. dollars on the
      business day immediately preceding the date of payment and satisfied
      through the issue by Sonic to the Seller of Sonic Shares. Such Sonic
      Shares will be valued at a price per share equal to the average closing
      price for Sonic Shares on the Exchange for the twenty trading days
      preceding the payment date;

- 12 - 

	 	(c) 	
      within 45 days of each Interim Period following the
      Closing, Sonic will pay to Seller 50% of all revenue generated from the
      Business by the Surviving Corporation in such Interim Period, to a maximum
      cumulative total of U.S.$500,000 (or such lesser amount as determined by
      an adjustment pursuant to Section 3.3) in such payments or until three
      years following the date of this Agreement, whichever is
earlier;

	 	 	 
	 	(d) 	
      upon there being Net Contributions generated from and
      after the Closing Date equal to U.S.$1,988,694.70, as may be adjusted by
      Section 3.3 (the “Net Contribution Payment Threshold”), and so long as no
      Disqualifying Event shall have occurred, Sonic will thereafter pay to the
      Seller an amount equal to all Net Contributions generated (“Net
      Contribution Payments”) until the Company either generates Net
      Contributions equal to the Maximum Net Contribution Payment or the date
      that is three years following the Closing Date, whichever is earlier.
      Sonic will pay Net Contributions as they accrue during each Interim Period
      commencing on the Interim Period in which the Net Contribution Payment
      Threshold is achieved and during which no Disqualifying Event has
      occurred. A Net Contribution that is a negative amount for an Interim
      Period will not result in any payment by Seller. Payment of a Net
      Contribution Payment for an Interim Period will be completed no later than
      45 days following the end of an applicable Interim Period. Sonic will pay
      at least 30% of each Net Contribution Payment in cash. The remainder of
      each Net Contribution Payment will be allocated as between Sonic Shares
      and cash in an amount to be determined by Sonic, in its sole discretion.
      To the extent Sonic elects to pay a portion of the Net Contribution
      Payment through the issue of Sonic Shares, the amount of such payment will
      be converted to Canadian dollars based on the Bank of Canada noon buying
      rate for U.S. dollars on the business day immediately preceding the date
      of payment and the Sonic Shares will be valued at a price per share equal
      to the average closing price for Sonic Shares on the Exchange for the
      twenty trading days preceding the payment date; and

	 	 	 
	 	(e) 	
      Sonic will pay to Seller an amount equal to 10% of all
      funds collected by the Surviving Corporation from the Stockton Receivable
      forthwith following receipt of such funds by the Surviving
      Corporations.

3.3     Adjustment
Amount. 

          Forthwith
following the Closing Date, the auditors of Sonic shall calculate the amount of
aggregate accounts payable, accounts receivable and debt obligations owed by the
TK Companies as at the Closing Date. Such calculations will be prepared on a
basis consistent with that of the Annual Financial Statements. If such
calculation evidences that the aggregate accounts payable, to the extent not
offset by accounts receivable, and aggregate debt obligations owed by the TK
Companies to arm's length third parties as at the Closing Date exceeds the
aggregate accounts payable, to the extent not offset by accounts receivable, and
aggregate debt obligations owed by the TK Companies to arm's length third
parties as set out in the March 31 Financial Statements by more than
U.S.$100,000, Sonic may elect to have the Purchase Price reduced. The reduction
in Purchase Price will be equal to the full amount of the excess amount owing as
determined above (the "Adjustment Amount"). Such a reduction of the Purchase
Price 

- 13 - 

will be effected by reducing the amount payable in paragraph
3.2(c) by an amount equal to 50% of the Adjustment Amount and by increasing the
Net Contribution Payment Threshold in paragraph 3.2(d) by an amount equal to 50%
of the Adjustment Amount. 

PART 4 
SELLERS’ REPRESENTATIONS

4.1     Seller’s
Representations.

          In
order to induce Sonic and Merger Sub to enter into and consummate this
Agreement, the Seller and Company represent, jointly and severally, as follows:

	 	(a) 	
      schedule 4.1(a) contains a complete and accurate list for
      each of the Company and the TK Subsidiary (collectively the “TK
      Companies”) of its name, its jurisdiction of incorporation and other
      jurisdictions in which it is authorized to do business. Each TK Company is
      a corporation duly organized, validly existing, and in good standing under
      the laws of its jurisdiction of incorporation, with full corporate power
      and authority to conduct business as it is now being conducted, to own or
      use the properties and assets that it purports to own or use, and to
      perform all its obligations under Applicable Contracts. Each TK Company is
      duly qualified to do business as a foreign corporation and is in good
      standing under the laws of each state or other jurisdiction in which
      either the ownership or use of the properties owned or used by it, or the
      nature of the activities conducted by it, require such qualification,
      except where the failure to so qualify or be in good standing would not
      have a material adverse effect on the applicable TK Company. Seller has
      delivered to Sonic copies of the Organizational Documents of each TK
      Company, as currently in effect;

	 	 	 	 
	 	(b) 	
      this Agreement and, upon execution by the Seller the
      Employment Agreement will, constitute legal, valid, and binding
      obligations of Seller and the Company, enforceable against Seller and the
      Company in accordance with their terms. Each of Seller and the Company, as
      the case may be, has the absolute and unrestricted right, power,
      authority, and capacity to execute and deliver this Agreement and to
      execute and deliver the Escrow Agreement, the Employment Agreement and the
      Seller’s Releases (collectively, the “Seller’s Closing Documents”) and to
      perform his or its obligations under this Agreement and the Seller’s
      Closing Documents;

	 	 	 	 
	 	(c) 	
      neither the execution and delivery of this Agreement nor
      the consummation or performance of any of the Contemplated Transactions
      will, directly or indirectly (with or without notice or lapse of
    time):

	 	 	 	 
	 		(i) 	
      contravene, conflict with, or result in a violation of
      (A) any provision of the Organizational Documents of any of the TK
      Companies, or (B) any resolution adopted by the board of directors or the
      stockholders of any TK

	 	 	 	 
	 			
      Company;

	 	 	 	 
	 		(ii) 	
      contravene, conflict with, or result in a violation of,
      or give any U.S. Governmental Body or other Person the right to challenge
      any of the Contemplated Transactions or to exercise any remedy or obtain
      any relief

- 14 - 

under, any Legal Requirement or any
Order to which any TK Company or the Seller, or any of the assets owned or used
by any TK Company, may be subject; 

	 	(iii) 	
      contravene, conflict with, or result in a violation of
      any of the terms or requirements of, or give any U.S. Governmental Body
      the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
      Governmental Authorization that is held by any TK Company or any U.S.
      Governmental Authorization that otherwise relates to the business of, or
      any of the assets owned or used by, any TK Company;

	 	 	 
	 	(iv) 	
      cause any of the assets owned by any TK Company to be
      reassessed or revalued by any U.S. taxing authority or other U.S.
      Governmental Body;

	 	 	 
	 	(v) 	
      contravene, conflict with, or result in a violation or
      breach of any provision of, or give any Person the right to declare a
      default or exercise any remedy under, or to accelerate the maturity or
      performance of, or to cancel, terminate, or modify, any Applicable
      Contract; or

	 	 	 
	 	(vi) 	
      result in the imposition or creation of any Encumbrance
      upon or with respect to any of the assets owned or used by any TK
      Company;

	 	(d) 	
      the authorized equity securities of the Company consist
      of 5,000,000 shares of common stock, par value $0.01 per share, of which
      2,500,000 shares are issued and outstanding and constitute the Shares.
      Seller is and will be on the Closing Date the sole record and beneficial
      owner and holder of the Shares, free and clear of all Encumbrances (other
      than pursuant to this Agreement). All of the outstanding equity securities
      of the TK Subsidiary are owned of record and beneficially by the Company,
      free and clear of all Encumbrances. No legend or other reference to any
      purported Encumbrance appears upon any certificate representing equity
      securities of any TK Company, except legends required by or reciting Legal
      Requirements. All of the outstanding equity securities of each TK Company
      have been duly authorized and validly issued and are fully paid and
      nonassessable. There are no Contracts relating to the issuance, sale, or
      transfer of any equity securities or other securities of any TK Company
      (other than pursuant to this Agreement). None of the outstanding equity
      securities of any TK Company was issued in violation of the Securities Act
      or any other Legal Requirement. No TK Company owns, or has any Contract to
      acquire, any equity securities or other securities of any Person (other
      than TK Subsidiary) or any direct or indirect equity or ownership interest
      in any other business;

	 	 	 
	 	(e) 	
      the March 31 Financial Statements were prepared in good
      faith, consistent with past practices and, while Seller disclaims any
      representation that such financial statements conform to GAAP, such
      financial statements, to Seller’s Knowledge, include all short term and
      long term assets and liabilities on the balance sheet and all material
      revenue, costs and expenses on the statements of profit and loss and
      statement of cash flows;

- 15 - 

	 	(f) 	
      the books of account, stock record books, and other
      material records of the TK Companies, all of which have been made
      available to Sonic, are complete and correct in all material respects. At
      the Closing, all of those books and records will be in the possession of
      the TK Companies;

	 	 	 
	 	(g) 	
      Schedule 4.1(g) contains a complete and accurate list of
      all Assets of the TK Companies. The TK Companies own all such Assets
      (whether real, personal, or mixed and whether tangible or intangible) that
      they purport to own, including all of the properties and assets reflected
      in the March 31 Financial Statements (except for personal property sold
      since the date of the March 31 Financial Statements in the Ordinary Course
      of Business), and all of the Assets purchased or otherwise acquired by the
      TK Companies from the date of the March 31 Financial Statements to the
      date hereof are listed in Schedule 4.1(g);

	 	 	 
	 	(h) 	
      The Remediation Equipment owned by the Company has been
      field tested with positive results. As of the date of last use, it was in
      good operating condition and repair, and was adequate for the uses to
      which it was being put. The Remediation Equipment is currently being used
      for a project in Australia, and is subject to an Australian company’s
      right to purchase.

	 	 	 
	 	(i) 	
      the TK Companies have filed or caused to be filed (on a
      timely basis since August 31, 1999) all tax returns that are or were
      required to be filed by or with respect to any of them, either separately
      or as a member of a group of corporations, pursuant to applicable Legal
      Requirements. Seller has delivered to Sonic all such tax returns filed
      since August 31, 1999. The TK Companies have paid, or made provision for
      the payment of, all Taxes that have or may have become due pursuant to
      those tax returns or otherwise, or pursuant to any assessment received by
      Seller or any TK Company. All tax returns filed by (or that include on a
      consolidated basis) any TK Company are true, correct, and complete. No TK
      Company is, or within the five-year period preceding the Closing Date has
      been, an “S” corporation. During the consistency period (as defined in
      Section 338(h)(4) of the IRC with respect to the sale of the Shares to
      Sonic), no TK Company or target affiliate (as defined in Section 338(h)(6)
      of the IRC with respect to the sale of the Shares to Sonic) has sold or
      will sell any property or assets to Sonic or to any member of the
      affiliated group (as defined in Section 338(h)(5) of the IRC) that
      includes Sonic;

	 	 	 
		(j) 	
      since March 31, 2005, there has not been any material
      adverse change in the business, operations, properties or assets, or
      financial condition of any TK Company, and no event has occurred or
      circumstance exists that may result in such a material adverse
    change;

	 	 	 
	 	(k) 	
      there are no pension, welfare or other benefit plans,
      including plans under ERISA, of a TK Company, except for the Company’s
      401(k) plan and money purchase pension plan, copies of which have been
      delivered to Sonic. The Company is under no obligation and is subject to
      no liability, whether or not contingent, with respect to such plans except
      reasonable administration obligations;

- 16 - 

	 	(l) 	
      Company holds all licences and permits, including the
      Operating Authorities described in Schedule 4.1(l), required for carrying
      on the Business in the manner in which it has been and is being carried on
      and all such licences and permits and Operating Authorities are in good
      standing and all necessary consents to the assignment of the Operating
      Authorities has been obtained;

	 	 	 	 
	 	(m) 	
      except as disclosed in Schedule 4.1(m):

	 	 	 	 
	 		(i) 	
      to the Seller’s Knowledge, the Company has not used any
      of its Facilities, or permitted them to be used, to generate, manufacture,
      refine, treat, transport, store, handle, dispose of, transfer, produce,
      remediate or process Hazardous Substances nor otherwise conducted any
      Hazardous Activity, except in compliance with Legal Requirements,
      including Environmental Laws and Occupational Safety and Health
    Laws,

	 	 	 	 
	 		(ii) 	
      to the Seller’s Knowledge, the conduct of the Business
      and the use of the Remediation Equipment by the TK Companies is, and at
      all times has, complied with all Environmental Laws, Occupational Safety
      and Health Laws and other material Legal Requirements,

	 	 	 	 
	 		(iii) 	
      to the Seller’s Knowledge, none of the TK Companies or
      the Business, Assets or Facilities of the TK Companies are subject to any
      Environment, Health and Safety Liabilities and no such liabilities are
      pending or Threatened,

	 	 	 	 
	 		(iv) 	
      Neither the Seller nor any TK Company has received any
      actual or Threatened order, notice or other communication from any Person,
      including any Governmental Authority or client in connection with the
      Business, of any actual or potential violation or failure to comply with
      any Environmental Law Occupational Safety and Health Law or other material
      Legal Requirement or of any actual or Threatened obligation to undertake
      or bear the cost of any Environmental, Health and Safety Liabilities with
      respect to any Facility, from the use of the Remediation Equipment or
      otherwise from the conduct of the Business,

	 	 	 	 
	 		(v) 	
      the Seller has made available to Sonic all notices filed
      under applicable Environmental Law or Occupational Safety and Health Laws,
      judgment, decree, order, injunction, rule, statute or regulation
      indicating past or present Hazardous Activity,

	 	 	 	 
	 	(n)	
      Schedule 4.1(n) lists all of the Applicable Contracts of
      the TK Companies. Each such contract is, as of the date hereof, and will
      continue to be after the Closing, a legal, valid, binding obligation,
      enforceable against, and in full force and effect against the Company and,
      to Seller’s knowledge, all the other parties thereto on identical terms
      following the Closing. There is no breach, violation or default by any TK
      Company and no event (including, without limitation, the consummation of
      the Contemplated Transactions) which, with notice or lapse of time or
      both, would (i) constitute a breach, violation or default by such TK
      Company under any

- 17 - 

such Applicable Contract or (ii) give
rise to any lien or right of termination, modification, cancellation,
prepayment, suspension, limitation, revocation or acceleration against such TK
Company under, any such Applicable Contract. To the Seller’s Knowledge, no other
party to any of such Applicable Contracts is in arrears in respect of the
performance or satisfaction of the terms and conditions on its part to be
performed or satisfied under any of such Applicable Contracts, no waiver or
indulgence has been granted by any of the parties thereto and no party to any of
such Applicable Contracts has repudiated any provision thereof; 

	 	(o) 	
      attached as Schedule 4.1(o) is a complete and accurate
      list of all employees of the TK Companies, together with particulars of
      the material terms and conditions of employment of such persons, and each
      employee has been, on the date hereof and will have been on the Closing
      Date, paid all wages, income and any other sums due and owing to it by TK
      Companies;

	 	 	 
	 	(p) 	
      Schedule 4.1(p) is a complete and accurate description of
      all insurance policies held by TK Companies and, to the Seller’s
      Knowledge, each insurance policy is in full force and effect and no TK
      Company is in default with respect to the payment of premiums on any such
      policy and no claim is pending under any such policy;

	 	 	 
	 	(q) 	
      except as limited by the Mitsubishi and Collex licenses
      delivered to Sonic and referenced in Schedule 4.1(n), Seller and the TK
      Companies collectively own or have the right to use pursuant to license,
      sublicense, agreement or permission all Intellectual Property,
      individually or in the aggregate, material to the operation of the
      Business as currently conducted, and on Closing the Company will be the
      sole legal and beneficial owner of all such Intellectual Property. Each
      item of Intellectual Property owned or used by Seller and TK Company on
      the date hereof will be owned or available for use by Company on identical
      terms and conditions immediately subsequent to the Closing. Each of the
      Seller and each TK Company has taken all necessary action, and continues
      to do so, to maintain and protect each item of Intellectual Property that
      it owns or uses;

	 	 	 
	 	(r) 	
      to Seller’s Knowledge, neither the Seller nor any TK
      Company has interfered with, infringed upon or misappropriated any
      Intellectual Property rights of third parties. Neither Seller nor any TK
      Company has received any charge, complaint, claim, demand or notice
      alleging any such interference, infringement or misappropriation
      (including any claim that it must license or refrain from using any
      Intellectual Property rights of any third party). To Seller’s Knowledge,
      no third party has interfered with, infringed upon or misappropriated any
      Intellectual Property rights of Seller or any TK Company;

	 	 	 
	 	(s) 	
      Schedule 4.1(s) identifies each item of Intellectual
      Property owned by or licensed by the TK Companies, including each patent
      and each pending patent application which has been filed by the Seller and
      the TK Companies and all copyrights and trademarks of the Seller relating
      to the Business and the Company and of the TK Companies. With respect to
      each patent, to Seller’s Knowledge, there is no legally sufficient basis
      for invalidating any claim therein and Seller is not
  aware

- 18 - 

of any substantial suggestion or
assertion that any such claim is invalid or unenforceable. To Seller’s
Knowledge, the patent applications identified on Schedule 4.1(s) hereto have
been properly prepared and filed. Schedule 4.1(s) identifies each license,
agreement and other permission that Seller and the TK Companies have granted to
any third party with respect to any of its Intellectual Property. The Seller has
made available to Sonic correct and complete copies of all registrations, patent
applications, licenses, agreements and permissions (as amended), identified in
Schedule 4.1(s) hereto, and has made available to Sonic correct and complete
copies of all other written documentation evidencing ownership and prosecution
of each such item. With respect to each item of Intellectual Property required
to be identified in Schedule 4.1(s): 

	 	(i) 	
      the Seller or relevant TK Company possesses all right,
      title and interest in and to the item, free and clear of any Encumbrance,
      license or other restriction;

	 	 	 
	 	(ii) 	
      the item is not subject to any outstanding injunction,
      judgment, order, decree, ruling or charge; and

	 	 	 
	 	(iii) 	
      except as set forth in any Applicable Contract delivered
      to Sonic, Seller or such TK Company has never agreed to indemnify any
      Person for or against any interference, infringement, misappropriation or
      other conflict with respect to the item;

	 	(t) 	
      neither the Seller nor any officer, director or employee
      of the Company or any Related Party of the foregoing is indebted or under
      obligation to the Company on any account;

	 	 	 
	 	(u) 	
      except as addressed in Section 7.2(a), and as set forth
      in Section 8.3, neither the Seller nor any officer, director or employee
      of the Company or any Related Party of the foregoing is a party to any
      agreement pursuant to which the Company is indebted or under an obligation
      of payment to such Person;

	 	 	 
	 	(v) 	
      except with respect to the Stockton Receivable, there are
      no actions, suits or proceedings, judicial or administrative (whether or
      not purportedly on behalf of a TK Company or the Seller) pending or, to
      the Seller’s Knowledge, Threatened, by or against or affecting the TK
      Companies, at law or in equity, or before or by any court or any
      Governmental Body;

	 	 	 
	 	(w) 	
      Seller is aware that the issuance and sale of the Shares
      has not been and will not be registered under the Securities Act or any
      applicable state securities laws;

	 	 	 
	 	(x) 	
      Seller is acquiring the Sonic Shares as principal, for
      investment only and not with a view to resale or distribution and will not
      resell or otherwise transfer or dispose of the Shares except in accordance
      with the provisions of applicable securities laws and in the jurisdiction
      in which any resale offer is received;

	 	 	 
	 	(y) 	
      Seller has such knowledge and experience in financial and
      business affairs as to be capable of evaluating the merits and risks of,
      and protecting his own interests

- 19 - 

in connection with, the Contemplated
Transaction and is able to bear the economic risk of loss of his investment in
the Sonic Shares;

	 	(z) 	
      Seller understands that all certificates representing the
      Sonic Shares will (a) bear a legend referencing the Escrow Agreement, (b)
      bear a legend to the effect that the securities represented by the
      certificates are subject to a hold period and may not be traded until the
      expiry of such hold period, except as permitted by applicable securities
      laws, and (c) bear the following legend:

THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SHARES
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
QUALIFICATION WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT
SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED. 

	 	(aa) 	
      no dividends or other distribution on any shares in the
      capital of the Company have ever been made, declared or
  authorized;

	 	 	 	 
	 	(bb) 	
      the Company has not before the date of this
    Agreement:

	 	 	 	 
	 		(i) 	
      acquired any property from a person with whom it was not
      dealing at arm’s length; or

	 	 	 	 
	 		(ii) 	
      disposed of anything to a Person with whom the Company
      was not dealing at arm’s length for proceeds less than the fair market
      value.

	 	 	 	 
	 	(cc)	
      since March 31, 2005

	 	 	 	 
	 		(i) 	
      the Company has not waived or surrendered any right of
      material value;

	 	 	 	 
	 		(ii) 	
      the Business of the Company has been carried on in the
      ordinary course; and

	 	 	 	 
	 		(iii) 	
      no material capital expenditures have been authorized or
      made.

PART 5 
BUYER’S REPRESENTATIONS

5.1    Sonic’s
Representations.

          In
order to induce the Seller to enter into and consummate this Agreement, Sonic
and Merger Sub represent and warrant, jointly and severally, to the Seller and
the Company as follows: 

	 	(a) 	
      Sonic is a corporation duly incorporated under the laws
      of the Province of British Columbia is a reporting company and is a valid
      and subsisting corporation in

- 20 - 

good standing with the Office of the
Registrar of Companies of British Columbia, has the power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby, all
of which have been duly and validly authorized by all requisite proceedings;

	 	(b) 	
      Merger Sub is a corporation duly incorporated under the
      laws of State of California and is a valid and subsisting corporation in
      good standing under the laws of the State of California, has the power and
      authority to enter into this Agreement and to carry out the transactions
      contemplated hereby, all of which have been duly and validly authorized by
      all requisite proceedings;

	 	 	 
	 	(c) 	
      Sonic’s common shares trade on the TSX Venture Exchange,
      and Sonic has not received any notice of any pending or actual de-listing
      or suspension of trading therefrom,, nor has reason to believe any such
      notice is pending or Threatened;

	 	 	 
	 	(d) 	
      no securities commission or similar regulatory authority
      has issued any order which is currently outstanding preventing or
      suspending trading in any securities of Sonic, and Sonic is not in default
      of any requirement of securities laws of the Provinces of
Canada;

	 	 	 
	 	(e) 	
      neither the execution of this Agreement nor the
      performance by Sonic of its obligations hereunder will result in a breach
      by it of any term or provision or constitute a default under any deed of
      trust or any other agreement to which it is bound;

	 	 	 
	 	(f) 	
      this Agreement constitutes a legal, valid, and binding
      obligation of Sonic and Merger Sub, enforceable against Sonic and Merger
      Sub in accordance with its terms. Upon the execution and delivery by Sonic
      of the Seller’s Closing Documents to which it is a party, such Agreements
      will constitute legal, valid, and binding obligations of Sonic,
      enforceable against Sonic in accordance with their respective terms. Sonic
      and Merger Sub have the absolute and unrestricted right, power, authority,
      and capacity to execute and deliver this Agreement and the Seller’s
      Closing Documents to which they are a party and to perform their
      obligations thereunder; and

	 	 	 
	 	(g) 	
      the Sonic Shares issued to Seller hereunder will be duly
      and validly issued. The Sonic Shares issuable to Seller after the Closing
      shall be reserved for issuance as of the Closing Date. Subject to (i)
      restrictions under the Escrow Agreement (ii) a restriction under
      securities laws of British Columbia that will impose a hold period on the
      Sonic Shares for four months following the Closing Date and corresponding
      legend on the applicable share certificates during that period, (iii)
      restrictions imposed by the Securities Act in respect of the resale of
      unregistered securities outside the United States, and (iv) notification
      and reporting requirements applicable to insiders and control persons
      pursuant to securities laws of the provinces of Canada, as applicable, the
      Sonic Shares may be traded through the facilities of the Exchange in
      ordinary course transactions.

- 21 - 

PART 6 
SELLERS’ COVENANTS 

6.1     Seller’s
Covenants.

          The
Seller and the Company covenants and agrees with Sonic as follows: 

	 	(a) 	
      Consents. Both before and after the Closing, the
      Seller will use its best efforts to assist Sonic in obtaining from all
      Governmental Authorities and all other persons all such approvals and
      consents in form and on terms satisfactory to counsel for Sonic as are
      necessary or required in order to permit the Closing of the Contemplated
      Transactions.

	 	 	 
	 	(b) 	
      Books and Records. At any time up to the Closing
      Date, during normal business hours and with reasonable prior notice, the
      Seller and the Company will permit Sonic and its auditors, solicitors and
      other authorized persons to make such investigation of the properties and
      assets of the TK Companies, and of its financial and legal condition and
      its properties and assets, as Sonic considers necessary or advisable to
      familiarize itself with such properties, assets and other matters, and to
      have full access to the Facilities and to all records, documents and other
      information related to the Business, the Seller and the TK Companies,
      including all working papers (internal and external) and details of
      accounts and inventories prepared, obtained or used in connection with the
      preparation of financial statements. Following the date of this Agreement
      until the Closing, Seller will provide to Sonic all documents and
      information that, to Seller’s Knowledge, are material or could have a
      material impact on the TK Companies or the business affairs or financial
      condition of the TK Companies which has not previously been disclosed to
      Sonic and which could reasonably be expected to have an adverse effect
      upon the business, operations, properties, assets or financial prospects
      of the TK Companies.

	 	 	 
	 	(c) 	
      Escrow. At Closing, Seller will enter into an
      escrow agreement (the “Escrow Agreement”) pursuant to which Sonic Shares
      issued to Seller hereunder will be restricted from trading until released
      from escrow. All Sonic Shares issued to Seller will, immediately upon
      issue, be delivered into escrow. Pursuant to the Escrow Agreement, each
      time a tranche of Sonic Shares is placed into escrow, those shares will
      become subject to a release schedule in which 10% of the original amount
      will be released at four month intervals until all Sonic Shares in that
      tranche are released (being 10 increments for an aggregate of 40 months
      for each tranche). Sonic Shares held in escrow will be subject to
      cancellation and returned to treasury upon the occurrence of a
      Disqualifying Event. Seller will be entitled to exercise all voting rights
      and dividend rights to Sonic Shares that are in escrow.

	 	 	 
	 	(d) 	
      No Negotiation. Until such time, if any, as this
      Agreement is terminated, Seller and Company will not, directly or
      indirectly solicit, initiate, or encourage any inquiries or proposals
      from, discuss or negotiate with, provide any non-public information to, or
      consider the merits of any unsolicited inquiries or
  proposals

- 22 - 

from, any Person (other than Sonic)
relating to any transaction involving the sale of the Business or Assets of any
TK Company, or any of the capital stock of any TK Company, or any merger,
consolidation, business combination, or similar transaction involving any TK
Company.

	 	(e) 	
      Interim Management - Negative Covenants. From the
      date of this Agreement to the Closing Date, the Seller will not, and will
      not permit any TK Company to, without the prior consent in writing of
      Sonic:

	 	 	 	 
	 		(i) 	
      except in the Ordinary Course of Business, purchase or
      sell, consume or otherwise dispose of any of the Assets;

	 	 	 	 
	 		(ii) 	
      enter into any contract or assume or incur any liability
      relating to or in any way affecting the Business except in the Ordinary
      Course of Business;

	 	 	 	 
	 		(iii) 	
      settle any accounts receivable of a material nature at
      less than face value;

	 	 	 	 
	 		(iv) 	
      waive or surrender any material right in connection with
      the Business;

	 	 	 	 
	 		(v) 	
      discharge, satisfy or pay any lien, encumbrance,
      obligation or liability in connection with the Business except in the
      Ordinary Course of Business;

	 	 	 	 
	 		(vi) 	
      make any material capital expenditures or commitment for
      any material capital expenditures in connection with the Business;
    or

	 	 	 	 
	 		(vii) 	
      issue any securities in the capital of a TK Company or
      any securities convertible or exchangeable into securities in the capital
      of a TK Company or transfer or grant an Encumbrance over any currently
      issued securities in the capital of a TK Company to any Person.

	 	 	 	 
	 	(f)	
      Release. At the Closing, Seller will, and will
      cause each other director and officer of the TK Companies and the
      recipients of the Loan Repayment funds from the Company referenced in
      Section 8.3 following receipt of such funds to deliver a release of all
      claims, debts and any and all other rights as against the TK Companies as
      of the Closing Date (the “Seller’s Releases”).

	 	 	 	 
	 	(g)	
      Interim Management - Positive Covenants. From the
      date of this Agreement to the Closing Date, the Seller and the Company
      will cause the TK Companies to:

	 	 	 	 
	 		(i) 	
      carry on the Business in the Ordinary Course of Business
      and substantially in accordance with the procedures and practices
      currently in effect;

	 	 	 	 
	 		(ii) 	
      maintain insurance on the Assets as they are insured on
      the date of this Agreement;

	 	 	 	 
	 		(iii) 	
      use their best efforts to preserve and maintain the
      goodwill of the Business and keep available the services of current
      officers, employees and directors;

- 23 - 

	 	(iv) 	
      confer with Sonic on all operational matters of a
      material nature; and

	 	 	 
	 	(v) 	
      do all necessary repairs and maintenance to the Assets
      and take reasonable care to protect and safeguard those
  assets.

	 	(h) 	
      Notice. If Seller determines a state of facts
      exists which will result in an untrue representation, the non-fulfilment
      of any condition, any material detrimental change to the Assets or the
      Business or constitute a Breach of this Agreement, the Seller will as soon
      as is reasonably possible notify Sonic of such facts.

	 	 	 
	 	(i) 	
      Assignment of Intellectual Property. Seller will,
      prior to the Closing, transfer to the Company all legal and beneficial
      interest held by Seller in all Intellectual Property used by or for the
      benefit of the Business, including the Intellectual Property listed in
      Schedule 3.1(s).

	 	 	 
	 	(j) 	
      Annual Financial Statements. Forthwith following
      the date of this Agreement, Seller and Company will commence preparation
      of preliminary Annual Financial Statements, and will co-operate with the
      auditors of Sonic, Staley Oakada, in connection with the audit of those
      financial statements and preparation of an audit report on such financial
      statements. Seller will complete the preliminary Annual Financial
      Statements no later than 60 days following the date of this
    Agreement.

PART 7 
BUYER COVENANTS 

7.1    Sonic’s
Covenants – Pre-Closing.

          Sonic
covenants and agrees with the Seller that as promptly as practicable after the
date of this Agreement, Sonic will, and will cause each of its Related Persons
to, make all filings required by Legal Requirements to be made by them to
consummate the Contemplated Transactions. Between the date of this Agreement and
the Closing Date, Sonic will, and will cause each Related Person to, cooperate
with Seller with respect to all filings that are required to be made by Seller
pursuant to Legal Requirements in connection with the Contemplated Transactions,
and cooperate with Seller in obtaining all Consents required in order to
complete the Contemplated Transactions, including all consents relating to
restrictions on assignment in the Applicable Contracts; provided that this
Agreement will not require Sonic to dispose of or make any change in any portion
of its business or to incur any other burden to obtain a Consent or Governmental
Authorization.

7.2      Sonic
Covenants – Post-Closing.

	 	(a) 	
      Sonic covenants that following the Closing, Sonic will
      for six months following the Closing Date provide funding to the Surviving
      Corporation sufficient to permit the Surviving Corporation to continue
      carrying on Business in a manner no less significant than that carried on
      as at the date of this Agreement. Sonic covenants that with respect to all
      obligations regarding indebtedness of the Company in which Seller is a
      guarantor or Seller personally or his assets are otherwise obligated with
      respect to such indebtedness (“Seller Guarantees”), Sonic will within six
      months following the Closing either: (i) obtain a release
  of

- 24 - 

Seller from the Seller Guarantees;
(ii) retire the amount owing under such indebtedness and terminate the principal
agreement in which the indebtedness has arisen; or (iii) make such other
security arrangements on the indebtedness as are acceptable to Seller
(collectively, a “Seller Guarantee Settlement”). If the completion of the
Contemplated Transactions would cause a breach of or accelerate or crystallize
contingent payment obligations under a Seller Guarantee or the principal
indebtedness underlying a Seller Guarantee and Company is unable to obtain a
consent or waiver of such breach, acceleration or crystallization prior to
Closing, Sonic will complete the Seller Guarantee Settlement on the applicable
Seller Guarantee at or prior to Closing. Sonic agrees to indemnify Seller for
any amount payable by Seller from the Seller Guarantees that arises following
the Closing; 

	 	(b) 	
      Sonic covenants to add Seller as a nominee to the board
      of directors of Sonic at the next annual meeting of Sonic;

	 	 	 
	 	(c) 	
      Sonic covenants to use reasonable commercial efforts to
      complete the financing contemplated in paragraph 9.1(i);

	 	 	 
	 	(d) 	
      Sonic covenants and agrees, so long as Seller is eligible
      to receive Purchase Price pursuant to Section 3.2, that it will operate
      the Business in good faith and in a manner designed, in Sonic’s reasonable
      judgment, to maximize the value of the Business to Sonic, and will
      maintain the Surviving Corporation as primarily responsible for
      development and operations of the Business;

	 	 	 
	 	(e) 	
      Sonic covenants and agrees that each payment of Purchase
      Price pursuant to paragraphs 3.1(b), (c) and (d) shall be accompanied by a
      calculation showing in reasonable detail how the payment was determined
      and certified by an officer of Sonic.

PART 8 
MUTUAL COVENANTS

	8.1 	
      Short-Form Merger Agreement. Sonic and Seller
      shall agree to the terms of the Short- Form Merger Agreement, and Sonic
      shall make arrangements for the Short-Form Merger Agreement to be filed
      with the Secretaries of State of the States of California and Oklahoma. At
      the Effective Time, the Company and the Merger Sub shall execute the
      Short-Form Merger Agreement.

	 	 
	8.2 	
      Employment.

          At
the Effective Time, Seller and the Surviving Corporation will enter into an
employment agreement (the “Employment Agreement”) substantially in the form
attached in Schedule 8.1 of this Agreement. 

- 25 - 

8.3    
Shareholder Loan Repayment.

          At
the Closing, Sonic will loan to the Company U.S.$488,694.70 (the “Loan
Repayment”). Seller and Sonic will cause the Company to immediately pay such
funds as follows in settlement of all outstanding loans owed by Company to
non-arm’s length Persons: 

	 	(a) 	
      to Carl and Mary Cash, U.S.$362,076; and

	 	 	 
	 	(b) 	
      to Kathy and Alan Cash,
U.S.$126,618.70.

8.4     Stockton
Receivable.

          The
Seller and Sonic will use reasonable commercial efforts to cause repayment of
the Stockton Receivable. 

PART 9 
BUYER’S CONDITIONS PRECEDENT

9.1     Conditions
Precedent.

          The
obligations of Sonic and Merger Sub under this Agreement are subject to the
following conditions, which are for the exclusive benefit of Sonic and Merger
Sub, being fulfilled in all material respects in the reasonable opinion of Sonic
at the Closing or being waived by Sonic at or before the Closing: 

	 	(a) 	
      the representations and warranties of the Seller and
      Company contained in this Agreement will be true and correct as of the
      Execution Date and on and, as updated by Seller and Company to reflect
      interim development in a manner acceptable to Sonic, as of the Closing
      Date;

	 	 	 	 
	 	(b) 	
      the Seller and Company will have performed all covenants
      and agreements in this Agreement agreed to be performed or caused to be
      performed by it on or before the Closing Date;

	 	 	 	 
	 	(c) 	
      completion of a due diligence review of the TK Companies
      by Sonic with results satisfactory to Sonic;

	 	 	 	 
	 	(d) 	
      approval of the Contemplated Transactions by the Board of
      Directors of Sonic;

	 	 	 	 
	 	(e) 	
      no action or proceeding will be pending or threatened by
      any person, company, firm, governmental authority, regulatory body or
      agency to enjoin or prohibit:

	 	 	 	 
	 		(i) 	
      the Merger; and

	 	 	 	 
	 		(ii) 	
      the right of the Company to conduct its operations and
      carry on the Business in the normal course as the Business and its
      operations have been carried on in the past;

	 	 	 	 
	 	(f) 	
      the TK Companies will have the benefit of all licences
      and permits, contracts, agreements and leases, including the Operating
      Authorities, necessary to permit it

- 26 - 

to carry on the Business as carried on
by TK Companies, and all Consents required in connection with the Contemplated
Transactions will have been obtained on or before the Closing Date; 

	 	(g) 	
      approval or conditional approval of the Contemplated
      Transactions by the Exchange;

	 	 	 
	 	(h) 	
      delivery of the opinion set forth in paragraph
      11.2(d);

	 	 	 
	 	(i) 	
      Since June 30, 2005, the absence of any material
      transaction out of the Ordinary Course of Business (other then a
      transaction undertaken by the Company which is consented to in writing by
      Sonic ) or any material adverse change in the financial condition, assets,
      liabilities (contingent or otherwise) or results of operations of the TK
      Companies or the Business; and

	 	 	 
	 	(j) 	
      completion by Sonic of an equity financing transaction
      through the sale of its securities no later than 120 days following the
      date of this Agreement in an amount of no less than U.S.$5,000,000 and at
      a price of no less than Cdn.$2.00 per Sonic Share (or equivalent) in which
      at least a portion of the proceeds are allocated to pay amounts owing by
      Sonic under this Agreement.

9.2    
Termination - Conditions Precedent.

          If
any of the conditions in this Part 9 are not fulfilled or waived by the Closing
Date, Sonic may terminate this Agreement by notice in writing to the Seller. In
such event, Sonic and Merger Sub will be released from all obligations under
this Agreement.

9.3     Waiver.

          The
conditions in this Part 9 may be waived in whole or in part without prejudice to
any right of rescission in the event of the non-fulfilment of any other
condition or conditions.

PART 10 
SELLERS’ CONDITIONS
PRECEDENT

10.1    Conditions
Precedent.

          The
obligations of the Seller and Company under this Agreement are subject to the
following conditions, which are for the exclusive benefit of the Seller and
Company, being fulfilled in all material respects in the reasonable opinion of
the Seller at the Time of Closing or being waived by the Seller at or before the
Closing: 

	 	(a) 	
      the representations and warranties of Sonic and Merger
      Sub contained in this Agreement will be true and correct as of the
      Execution Date and on and as of the Closing Date;

	 	 	 
	 	(b) 	
      Sonic will have performed all covenants and agreements in
      this Agreement agreed to be performed or caused to be performed by it on
      or before the Closing Date;

- 27 - 

	 	(c) 	
      Sonic shall not have issued any equity securities with
      rights superior to those of its common shares; and

	 	 	 
	 	(d) 	
      The absence of any material adverse change in the
      financial condition, assets, liabilities (contingent or otherwise) or
      results of operations of Sonic.

10.2 Termination - Conditions Precedent.

          If
any of the conditions in this Part 10 are not fulfilled or waived, the Seller on
the Closing Date may terminate this Agreement by notice in writing to Sonic. In
such event, the Seller and Company will be released from all obligations under
this Agreement.

10.3 Termination - Other. 

          The
parties hereto agree that Seller is responsible for the conduct of the Business
between the date of this Agreement and Closing, subject to the restrictions in
favour of Sonic set forth in Part 6 of this Agreement, which include an
obligation on the part of Seller to obtain Sonic’s consent prior to completing a
transaction that is Outside the Ordinary Course of Business. If, prior to
Closing, Seller seeks Sonic’s consent to any such transaction that Seller
reasonably believes will further the Business and, after good faith discussions,
Sonic unreasonably refuses to provide its consent to such transaction, Seller
may terminate this Agreement. In such event, Seller and Company shall be
released from all obligations under this Agreement. 

10.4 Waiver.

          The
conditions in this Part 9 may be waived in whole or in part without prejudice to
any right of rescission in the event of the non-fulfilment of any other
condition or conditions. A waiver will be binding only if it is in writing. 

PART 11 
CLOSING ARRANGEMENTS 

11.1 Place.

          The
Closing will take place on the earlier of January 23, 2006 and 15 days following
completion or waiver of all conditions precedent, at the offices of Goodmans,
Vancouver, British Columbia, or such other date and such other place as may be
mutually agreed by the parties, 

11.2 Seller Deliveries.

          At
the Closing, upon fulfilment of all conditions precedent set out in Part 9 and
10 which have not been waived in the manner provided by Section 9.3 and 10.4 as
applicable, the Seller and Company will deliver to Sonic and Merger Sub:

	 	(a) 	
      possession of all books, records, book accounts, lists of
      suppliers and customers of the TK Companies and all other documents,
      files, records and other data, financial or otherwise, relating to the
      Business;

	 	 	 
	 	(b) 	
      certificates respecting all the Shares duly endorsed for
      transfer;

- 28 - 

	 	(c) 	
      executed copies of the Escrow Agreement, Employment
      Agreement and Releases;

	 	 	 
	 	(d) 	
      an opinion of Peter D. Taylor, Attorney of Law, A
      Professional Corporation, dated the Closing Date, opining as to such
      matters regarding the TK Companies and Seller as Sonic requests, acting
      reasonably and consistent with practice in California for merger
      transactions of a similar size;

	 	 	 
	 	(e) 	
      certified resolutions of the Company approving the
      Contemplated Transactions;

	 	 	 
	 	(f) 	
      resignations of each of the directors and officers of the
      TK Companies; and

	 	 	 
	 	(g) 	
      such other certificates, instruments and other documents
      as Sonic and its counsel may reasonably request in connection with the
      Closing.

11.3 Sonic Deliveries.

          At
the Closing, Sonic and Merger Sub will deliver the following: 

	 	(a) 	
      a loan to Terra-Kleen equal to the Loan Repayment
      amount;

	 	 	 
	 	(b) 	
      a certificate representing the Sonic Shares to be issued
      pursuant to paragraph 3.2(a) accompanied by a calculation showing in
      reasonable detail how the payment was determined and certified by an
      officer of Sonic;

	 	 	 
	 	(c) 	
      executed copies of the Escrow Agreement and Employment
      Agreement; and

	 	 	 
	 	(d) 	
      a certified resolution of Sonic approving the
      Contemplated Transactions;

PART 12 
NON-COMPETITION 

12.1 

          In
this Part: 

	 	(a) 	
      “Competitive Business” means any business which is
      involved in the Business or involved in another part of the business of
      Sonic in which Seller is actively engaged on behalf of Sonic;

	 	 	 
	 	(b) 	
      “Customer” means any person who has been a customer of
      Sonic or its Affiliates at any time within a period of one year prior to
      the date of termination or expiration of the Employment
  Agreement;

	 	 	 
	 	(c) 	
      “Restricted Area” means North America, Australia and
      Japan and such other jurisdictions in which Seller has actively conducted
      business on behalf of Sonic and its Affiliates or been actively engaged in
      establishing contacts in furtherance of the business of Sonic and its
      Affiliates; and

	 	 	 
	 	(d) 	
      “Restricted Period” means four years from the Closing
      Date.

- 29 - 

12.2 Non-Competition.

          Seller
will not, during the Restricted Period and within the Restricted Area, 

	 	(a) 	
      directly or indirectly carry on, engage in or participate
      in, any Competitive Business either alone or in partnership or jointly or
      in conjunction with any other person;

	 	 	 
	 	(b) 	
      directly or indirectly assist (as principal, beneficiary,
      director, shareholder, partner, nominee, executor, trustee, agent,
      servant, employee, independent contractor, supplier, consultant, lender,
      guarantor, financier or in any other capacity whatever) any person to
      carry on, engage in or participate in, a Competitive Business;
  and

	 	 	 
	 	(c) 	
      have any direct or indirect interest or concern (as
      principal, beneficiary, director, shareholder, partner, nominee, executor,
      trustee, agent, servant, employee, consultant, independent contractor,
      supplier, creditor or in any other capacity whatever) in or with any
      person, if any part of the activities of such person consists of carrying
      on, engaging in or participating in a Competitive Business except holding
      securities of a public company constituting less than 10% of its
      outstanding share capital;

12.3 Non-Solicitation.

          During
the Restricted Period and within the Restricted Area, the Executive will not:

	 	(a) 	
      directly or indirectly solicit any Customer;

	 	 	 
	 	(b) 	
      directly or indirectly assist (whether as principal,
      beneficiary, servant, director, shareholder, partner, nominee, executor,
      trustee, agent, employee, independent contractor, supplier, consultant,
      lender, financier or in any other capacity whatever) any person directly
      or indirectly to solicit any Customer; or

	 	 	 
	 	(c) 	
      have any direct or indirect interest or concern (be it as
      principal, beneficiary, director, shareholder, partner, nominee, executor,
      trustee, agent, servant, employee, consultant, independent contractor,
      supplier, creditor or in any other capacity whatever) in or with any
      person if any of the activities of which person consists of soliciting any
      Customer except holding securities of a public company constituting less
      than 10% of its outstanding share capital;

if such solicitation would, directly or indirectly, be intended
to result in a sale of any product or service to such Customer and is directly
or indirectly competitive or potentially competitive with any product or service
then produced by the Business. 

12.4 Employees, etc.

          Seller
will not during the Restricted Period, directly or indirectly, solicit any
individual who to his knowledge is employed by Sonic, or any of its Affiliates,
to leave the employ of Sonic or any of its Affiliates without the prior written
consent of Sonic. 

- 30 - 

12.5 Covenants Reasonable.

          The
Seller agrees that: 

	 	(a) 	
      the covenants in this Part are reasonable in the
      circumstances and are necessary to protect Sonic in that a principle
      reason for the Merger is to entitle Sonic to acquire the goodwill of the
      Company from the Seller; and

	 	 	 
	 	(b) 	
      the breach by him of any of the provisions of this
      Agreement would cause serious and irreparable harm to Sonic and its
      shareholders which could not adequately be compensated for in damages in
      the event of a breach by him of such provisions or an order of injunction
      being issued against him restraining him from any further breach of such
      provisions and agrees that such injunction may be issued against him
      without the necessity of an undertaking as to damages by Sonic or its
      shareholders; the provisions of this section shall not be construed so as
      to be in derogation of any other remedy which Sonic or any of its
      shareholders may have in the event of such a
breach.

12.6 Covenants Independent.

          The
existence of any claim or cause of action of the Seller against Sonic will not
constitute a defence to the enforcement by Sonic of the provisions of this
Agreement. 

12.7 Invalidity.

          In
the event that any term or provision of this Part shall, to any extent, be
invalid or unenforceable, the remaining terms and provisions of this Agreement
shall not be affected thereby and shall be valid and enforceable to the fullest
extent permitted by law. 

PART 13 
GENERAL 

13.1 Survival of Representations.

          The
representations and warranties of the parties contained in this Agreement will
survive the closing of the transactions contemplated by this Agreement and
remain in full force and effect for thirty-six months thereafter notwithstanding
any waiver hereunder unless such waiver was made after notice in writing setting
forth the Breach provided that the representations and warranties set forth in
paragraph 4.1(o) and 4.1(u) will survive and remain in full force and effect
until their expiry under the Statute of Limitations of California. With the
exception of a Breach of the representations in paragraph 4.1(o), a failure by a
party to exercise, or a delay by it in exercising, a right in respect of a
Breach of representation or warranty for a period of six months or more
following the date the party becomes aware of the Breach will be deemed to
constitute a waiver of all rights arising under this Agreement in respect of
such Breach, and, for greater certainty, such party will not be entitled to make
a claim in respect of the indemnity provisions of this Agreement with respect to
such Breach. For the purposes of this Section, the term “aware” means actual
knowledge or knowledge that the party should reasonably have known in respect of
the facts forming the basis of the Breach of the representation and warranty.

- 31 - 

13.2 Indemnification by the Seller.

          The
Seller covenants and agrees to indemnify and save harmless Sonic from any loss,
damage, liability, cost and expense (including without limitation any tax
liability) suffered by Sonic directly or indirectly as a result of or arising
out of any Breach of the Seller contained in this Agreement; provided,
however, that Seller shall have no obligation to indemnify Sonic from and
against any such loss, damage, liability, cost or expense until the same has
aggregated in excess of Fifty Thousand Dollars ($50,000); and provided,
further, that the maximum aggregate liability of the Seller to indemnify
Sonic hereunder shall be limited to the value of all Purchase Price actually
received or receivable by Seller pursuant to Section 3.2(d) . 

13.3 Right of Set-Off.

          Sonic
shall have the right to satisfy any amount from time to time owing by the Seller
to Sonic pursuant to Section 13.2 of this Agreement by way of set off against
any amount from time to time owing by Sonic to the Seller pursuant to Section
3.2(d) . 

13.4 Sonic Indemnity.

          Sonic
covenants and agrees to indemnify and save harmless Seller from any loss,
damage, liability, cost and expense (including without limitation any tax
liability) suffered by Seller directly or indirectly as a result of or arising
out of any Breach of Sonic contained in this Agreement; provided,
however, that Sonic shall have no obligation to indemnify Seller from and
against any such loss, damage, liability, cost or expense until the same has
aggregated in excess of Fifty Thousand Dollars (US$50,000); and provided,
further, that the maximum aggregate liability of Sonic to indemnify
Seller hereunder shall be limited to US$500,000. 

13.5 Fees.

          Sonic
shall pay directly any external audit and legal expenses incurred by Company and
Seller prior to the Closing and arising as a result of the Contemplated
Transactions to a maximum of US$50,000. Otherwise, each of the parties will bear
the fees and disbursements of the lawyers, accountants and consultants engaged
by them in connection with this Agreement. This obligation of Sonic shall
survive any termination of the Agreement. 

13.6 Notices.

          In
this Agreement: 

	 	(a) 	
      any notice or communication required or permitted to be
      given under this Agreement will be in writing and will be considered to
      have been given if delivered by hand or transmitted by facsimile
      transmission to the address or facsimile transmission number of each party
      set out below:

	 	 	 	 
	 		(i) 	
      if to Seller:

	 	 	 	 
	 			
      Terra-Kleen Response Group, Inc. 
3970 Sorrento Valley
      Blvd., Suite B 
San Diego, CA 92121

- 32 - 

	 	 	  	Attention:      
      Alan Cash 
	 	 	  	Facsimile:        (858)
      558-8759 
	 	 	  	 
	 	 	(ii) 	if to Sonic: 
	 	 	  	  
	 	 	  	Sonic Environmental Solutions Inc. 
	 	 	  	2100-1066 West Hastings Street 
	 	 	 	Vancouver, BC V6E 3X2 
	 	 	  	  
	 	 	  	Attention:      
      James Hill 
	 	 	  	Facsimile:        (604)
      736-2558 
	 	 	  	 
	 	 	  	with a copy to: 
	 	 	  	 
	 	 	  	Goodmans 
	 	 	  	1900- 355 Burrard Street 
	 	 	  	Vancouver, BC V6c 2G8 
	 	 	  	 
	 	 	  	Attention:      
      David Redford 
	 	 	  	Fax No.: 

or to such other address or facsimile
transmission number as any party may designate in the manner set out above; 

	 	(b) 	
      notice or communication will be considered to have been
      received:

	 	 	 	 
	 		(i) 	
      if delivered by hand during business hours on a Business
      Day, upon receipt by a responsible representative of the receiver, and if
      not delivered during business hours, upon the commencement of business on
      the next Business Day; and

	 	 	 	 
	 		(ii) 	
      if sent by facsimile transmission during business hours
      on a Business Day, upon the sender receiving confirmation of the
      transmission, and if not transmitted during business hours, upon the
      commencement of business on the next Business Day.

13.7 Public Announcements.

          An
initial press release concerning the Merger and the transactions contemplated
hereby shall be issued by Sonic on or after the date of this Agreement. Sonic
and Seller shall consult with each other before issuing, and give each other the
opportunity to review and comment upon, any other press release or public
statements with respect to the transactions contemplated by this Agreement,
including the Merger, and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
Applicable Law, court process or by obligations pursuant to any listing
agreement of Sonic with any securities exchange or securities quotation system.
In addition to the foregoing, neither Sonic nor Seller shall issue any press
release or otherwise make any public statement or disclosure concerning
non-public information relating to the other party’s business, financial
condition or results of operations 

- 33 - 

without the consent of the other party, which consent shall not
be unreasonably withheld, conditioned or delayed, or except as required by Legal
Requirements. 

13.8 Further Assurances.

          Each
of the parties will execute and deliver such further documents and instruments
and do such acts and things as may, before or after the Closing Date, be
reasonably required by another party to carry out the intent and meaning of this
Agreement and to assure to Sonic the Shares. 

13.9 Headings.

          The
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement. 

13.10 Governing Law.

          This
Agreement will be construed and enforced in accordance with, and the rights of
the parties will be governed by the laws of State of California, and the parties
agree to irrevocably attorn to exclusive jurisdiction of the courts of the State
of California. 

13.11 Benefit and Binding Nature of the Agreement.

          This
Agreement will enure to the benefit of and be binding upon the parties and their
respective successors and permitted assigns. 

13.12 Entire Agreement.

          This
Agreement (including the documents and the instruments referred to herein)
constitutes the entire agreement among the parties and supersedes all prior
agreements and understandings, agreements or representations by or among the
parties, written and oral, with respect to the subject matter hereof and
thereof. 

13.13 Specific Performance. 

          The
transactions contemplated by this Agreement are unique. Accordingly, each of the
parties acknowledges and agrees that, in addition to all other remedies to which
it may be entitled, each of the parties hereto is entitled to a decree of
specific performance, provided such party is not in material default hereunder.
The party prevailing in any proceeding seeking such a decree shall be entitled
to payment of all reasonable legal fees and expenses by the non-prevailing
party. 

13.14 Severability. 

          The
invalidity or unenforceability in whole or in part of any covenant, promise or
undertaking, or any section, subsection, sentence, clause, phrase, word, or any
of the provisions of this Agreement, will not affect the validity or
enforceability of the remaining portions of this Agreement. If for any reason,
any provision is determined to be invalid or in conflict with any existing, or
future law or regulation by a court or agency having valid jurisdiction, such
will not 

- 34 - 

impair the operation or have any other effect upon such other
provisions of this Agreement as may remain otherwise valid, and the latter will
continue to be given full force and effect and bind the parties hereto. 

13.15 Amendment. 

          This
Agreement may be amended only by an agreement in writing executed by each of the
parties hereto. 

13.16 Counterparts.

          This
Agreement may be executed in any number of counterparts, with the same effect as
if all the parties had signed the same document, and will become effective when
one or more counterparts have been signed by all of the parties and delivered to
each of the other parties. All counterparts will be construed together and
evidence only one agreement, which, notwithstanding the dates of execution of
any counterparts, will be deemed to be dated the date first above written, and
only one of which need be produced for any purpose.

- 35 - 

13.17 Facsimile Execution.

          This
Agreement may be executed by the parties and transmitted by facsimile and if so
executed and transmitted, this Agreement will be for all purposes as effective
as if the parties had delivered an executed original agreement.

          TO
EVIDENCE THEIR AGREEMENT each of the parties has executed this Agreement as
of the date first written above. 

	  	}	“Alan Cash” 
	               
                         
         Witness 	 	Alan Cash 
	  	 	  
	 	 	 
	TERRA-KLEEN RESPONSE GROUP, INC. 	 	  
	 	 	 
	“Alan
      Cash” 	 	  
	Authorized Signatory 	 	  
	  	 	  
	 	 	 
	SONIC ENVIRONMENTAL SOLUTIONS INC. 	 	  
	 	 	 
	“Adam
      Sumel” 	 	  
	Authorized Signatory 	 	  
	  	 	  
	 	 	 
	SONIC ENVIRONMENTAL SOLUTIONS (USA) INC. 	 	  
	 	 	 
	“Adam
      Sumel” 	 	  
	Authorized Signatory 	 	  

SCHEDULE 4.1(a) 

CORPORATE INFORMATION 

Terra-Kleen Response Group, Inc 
An Oklahoma Corporation
authorized to do business as a foreign corporation in California, Oklahoma and
North Carolina 
Capitalization: 5,000,000 shares authorized, $0.01 par value,

2,500,000 shares issued to Alan B. Cash 

Terra-Kleen Limited 
A North Carolina Corporation

Capitalization: 50,000 shares authorized, no par value, 
20,000 shares
issued to Terra-Kleen Response Group, Inc. 

SCHEDULE 4.1(d) 

MARCH 31 FINANCIAL STATEMENTS 

See attached.

SCHEDULE 4.1(g) 

ASSETS 

As of March 31, 2005 Terra-Kleen has the following Assets: 

Cash                        (5,745.06)

AR                          
116,674.56 
Other Current Assets $1,733,131 (including $1,564,186
representing the Stockton Claim)

Equipment             
$245,0452 
Other Assets        
$26,097 

In more detail: 

Cash is negative as a result of checks written on March
31, 2005 in anticipation of receiving accounts receivable. Checks written were
held until A/R was received. 

	AR 	Includes three customers: 
	  	Collex Pty Ltd. for work on the Huntsman site
      $116,274.56 (now collected) 
	  	Mitsui Engineering for miscellaneous costs
      $400.00 

Other Current Assets Includes: 

Unbilled
Receivables:                
 $1,564,186 which is comprised of the Stockton Claim and any leftover from
work from the Carolina Contract. 

The Stockton Claim filed with the Government is $1,269,077.44.
This figure includes interest due from IT Corporation from the filing of the
claim in August, 2000. The Department of Defense Contract Review Board is
currently reviewing this claim for payment in full. In addition to the
$1,269,077.44, if awarded, Terra-Kleen is entitled to interest from the US
Government from August 2002. Interest from August 2002 to March 31, 2005 is
anticipated to be $190,361 if calculated as simple interest of 6.5% . We are
unsure of the interest rate that will be paid. 

		Employee Advances 	
      $1,766.72 is for various employees that have received
      advances 

	 	  	
       

		Supplies on Hand 	
      $182,556 is for supplies within North Carolina and San
      Diego. Much of this supply is for Solvent. Terra-Kleen currently owns
      approximately 23,000 gallons of Isopropyl Alcohol. Note that the current
      price for IPA is $4.96 per gallon (Bulk delivery price, Dow Chemical
      Price, August 2005). A large portion of this solvent (17,000 gallons) is
      being sold to Collex as part of the Huntsman Job. 

	 	 	
       

		Prepaid Insurance 	
      -$15,378.40 is negative due to an insurance payment being
      due. 

- 39 - 

Fixed Assets of $245,052 Include the following: 

General Office Equipment in San Diego
		5 computers 
		3 printers 
		1 copy machine 
		1 fax machine 
		Desks, chairs, filing cabinets,
      tables 

Laboratory Equipment in San Diego
		1 Distillation Rotary Evaporator 
		1 5 Gallon Electrical Evaporator Solvent
      Recovery Unit 
		1 Set of Bench-Scale Test Equipment 
		2 Gas Chromatography Units 
		1 Hot oil bath heater 
		1 Centrifuge 
		1 Set miscellaneous lab ware 
		1 Carbon Drum 
		1 Set Laboratory Chemicals 
		1 Set miscellaneous fittings and connectors
  

Vehicles
		1 1996 Chevy Suburban 
		1 1986 Peterbuilt Roll-Off Truck 
		1 1989 Rolls Royce 

Remediation Equipment
		1 Containerized Distillation Unit 
		1 Containerized Air Cooler 
		1 Containerized Boiler 
		1 Containerized Boiler Return Unit 
		8 New-Style Extraction Containers 
		23 Old-Style Extraction
      Containers 
		2 Rotary Screw Air Compressors 
		2 50-Ton Commercial Chillers 
		2 Glycol pump skids 
		2 Positive Displacement Blower Assembly 
		2 Coalessors 
		2 Knock Out Tanks 
		1 23,000 Gallon Mobile Frac Tank 
		3 8,000 Gallon HDPE Storage Tanks 
		1 3,000 Gallon Water Treatment Tank 
		16 1-Ton GAC Containers 
		2 ALLU soil shreaders 
		1 Hot Oil Heating Unit 
		1 Set Manifolds, pumps & spare parts
  

SCHEDULE 4.1(l) 

OPERATING AUTHORITIES 

Terra-Kleen currently has the following Licenses: 

General Engineering Contractor License
for California, License Number 767416 

Unlimited General Contracting License,
Classification H (Grading & Excavation); S (Asbestos) for North Carolina,
License No. 48340 

County of San Diego, Department of
Environmental Health, Unified Program Facility Permit, Number HK07-130486 6HK66

County of San Diego, Department of
Environmental Health, Health Permit, Haz Mat Estab, H30486 

City of San Diego, Certificate of
Payment of Business Tax, Number B1996005514 

Additionally, Terra-Kleen operates a treatment system under a
specially passed regulation within the Federal Code of Regulations: 40 CFR
761.61 (A) 

SCHEDULE 4.1(m) 

ENVIRONMENT 

Nil

SCHEDULE 4.1(n) 

APPLICABLE CONTRACTS 

Terra-Kleen has two ongoing working contracts as a result of
licensing its Intellectual Property. These contracts are under the following
license agreements as follows: 

License and Technical Assistance
Agreement Between Terra-Kleen Response Group, Inc. and Mitsubishi Heavy
Industries, Ltd. dated January 1, 2001 and as amended by Amendment 1 dated 16
September 2003. 

Master License and Technical Assistance
Agreement Between Terra-Kleen Response Group, Inc. and Collex Pty Ltd dated 6
August 2004 and as amended by Amendment 1 dated June 10, 2005

In addition Terra-Kleen is currently
working with Mitsui Engineering and Shipbuilding Ltd. (MES) without a contract.
A contract is currently in negotiation. 

Terra-Kleen maintains Agency contacts with the following
parties: 

Hattori Engineering, a verbal contract.
Terms are Terra-Kleen pays 10% of initial license fees as the fees are received
and 7% of ongoing royalty fees as received to Hattori Engineering to introduce
to us customers, maintain the relationship with customers, and assist us with
language and cultural differences. 

TYT International, Inc., Exclusive
Representation Agreement for Taiwan Alkali Industrial Corp.’s Dioxin &
Mercury contaminated soil project in Anshun, Tainan, Taiwan, dated 9 August
2005. Terra-Kleen has agreed to pay 15% of profit received from work on this
particular site, paid as received as a commission. 

Further, Terra-Kleen has contracts with professionals (such as
engagement letters) with various vendors for providing legal advice and
accounting advice.

Lease of Corporate Headquarters of Terra-Kleen Response Group,
Inc with Manufacturers Life Insurance Company (USA), a Michigan Corporation,
pursuant to a Renewal Agreement dated February 17, 2005 for a 1 year term. 

Bank Loans between: 

	  	  	Original Amount 	Estimated Owed 
	 	 	 	 
	Terra-Kleen Response Group, Inc. 	California Bank
      & Trust 	  	  
	 	 	 	 
	  	Loan
      #9892001717-1 	$769,000.00 	$525,640 
	 	 	 	 
	  	Dated June
      19,2003 	  	  

- 43 - 

	Terra-Kleen Response Group,
      Inc. 	GE Capital Small
      Bus. Finance Corp. 	  	  
	 	 	 	 
	  	SBA Loan #PLP
      438-309-4005 	$410,000.00 	78,858 
	 	 	 	 
	  	Dated March
      22,2001 	  	  
	 	 	 	 
	Terra-Kleen Response Group,
      Inc. 	GE Capital
      Colonial Pacific 	  	  
	 	 	 	 
	  	Equip. Lease
      #90133401472 	$19,326.96 	3,900 
	 	 	 	 
	  	Dated September 29, 2003  	 	 
	  		  	  
	Terra-Kleen Response Group,
      Inc. 	North Island
      Financial Credit Union 	  	  
	 	 	 	 
	  	Auto Loan
      #114992972 	$21,784.99 	11,944 
	 	 	 	 
	  	Dated October 3,
      2003 	  	  

SCHEDULE 4.1(o) 

EMPLOYEES 

	Alan B. Cash 	  
	President 	  
	Compensation: 	$156,000.00 
	Hired: 12/20/1995 	  
	Benefits: 	Health Insurance 
	  	401k Employer Savings Payment 
	  	Company Auto 
	  	  
	  	  
	Kathy Cash 	  
	Insurance Manager 	  
	Compensation: 	$7,020.00 
	Hired: 3/1/1996 	  
	Benefits: 	Health Insurance 
	  	401k Employer Savings Payment 
	  	  
	  	  
	Michael Voytilla 	  
	Contracts Manager 	  
	Compensation: 	$103,500.00 
	Hired: 8/1/2002 	  
	Benefits: 	Health Insurance 
	  	401k Employer Savings Payment 
	  	  
	  	  
	Lynda Reynolds 	  
	Office Manager 	  
	Compensation: 	$39,561.00 
	Hired: 3/11/1996 	  
	Benefits: 	Health Insurance 
	  	401k Employer Savings Payment 
	  	  
	  	  
	Robert Fortier 	  
	Site Employee 	  
	Compensation: 	$27,040.00 
	Hired: 8/7/2005 	  
	Benefits: 	Health Insurance 

SCHEDULE 4.1(p) 

LIST OF INSURANCE POLICIES 

	Insurance Coverages Between: 	  	  
	  	  	  
	Terra-Kleen Response Group, Inc. 	& 	Hudson Specialty Ins. Co.

	 	 	 
	  	  	Policy #FEC5103738 
	 	 	 
	  	For 	General Liability Coverage
  
	 	 	 
	  	  	Contractors Pollution Liability
      Coverage 
	 	 	 
	  	  	Professional Liability Coverage
    
	  	  	  
	Terra-Kleen Response Group, Inc. 	& 	State Fund 
	 	 	 
	  	  	Policy #1820042-05 
	 	 	 
	  	  	Worker's Compensation Insurance
    
	  	  	  
	Terra-Kleen Response Group, Inc. 	& 	Travelers Property Casualty
  
	 	 	 
	  	  	Policy #QT660141D1432 
	 	 	 
	  	  	Equipment Owned/Leased
  

SCHEDULE 4.1(s) 

INTELLECTUAL PROPERTY 

	T-K # 	Application 	Patent # 	Patent Date 	For 
	  	  	  	  	  
	1 		5,434,332 	7/18/1995 	
      Process for Removing Hazardous, Toxic, & Radioactive
      wastes from Soils, Sediments, & Debris 

	  	  	  	  	
       

	2 		6,027,651 	2/22/2000 	
      Process for Regenerating Spent Solvent 

	  	  	  	  	
       

	3 		5,804,434 	9/8/1998 	
      Process for Removing Solvent from Soil & Debris
    

	  	  	  	  	
       

	4 	3078435.9 	10/288,049 	11/26/2004 	
      Method for Treating Dioxin Contaminated Incineration Ash
      

	  	  	  	  	
       

	5 		6881010 B2 	4/19/2005 	
      Systems for on Site Treatment & Disposal of
      Contaminated Soils & Sediments 

	  	  	  	  	
       

	  	  	  	  	
       

		Trademark
 75/217244 		4/7/1998 	
      Supplying Solutions for Contaminated Soil
  

Copyright over reports, proposals, specifications and similar
documents prepared by or on behalf of the TK Companies, Seller and employees of
the TK Companies relating to the Business. 

SCHEDULE 8.1 

EMPLOYMENT AGREEMENT 

For Discussion Purposes Only 

  DRAFT: 1 - December 13, 2005 at 9:43 AM

AMENDING AGREEMENT 

THIS AMENDING AGREEMENT is made as of the 21st
  day of December, 2005 

AMONG: 

  
    
      ALAN CASH, an individual resident at 5033 Seachase
        Street, San Diego, California, 92130 

    

  

AND: 

  
    
      TERRA-KLEEN RESPONSE GROUP, INC., a corporation
        incorporated under the laws of Oklahoma 

    

  

AND: 

  
    
      SONIC ENVIRONMENTAL SOLUTIONS INC., a corporation
        incorporated under the laws of British Columbia 

    

  

AND: 

  
    
      SONIC ENVIRONMENTAL SOLUTIONS (USA) INC., a corporation
        incorporated under the laws of California
      

    

  

WHEREAS: 

	A. 	 The parties are party to an Agreement and Plan of Merger
        made as of September 26, 2005, (the “Merger Agreement”);

	 	 
	B. 	 The parties wish to have the adjustment provision in
        the Merger Agreement reflect more recent financial statements; and

	 	 
	C. 	 The parties wish to amend the Merger Agreement by executing
        this Amending Agreement.

NOW THEREFORE for good and valuable consideration the
  receipt and sufficiency of which is herby acknowledged, the parties agree as
  follows: 

1.           
  The Merger Agreement is hereby amended as follows: 

	 	a) 	 reference to “Schedule 3.3 June 30 Financial Statements”
        is hereby added to section 1.2;

	 	 	 
	 	b) 	 the defined term “March 31 Financial Statements”
        in section 3.3 is hereby deleted and replaced with the words: “audited
        financial statements dated June 30, 2005 and attached hereto as Schedule
        3.3”; and

	 	 	 
	 	c) 	 Schedule 3.3 “June 30 Financial Statements”,
        which is attached hereto, is hereby added as a schedule to the Merger
        Agreement.

For Discussion Purposes Only 

  DRAFT: 1 - December 13, 2005 at 9:43 AM

- 2 -

3.           
  The parties hereby confirm that all other terms and conditions of the Merger
  Agreement remain unamended and unaffected by this Amending Agreement and remain
  in full force and effect. 

4.           
  This Amending Agreement may be executed in any number of counterparts, and it
  shall not be necessary that the signatures of all parties be contained on any
  counterpart. Each counterpart shall be deemed an original, but all counterparts
  together shall constitute one and the same instrument. Execution and delivery
  of this Amending Agreement may be made and evidenced by facsimile transmission.

IN WITNESS WHEREOF the parties have executed and delivered
  this Amending Agreement as of the date first above written. 

 

	  	}	“Alan Cash” 
	           
                           
             Witness 	 	ALAN CASH 
	  	 	  
	TERRA-KLEEN RESPONSE GROUP, INC. 	 	 
	 	 	 
	“Alan
      Cash” 	 	  
	Authorized Signatory 	 	  
	 	 	 
	SONIC ENVIRONMENTAL SOLUTIONS INC. 	 	 
	 	 	 
	“Ed
      Farrauto” 	 	  
	Authorized Signatory 	 	  
	 	 	 
	SONIC ENVIRONMENTAL SOLUTIONS (USA) INC. 	 	 
	 	 	 
	“Ed
      Farrauto” 	 	  
	Authorized SignatoryFiled by Automated Filing Services Inc. (604) 609-0244 - K-Tronik International Corp. - Exhibit 10.1

K-Tronik International Corp.
144 Front Street West
Suite
700
Toronto, Ontario
M5J 2L7

June 19, 2006

Mr. Michael B. Connell
Principal
MBC Racing
12 St.
Clair Ave E
PO Box 69062
Toronto, Ontario
M4T 3A1

Re: Letter of Intent to Acquire QUEEN CITY RACEWAY RIGHTS

Dear Mr. Connell,

This letter of intent will confirm our mutual understanding
regarding K-Tronik International Corp. (referred to herein as "K-Tronik")
acquisition of the exclusive rights agreement between MBC Racing and the
Saskatchewan Standardbred Horsemanís Association (referred to herein as "SSHA")
for the exclusive support of the racino development opportunity known as Queen
City Raceway (referred to herein the "Rights").

The primary features of the proposed Rights purchase are as
follows:

	1. 	
      Background:

               
MBC Racing is a special purpose company organized for the sole purpose of
pursuing a new racetrack and gaming development in Regina, Saskatchewan. MBC has
entered into an agreement with the SHHA for their exclusive support of this
initiative. (Schedule: A)

               
  K-Tronik is a publicly traded NASDAQ Bulletin Board corporation that is incorporated
  under the laws of the state of Nevada.

	2. 	
      Significant Dates:

               
  The Closing shall be on or before June 19, 2006 ("Closing") or such other date
  as may be agreed by the all parties in writing.

	3. 	
      Purchase Agreement Terms &
  Provisions:

               
  The Purchase of the Rights is subject to the following terms and provisions:

               
  K-Tronik intends to buy and MBC Racing intends to sell the Rights for CDN$25,000
  Cash, 5,000,000 common shares of K-Tronik, and 500,000 common share purchase
  warrants of K-Tronik exercisable at $0.10 per share expiring three years from
  Closing. The warrants are restricted in that a maximum of 50,000 of the same
  $0.10 common share purchase warrants are exercisable in each calendar quarter
  commencing with completion of formal agreement.

               
  K-Tronik will also enter into a consulting agreement with MBC Racing for various
  management services at a monthly retainer of CDN$5,000 for a minimum term of
  six months from closing.

               
  MBC Racing and K-Tronik represent that they have full and complete authority
  to enter and complete this transaction.

	4. 	
      Legal, Advisor and Finder's Fees:

               
  Each Party agrees to pay for any and all of its own legal, advisory and finder's
  fees.

	5. 	
      Public Announcement:

               
  It is understood that K-Tronik may be obligated by law or regulatory policy
  to make a public announcement of the transaction and, to the extent possible,
  notification to the other party will precede any public announcement.

	6. 	
      Regulatory Bodies:

               
  This agreement will be subject to approval from all pertinent regulatory bodies.

	7. 	
      Term:

               
  This letter and the rights and obligations contained herein shall continue in
  effect through Closing as defined above, at which time they shall expire unless
  the parties mutually agree in writing to extend the term hereof.

Yours truly,

On behalf of K-Tronik International Corp.

/s/ Gerry Racicot

  G.A. Racicot

  Director

   

We acknowledge and agree with the terms of the engagement as
described herein.

On behalf of MBC Racing

/s/ Michael Connell
Mr. Michael B.
Connell
Principal

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