Document:

<PAGE>

                                                                    EXHIBIT 10.4

                             TIME SHARING AGREEMENT

This Time Sharing Agreement ("Agreement") is effective as of January 30, 2006,
("Effective Date") by and between Oakley, Inc., a Washington corporation with
its principal offices located at One Icon, Foothill Ranch, California 92610
("Oakley") and X, LLC, a Washington limited liability company with a mailing
address at PO Box 1389, Eastsound, Washington 98245 ("X, LLC") (each a "Party"
and collectively the "Parties").

A. Oakley and X, LLC desire to enter into this Agreement to provide for the
lease by Oakley of an aircraft with flight crew, to X, LLC on an as-needed,
as-available basis and on a time-sharing basis pursuant to Federal Aviation
Regulation Part 91.501(b)(6) and (c)(1); and

B. Oakley and X, LLC desire that X, LLC will not be charged for such flights and
that no amount will be collected by Oakley, other than the amounts permitted in
Federal Aviation Regulation Part 91.501(d), as more fully set forth in this
Agreement;

NOW THEREFORE, in consideration of the mutual provisions contained herein, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:

                                    ARTICLE 1
                                   DEFINITIONS

      1.1 AIRCRAFT. The term "Aircraft" means that certain 2005 Bombardier
BD-700-1A10 aircraft, with a serial number of 9162, registered as N2T and
operated by Oakley under its Operational Control, and all engines and equipment,
avionics, accessories and furnishings, documentation and other items which are
from time to time incorporated or installed in or attached thereto.

      1.2 FAR. The term "FAR" means the Federal Aviation Regulations.

      1.3 FLIGHT CHARGE. The term "Flight Charge" means the aggregate of (Y) up
to 200 percent of the cost of fuel, oil, lubricants, and other additives used
for a Time Sharing Flight based on the actual Flight Hours for such flight; and
(Z) the following actual expenses, if applicable to a Time Sharing Flight: (i)
travel expenses of the crew, including food, lodging, and ground transportation;
(ii) hangar and tie-down costs away from the Aircraft's base of operation; (iii)
insurance obtained for the specific Time Sharing Flight; (iv) landing fees,
airport taxes, and similar assessments, including, but not limited to, Internal
Revenue Code Section 4261 and related excise taxes; (v) customs, foreign permit,
and similar fees directly related to the Time Sharing Flight; (vi) in flight
food and beverages; (vii) passenger ground transportation; and (viii) flight
planning and weather contract services for the specific Time Sharing Flight.

      1.4 FLIGHT CREW. The term "Flight Crew" means employees of or other
persons under the control of Oakley which shall consist of a properly rated and
qualified captain and a properly rated and qualified first officer.

      1.5 FLIGHT HOURS. The term "Flight Hours" means actual flight time as
depicted in the aircraft flight logs for actual time that the aircraft is aloft
(takeoff to landing) expressed in one-tenth of an hour increments.

                                     Page 1
<PAGE>

      1.6 HOME BASE. The term "Home Base" means John Wayne-Orange County
Airport, Santa Ana, California.

      1.7 LEASE AGREEMENT. The term "Lease Agreement" means that certain
Aircraft Lease between Oakley and N2T dated December 18, 2003, as amended, with
respect to the Aircraft.

      1.8 N2T. The term "N2T" means N2T, Inc. a Washington corporation and
lessor of the Aircraft to Oakley.

      1.9 OPERATIONAL CONTROL. The term "Operational Control" means being the
legal operator, holding sole authority over initiating, conducting, or
terminating a flight, and having command and control of the Flight Crew.

      1.10 TIME SHARING FLIGHT. The term "Time Sharing Flight" means a specific
flight conducted by Oakley and involving the carriage of officials, employees or
guests of X, LLC pursuant to this Agreement as permitted under FAR Part
91.501(b)(6) and (c)(1).

                                    ARTICLE 2
                                  TIME SHARING

      2.1 TIME SHARING ARRANGEMENT.

          2.1.1 Subject to X, LLC's performance of all of its obligations
hereunder, including payment of all applicable Flight Charges, Oakley hereby
grants to X, LLC a non-exclusive, non-assignable, non-transferable, indivisible,
terminable right to use the Aircraft, on an as-needed, as-available basis only,
for Time Sharing Flights scheduled with Oakley pursuant to this Agreement.

          2.1.2 For each Time Sharing Flight where the Aircraft was available
and scheduled pursuant to this Agreement, provided that at such time (i) no
event of default shall have occurred and be continuing under the Lease
Agreement; and (ii) no event of default under the Lease Agreement shall occur or
result from any such Time Sharing Flight, then Oakley shall provide the Aircraft
to X, LLC on a time-sharing basis under FAR Section 91.501(b)(6) and (c)(1) for
such Time Sharing Flight subject to Section 2.1.3 below. Accordingly, for each
such permitted Time Sharing Flight, Oakley shall lease to X, LLC and X, LLC
shall lease from Oakley, the Aircraft with Flight Crew pursuant to this
Agreement, at no charge; provided that X, LLC shall pay to Oakley the applicable
Flight Charge for such Time Sharing Flight.

          2.1.3 Upon the request of X, LLC, subject to the availability of the
Aircraft as determined by Oakley in accordance with ARTICLE 3, Oakley shall make
the Aircraft available to X, LLC at the Home Base or at such other location as
acceptable to Oakley, in its sole discretion. The repositioning, ferry or dead
head flights of the Aircraft required in connection with X, LLC's flights of the
Aircraft under this Agreement, including delivery and redelivery of the Aircraft
to the Home Base, or such other location as the Parties may agree, shall be
deemed to be use of the Aircraft by X, LLC (as a Time Sharing Flight) and at X,
LLC's expense subject to the Flight Charge.

                                     Page 2
<PAGE>

      2.2 RIGHTS RESERVED. Notwithstanding anything to the contrary herein, all
rights not specifically granted to X, LLC shall be reserved and remain always
with Oakley. This Agreement shall not be construed to confer any rights upon X,
LLC by implication, estoppel or otherwise as to the Aircraft.

      2.3 LEASE ONLY. At all times during the term of this Agreement, full legal
title to the Aircraft shall remain vested in Oakley to the exclusion of X, LLC.
This Agreement and any related documents shall in no way assign or transfer any
right or interest in the Aircraft or any other property of Oakley.

      2.4 LEGAL RELATIONSHIPS

          2.4.1 With respect to the Aircraft, Oakley shall be deemed to have
Operational Control of the aircraft at all times during the term of this
Agreement, including but not limited to during all Time Sharing Flights.

          2.4.2 Oakley does not intend to enter into, and this Agreement is not
intended to create or constitute, a joint ownership agreement, as such term is
defined in FAR Section 91.501(c)(3), or a joint venture, partnership, business
organization, association, cooperative arrangement or other relationship by and
among Oakley and X, LLC and through which any party may be held liable for the
omissions or commissions of any other party. This Agreement is intended to
create a time sharing agreement as such term is defined in FAR Section
91.501(c)(1).

      2.5 SUBORDINATE TO LEASE AGREEMENT.

          2.5.1 Oakley and X, LLC hereby acknowledge that this Agreement (1)
does not convey any lien or other interest in or against the Aircraft to X, LLC;
and (2) expressly (A) remains, subject and subordinate to the Lease Agreement
and the rights of N2T thereunder and in and to the Aircraft; and (B) does not
permit any further disposition of the Aircraft.

          2.5.2 Oakley and X, LLC hereby acknowledge that to the extent any
provision in this Agreement is inconsistent with the provisions of the Lease
Agreement or cause Oakley to breach any of its representations, warranties or
agreements under the Lease Agreement, then the provisions in the Lease Agreement
shall control.

                                    ARTICLE 3
                            SCHEDULING AND LOGISTICS

      3.1 SCHEDULING

          3.1.1 X, LLC shall advise Oakley of its request for flight time and
use of the Aircraft under this Agreement by giving Oakley advance notice by
telephone and/or facsimile. Time Sharing Flight requests must be made at least
two (2) hours prior to the scheduled take-off time of the first leg. Each Time
Sharing Flight request shall include the information that is reasonably required
by Oakley. If the Aircraft is not available, Oakley shall attempt to advise X,
LLC as soon as practicable. All requests for Time Sharing Flights, unless
accepted by Oakley, shall be deemed rejected.

                                     Page 3
<PAGE>

          3.1.2 In addition to the proposed schedules and flight times, X, LLC
shall provide at least the following information for each proposed Time Sharing
Flight prior to the scheduled departure, as may be required by Oakley or the
Flight Crew: (a) the number of anticipated passengers; (b) the nature and extent
of luggage and/or cargo to be carried; and (c) the date and time of return
flight, if any.

          3.1.3 Oakley shall have final authority over the scheduling of the
Aircraft, provided, however, that Oakley will try to accommodate X, LLC's needs
and avoid conflicts in scheduling. Oakley may cancel any scheduled Time Sharing
Flight, with no liability to X, LLC, should the Aircraft be no longer available
for the Time Sharing Flight or otherwise unable to conduct the scheduled Time
Sharing Flight. In the event of such cancellation, Oakley shall to advise X, LLC
as soon as practicable following the Aircraft becoming unavailable of unable to
conduct the scheduled Time Sharing Flight.

      3.2 MAINTENANCE

          3.2.1 Oakley shall be responsible for arranging and paying for all
maintenance, preventive maintenance and required or recommended inspections. X,
LLC shall have no rights or involvement with respect to any maintenance or other
operational matters concerning the Aircraft.

          3.2.2 Aircraft maintenance and inspections take precedence over
Aircraft scheduling unless such maintenance or inspections can be safely
deferred in accordance with applicable laws and regulations and within the sound
discretion of Oakley and/or the Flight Crew, as the case may be. The pilot in
command shall have final and complete authority to cancel or reschedule any Time
Sharing Flight for any reason or condition which in his or her judgment would
compromise the safety of the flight.

      3.3 FLIGHT CREW

          3.3.1 With respect to each Time Sharing Flight, Oakley shall have and
retain Operational Control of the Aircraft as provided in the applicable FAR;
and, for federal tax purposes, shall have and retain "possession, command and
control" of the Aircraft. Oakley shall employ, pay for and provide to X, LLC a
qualified Flight Crew for each flight undertaken under this Agreement.

          3.3.2 During all Time Sharing Flights, the Flight Crew alone shall be
empowered to take all steps necessary in the interest of the safety of any
aircraft under its Operational Control, including those that affect its
passengers, crew, cargo and the operation of the flight.

          3.3.3 In accordance with applicable FARs, the Flight Crew will
exercise all of its duties and responsibilities in regard to the safety of each
flight conducted hereunder. The Flight Crew shall have final authority regarding
whether or not to initiate or terminate each Time Sharing Flight, select the
routing, determine the load to be carried, and otherwise decide all matters
relating to the safety of such flight.

                                     Page 4
<PAGE>

                                    ARTICLE 4
                             FINANCIAL ARRANGEMENTS

      4.1 FLIGHT CHARGES. Oakley will pay all expenses related to the operation
of the Aircraft on Time Sharing Flights when incurred, and will provide an
invoice and bill X, LLC as provided below. Within fifteen (15) business days
following each calendar quarter in which any Time Sharing Flights occur, Oakley
shall submit X, LLC, in writing a statement detailing the Flight Charge for the
Time Sharing Flights in the preceding quarter, broken down by permissible
category as provided under FAR Section 91.501(d), with payment due within thirty
(30) calendar days of the statement date.

      4.2 PAYMENTS. X, LLC shall pay Oakley the Flight Charge for such Time
Sharing Flight within thirty (30) calendar days of the date of Oakley's
statement detailing the Flight Charges. Except as Oakley may otherwise direct in
writing, each payment of Flight Charges shall be made by X, LLC to Oakley by X,
LLC's company check or wire on or before the applicable due date.

      4.3 TAXES

          4.3.1 Excise Taxes. All Flight Charges are subject to a 7.5 percent
Federal excise taxes as imposed under Internal Revenue Code Section 4261.
Oakley's statement shall include a calculation of the excise taxes due and X,
LLC shall pay Oakley such taxes as required as part of its payment of the
applicable Flight Charges. Oakley shall pay the applicable Federal excise tax to
the Internal Revenue Service.

          4.3.2 State Taxes. Some states may apply state sales and use taxes to
Flight Charges received by Oakley. Should a Time Sharing Flight be subject to a
state sales and use tax, then Oakley's statement shall include a calculation of
such taxes due and X, LLC shall pay Oakley such state sales and use taxes along
with its payment of the applicable Flight Charges. Should Oakley's statement not
include applicable state sales and use taxes, Oakley may separately at a later
date provide X, LLC with a statement for such taxes and in each instance, X, LLC
shall within thirty (30) calendar days of receipt of Oakley's statement, pay
Oakley such state sales and use taxes.

                                    ARTICLE 5
                            WARRANTIES AND COVENANTS

      5.1 DISCLAIMER. OAKLEY PROVIDES THE AIRCRAFT "AS-IS, WHERE-IS," ON AN "AS
AVAILABLE BASIS" ONLY PURSUANT TO THIS AGREEMENT. OAKLEY HAS NOT MADE NOR SHALL
BE DEEMED TO HAVE MADE, AND HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION, VALUE,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR ANY PARTICULAR PURPOSE
OF THE AIRCRAFT OR ANY PART THEREOF, AND ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART
THEREOF.

      5.2 X, LLC COVENANTS

                                     Page 5
<PAGE>

          5.2.1 X, LLC will use the Aircraft only for and on account of, as
permitted under FAR Section 91.501(b)(6), the carriage of its officials,
employees or guests;

          5.2.2 X, LLC will not use the Aircraft for the purposes of
transporting passengers or cargo in air commerce for compensation or hire, for
any illegal purposes, or for any use prohibited by any insurance maintained on
the Aircraft, or which may impair existing insurance coverage in any way; and

          5.2.3 X, LLC will only use the Aircraft (i) in accordance with any
requirement of any insurance issued with respect to the Aircraft; and (ii) in
accordance with all requirements of any governmental authorities relating to the
conduct of its business, the Aircraft, and to its properties or assets,
including, but not limited to, applicable laws and regulations regarding
required security procedures, passenger screening, and any other security and
safety requirements applicable to X, LLC.

                                    ARTICLE 6
                            ALLOCATION OF LIABILITIES

      6.1 INURANCE.

                (a) Oakley maintains or has maintained on its behalf
comprehensive aircraft and general liability insurance against aircraft bodily
injury, property damage liability, including passenger liability, with limits of
not less than Two Hundred Million Dollars ($200,000,000.00) for each occurrence.

                (b) The policies of insurance carried in accordance with
subsection 6.1(a) above and any policies taken out in substitution or
replacement of any such policies (i) shall be endorsed to name X, LLC as
additional insured (but without responsibility for premiums, except as permitted
in Section 1.3 above); (ii) shall provide for thirty (30) days written notice by
such insurer of cancellation, material change, or non-renewal; (iii) shall
include a severability of interest clause providing that such policy shall
operate in the same manner as if there were a separate policy covering each
insured; (iv) shall waive any right of set-off against X, LLC, and any rights of
subrogation against X, LLC; and (v) shall be primary, not subject to any
co-insurance clause and shall be without right of contribution from any other
insurance. Oakley shall provide X, LLC with certificates of insurance
demonstrating compliance with the above provisions prior to the first Time
Sharing Flight under this Agreement.

                (c) Oakley will make its best efforts to provide such additional
insurance coverage as X, LLC shall request or require, provided, however, that
the cost of such additional insurance shall be borne by X, LLC as set forth in
Section 1.3 above.

      6.2 LIMITATION OF LIABILITY

          6.2.1 NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR ANY THIRD PARTY
FOR ANY DAMAGES IN CONNECTION WITH THE USE OR FAILURE TO USE THE AIRCRAFT OR FOR
DELAYS OR CANCELLATIONS OF TIME SHARING FLIGHTS, WHETHER ARISING IN CONTRACT,
TORT, STRICT LIABILITY OR OTHERWISE.

                                     Page 6
<PAGE>

          6.2.2 NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, EXCEPT AS
OTHERWISE COVERED BY THE POLICIES OF INSURANCE REQUIRED TO BE MAINTAINED UNDER
THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, WHETHER FORESEEABLE OR NOT, THAT
ARE IN ANY WAY RELATED TO THIS AGREEMENT OR THE BREACH THEREOF, THE USE OR
INABILITY TO USE THE AIRCRAFT, DELAYS OR CANCELLATIONS OF TIME SHARING FLIGHTS,
AND/OR FROM ANY OTHER CAUSE WHATSOEVER IN REGARD TO THE AIRCRAFT.

          6.2.3 THESE LIMITATIONS ARE NOT INTENDED TO AND SHALL NOT BE DEEMED TO
LIMIT OR OTHERWISE AFFECT THE COVERAGES PROVIDED UNDER AND THE RECOVERIES THAT
ARE OTHERWISE AVAILABLE UNDER ANY OF THE POLICIES MAINTAINED AS REQUIRED IN THIS
AGREEMENT.

                                    ARTICLE 7
                              TERM AND TERMINATION

      7.1 TERM. This Agreement entered into to as of the Effective Date and will
continue for a period of one (1) year, unless terminated earlier as provided
herein. The term of this Agreement may be renewed by the Parties in writing, in
each case, for successive additional one (1) year periods, unless terminated
earlier as provided herein.

      7.2 TERMINATION. This Agreement may be terminated: (a) By either Oakley or
X, LLC upon at least fifteen (15) days' prior written notice to the other Party
for any reason, with our without cause; or (b) By either Party upon written
notice if the other Party becomes insolvent or bankrupt, or is unable to meet
its obligations when they become due; or (c) Immediately and without notice (i)
if a receiver or other liquidating officer is appointed for substantially all of
the assets or business of a Party, or (ii) if a Party makes an assignment for
the benefit of creditors, or (iii) if the rights or interest of any Party under
this Agreement become an asset under any bankruptcy, insolvency or
reorganization proceeding, or (iv) upon the occurrence of an Event of Default
under the Lease Agreement, as defined therein.

      7.3 SURVIVAL. The provisions of Sections 2.2, 4.2, 4.3, 5.1 and 7.3 and
all Sections under ARTICLE 1, ARTICLE 6 and ARTICLE 8 shall survive the
termination or expiration of this Agreement.

      7.4 CESSATION OF USE. Upon termination or expiration of this Agreement:
(a) X, LLC shall thereafter immediately have no rights to use the Aircraft; and
(b) Both Parties shall remain liable for all of their respective obligations
hereunder that accrued prior to the date of termination.

      7.5 CUMULATIVE REMEDIES. All rights and remedies conferred herein shall be
cumulative and in addition to all of the rights and remedies available to each
Party at law, equity or otherwise.

                                     Page 7
<PAGE>

                                    ARTICLE 8
                               GENERAL PROVISIONS

      8.1 RELATIONSHIP OF PARTIES. The relationship between the Parties is only
that of independent contractors notwithstanding any joint activities set forth
in this Agreement. Neither Oakley on the one hand or X, LLC on the other hand is
the agent or legal representative of the other Party with respect to the subject
matter of this Agreement, and neither Party has the right or authority to bind
the other Party in any way with respect to the subject matter of this Agreement.
This Agreement creates no relationship as partners or a joint venture, and
creates no pooling arrangement.

      8.2 GOVERNING LAW AND VENUE. This Agreement shall be interpreted and
enforced under the laws of the State of California, without application of its
conflicts or choice of law rules.

      8.3 ASSIGNMENT. Neither party shall have the right to assign, delegate,
transfer or otherwise encumber this Agreement or any portion thereof without the
other's prior written consent, which consent may not be unreasonably withheld.

      8.4 WAIVER. The failure of a Party to enforce any of its rights hereunder
or at law shall not be deemed a waiver or a continuing waiver of any of its
rights or remedies against the other Party, unless such waiver is in writing and
signed by the Party to be charged.

      8.5 SEVERABILITY. If any provision of this Agreement, or part thereof, is
declared by a court of competent jurisdiction to be invalid, void or
unenforceable, each and every other provision, or part thereof, shall
nevertheless continue in full force and effect.

      8.6 ATTORNEYS' FEES. In the event a dispute arises regarding this
Agreement, the prevailing Party shall be entitled to its reasonable attorneys'
fees and expenses incurred in addition to any other relief to which it is
entitled.

      8.7 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties regarding the subject matter hereof, and supersedes all
prior or contemporaneous understandings or agreements, whether oral or written.
This Agreement shall be modified or amended only by a writing signed by each of
X, LLC and Oakley.

      8.8 FORCE MAJEURE. Neither Party shall be liable to the other for its
failure to perform any of its obligations hereunder during any period in which
such performance is delayed by circumstances beyond its reasonable control
including, but not limited to earthquake, fire, flood, viruses, bugs, war, acts
of terror, embargo, export controls, strike, riot, inability to secure materials
and transportation facilities, or the intervention of any governmental
authority.

      8.9 FURTHER ASSURANCES. Both Parties agree to execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement. Each Party shall provide the cooperation, assistance, information,
decisions and approvals required or reasonably required from time to time in
order to perform its obligations under this Agreement and will do so on a timely
basis.

                                     Page 8
<PAGE>

      8.10 NOTICES. All notices, requests or other communications under this
Agreement shall be in writing, and shall be sent to the Parties at their
addresses listed on page 1 above, and shall be deemed to have been duly given on
the date of service if sent by facsimile (provided a hard copy is sent in one of
the manners specified below), or on the day following service if sent by
overnight air courier service with next day delivery with written confirmation
of delivery, or five (5) days after mailing if sent by first class, registered
or certified mail, return receipt requested. Each Party is required to notify
the other Party in the above manner of any change of address.

      8.11 COUNTERPARTS. This Agreement may be executed in several counterparts
that together shall be originals and constitute one and the same instrument.

      8.12 TRUTH IN LEASING STATEMENT UNDER FAR 91.23 WITH RESPECT TO THE
OPERATION OF THE AIRCRAFT.

                (a) THE AIRCRAFT, WITHIN THE TWELVE (12) MONTH PERIOD PRECEDING
THE DATE OF THIS AGREEMENT, EXCEPT TO THE EXTENT THE AIRCRAFT IS LESS THAN
TWELVE (12) MONTHS OLD, HAS BEEN, AND SHALL BE DURING THE TERM OF THIS
AGREEMENT, INSPECTED AND MAINTAINED IN ACCORDANCE WITH FAR 91.409, AND ALL
APPLICABLE REQUIREMENTS FOR MAINTENANCE AND INSPECTION THEREUNDER HAVE BEEN
COMPLIED WITH;

                (b) OAKLEY CERTIFIES AND KNOWINGLY ACKNOWLEDGES THAT WHEN IT
OPERATES ANY AIRCRAFT UNDER THIS AGREEMENT, OAKLEY SHALL BE KNOWN AS, CONSIDERED
AND IN FACT WILL BE, THE OPERATOR OF SUCH AIRCRAFT;

                (c) AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND
PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA
FLIGHT STANDARDS DISTRICT OFFICE; AND

                (d) THE PARTIES HERETO CERTIFY THAT A TRUE COPY OF THIS
AGREEMENT SHALL BE CARRIED ON THE AIRCRAFT AT ALL TIMES DURING ANY TIME SHARING
FLIGHT, AND SHALL BE MADE AVAILABLE FOR INSPECTION UPON REQUEST BY ANY
REPRESENTATIVE OF THE FAA.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective
Date.

OAKLEY, INC.                             Y, LLC

By:   /s/ Cos Lykos                      By: /s/ Jim Jannard
   -----------------------------            -----------------------------

  Cos Lykos                               Jim Jannard
------------------------------           -------------------------------
Name                                     Name

  Vice President                            Manager
----------------------------             -----------------------------
Title                                    Title

                                     Page 9exv10w1

 

Exhibit
10.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

TELULAR CORPORATION

AS PURCHASER,

CSI WIRELESS INC. AND

CSI WIRELESS LLC

AS SELLERS

DATED AS OF APRIL 21, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Page	 
	ARTICLE I	 	PURCHASE AND SALE	 	 	1	 
	 	 	1.1	 	Purchase and Sale of Assets
	 	 	1	 
	 	 	1.2	 	Purchased Assets; Excluded Assets
	 	 	1	 
	 	 	1.3	 	Assumed Liabilities; Excluded Liabilities
	 	 	4	 
	 	 	1.4	 	Closing
	 	 	6	 
	 	 	1.5	 	Purchase Price
	 	 	6	 
	 	 	1.6	 	Post-Closing and Working Capital Adjustment
	 	 	6	 
	 	 	1.7	 	Earn-Out
	 	 	8	 
	 	 	1.8	 	Purchase Price Allocation
	 	 	10	 
	 	 	1.9	 	Procedures for Certain Purchased Assets Not Freely Transferable
	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE II	 	REPRESENTATIONS AND WARRANTIES OF SELLERS	 	 	11	 
	 	 	2.1	 	Organization, Authority and Binding Agreement
	 	 	11	 
	 	 	2.2	 	Purchased Assets
	 	 	11	 
	 	 	2.3	 	Conflicts; Consents
	 	 	12	 
	 	 	2.4	 	Financial Information
	 	 	12	 
	 	 	2.5	 	Absence of Change
	 	 	13	 
	 	 	2.6	 	Tax Matters
	 	 	13	 
	 	 	2.7	 	Property Related Matters
	 	 	14	 
	 	 	2.8	 	Intellectual Property
	 	 	14	 
	 	 	2.9	 	Contracts
	 	 	15	 
	 	 	2.10	 	Litigation
	 	 	15	 
	 	 	2.11	 	Compliance, Governmental Authorizations
	 	 	16	 
	 	 	2.12	 	Labor Relations; Employees
	 	 	16	 
	 	 	2.13	 	Prepayments
	 	 	17	 
	 	 	2.14	 	Inventory
	 	 	17	 
	 	 	2.15	 	Warranties
	 	 	17	 
	 	 	2.16	 	Significant Customers and Suppliers
	 	 	17	 
	 	 	2.17	 	Books and Records
	 	 	17	 
	 	 	2.18	 	Propriety of Past Payments
	 	 	18	 
	 	 	2.19	 	Investment Representations
	 	 	18	 
	 	 	2.20	 	Brokers
	 	 	19	 
	 	 	2.21	 	Complete Disclosure
	 	 	19	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE III	 	REPRESENTATIONS AND WARRANTIES OF PURCHASER	 	 	19	 
	 	 	3.1	 	Organization, Standing and Power
	 	 	19	 
	 	 	3.2	 	Authority; Binding Agreement
	 	 	19	 
	 	 	3.3	 	Conflicts; Consents
	 	 	19	 
	 	 	3.4	 	SEC Reports
	 	 	20	 
	 	 	3.5	 	Purchaser Shares
	 	 	20	 
	 	 	3.6	 	Brokers
	 	 	20	 
	 	 	3.7	 	No Material Adverse Change
	 	 	20	 
	 	 	3.8	 	Complete Disclosure
	 	 	21	 

- i -

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Page	 
	ARTICLE IV	 	ADDITIONAL AGREEMENTS	 	 	21	 
	 	 	4.1	 	Expenses
	 	 	21	 
	 	 	4.2	 	Conduct of Business
	 	 	21	 
	 	 	4.3	 	Further Assurances
	 	 	21	 
	 	 	4.4	 	Access and Information
	 	 	22	 
	 	 	4.5	 	Public Announcement
	 	 	22	 
	 	 	4.6	 	Tax Matters
	 	 	22	 
	 	 	4.7	 	Consents of Others
	 	 	23	 
	 	 	4.8	 	Notice of Developments
	 	 	23	 
	 	 	4.9	 	Non-Solicitation of Offers
	 	 	24	 
	 	 	4.10	 	Insurance
	 	 	24	 
	 	 	4.11	 	Post-Closing Access and Confidentiality of Information
	 	 	24	 
	 	 	4.12	 	Litigation Support
	 	 	24	 
	 	 	4.13	 	No Disclosure
	 	 	24	 
	 	 	4.14	 	Employment Matters
	 	 	25	 
	 	 	4.15	 	Non-competition
	 	 	26	 
	 	 	4.16	 	Lock-up Agreement and Registration Rights Agreement
	 	 	26	 
	 	 	4.17	 	Financial Statements
	 	 	26	 
	 	 	4.18	 	Sellers Closing Documents
	 	 	27	 
	 	 	4.19	 	Purchaser Closing Documents
	 	 	28	 
	 	 	4.20	 	Collection of Accounts Receivable
	 	 	29	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE V	 	CLOSING CONDITIONS	 	 	29	 
	 	 	5.1	 	Conditions to Obligations of Purchaser
	 	 	29	 
	 	 	 	 	(a) Covenants, Representations and Warranties
	 	 	29	 
	 	 	 	 	(b) Governmental Approvals
	 	 	29	 
	 	 	 	 	(c) No Injunction
	 	 	30	 
	 	 	 	 	(d) Consents and Waivers
	 	 	30	 
	 	 	 	 	(e) Material Adverse Change
	 	 	30	 
	 	 	 	 	(f) Key Employee Agreements
	 	 	30	 
	 	 	 	 	(g) Ancillary Agreements
	 	 	30	 
	 	 	5.2	 	Conditions to Obligations of Sellers
	 	 	30	 
	 	 	 	 	(a) Covenants, Representations and Warranties
	 	 	30	 
	 	 	 	 	(b) Governmental Approvals
	 	 	30	 
	 	 	 	 	(c) No Injunction
	 	 	31	 
	 	 	 	 	(d) Material Adverse Change
	 	 	31	 
	 	 	 	 	(e) Ancillary Agreements
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VI	 	INDEMNIFICATION	 	 	31	 
	 	 	6.1	 	Indemnification by Sellers
	 	 	31	 
	 	 	6.2	 	Indemnification by Purchaser
	 	 	31	 
	 	 	6.3	 	Defense of Claims
	 	 	32	 
	 	 	6.4	 	Survival
	 	 	33	 
	 	 	6.5	 	Limitation on Liability
	 	 	33	 
	 	 	6.6	 	Waiver of Certain Damages
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VII	 	MISCELLANEOUS	 	 	34	 

- ii -

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Page	 
	 	 	7.1	 	Entire Agreement
	 	 	34	 
	 	 	7.2	 	Termination
	 	 	34	 
	 	 	 	 	(a) Mutual Consent
	 	 	35	 
	 	 	 	 	(b) By Purchaser
	 	 	35	 
	 	 	 	 	(c) By Sellers
	 	 	35	 
	 	 	 	 	(d) By Either Purchaser or Sellers
	 	 	35	 
	 	 	7.3	 	Effect of Termination
	 	 	35	 
	 	 	7.4	 	Specific Performance
	 	 	36	 
	 	 	7.5	 	Descriptive Headings; Certain Interpretations
	 	 	36	 
	 	 	7.6	 	Notices
	 	 	36	 
	 	 	7.7	 	Counterparts, Facsimile Transmission
	 	 	37	 
	 	 	7.8	 	Waiver of Bulk Sales Laws
	 	 	37	 
	 	 	7.9	 	Benefits of Agreement
	 	 	37	 
	 	 	7.10	 	Amendments and Waivers
	 	 	37	 
	 	 	7.11	 	Assignment
	 	 	37	 
	 	 	7.12	 	Governing Law
	 	 	38	 
	 	 	7.13	 	Arbitration
	 	 	38	 
	 	 	7.14	 	Invalid Provisions
	 	 	39	 
	 	 	7.15	 	Remedies Cumulative
	 	 	39	 

- iii -

 

ASSET PURCHASE AGREEMENT

          ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of April 21, 2006, between TELULAR
CORPORATION, a Delaware corporation (“Purchaser”), CSI WIRELESS INC., a corporation incorporated
under the laws of the Province of Alberta (“Canadian Parent”), and CSI WIRELESS LLC, a limited
liability company organized under the laws of the State of Delaware (“US Seller” and together with
Canadian Parent, as appropriate, “Sellers”). Certain capitalized terms used in this Agreement are
defined in Exhibit A.

W I T N E S S E T H:

          WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to purchase from Sellers,
certain of Sellers’ assets used and useful in connection with the operation of Sellers’ fixed
wireless telephone division business (the “Business”).

          NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and
of the representations, warranties, conditions, agreements and promises contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

PURCHASE AND SALE

          1.1 Purchase and Sale of Assets. Pursuant to the terms and subject to the conditions of this
Agreement, at the Closing (as defined in Section 1.4) Sellers shall sell, convey, transfer and
assign to Purchaser, free and clear of all mortgages, liens, charges, claims, pledges or other
encumbrances (“Liens”), other than Permitted Liens (as defined in Section 2.2(a)), and Purchaser
shall purchase from Sellers, the Purchased Assets (as defined in Section 1.2(a)), and Sellers shall
assign to Purchaser, and Purchaser shall assume from Sellers, the Assumed Liabilities (as defined
in Section 1.3(a)).

          1.2 Purchased Assets; Excluded Assets.

          (a) The term “Purchased Assets” means, except for the Excluded Assets (as defined in Section
1.2(b)), all of Sellers’ right, title and interest in and to all properties and assets (tangible or
intangible) used or held by Sellers in connection with the Business, including the following:

               (i) Sellers’ leasehold or license interest in all of the real property leased or licensed by
Sellers that is occupied, used or held for use in connection with the Business and all improvements
thereon as described on Schedule 1.2(a)(i) (the “Leased Real Property”);

               (ii) certain tangible assets and properties, including inventory (including work-in-progress
at Closing), raw materials, machinery and equipment, spare parts and supplies, accessories,
tooling, tools, furniture, computers, central information technology

 

 

resources, office equipment and supplies, furnishings and fixtures, physically located on the
Leased Real Property or owned, used or held for use by or on behalf of Sellers in connection with
the Business, including without limitation any of the foregoing owned by Sellers as inventory, all
as described on Schedule 2.2(b) (the “Tangible Personal Property”);

               (iii) copies of all information and data, compliance records, sales and business records,
books of account, files, invoices, inventory records, accounting records, correspondence, technical
information and engineering data, product designs and documentation, current and as-built plans and
specifications, maintenance, operating and production records, sales studies, lists of clients and
other sales and promotional materials, marketing and demographic data, price lists, publications,
vendor and supplier lists and records, cost and pricing information, business plans, quality
control records and manuals, blueprints, litigation and regulatory files, human resources and
employee benefits records as permitted by law, customer credit records and all other books,
documents and records used or held for use in connection with the Business or relating to the
Purchased Assets, wherever located and whether in paper, digital or other tangible or intangible
form;

               (iv) subject to Sections 1.2(b)(viii) and 1.3(b)(vii), all rights of Sellers in, to and under
(A) those contracts, leases, licenses, agreements and other instruments (“Contracts”) set forth on
Schedule 2.9, (B) all other Contracts in effect on the date hereof relating to the Business and not
required to be set forth on Schedule 2.9 by reason of the materiality threshold set forth in
Section 2.9, and (C) the Contracts relating to the Business entered into after the date hereof and
before the Closing Date in accordance with Section 4.2 and the other terms and conditions of this
Agreement (collectively, the “Assumed Contracts”), including all rights to receive goods and
services purchased pursuant to such Assumed Contracts, and to assert claims and take other actions
in respect of breaches or other violations thereof;

               (v) subject to Section 2.11, all permits, licenses, franchises, approvals, consents,
registrations, clearances, variances, exemptions, orders, certificates or authorization by or of
any Governmental Authority (“Permits”), and all applications for Permits, together with any
renewals, extensions, and modifications thereof and additions thereto;

               (vi) all of Sellers’ prepayments, deposits, deferred charges, advance payments, claims for
refunds and prepaid expenses to the extent they relate to the Business or the Assumed Liabilities,
except to the extent related to the Excluded Assets or Excluded Liabilities;

               (vii) all claims, counterclaims, credits, causes of action, rights of recovery, and rights of
indemnification or setoff against third parties and other claims to the extent they arise out of or
relate to the Business or the Assumed Liabilities and all other intangible property rights which
relate to the operations of Sellers or the Assumed Liabilities, except to the extent related to the
Excluded Assets or Excluded Liabilities;

               (viii) all intellectual property used in the Business, including (without limitation) all
patents, copyrights, trademarks, service marks, logos (in each case, including applications
therefor), know-how, trade secrets, and product designs and documentation and all Sellers’ rights
in and to the proprietary or trade names for Sellers’ products used in the Business, and any
derivative of the foregoing, together with all goodwill associated with the foregoing and

- 2 -

 

the intellectual property set forth in Schedule 2.8; provided, that the right to use the CSI
Wireless name on or in connection with existing products purchased by Purchaser from Sellers under
this Agreement for such products shipped within one year of Closing or in connection with any
support or maintenance for such products at any time, the manner of use of the name to be subject
to Canadian Parent’s prior written consent, not to be unreasonably withheld;

               (ix) all Sellers’ rights under or pursuant to all warranties, representations and guarantees
made by suppliers, manufacturers and contractors in connection with products sold or services
provided to Sellers for or in connection with the Business or covering Tangible Personal Property;

               (x) all of Sellers’ rights to insurance proceeds received or receivable in respect of any loss
or casualty under all insurance policies of Sellers to the extent that such policies cover any
Assumed Liabilities;

               (xi) all proceeds, net of any direct out-of-pocket cost of disposition, from the sale or other
disposition after the date of this Agreement and prior to the Closing Date of any asset that (A) is
of a type permitted or required by GAAP to be treated as a fixed asset on the books of the Business
and (B) but for such sale or other disposition prior to the Closing would be a Purchased Asset;

               (xii) all telephone numbers, websites and domain names that are used or held for use in or
otherwise related to, useful in or necessary for the conduct of, the Business, except as otherwise
set forth on Schedule 1.2(b); and

               (xiii) all goodwill associated with the Business or the Purchased Assets, together with the
right to represent to third parties that Purchaser is the successor to the Business.

          (b) Purchaser shall not acquire from Sellers pursuant to this Agreement any of the Excluded
Assets. “Excluded Assets” means:

               (i) all rights, titles and interests in and to all properties and assets (tangible or
intangible) used or held by Sellers that are not used in connection with the Business;

               (ii) Sellers’ corporate charters, minute books, stock records and corporate seals, original
book of account, accounting records and related correspondence;

               (iii) any of Sellers’ rights under this Agreement and the other agreements, certificates and
documents delivered in connection herewith;

               (iv) Tangible Personal Property disposed of or consumed in the ordinary course of Business
and in accordance with Section 4.2 and the other terms of this Agreement, before the Closing Date;

               (v) real or personal property listed on Schedule 1.2(b);

               (vi) Sellers’ accounts receivable and any unbilled amounts owed for good or services provided
by Sellers prior to the Closing Date;

- 3 -

 

               (vii) cash and cash equivalents, bank accounts, passive investments and other securities on
hand and in accounts;

               (viii) any Contract that is not an Assumed Contract, including without limitation the License
Agreement made as of April 20, 2006 between US Seller and Canadian Parent (the “CSI Contract”) and
the purchase orders contract made as of February 23 and 26, 2006, between Canadian Parent and CTS
Development Services Inc. and any additional purchase orders received from CTS Development Services
Inc. (the “CTS Contract”);

               (ix) any rights of Sellers to insurance proceeds received or receivable in respect of any loss
or casualty under any insurance policies owned by Sellers, except to the extent that any such
policies cover any Assumed Liability;

               (x) refunds or claims for refunds with respect to Taxes paid or to be paid by Sellers with
respect to the period through the Closing Date;

               (xi) any assets needed by Sellers to perform their continuing obligation under the CSI
Contract or the CTS Contract, or any assets located in or relating to the conduct of business in or
with Cuba or any person or entity located therein, which assets are identified on Schedule 1.2(b);

               (xii) any rights or obligations arising out of the guarantee dated June 3, 2005 provided by
Canadian Parent to Freescale Service Contractor, Inc. relating to Honor Tone Limited; and

               (xiii) any other assets listed on Schedule 1.2(b).

          1.3 Assumed Liabilities; Excluded Liabilities.

          (a) Pursuant to the terms and subject to the conditions of this Agreement, at the Closing,
Sellers shall assign to Purchaser, and Purchaser shall assume from Sellers, only the Assumed
Liabilities. “Assumed Liabilities” means:

               (i) to the extent not excluded pursuant to Section 1.3(b), liabilities, obligations and
commitments under the Assumed Contracts accruing with respect to the period commencing on Closing
Date; excluding, however, any liability or obligation arising from or relating to any performance,
non-performance or other action occurring prior to the Closing Date; and

               (ii) Sellers’ warranty obligations to their customers with respect to the Business, to the
extent (i) set forth on Schedule 1.3(a) or (ii) incurred by Sellers subsequent to the date hereof
and prior to the Closing Date in the ordinary course
of business, consistent with past practice, and with notice to Purchaser.

          (b) Purchaser expressly does not assume and shall not become liable to pay, perform or
discharge, any obligation or liability whatsoever of Sellers or relating to the Business or any of
the Purchased Assets other than the Assumed Liabilities. All obligations, liabilities and
commitments other than the Assumed Liabilities are referred to herein as the “Excluded

- 4 -

 

Liabilities.” Without limitation of the foregoing, the term “Excluded Liabilities” includes the
following liabilities, whether accrued or fixed, absolute or contingent, known or unknown,
determined or determinable, and, unless otherwise expressly provided herein, whenever arising:

               (i) any liabilities and obligations relating to or arising out of the Excluded Assets;

               (ii) any liability of Sellers, or any member of any consolidated, affiliated, combined or
unitary group of which Sellers are or have been a member, for Taxes attributable to any period (or
portion thereof) ending on or prior to the Closing Date, including any Taxes which are not due or assessed
until after the Closing Date but which relate to the period prior to the Closing Date, except to the
extent included as liabilities on the Final Closing Balance Sheet; provided, that Transfer Taxes and
Apportioned Obligations shall be paid in the manner specified in Section 4.6 hereof;

               (iii) any claim, demand, liability or obligation of any nature whatsoever (including claims,
demands, liabilities or obligations in respect of environmental matters, occupational safety,
workers’ or workmen’s compensation, grievance proceedings or actual or threatened litigation,
suits, claims, demands or governmental proceedings) which arose or was incurred before the Closing
Date, or which arises from or is based on events occurring or conditions existing before the
Closing Date, including, without limitation, liabilities for any litigation disclosed on Schedule
2.10 arising on or before the Closing Date;

               (iv) except as set forth in Section 4.14, any liabilities or obligation with respect to the
employees of Sellers, including any deferred compensation obligation, any payment or obligation to
any employee of Sellers, and any other liability or obligation arising under any Plan or other
compensation arrangement of Sellers which arose or was incurred before the Closing Date, or which
arises from or is based on events occurring or conditions existing before the Closing Date or
arising out of a sale of the Purchased Assets;

               (v) any liability or obligation of Sellers under this Agreement and the other agreements,
certificates and documents delivered in connection herewith or otherwise in connection with the
transactions contemplated hereby and thereby, including all legal, accounting, brokerage,
investment banking and finder’s fees or other fees and expenses incurred by or on behalf of Sellers
in connection with this Agreement and the transactions contemplated hereby;

               (vi) any liability or obligation for any indebtedness of Sellers for borrowed money, including
without limitation any promissory notes evidencing such indebtedness and any guaranties thereof;

               (vii) any obligation, liability or commitment under the Assumed Contracts to the extent such
obligation, liability or commitment relates to the period prior to the Closing Date, and any
obligation, liability or commitment under any Contract that is not an Assumed Contract, except to
the extent included as a liability on the Final Closing Balance Sheet;

- 5 -

 

               (viii) any liability or obligation for any defects in or damages arising out of any goods or
services sold by Sellers, except for the warranty obligations assumed pursuant to Section
1.3(a)(ii);

               (ix) liabilities for the accounts payable and other operating expenses accrued by Sellers with
respect to the Business for all periods prior to the Closing in the ordinary course of business;
and

               (x) liabilities of Sellers under or with respect to the CSI Contract, the
CTS Contract or any other contract or obligation of Sellers that relates to the conduct of business
in Cuba.

          1.4 Closing. Subject to the conditions of this Agreement, the consummation of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the offices of Covington &
Burling, 1201 Pennsylvania Avenue, N.W., Washington, D.C., at 10:00 a.m. local time on May 1, 2006,
or such other time and place as Purchaser and Sellers may agree to in writing (such date of the
Closing hereinafter referred to as the “Closing Date”) and shall be deemed to be effective as of
12:01 am on the Closing Date.

          1.5 Purchase Price. In consideration of the sale of the Purchased Assets and Sellers’ other
covenants and obligations hereunder, Purchaser shall pay a purchase price in an aggregate amount of
$9.4 million (the “Base Purchase Price”), as such amount is adjusted in accordance with Section
1.6, plus the assumption of the Assumed Liabilities, plus the earn-out as specified in Section 1.7.
At the Closing, Purchaser shall pay the Base Purchase Price as follows::

          (a) $3.4 million, adjusted by the Estimated Working Capital Adjustment, if any (as determined
pursuant to Section 1.6(a)) (the “Cash Purchase Price”) by wire transfer of same day funds; and

          (b) an aggregate number of shares of Purchaser Common Stock equal to $6.0 million divided by
the Purchaser Share Price (the “Initial Purchaser Shares”).

          1.6 Post-Closing and Working Capital Adjustment.

          (a) In the event that that Final Working Capital (as defined below) is different than $0, the
Purchase Price shall be adjusted by the “Working Capital Adjustment.” “Working Capital” shall
consist of (x) Sellers’ inventory, undelivered material on order pursuant to purchase orders issued
by Sellers or issued by contract manufacturers as permitted by Sellers’ agreements with such
contract manufacturers (“Undelivered Material”), offset by a reserve equal to the amount, if any,
by which the cost of the Undelivered Material exceeds the fair market value thereof as agreed by
Purchaser and Sellers, and prepaid expenses and deposits relating to the Business, minus (y) the
purchase price payable with respect to the Undelivered Material and a $40,000 warranty reserve,
each as of 12:01 am on the Closing Date and as determined in accordance with Canadian GAAP (except
as otherwise agreed by the parties). Sellers shall deliver to Purchaser not later than three
Business Days prior to the Closing Date an estimate of the Working Capital as of the Closing Date
(the “Estimated Working Capital”), prepared by Sellers in good faith in accordance with Canadian
GAAP (except as otherwise agreed by the

- 6 -

 

parties) and in consultation with Purchaser, in order to determine the Estimated Working Capital
Adjustment (as defined below). The “Estimated Working Capital Adjustment” shall be the amount, if
any, by which the Estimated Working Capital is different than $0. If the Estimated Working Capital
is greater than $0, then the Estimated Working Capital Adjustment shall be a positive amount. If
the Estimated Working Capital is less than $0, then the Estimated Working Capital will be a
negative amount.

          (b) Sellers shall prepare and deliver to Purchaser within 30 days after the Closing Date a
determination by Sellers of the Working Capital as of the Closing Date (the “Final Working
Capital”).

          (c) Purchaser shall have 30 days after receipt of the Final Working Capital to review Sellers’
books and records with respect to Sellers’ determination of the Final Working Capital and Purchaser
and Sellers shall in good faith seek to reach agreement with respect thereto. If Purchaser does
not notify Sellers within such 30-day period that it disputes the determination of Final Working
Capital, then Purchaser shall be deemed to have agreed with it. If Purchaser notify Sellers within
such 30-day period that it disputes the determination of Final Working Capital, then Sellers and
Purchaser shall work together in good faith to resolve such dispute. If an agreement is reached
during the 90 days following the Closing Date, then within ten Business Days following such
agreement, Sellers shall pay to Purchaser or Purchaser shall pay to Sellers, as the case may be, an
amount equal to the difference between (x) the Estimated Working Capital and (y) the Final Working
Capital (such amount being referred to herein as the
“Adjustment Amount”); provided, however, that
in no event shall any Adjustment Amount payable by Purchaser to Sellers exceed the amount of the
Estimated Working Capital Adjustment.

          (d) If the parties do not reach an agreement on the Final Working Capital within the 90 days
following the Closing Date, then Sellers and Purchaser shall select an independent accounting firm
of recognized national standing in the United States (the “Arbitrating Firm”) to resolve the
disputed items. If Sellers and Purchaser do not agree on the Arbitrating Firm within five calendar days after the end of such 90-day
period, then the Arbitrating Firm shall be a nationally recognized independent accounting firm in
the United States selected by lot (after excluding one firm designated by Sellers and one firm
designated by Purchaser). Purchaser and Sellers shall each inform the Arbitrating Firm in writing
as to their respective positions with respect to the Final Working Capital, and each shall make
available to the Arbitrating Firm any books and records and work papers relevant to the preparation
of the Arbitrating Firm’s computation of the Final Working Capital. The Arbitrating Firm shall be
instructed to complete its analysis within 30 days from the date of its engagement and upon
completion to inform the parties in writing of its own determination of the Final Working Capital
and the basis for its determination, whether its determination is within the Mid-Range (as defined
in paragraph (e) below) or if not, whether it is closer to Purchaser’s or Sellers’ written
determination of the Final Working Capital. Any determination by the Arbitrating Firm in
accordance with this Section 1.6(d) shall be final and binding on the parties. Within five days
after the Arbitrating Firm delivers to the parties its written determination of the amount of the
Final Working Capital, Sellers shall pay to Purchaser, or Purchaser shall pay to Sellers, as the
case may be, the Adjustment Amount.

- 7 -

 

          (e) If the Arbitrating Firm’s determination of the Final Working Capital is within the
Mid-Range, then Sellers and Purchaser shall each pay one-half of the fees and disbursements of the
Arbitrating Firm in connection with its analysis. If not, then (i) if the Arbitrating Firm
determines that the written position of Purchaser concerning the Final Working Capital is closer to
its own determination, then Sellers shall pay the fees and disbursements of the Arbitrating Firm in
connection with its analysis, or (ii) if the Arbitrating Firm determines that the written position
of Sellers concerning the Final Working Capital is closer to its own determination, then Purchaser
shall pay the fees and disbursements of the Arbitrating Firm in connection with its analysis. As
used herein, the term “Mid-Range” means a range that (i) equals 20% of the absolute difference
between the written positions of Purchaser and Sellers as to the Final Working Capital and (ii) has
a midpoint equal to the average of such written positions of Purchaser and Sellers.

          (f) All
payments to be made under this Section 1.6 shall be paid by wire transfer of same day
funds to the account of the payee at a financial institution in the United States and shall for all
purposes constitute an adjustment to the Purchase Price.

          1.7 Earn Out.

          (a) Sellers shall be entitled to receive, in addition to the Base Purchase Price, up to the
number of shares of Purchaser Common Stock equal to $2.0 million divided by the Purchaser Share
Price, depending on the India GSM Fixed Wireless Revenue (as defined below) earned by Purchaser
after the Closing (the “India Additional Purchaser Shares”).

               (i) The number of India Additional Purchaser Shares to which Sellers are entitled shall be
calculated and determined as follows:

(A) if the India GSM Fixed Wireless Revenue for the period from
May 1, 2006 to the earlier of June 30, 2007 and 365 days following
the national launch of GSM fixed wireless service (the “National
Launch Date”) by Airtel (the “GSM Earnout Period”) is $0, then
Sellers are not entitled to any India Additional Purchaser Shares;

(B) if the India GSM Fixed Wireless Revenue for the GSM Earnout
Period meets or exceeds $40 million, then Sellers are entitled to
all of the India Additional Purchaser Shares; or

(C) if the India GSM Fixed Wireless Revenue for the GSM Earnout
Period meets or exceeds the lower end of the India GSM Forecast
Range but is below the upper end of the India GSM Forecast Range,
then Sellers shall be entitled to the India GSM Pro-Rata Portion
of the India Additional Purchaser Shares.

               (ii) Purchaser agrees to provide notice of the National Launch Date to Sellers within 14 days
thereof.

               (iii) For
the purposes of this Section 1.7(a), the following terms mean:

- 8 -

 

(A) “India GSM Forecast Range” means $0 to $40 million;

(B) “India GSM Fixed Wireless Revenue” means the aggregate
gross revenue earned by Purchaser from the sale of fixed wireless phones
shipped for sale in India; and

(C) “India GSM Pro-Rata Portion” means the fraction equal to India GSM
Fixed Wireless Revenue divided by $40 million.

          (b) Sellers shall be entitled to receive, in addition to the Purchase Price, up to the number
of shares of Purchaser Common Stock equal to $1.6 million divided by the Purchaser Share Price,
depending on the TDMA Fixed Wireless Revenue (as defined below) earned by Purchaser after the
Closing (the “TDMA Additional Purchaser Shares”).

               (i) The number of TDMA Additional Purchaser Shares to which Sellers are entitled shall be
calculated and determined as follows:

(A) if the TDMA Fixed Wireless Revenue for the period from March
31, 2006 to December 31, 2006 (the “TDMA Earnout Period”) is $0,
then Sellers are not entitled to any TDMA Additional Purchaser
Shares;

(B) if the TDMA Fixed Wireless Revenue for the TDMA Earnout Period
meets or exceeds $20 million, then Sellers are entitled to all of
the TDMA Additional Purchaser Shares; or

(C) if the TDMA Fixed Wireless Revenue for the TDMA Earnout Period
meets or exceeds the lower end of the TDMA Forecast Range but is
below the upper end of the TDMA Forecast Range, then Sellers shall
be entitled to the TDMA Pro-Rata Portion of the TDMA Additional
Purchaser Shares.

               (ii) For
the purposes of this Section 1.7(b), the following terms mean:

(A) “TDMA Forecast Range” means $0 to $20 million;

(B) “TDMA Fixed Wireless Revenue” means the aggregate gross revenue earned
by Purchaser from the sale of TDMA fixed wireless phones; and

(C) “TDMA Pro-Rata Portion” means the fraction equal to TDMA Fixed
Wireless Revenue divided by $20 million.

          (c) Within 10 days following the end of each of the GSM Earnout Period and the TDMA Earnout
Period, a senior officer of Purchaser will provide Sellers with an officer’s certificate certifying
the amount of the India GSM Fixed Wireless Revenue for the GSM Earnout Period and the TDMA Fixed
Wireless Revenue for the TDMA Earnout Period, respectively (each, a “Revenue Certification”).
Sellers shall have the right to audit Purchaser’s books and

- 9 -

 

records pertaining to the India GSM Fixed Wireless Revenue for the GSM Earnout Period and the TDMA
Fixed Wireless Revenue for the TDMA Earnout Period, respectively, for a period of 30 days after
receiving the respective Revenue Certification (the “Audit Period”). Purchaser will allow Sellers’
auditor to conduct such audit during normal working hours and will provide such auditor with access
to all relevant books, records and personnel as such auditor may reasonably require to conduct such
audit.

          (d) Upon the expiration of the Audit Period (or on such earlier date as may be requested by
Sellers upon their written acceptance of the Revenue Certification), Purchaser shall issue such
number of shares of Purchaser Common Stock equal to the number of India Additional Purchaser Shares
or TDMA Additional Purchaser Shares to which Sellers are entitled
pursuant to Section 1.7(a), or
Section 1.7(b) based on the revenues set forth in the Revenue
Certification; provided, however,
that if Sellers deliver written notice to Purchaser during the Audit Period of a dispute with the
amount in a Revenue Certification, the Audit Period shall be extended an additional 30 days (or
such shorter period as agreed by the parties) to allow Purchaser and Sellers to seek in good faith
to reach agreement with respect to the amount in the Revenue Certification. If an
agreement cannot be reached, either Sellers or Purchaser may refer the dispute to dispute
resolution in accordance with Section 7.13.

          1.8 Purchase Price Allocation. The Purchase Price (including the assumption of the Assumed
Liabilities) shall be allocated among the Purchased Assets in a manner to be determined jointly by
Purchaser and Sellers, each acting reasonably, as soon as reasonably practical following the
Closing, which allocation shall be consistent with Section 1060 of the Internal Revenue Code of
1986, as amended (the “Purchase Price Allocation”). Each of the parties hereto agrees to be bound
by the Purchase Price Allocation and will not take a position on any Tax Return before any
Governmental Authority charged with the collection of any Tax or in any judicial proceeding that is
in any way inconsistent with the Purchase Price Allocation and will cooperate with each other in
timely filing Forms 8594 with the IRS consistent with such allocation. In the event that the
Purchase Price Allocation is disputed by any Governmental Authority, the party receiving notice of
the dispute shall promptly notify the other party hereto in writing of such notice and resolution
of the dispute.

          1.9 Procedures for Certain Purchased Assets Not Freely Transferable.

          (a) If any property or right (other than the Permits) included in the Purchased Assets is not
assignable or transferable to Purchaser either by virtue of the provisions thereof or under any Law
applicable to Sellers or Sellers’ properties or assets without the consent of one or more third
persons (each, a “Non-Assignable Right”), Sellers shall use their commercially reasonable efforts,
at Sellers’ sole cost and expense, to obtain such consents after the execution of this Agreement
until such consent is obtained. If any such consent in respect of a Non-Assignable Right cannot be
obtained prior to the Closing Date and the Closing nevertheless occurs, (i) this Agreement and the
related instruments of transfer shall not constitute an assignment or transfer thereof, but (A)
Sellers shall use their commercially reasonable efforts to obtain such consent as soon as possible
after the Closing Date, and (B) Purchaser shall cooperate, to the extent commercially reasonable,
with Sellers in Sellers’ efforts to obtain such consents; and (ii) if such consent has not been
obtained within 180 days after the Closing Date, then at Purchaser’s election by notice to Sellers,
(A) the Non-Assignable Right shall be an

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Excluded
Asset and Purchaser shall have no obligation pursuant to
Sections 1.2(a) or 1.3(a) or
otherwise with respect to any such Non-Assignable Right or any liability with respect thereto, or
(B) Sellers shall use their commercially reasonable efforts to obtain for Purchaser substantially
all of the practical benefit and burden of such property or rights, including by (1) entering into
appropriate and reasonable alternative arrangements on terms mutually agreeable to Purchaser and
Sellers and (2) subject to the consent and control of Purchaser, enforcement, at the cost and for
the account of Purchaser, of any and all rights of Sellers against the other party thereto arising
out of the breach or cancellation thereof by such other party or otherwise.

          (b) If any of the Permits included in the Purchased Assets is not assignable or transferable,
this Agreement and the related instruments of transfer shall not constitute an assignment or
transfer thereof, and Sellers shall cooperate with Purchaser in
its efforts to obtain a replacement Permit issued in Purchaser’s name. If any replacement
Permit cannot be obtained prior to the Closing Date and the Closing occurs, Sellers agree to allow
Purchaser to operate under its Permits if permitted by applicable Laws or applicable Governmental
Authorities for a period of up to 90 days after the Closing (or such longer period as may be
reasonably necessary for Purchaser and permitted by applicable laws and Governmental Authorities,
using its commercially reasonable efforts, to obtain the replacement Permits).

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLERS

     Each of Canadian Parent and US Seller jointly and severally make the representations and
warranties set forth in this Article II to Purchaser, as of the date hereof, and again at and as of
the Closing Date. All representations and warranties of Sellers are made subject to the exceptions
which are noted in the Disclosure Letter delivered by Sellers to Purchaser concurrently herewith
and identified by the parties as the “Schedules.”

          2.1 Organization, Authority and Binding Agreement. Canadian Parent is a corporation duly
organized, validly existing and in good standing under the laws of the Province of Alberta. US
Seller is a limited liability company duly organized, validly existing and in good standing under
the laws of Delaware. Sellers are qualified to do business as a foreign corporation in each other
jurisdiction in which the nature of the Business or ownership of the Purchased Assets requires.
Sellers have full corporate power to execute and deliver this Agreement and to perform their
obligations hereunder. This Agreement has been duly authorized by Sellers’ board of directors and
authorization by Sellers’ stockholders is not required. This Agreement has been duly executed and
delivered by Sellers and is the valid and binding obligation of Sellers, enforceable against them
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.

          2.2 Purchased Assets.

          (a) Except
as set forth on Schedule 2.2(a), Sellers have good and marketable title to (or, if
so indicated on Schedule 2.2(a), a valid leasehold interest in, as applicable), all of the
Purchased Assets, free and clear of all Liens other than (i) liens for current taxes, payments of
which are not yet due and payable and (ii) liens in respect of pledges or deposits under

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worker’s compensation laws or similar legislation, carriers’, warehousemen’s, mechanics’, laborers’
and materialmen’s and similar liens, if the obligations secured by such liens are not then
delinquent or are being contested in good faith by appropriate proceedings and do not exceed
$100,000 in the aggregate (collectively, “Permitted Liens”).

          (b) Schedule 2.2(b) lists all items of Tangible Personal Property
included in the Purchased Assets and having an original cost of at least $25,000. Except as
otherwise set forth on Schedule 2.2(b), all items of Tangible Personal Property are in good
operating condition and adequate repair (ordinary wear and tear excepted). Sellers have, and on the
Closing Date, Purchaser will enjoy, peaceful and undisturbed possession under all leases of
Tangible Personal Property. The Purchased Assets are suitable for the purposes for which they are
now being used and, together with the Excluded Assets, constitute all of the properties, assets,
interests and rights necessary to continue to operate the Business consistent with current
practice.

          2.3
Conflicts; Consents. Except as set forth on
Schedule 2.3, none of the execution and
delivery of this Agreement, the consummation of the transactions contemplated hereby, nor
compliance by Sellers with any of the provisions hereof (as well as all other instruments,
agreements, certificates or other documents contemplated hereby) does or will (i) conflict with or
result in a breach of, or require any consent or approval under, the
charter or by-laws of Sellers,
(ii) conflict with or result in a default, give rise to any right of termination, cancellation,
acceleration, or modification, or require any consent or approval, under any of the provisions of
any Contract listed on Schedule 2.9 or any other material Contract to which Sellers are a party,
(iii) violate any Law, or (iv) result in the creation or imposition of any claim, lien or
encumbrance on the Purchased Assets. Except as set forth on
Schedule 2.3, no consent or approval
by, or any notification of or filing with, any Governmental Authority is required in connection
with the execution, delivery and performance by Sellers of this Agreement or the consummation of
the transactions contemplated hereby.

     2.4 Financial Information.

          (a) The
following financial statements are attached to
Schedule 2.4(a) (the
“Financial Statements”): unaudited balance sheets of the Business at December 31, 2005, and the
unaudited statements of income for the twelve months ended December 31, 2004, and December 31,
2005.

          (b) The Financial Statements have been prepared in conformity with the principles set out in
Schedule 2.4(b). Except as specified on
Schedule 2.4(b), the balance sheet of the Business as set
forth above presents fairly Sellers’ financial position of the Business as of such date, and each
of the statements of income presents fairly Sellers’ results of operations of the Business for the
period then ended. Except for obligations or liabilities incurred in the ordinary course of
business since December 31, 2005, there are no obligations or liabilities (whether absolute,
accrued, contingent or otherwise, and whether due or to become due) incurred by Sellers with
respect to the Business which were required in accordance with Canadian GAAP to be shown or
provided for, but were not shown or provided for, on the balance sheet forming a part of the
Financial Statements.

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          2.5
Absence of Change. Except as set forth on Schedule 2.5, since December 31, 2005, Sellers
have conducted the Business in the ordinary course, and there has not been:

          (a) any material obligation or liability (whether absolute, accrued, contingent or otherwise,
and whether due or to become due) incurred by Sellers with respect to the Business, other than
current obligations and liabilities incurred in the ordinary course of business;

          (b) any sale, assignment, pledge, encumbrance, transfer or other disposition of any asset
(real or personal, tangible or intangible) with respect to the Business, except in each case under
this Section 2.5(b), in the ordinary course of business;

          (c) any write-down of the value of any Purchased Asset;

          (d) any cancellation of any debts or claims or any amendment, termination or waiver of any
rights of value to Sellers with respect to the Business;

          (e) any purchase of inventory or other tangible assets with respect to the Business, in excess
of $25,000 in any individual case or $100,000 in the aggregate;

          (f) any capital expenditure or commitment or addition to Sellers’ property, plant or equipment
with respect to the Business, in excess of $10,000 in any individual case or $50,000 in the
aggregate;

          (g) any damage, destruction or loss (whether or not covered by insurance) affecting any
Purchased Asset that is material to the conduct of the Business;

          (h) any change in the accounting methods or practices followed by Sellers, any change in
depreciation or amortization policies or rates followed by Sellers, or any change in the policies
for establishing reserves on Sellers’ books with respect to salability of inventory of the Business
or contingent liabilities of the Business;

          (i) any extension, amendment or termination of any material Contract relating to the Business,
except in the ordinary course of business, including termination due to the expiration of the term
of any such Contract in accordance with its terms;

          (j) any Material Adverse Effect or the loss of any of Sellers’ material customers or suppliers
relating to the Business;

          (k) any shutdown or cessation of operations conducted by, or constituting a part of, the
Business; or

          (l) any agreement, whether in writing or otherwise, to take any of the actions specified in
the foregoing paragraphs (a) through (k).

     2.6 Tax Matters. Taxes due from or payable by Sellers to the extent they arise out of the
Business on or prior to Closing have been fully paid on a timely basis or are adequately provided
for on the Financial Statements. Sellers have not executed any presently effective

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waiver or extension of any statute of limitations against assessments and collection of any Taxes
to the extent they arise out of the Business, and there are no pending or threatened claims,
assessments, notices, proposals to assess, deficiencies or audits with respect to any such Taxes.
There are no Tax liens on any of the Purchased Assets. None of the Purchased Assets constitute a
“United States real property interest” as defined in Section 897(c) of the Internal Revenue Code of
1986, as amended, and the Treasury Regulations promulgated thereunder.

     2.7 Property Related Matters.

          (a) There is no real property which is owned by Sellers and used or held for
use in connection with the Business. Schedule 1.2(a)(i) contains a true, correct and complete list
of all real property and interests in real property leased, licensed, occupied, or used by Sellers
in connection with the Business, together with its legal description, the address by which it is
commonly known and the use for which it is being employed as of the Closing Date. Sellers have a
good, valid and existing leasehold estate, as tenant or such other
status (as described in Schedule
1.2(a)(i)) in each Leased Real Property, in each case free and clear of all Liens affecting title
to or the use and occupancy of such Leased Real Property, except for Permitted Liens. Sellers have
provided Purchaser with true, correct and complete copies of each of the leases, subleases,
licenses and other Contracts with respect to all Leased Real Property

          (b) Sellers have, and on the Closing Date Purchaser will enjoy, peaceful and undisturbed
possession under all leases, subleases or other Contracts with respect to the Leased Real Property.
Sellers have not received, or sent to any tenant, subtenant, or licensee of Sellers, any notice of
default under any lease, sublease, license or other Contract with respect to the Leased Real
Property that remains outstanding or uncured as of the Closing Date. Sellers have no knowledge of
any event which now constitutes, or which upon the giving of notice or the passage of time, or
both, would give rise to, any default in the performance by them or any landlord, licensor, tenant,
subtenant, or licensee of Sellers of any obligation under any lease, sublease, license or other
Contract with respect to the Leased Real Property. Sellers have no liability for any leasing
commission or underpaid or unpaid operating expense, tax, other imposition amounts, or similar
amounts due, arising out of, resulting from or relating to any lease, sublease, license or other
Contract with respect to the Leased Real Property incurred by Sellers.

     2.8 Intellectual Property.

          (a) Schedule 2.8 sets forth all of the following used by Sellers in connection with the
Business (A) patents, patent applications, patent disclosures, inventions; (B) trademarks, service
marks, trade names, logos and corporate names and registrations and applications for registration
and applications for registration thereof, together with all of the goodwill associated therewith;
(C) registered copyrights; (D) computer software (other than general commercial software), data,
data bases and documentation thereof; and (E) domain names and
URLs used by Sellers. Schedule 2.8
sets forth the registration numbers for any of the foregoing intellectual property rights that
have been registered by Sellers. To Sellers’ best knowledge and
except as set forth on Schedule
2.8, Sellers (i) own, or possess legally enforceable rights under valid agreements listed on
Schedule 2.9, to use in the manner that they currently use, each of the foregoing items of
intellectual property and all inventions, processes, designs, formulae, trade

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secrets and know-how
necessary for the conduct of their business, as presently conducted, without the payment of any
royalty or similar payment, and (ii) except for the CSI Contract, and any rights or license granted
by Sellers in Contracts listed in Schedule 2.9, have not granted to any third party any rights to
use any of the foregoing intellectual property rights of Sellers.

          (b) To
Sellers’ best knowledge and except as disclosed on
Schedule 2.8, the Purchased Assets
or Assumed Liabilities currently are not infringing upon any intellectual property rights of any
other Person, and to Sellers’ best knowledge, no other Person is infringing upon, or challenging
the validity of, the intellectual property rights set forth on
Schedule 2.8.

          (c) Except
as disclosed on Schedule 2.8 to Sellers’ best knowledge, Sellers own all of their
formulas, processes, designs and other confidential information used in the Business that confers a
commercial advantage to Sellers as a result of their confidential status (“Trade Secrets”). All
Trade Secrets were developed internally by Sellers through bona fide business practices or were
acquired by purchase from others. To Sellers’ best knowledge, no inadvertent disclosure of any
Trade Secret has occurred, whether through negligence, corporate espionage, or otherwise, and to
Sellers’ best knowledge, the Trade Secrets have not been independently discovered by any
competitor.

          (d) Except
as set forth on Schedule 2.8, Sellers have taken commercially reasonable steps to
(i) maintain the confidentiality of all Trade Secrets and other proprietary inventions, technical
data, customer and supplier lists and information pertaining to the Business and (ii) backup and
maintain in secure places copies of all databases, computer programs, and other electronically
stored information material to Sellers’ conduct of the Business.

          2.9
Contracts. Schedule 2.9 contains a true, correct and complete list of all written or oral
Contracts relating to the Business to which Sellers are a party (each in their own name and on
their own behalf) or by which any Sellers or the Purchased Assets are bound relating to commitments
(contingent or otherwise) in excess of $25,000, with a duration in excess of one year, or including
any material restriction or limitation on the conduct of the Business. Sellers have provided
Purchaser and its representatives with access to a true, correct and complete copy of each written
Contract listed on Schedule 2.9, including all amendments thereto. Each such Contract is in full
force and effect, unimpaired by Sellers’ acts or omissions, is the valid and binding obligation of
Sellers, and, to Sellers’ best knowledge, the other parties thereto, is enforceable against Sellers
and, to Sellers’ best knowledge, the other parties thereto in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors’ rights and to general equity principles. Sellers
have performed each material term, covenant and condition of
such Contracts that is to be performed by it at or before the date hereof.

          2.10
Litigation. Except as set forth on Schedule 2.10, there are no pending lawsuits,
actions, claims or legal or administrative or arbitration proceedings instituted by or against
Sellers and, to Sellers’ best knowledge, no investigations are pending and no such lawsuits,
actions, claims, investigations or proceedings are threatened or have any reason to be threatened,
whether at law or in equity, or before or by any Governmental Authority or other governmental
department commission, board, bureau, agency or instrumentality.
Except as set forth on Schedule
2.10, there are no judgments, decrees, injunctions or orders of any

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Governmental Authority or other
governmental department commission, board, bureau, agency, instrumentality or arbitrator against
Sellers.

          2.11 Compliance, Governmental Authorizations.

          (a) To the best of Sellers’ knowledge, Sellers have been and are in compliance with all
federal, national, provincial, regional, state and local Laws, including Laws relating to
pollution, protection of the environment or Hazardous Substances or any other applicable
Environmental Laws.

          (b) Schedule 2.11(b) sets forth all material federal, national, provincial, regional, state
and local Permits necessary to conduct the Business as presently being conducted, including each
Permit necessary or useful for Sellers to lease or use any Leased Real Property, and indicates
which of such Permits Sellers possess. Sellers are in compliance with all such Permits. All such
Permits held by Sellers are in full force and effect.

          (c) Sellers do not conduct the Business with or for the benefit of any person or entity
located in Cuba, except pursuant to contracts that are included in the Excluded Assets.

     2.12 Labor Relations; Employees.

          (a) Within the last three years, Sellers have not experienced any labor disputes
with, or any work stoppages by, any workers involved in the Business and, to Sellers’ best
knowledge, no such dispute or work stoppage is threatened against Sellers. Sellers are not subject
to any collective bargaining agreement or other Contract with any labor organization or other
representative of any of Sellers’ workers involved with the Business. To Sellers’ best knowledge,
there is no labor union organizing activity pending or threatened with respect to any of Sellers’
workers involved in the Business. There is no unfair labor practice claim against Sellers before
the United States National Labor Relations Board in connection with the Business.

          (b) Sellers have not offered to provide life, health or medical benefits or insurance coverage
to any individual involved in the Business, or to the family members of any such individual, for
any period extending beyond the termination of the individual’s employment, except to the extent
required by applicable law.

          (c) Except
as set forth on Schedule 2.12(c) the consummation of the transactions contemplated
by this Agreement will not, either alone or in connection with termination of employment, (i)
entitle any current or former employee, independent contractor, officer, director or partner of
Sellers involved in the Business to severance pay, any change in control payment or any other
payment, except as expressly provided in this Agreement or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due, any such employee, independent contractor,
officer, director or partner.

          (d) Except
as disclosed in Schedules 2.12(c), 2.12(e),
4.14(a), 4.14(b) and 4.14(c), Sellers
have no Plans applicable to the Business or the Business Employees (as defined below).

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          (e) Schedule 2.12(e) includes a list of the names and annual rates of compensation of Sellers’
employees, contractors and consultants involved with or supporting the Business whose annual rates
of compensation during the fiscal year ended December 31, 2005 (including base salary, bonus and
incentive pay), exceed $75,000. Schedule 2.12(e) also summarizes the Plan benefits and other like
benefits (e.g., company automobile, club membership), if any, paid or payable to such employees
during Sellers’ fiscal year ended December 31, 2005, and to the date hereof.

          2.13 Prepayments. Sellers have not received any prepayment for services to be performed or
goods to be delivered related to the Assumed Liabilities after the Closing Date.

          2.14
Inventory. Schedule 2.14 sets forth a schedule, as of March 31, 2006, of all items of
usable or salable inventory of the Business, together with the dollar amount of their book value.
Except as noted on Schedule 2.14, all such inventory is in new condition, is (if manufactured by a
Person other than Sellers) subject to the full benefit of any applicable manufacturer’s warranties,
and is in merchantable condition.

          2.15 Warranties. Attached to Schedule 2.15 is a copy of the warranty terms offered by Sellers
to their customers of the Business. Except as indicated on Schedule 2.15 and except for any
warranties granted by any third parties directly to Sellers’ customers, Sellers have not granted to
any customers of the Business any warranties currently in effect with respect to goods or services
sold, leased, or otherwise provided to such customers in a form other than the standard terms
referenced above.

          2.16 Significant Customers and Suppliers.

          (a) Schedule 2.16(a) lists the five most significant customers of the Business, on the basis
of revenues for goods sold or services provided for the most recent fiscal year. Except as set out
in Schedule 2.16(a), Sellers have not received any notice and has no reason to believe that any
customer listed in Schedule 2.16(a) has ceased, or will cease, to use the products, equipment,
goods or services of the Business, or has substantially reduced, or will substantially reduce, the
use of such products, equipment, goods or services at any time.

          (b) Schedule 2.16(b) list the ten most significant vendors or suppliers of raw materials,
supplies, merchandise and other goods of the Business, on the basis of cost of goods or services
purchased for the most recent fiscal year. Except as set out in Schedule 2.16(b), Sellers have not
received any notice, and do not have any reason to believe, that any such vendor or supplier will
not sell raw materials, supplies, merchandise or other goods to Purchaser at any time after the
Closing Date on terms and conditions substantially similar to those used in its current sales to
Sellers, subject only to general and customary price increases. To Sellers’ best knowledge, no such
customer, vendor or supplier is threatened with bankruptcy or insolvency.

          2.17 Books and Records. Sellers’ minute books as they pertain to the Business and general
ledgers and books of account of the Business and all of Sellers’ other books and records related to
the Business are complete and correct.

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          2.18 Propriety of Past Payments. In connection with the Business, none of Sellers, any
director, officer, employee or agent of Sellers or any other Person associated with or acting for
or on behalf of Sellers has, directly or indirectly, made any illegal contribution, gift, bribe,
rebate, payoff, influence payment, kickback or other payment to any Person, private or public,
regardless of form, whether in money, property or services, (i) to obtain favorable treatment for
Sellers in securing business, (ii) to pay for favorable treatment for business secured for Sellers,
(iii) to obtain special concessions, or for special concessions already obtained, for or in respect
of Sellers or (iv) otherwise for the benefit of Sellers in violation of any federal, state,
provincial, local, municipal, foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or treaty.

          2.19 Investment Representations.

          (a) Sellers understand that the Purchaser Shares are being offered and sold pursuant to a
private placement exemption from (i) registration contained in the Securities Act based in part
upon Sellers’ representations contained in this
Section 2.19, and (ii) from the prospectus and
registration requirements of applicable Canadian securities legislation pursuant to the asset
acquisition exemption in Section 2.12 of National Instrument 45-106.

          (b) Sellers are accredited investors within the meaning of Regulation D under the Securities
Act and are acquiring the Purchaser Shares for their own account for investment only, and not with
a view towards their distribution. Sellers, by reason of their management’s, business or financial
experience, has the capacity to protect their own interests in connection with the transactions
contemplated by this Agreement.

          (c) Sellers understand that they must bear the economic risk of the Purchaser Shares
indefinitely unless their Purchaser Shares are registered pursuant to the Securities Act, or an
exemption from registration is available. Sellers understand that there is no assurance that any
exemption from registration under the Securities Act will be available and that, even if available,
such exemption may not allow Sellers to transfer all or any portion of the Purchaser Shares under
the circumstances, in the amounts or at
the times Sellers might propose. Sellers understand that the Purchaser Shares may not be sold
or otherwise transferred during the 180 days following the Closing Date, except in accordance with
the Lock-up Agreement (as defined below).

          (d) Sellers have been advised or is aware (i) of the provisions of Rule 144, which permits
limited resale in the United States of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things: the availability of certain
current public information about Purchaser, the resale occurring following the required holding
period under Rule 144 and the number of shares being sold during any three-month period not
exceeding specified limitations; and (ii) that unless permitted pursuant to an exemption under
applicable Canadian securities legislation, the Purchaser Shares cannot be resold in Canada before
the date which is four months and one day after Purchaser becomes a reporting issuer in Canada (as
defined under applicable Canadian securities legislation), and Sellers acknowledge that Purchaser
is not currently, and has no present intention of becoming in future, a reporting issuer in Canada.

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          2.20 Brokers. No agent, broker, investment banker or any other Person acting on Sellers’
behalf or under Sellers’ authority is or will be entitled to any broker’s or finder’s fee or any
other commission or similar fee directly or indirectly from any of the parties hereto in connection
with any of the transactions contemplated hereby, with the exception of GMP Securities, Inc., whose
fees and commissions are Sellers’ sole obligation.

          2.21 Complete Disclosure. No representation or warranty made by Sellers in this Agreement or
in any schedule, exhibit, certificate or other instrument executed by Sellers and delivered to
Purchaser pursuant to or as part of this Agreement on the date hereof or at Closing contains any
untrue statement of material fact or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the circumstances in
which they were furnished.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser
makes the representations and warranties set forth in this
Article III to Sellers,
as of the date hereof, and again at and as of the Closing Date.

          3.1 Organization, Standing and Power. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Purchaser has full corporate
power and authority to own, lease and operate its properties and to carry on its business as now
being conducted.

          3.2 Authority; Binding Agreement. Purchaser has full corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly
authorized, executed and delivered by Purchaser and is its valid and binding obligation,
enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors’ rights
and to general equitable principles.

          3.3 Conflicts; Consents. Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor compliance by Purchaser with any of the
provisions hereof (as well as all other instruments, agreements, certificates or other documents
contemplated hereby) will (i) conflict with or result in a breach of Purchaser’s charter, by-laws
or other constitutive documents, (ii) conflict with or result in a default (or give rise to any
right of termination, cancellation, acceleration or modification) under any of the provisions of
any note, bond, lease, mortgage, indenture, license, franchise, Permit, agreement or other
instrument or obligation to which Purchaser is a party, or by which Purchaser or its properties or
assets, may be bound or affected, except for such conflict, breach or default as to which requisite
waivers or consents shall be obtained before the Closing, or (iii) violate any Law applicable to
Purchaser or its properties or assets. No consent or approval by, or any notification of or filing
with, any governmental authority or body is required in connection with the execution, delivery and
performance by Purchaser of this Agreement or the consummation of the transactions contemplated
hereby.

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          3.4 SEC Reports. Purchaser has on a timely basis filed all forms, reports and documents
required to be filed by it with the United States Securities and Exchange Commission (the “SEC”)
since December 31, 2003 (the “SEC Reports”), and no event required to be disclosed has occurred
since March 31, 2006 that has not been disclosed on a timely basis in accordance with the SEC’s
rules and regulations. All SEC Reports (x) were prepared in accordance with the requirements of
the Securities Act and the Exchange Act, as the case may be, and the rules and regulations
thereunder and (y) did not at the time they were filed with the SEC contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances under which they were
made, not misleading. Purchaser is in compliance with the applicable listing rules of Nasdaq and,
since December 31, 2003, has not received any notice from Nasdaq asserting any non-compliance with
such rules.

          3.5 Purchaser Shares. Upon delivery of the Initial Purchaser Shares and the Cash Purchase
Price by Purchaser in the manner contemplated in Section 1.5, and the delivery of the Purchased
Assets by Sellers to Purchaser, Sellers shall acquire the beneficial and legal title to the Initial
Purchaser Shares, free and clear of all Liens, except for restrictions on transfer under United
States federal and state securities laws and the restrictions set forth in this Agreement (and in
the Registration Rights Agreement) against the sale or transfer of the Purchaser Shares during the
180 days following the Closing Date, subject to the Lock-up Agreement. Upon delivery of the India
Additional Purchaser Shares and the TDMA Additional Purchaser Shares in the manner contemplated in
Section 1.7, Sellers shall acquire the beneficial and legal title to such shares, free and clear of
all Liens, except for restrictions on transfer under United States federal and state securities
laws and the restrictions set forth in this Agreement (and in the Registration Rights Agreement).
All shares of Purchaser Common Stock issued under this Agreement will be validly issued, fully paid
and nonassessable and shall have the benefit of the Registration Rights Agreement to be entered into at the Closing.

          3.6 Brokers. No agent, broker, investment banker or other Person acting on Purchaser’s behalf
or under Purchasers’ authority is or will be entitled to any broker’s or finder’s fee or any other
commission or similar fee directly or indirectly from any of the parties hereto in connection with
any of the transactions contemplated hereby, with the exception of Canaccord Adams, whose fees and
commissions are Purchaser’s sole obligation.

          3.7 No Material Adverse Change. Since December 31, 2005, except as identified and described
in the SEC Reports and except for this Agreement, there has not been:

          (a) any change in the consolidated assets, liabilities, financial condition or operating
results of Purchaser from that reflected in the financial statements included in Purchaser’s
Quarterly Report on Form 10-Q for the quarter ended December 31, 2005, except for changes in the
ordinary course of business which have not had and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate;

          (b) any declaration or payment of any dividend, or any authorization or payment of any
distribution, on any of Purchaser’s capital stock, or any redemption or repurchase of any
securities of Purchaser;

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          (c) any material damage, destruction or loss, whether or not covered by insurance to any
assets or properties of Purchaser;

          (d) any waiver, except in the ordinary course of business, by Purchaser of a material right or
of a material debt owed to it;

          (e) any satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by Purchaser, except in the ordinary course of business and which is not material to
Purchaser’s assets, properties, financial condition, operating results or business (as such
business is presently conducted and as it is proposed to be conducted);

          (f) any change or amendment to Purchaser’s Certificate of Incorporation or Bylaws, or material
change to any material contract or arrangement by which Purchaser is bound or to which any of its
assets or properties is subject;

          (g) any material labor difficulties or labor union organizing activities with respect to
Purchaser’s employees; or

          (h) any material transaction entered into by Purchaser required to be disclosed in a Current
Report on Form 8-K.

          3.8 Complete Disclosure. No representation or warranty made by Purchaser in this Agreement or
in any schedule, exhibit, certificate or other instrument
executed by Purchaser and delivered to Sellers pursuant to or as part of this Agreement on the
date hereof or at Closing contains any untrue statement of material fact or omits to state a
material fact necessary to make the statements or facts contained herein or therein not misleading
in light of the circumstances in which they were furnished.

ARTICLE IV

ADDITIONAL AGREEMENTS

          4.1 Expenses. Each party hereto shall bear its own costs and expenses incurred in connection
with the transactions contemplated by this Agreement.

          4.2 Conduct of Business.

          (a) From the date hereof until the earlier of the termination of this Agreement or the Closing
Date, except as otherwise expressly permitted by this Agreement or except with Purchaser’s prior
written consent, Sellers shall operate the Business in the ordinary course of business.

          (b) Without limiting the generality of the foregoing, except as otherwise expressly permitted
by this Agreement or except with Purchaser’s prior written consent, Sellers shall prohibit any
state of affairs or action described in Section 2.5, to the extent any of such matters relate to
the Business and are within their control, using commercially reasonable efforts.

          4.3 Further Assurances. Each of the parties hereto agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be

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done, all things necessary, proper or advisable under applicable law, to consummate and make
effective the transactions contemplated by this Agreement as expeditiously as practicable and to
ensure that the conditions to the other party’s obligations to
close as set forth in Article V
hereof are satisfied, insofar as such matters are within the control of either of them. In case at
any time after the Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, each of the parties to this Agreement shall take or cause to be taken
all such necessary action, including the execution and delivery of such further instruments and
documents, as may be reasonably requested by either party for such purposes or otherwise to
complete or perfect the transactions contemplated hereby.

          4.4 Access and Information. From the date hereof until the earlier of the Closing Date or the
termination of this Agreement, each party shall permit the other parties and their agents and
representatives to have access to such party and their officers, counsel, auditors, books and
records with respect to the Business, the Purchased Assets and the liabilities of the Business, and
the opportunity to investigate Sellers’ title to the Purchased Assets and the condition and nature
of the Purchased Assets and the liabilities of the Business, in each case upon reasonable notice
and during normal business hours. All information furnished to Purchaser by Sellers shall be
subject to the terms of the
Mutual Non-Disclosure Agreement, dated as of September 20, 2005 (the “Confidentiality
Agreement”), between Canadian Parent and Purchaser, which is hereby reaffirmed.

          4.5 Public Announcement. Until the Closing, neither Purchaser nor Sellers shall issue or
cause the dissemination of any press release or other public announcements or statements with
respect to this Agreement or the transactions contemplated hereby without the consent of the other
party, which consent will not be unreasonably withheld or delayed, except as may be required by law
or by any listing agreement with a national securities exchange or trading market (and in such case
shall use all reasonable efforts to consult the other party prior to such release or statement).

          4.6 Tax Matters.

          (a) Transfer Taxes. All recordation, transfer, documentary, excise, sales, value added, use,
stamp, conveyance or other similar Taxes, duties or governmental charges, and all recording or
filing fees or similar costs, imposed or levied by reason of, in connection with or attributable to
the Purchased Assets by Sellers to Purchaser pursuant to this Agreement or the transactions
contemplated hereby (collectively, “Transfer Taxes”) shall be borne equally by Sellers, on the one
hand, and Purchaser on the other hand.

          (b) Allocation
of Taxes. All real property Taxes, personal property Taxes and similar ad
valorem obligations levied with respect to the Purchased Assets for a taxable period which includes
(but does not end on) the day prior to the Closing Date (collectively, the “Apportioned
Obligations”) shall be apportioned between Sellers and Purchaser based on the number of days of
such taxable period that are prior to the Closing Date and the number of days of such taxable
period that are on or after the Closing Date. Sellers shall be liable, and shall indemnify
Purchaser against, the proportionate amount of Apportioned Obligations attributable to the portion
of such a taxable period ending on the Closing Date and Purchaser shall be liable

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for, and shall indemnify Sellers against, the proportionate amount of Apportioned Obligations
attributable to the portion of such a taxable period after the Closing Date.

          (c) Refunds.

               (i) Sellers shall be entitled to any refunds or credits of Taxes
attributable to or arising from taxable periods ending on or before the Closing Date with respect
to the Business.

               (ii) Purchaser shall be entitled to any refunds or credits of Taxes attributable to or arising
in taxable periods beginning after the Closing Date with respect to the Business.

               (iii) Sellers and Purchaser shall use commercially reasonable efforts to obtain any applicable
Tax refund or reduction with respect to any Taxes. Purchaser shall promptly forward to Sellers or
reimburse Sellers for any Tax refunds or
Tax credits due Sellers (pursuant to the terms of this
Article IV) after receipt thereof, and
Sellers shall promptly forward to Purchaser (pursuant to the terms of
this Article IV.) or reimburse
Purchaser for any Tax refunds or Tax credits due Purchaser after receipt thereof.

          (d) Cooperation
and Exchange of Information. In connection with the Business, the Purchased
Assets and the Assumed Liabilities, each of Sellers and Purchaser shall (i) provide the other with
such assistance as may reasonably be requested by the other party in connection with the
preparation of any Tax Return, audit or other examination by any taxing authority or judicial or
administrative proceeding relating to liability for Taxes, (ii) retain and provide the other with
any records or other information that may be relevant to such Tax Return, audit or examination,
proceeding or determination, and (iii) provide the other with any final determination of any such
audit or examination, proceeding or determination that affects any amount required to be shown on
any Tax Return of the other for any period.

          4.7 Consents of Others. Prior to the Closing, each party shall use commercially reasonable
efforts to obtain all authorizations, consents and permits required for such party to permit the
consummation of the transactions contemplated hereby, including without limitation the consents
described on Schedule 2.3. Each party shall, upon
request, cooperate in such efforts; provided,
however, that such cooperation shall not require either party to accept any material modification
to the terms of any agreement.

          4.8 Notice of Developments. Between the date of this Agreement and the earlier of the Closing
Date or the termination of this Agreement, (i) Sellers shall give prompt written notice to
Purchaser of any material development affecting the Purchased Assets, liabilities, business,
financial condition, prospects, operations or results of operations of Sellers in connection with
the Business, (ii) Purchaser shall give prompt written notice to Sellers of any material
development affecting Purchaser’s business and (iii) each party hereto will give prompt written
notice to the others of any material development affecting the ability of any such parties to
consummate the transactions contemplated hereby.

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          4.9 Non-Solicitation of Offers. Between the date of this Agreement and the earlier of the
Closing Date or the termination of this Agreement, Sellers shall not solicit any offers for, engage
in any negotiations or discussions with respect to, or provide any information with respect to
Sellers in connection with any sale, lease, transfer or other conveyance of all or any substantial
portion of the Purchased Assets. Sellers shall promptly notify Purchaser of any inquiry made to
Sellers with respect to any of the foregoing, specifying the source of such inquiry and any
proposed terms. Between the date of this Agreement and the earlier of Closing Date or termination
of this Agreement, Purchaser shall not solicit or make any offers with respect to the sale of its
fixed wireless business or the Business. Purchaser shall notify Sellers of any such solicitation
made to it that it intends to pursue, specifying the source of such inquiry and any proposed terms.

          4.10 Insurance. Prior to Closing, Sellers shall use their commercially
reasonable efforts to cooperate and provide information requested by Purchaser in order to
facilitate the replacement by Purchaser at Closing of Sellers’ current insurance coverage.

          4.11 Post-Closing Access and Confidentiality of Information. Sellers acknowledge and agree
that from and after the Closing Date, Purchaser will be entitled to copies of all documents, books,
records, agreements, and financial data of any sort relating to the Business, the Purchased Assets
and Assumed Liabilities (exclusive of the Excluded Assets and the Excluded Liabilities) maintained
at Sellers’ principal office or otherwise within the Sellers’ possession or control. Following the
Closing, Sellers acknowledge and agree that all information that they have regarding the Business,
the Purchased Assets and Assumed Liabilities (exclusive of the Excluded Assets and the Excluded
Liabilities) will constitute Purchaser’s confidential information (“Confidential Information”).
Sellers shall not disclose any Confidential
Information to any other person or use any Confidential Information for any purpose, other than as
required by Law after notice to Purchaser. For purposes of this
Section 4.11, information that has
been publicly disclosed other than by a breach by Sellers of this Agreement shall cease to be
Confidential Information.

          4.12 Litigation Support. In the event and for so long as any party actively is contesting or
defending against any charge, complaint, action, suit, proceeding, hearing, investigation, claim or
demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction on or before the Closing Date involving Sellers, each of the
other parties will cooperate with it and its counsel in the contest or defense, make available its
personnel, and provide such testimony and access to its books and records as shall be reasonably
necessary in connection with the contest or defense, all at the sole cost and expense of the
contesting or defending party (unless the contesting or defending party is entitled to
indemnification therefore under Article VI below).

          4.13 No Disclosure. Each party shall keep and cause its affiliates to keep the terms and
conditions of this Agreement, as well as information disclosed to such party under this Agreement,
confidential, except to the extent required by law and pursuant to the parties’ public reporting
obligations or to attorneys, accountants or other advisors or in connection with litigation
relating to this Agreement.

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          4.14 Employment Matters.

          (a) Schedule 4.14(a) lists the name, position, annual compensation and office location of each
of Sellers’ employees, independent contractors or consultants providing services to the Business to
whom Purchaser will make employment offers (the “Business Employees”). Purchaser will make
employment offers to all Business Employees, other than the Key Employees (as defined below), on
terms and conditions substantially similar to Purchaser’s existing employees. Purchaser shall
provide each Business Employee who accepts Purchaser’s offer of employment with severance
benefits in accordance with Purchaser’s severance policies as in effect from time to time, and
shall give such Business Employee credit, for such purpose, for such Business Employee’s period of
employment by Sellers with the same effect as if such Business Employee had been employed by
Purchaser for such period. Sellers shall not terminate the employment of any Business Employee as a
result of the execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, nor shall Sellers take any action that would impede, interfere or otherwise
compete with Purchaser’s effort to retain any Business Employee. Nothing contained in this
Agreement, however, shall preclude or limit Purchaser from changing the employment conditions of
any Business Employee in the normal and ordinary course of business or terminating any Business
Employee. The foregoing does not constitute a commitment to continue the employment of any Business
Employee of Sellers, or to provide any Business Employee of Sellers with any specified level of
compensation or benefits.

          (b) Schedule 4.14(b) identifies certain of Sellers’ employees who are designated as key
employees under this Agreement (the “Key Employees”). Each Key Employee shall be offered
employment by Purchaser after the Closing pursuant to offer letters in substantially the form
previously discussed by Purchaser and Sellers (the “Key Employee Terms”).

          (c) Certain
of Sellers employees identified on Schedule 4.14(c) who are not Business Employees
shall participate in a transition plan for a mutually agreed time, during which time such employees
shall support the transition of the Business to Purchaser following the Closing (the “Transition
Staff”). The Transition Staff shall continue to be employed by Sellers (unless employment is
terminated by such Transition Staff employee), and all employment, severance and Plan-related
obligations for such employees shall remain obligations of Sellers. Sellers shall not take any
action that would impede, interfere or otherwise compete with Purchaser’s effort to offer
employment to any Transition Staff if it so elects not later than 15 days before the expiration of
such employee’s transitional period of service. The Transition Staff, the transition services, the
fees and expenses to be paid by Purchaser for transition services and the time period during which
such employees will provide transition support to the Business are
described in Schedule 4.14(c).

          (d) Canadian Parent shall provide certain location services to Purchaser to assist it in
establishing a presence in Calgary. For a period of three months following the Closing, Canadian
Parent shall provide office space and office facilities (the “Office Space and Facilities”) for any
Business Employee in Calgary at no cost to Purchaser. After the initial three month period, for up
to five additional months, Canadian Parent will provide Office Space and Facilities to Purchaser at
a rate of $500 per employee, per month, such cost to be invoiced by Canadian
Parent, and paid by
Purchaser, on a monthly basis. At Purchaser’s request, Canadian

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Parent agrees to use commercially
reasonable efforts to assist Purchaser in securing independent internet services for its
Calgary-based employees, with the cost of such services to be paid directly by Purchaser.

          4.15 Non-competition. At the Closing, Sellers shall enter into the Non-
compete Agreement with Purchaser in the form of Exhibit B (the “Non-compete Agreement”).

          4.16 Lock-up Agreement and Registration Rights Agreement. At the Closing, Sellers shall enter
into a (a) Lock-up Agreement with Purchaser in the form of
Exhibit C (the “Lock-up Agreement”),
which agreement will grant Sellers certain rights with respect to Purchaser’s board of directors in
exchange for accepting restrictions on the Purchaser Shares, and (b) a Registration Rights
Agreement with Purchaser in the form of Exhibit D (the “Registration Rights Agreement”), which will
govern Purchaser’s registration obligations with respect to the Purchaser Shares.

          4.17 Financial Statements.

          (a) Immediately after the date of this Agreement, Sellers shall (i) prepare the historical
financial statements including balance sheets, statements of operations, statements of cash flows
and accompanying footnotes of the Business for the number of most recently completed fiscal years
of Sellers ending prior to Closing that Purchaser will be required to file with the SEC on Form 8-K
under Rule 3-05 of Regulation S-X; (ii) engage KPMG LLP (“KPMG”) to conduct an audit of and report
on the historical financial statements under (i) above; (iii) prepare the unaudited interim
financial statements and accompanying footnotes for all periods of the current and prior fiscal
year that Purchaser will be required to file interim financial statements with the SEC on Form 8-K
under Rule 3-05 of Regulation S-X; and (iv) engage KPMG to perform a review of such unaudited
interim financial statements under (iii) above in accordance with SAS 100.

          (b) Sellers agree that (i) the audited historical and unaudited interim financial statements
will be prepared in United States dollars in accordance with US GAAP; and (ii) Sellers shall
provide Purchaser the audited and unaudited financial statements
required by Section 4.17(a) as
soon as practicable but no later than 60 days after Closing.

          (c) In connection with the audit to be performed by KPMG, Sellers agree to (i) provide KPMG
with full and timely assistance and access to, and to examine and make copies of, all books and
records of Sellers relating to the Business; (ii) close the books of the Business in accordance
with US GAAP; (iii) prepare all appropriate income tax provisions; (iv) draft the financial
statements and footnotes of the Business; (v) execute reasonable and customary “representation
letters” upon completion of the audit prior to the issuance of KPMG’s audit report and (vi) if
necessary, “carve out” the necessary financial information and allocate corporate expenses in
accordance with Staff Accounting Bulletin No. 55 for the audited historical financial statements of
the Business to comply with the SEC’s rules and regulations.

          (d) Purchaser agrees to promptly reimburse Sellers for all reasonable out-of-pocket expenses
incurred by Sellers in the performance of their obligations under
this Section 4.17, including but
not limited to fees and expenses of KPMG and any third parties engaged to

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provide accounting and US GAAP consulting services in connection with the preparation of the
audited financial statements.

          4.18 Sellers Closing Documents. At the Closing, Sellers shall deliver or cause to be delivered
to Purchaser:

          (a) a duly executed bill of sale, in form and substance to the reasonable satisfaction of
Purchaser;

          (b) a duly executed assignment and assumption agreement, in form and substance to the
reasonable satisfaction of Purchaser;

          (c) an assignment for each of the leases, subleases, licenses or other Contracts in respect of
the Leased Real Property;

          (d) assignments for any registrations and applications included in the intellectual property
to be assigned pursuant to Section 1.2(a)(viii), in such form or forms as shall be recordable in
all jurisdictions in which such registrations have been made or such applications have been filed;

          (e) all such other deeds, endorsements or other instruments as shall be requested by Purchaser
to vest in Purchaser good and marketable title to all of the Purchased Assets, free and clear of
all Liens other than Permitted Liens;

          (f) a receipt, in a form satisfactory to Purchaser, acknowledging receipt of the Cash Purchase
Price and the Initial Purchaser Shares in satisfaction in full of Purchaser’s obligations pursuant
to Section 1.5;

          (g) an opinion of Sellers’ counsel dated as of the Closing Date, in a form customary for like
transactions and reasonably acceptable to Purchaser;

          (h) evidence acceptable to Purchaser in its sole discretion, that all Liens identified on
Schedule 2.2(a) have been prior to Closing, or at Closing will be, properly terminated or released;

          (i) a certificate of good standing (or equivalent document) in respect of each of the Sellers
certified by an appropriate official in Sellers’ jurisdiction of incorporation or formation, dated
as of a date not more than ten days prior to the Closing Date;

          (j) a certificate, dated as of the Closing Date, duly executed by an authorized officer of
each Seller certifying that:

               (i) the
conditions set forth in Sections 5.1(a), 5.1(c)
and 5.1(d) have been fulfilled;

               (ii) all documents to be executed by Sellers and delivered at the
Closing, including all documents listed in this
Section 4.18 and Section 5.1, have been
executed by duly authorized officers of Sellers; and

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               (iii) (A) Canadian Parent’s articles of incorporation and bylaws, including all amendments
thereto, attached to the certificate are true, correct and complete, (B) US Seller’s certificate of
formation and LLC agreement, including all amendments thereto, attached to the certificate are
true, correct and complete, (C) such organizational documents have been in full force and effect in
the form attached since the date of the adoption of the resolutions referred to in clause (D) below
and no amendment to such organizational documents has occurred since the date of the last amendment
annexed thereto, if any, (D) the resolutions adopted by Canadian Parent’s and US Seller’s board of
directors authorizing the execution, delivery and performance of this Agreement by Canadian Parent
and US Seller, respectively, which are attached to the certificate, were duly adopted by unanimous
written consent or at a duly convened meeting thereof, at which a quorum was present and acting
throughout, remain in full force and effect, and have not been amended, rescinded or modified,
except to the extent attached thereto, and (E) no authorization by any of Canadian Parent’s
stockholders is required for Canadian Parent or US Seller to authorize, execute, deliver or perform
this Agreement; and

          (k) such other documents, certificates or instruments as it may reasonably request, and all
actions and proceedings hereunder and all documents and other papers required to be delivered by
Sellers hereunder or in connection with the consummation of the transactions contemplated hereby,
and all other related matters, shall be reasonably acceptable to Purchaser as to their form and
substance.

          4.19 Purchaser Closing Documents. At the Closing, Purchaser shall deliver or cause to be
delivered to Sellers:

          (a) a certificate or certificates for the Initial Purchaser Shares duly registered to or to
the order of Sellers;

          (b) the Cash Purchase Price by wire transfer of same day funds to an account designated by
Sellers at least one Business Day prior to the Closing Date;

          (c) an opinion of Purchaser’s counsel dated as of the Closing Date in a form customary for
like transactions and reasonably accepted to Sellers;

          (d) a certificate of good standing in respect of Purchaser certified by an appropriate
official in Purchaser’s jurisdiction of incorporation, dated as of the date not more than ten days
prior to the Closing Date;

          (e) a certificate, dated as of the Closing Date, duly executed by an authorized officer of
Purchaser, certifying that;

               (i) the
conditions set forth in Sections 5.2(a), 5.2(c) and
5.2(d) have been fulfilled;

               (ii) all documents to be executed by Purchaser and delivered at the
Closing, including all documents listed in this
Section 4.19 and Section 5.2, have been duly
executed by a duly authorized officer of Purchaser; and

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               (iii) (A) Purchaser’s Articles of Incorporation and By-laws, including all amendments thereto,
attached to the certificate are true, correct and complete, (B) such organizational documents have
been in full force and effect in the form attached since the date of the adoption of the
resolutions referred to in clause (C) below and no amendment to such organizational documents has
occurred since the date of the last amendment annexed thereto, if any, (C) the resolutions adopted
by Purchaser’s board of directors authorizing the execution, delivery and performance of this
Agreement, which are attached to the certificate, were duly adopted by unanimous written consent or
at a duly convened meeting thereof, at which a quorum was present and acting throughout, remain in
full force and effect, and have not been amended, rescinded or modified except to the extent
attached thereto, and (D) no authorization by any of Purchaser’s stockholders is required for
Purchaser to authorize, execute, deliver or perform this Agreement; and

          (f) such other documents, certificates or instruments as Sellers may reasonably request, and
all actions and proceedings hereunder and all documents and other papers required to be delivered
by Purchaser hereunder or in connection with the consummation of the transactions contemplated
hereby, and all other related matters, shall be reasonably acceptable to Sellers as to their form
and substance.

          4.20 Collection of Accounts Receivable. Purchaser agrees that it shall not take any action to
interfere with Sellers’ efforts to collect accounts receivable or any unbilled amounts owed for
good or services provided by Sellers prior to the Closing Date.

     ARTICLE V

CLOSING CONDITIONS

          5.1 Conditions to Obligations of Purchaser. Purchaser’s obligations to enter into the Closing
are subject to the satisfaction, at or prior to the Closing, of the following conditions, unless
waived by Purchaser:

          (a) Covenants,
Representations and Warranties. Sellers’ representations and warranties
contained herein shall be true and correct as of the date hereof and again at and as of the Closing
Date, except for any changes resulting from activities or transactions which may have taken place
after the date hereof and which are permitted or contemplated by this Agreement and except to the
extent that such representations and warranties are expressly made as of another specified date
and, as to such representation, the same shall be true as of such
specified date; provided, that
this condition shall be deemed satisfied unless the failure of such representations and warranties
to be true and correct would, or could reasonably be anticipated to, have a Material Adverse Effect
on the Business. Sellers shall have performed and complied in all material respects with all
covenants and agreements required to be performed or complied with by them on or prior to the
Closing Date.

          (b) Governmental
Approvals. All notices, reports, registrations and other filings with, and
all consents, approvals and authorizations from, any governmental entity shall have been made or
obtained, as the case may be, except for any such filings and approvals the failure of which to
make or obtain would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Business.

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          (c) No
Injunction. No Law shall have been enacted, entered, promulgated or enforced by any
Governmental Authority that prohibits the consummation of all or any part of the transactions
contemplated by this Agreement and the other agreements, certificates and documents delivered in
connection herewith, and no action or proceeding shall be pending or threatened by any Governmental
Authority or other Person seeking any such order or decree or seeking to recover any damages or
obtain other relief as a result of the consummation of such transactions.

          (d) Consents
and Waivers. Purchaser shall have received copies of all duly executed and
delivered waivers and consents contemplated by
Section 2.3 and Schedule 2.3, all in form and
substance reasonably satisfactory to Purchaser.

          (e) Material
Adverse Change. There shall have been no change, effect or circumstance that has
caused, or could reasonably be anticipated to cause, a Material Adverse Effect on the Business.

          (f) Key
Employee Agreements. Each Key Employee shall have entered into an employment agreement
with Purchaser on substantially the terms and conditions described in the Key Employee Terms. If
any such employment agreement is not concluded on or before the earlier of the Closing Date and
eight days after the date of this Agreement, Purchaser may terminate this Agreement by giving
written notice to Sellers by 8:00 p.m. Central time on the earlier of such dates. If this Agreement
is not so terminated, the condition in this Section 5.1(f) shall be deemed waived by Purchaser.

          (g) Ancillary
Agreements. Sellers shall have entered into the Lock-up Agreement, Non-compete
Agreement and Registration Rights Agreement (the “Ancillary Agreements”).

          5.2 Conditions to Obligations of Sellers. The obligations of Sellers to perform this Agreement
are subject to the satisfaction, at or prior to the Closing, of the following conditions, unless
waived by Sellers:

          (a) Covenants,
Representations and Warranties. Purchaser’s representations and warranties
contained herein shall be true and correct in all material respects as of the date hereof, except
for any changes resulting from activities or transactions which may have taken place after the date
hereof and which are permitted or contemplated by this Agreement or which have been entered into in
the ordinary course of business and except to the extent that such representations and warranties
are expressly made as of another specified date and, as to such representation, the same shall be
true as of such specified date. Purchaser shall have performed and complied in all material
respects with all covenants and agreements required to be performed or complied with by
it on or prior to the Closing Date.

          (b) Governmental
Approvals. All notices, reports, registrations and other filings with, and
all consents, approvals and authorizations from, any governmental entity shall have been made or
obtained, as the case may be, except for any such filings and approvals the failure of which to
make or obtain would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

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          (c) No
Injunction. No Law shall have been enacted, entered, promulgated or enforced by any
Governmental Authority that prohibits the consummation of all or any part of the transactions
contemplated by this Agreement and the other agreements, certificates and documents delivered in
connection herewith, and no action or proceeding shall be pending or threatened by any Governmental
Authority or other Person seeking any such order or decree or seeking to recover any damages or
obtain other relief as a result of the consummation of such transactions.

          (d) Material
Adverse Change. There shall have been no change, effect or circumstance that has
caused, or could be reasonably be anticipated to cause, a Material Adverse Effect on Purchaser.

          (e) Ancillary
Agreements. Purchaser shall have entered into the Ancillary Agreements.

ARTICLE VI

INDEMNIFICATION

          6.1 Indemnification by Sellers. After the Closing and subject to the limits set forth in
Section 6.5, Sellers shall jointly and severally indemnify and hold harmless Purchaser and its
former, present and future directors, officers, employees and other agents and representatives
(collectively, the “Purchaser Indemnified Parties”) from and against any and all damages, fees,
liens, taxes, obligations, losses, claims, liabilities, demands, charges, suits, penalties, costs
and expenses (including court costs and reasonable attorneys’ fees and expenses incurred in
investigating and preparing for any litigation or proceeding) (collectively, the “Indemnifiable
Costs”) incurred or suffered by any such Person directly or indirectly arising from, by reason of,
or in connection with (i) any misrepresentation or breach of any representation or warranty of
Sellers contained in Article II, (ii) any breach by Sellers of any of their covenants or agreements
in this Agreement, (iii) any liability for Tax payable with respect to or by reason of the Business
and operations of Sellers or the ownership of their assets for all periods or portions thereof
ending on or before the Closing Date, (iv) any liability of Sellers other than an Assumed
Liability, (v) any warranty obligations assumed by Purchaser
pursuant to Section 1.3(a)(ii), to the
extent that the aggregate costs thereof exceed the reserve therefor set forth on the Closing
Balance Sheet, (vi) the failure by Sellers to comply with any applicable bulk sales law, and (vii)
the failure of any Key Employee to repay, if and when due, any prepaid retention bonus included as
a prepaid expense in the Working Capital Adjustment.

          6.2 Indemnification by Purchaser. After the Closing and subject to the limits set forth in
Section 6.5, Purchaser shall indemnify and hold harmless Sellers and
Sellers’ directors, officers, employees and other agents and representatives (collectively,
the “Seller Indemnified Parties”) from and against any and all Indemnifiable Costs incurred or
suffered by any such Person directly or indirectly arising from, by reason of or in connection with
(i) any misrepresentation or breach of any representation or warranty of Purchaser contained in
Article III, (ii) any breach by Purchaser of any of its covenants or agreements in this Agreement,
(iii) any liability for Tax payable with respect to or by reason of the Business and operations of
Purchaser or the ownership of its assets for all periods or portions thereof beginning after the
Closing Date or (iv) any Assumed Liabilities.

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          6.3 Defense of Claims.

          (a) If any legal proceeding shall be instituted, or any claim or demand made, against any
Purchaser Indemnified Party or Seller Indemnified Party (an “Indemnified Party”) in respect of
which Sellers or Purchaser may be liable hereunder (such party or parties, in such circumstance,
being referred to herein as the “Indemnifying Party”), such Indemnified Party shall give prompt
written notice thereof (the “Claim Notice”) to the
Indemnifying Party; provided, however, that any
delay in so notifying the Indemnifying Party shall relieve the Indemnifying Party of its
obligations hereunder only to the extent, if at all, that it is prejudiced by reason of such delay.
The Indemnifying Party shall have the right to defend any litigation, action, suit, demand or claim
for which indemnification is sought (a “Proceeding”) and, to the extent it elects to do so by
written notice to the Indemnified Party, assume and pay the expenses of the defense of such
Proceeding with counsel reasonably satisfactory to the Indemnified
Party; provided, however, that
the Indemnified Party shall be permitted, at its sole expense, to file any motion, answer or other
pleading that it shall deem reasonably necessary to protect its interests or those of the
Indemnifying Party and that is not prejudicial to the Indemnifying Party. In no event shall any
Indemnified Party be required to make any expenditure or bring any cause of action to establish the
Indemnifying Party’s obligations and liability under and
pursuant to this Article VI. In addition,
actual or threatened action by a Person shall not be a condition or prerequisite to the
Indemnifying Party’s indemnification obligations under this
Article VI. Except as specifically
provided below, after notice by the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such Proceeding, the Indemnifying Party shall not, as long as it diligently
conducts such defense, be liable to the Indemnified Party under this
Article VI for any fees of
other counsel or any other expenses with respect to the defense of such Proceeding, other than
reasonable costs of investigation. The Indemnified Party shall have the right to employ separate
counsel in any of the foregoing Proceedings and to participate in the defense thereof, but the
reasonable fees and expenses of such counsel shall be at the expense of the Indemnified Party
unless the Indemnified Party shall in good faith determine, upon the written advice of counsel,
that there exists actual or potential conflicts of interest which make representation by the same
counsel inappropriate, in which event the Indemnifying Party shall bear such fees and expenses.
Except to the extent specified in the immediately preceding sentence or with respect to the
reasonable fees and expenses of appropriate local counsel, the Indemnifying Party shall not be
obligated to pay the reasonable fees and expenses of more than one counsel for all such Indemnified
Parties. The Indemnified Party’s right to participate in the defense or response to any Proceeding
shall not be deemed to limit or otherwise modify its obligations
under this Article VI. In the
event that, within 20 days after receiving a Claim Notice, the Indemnifying Party fails to notify
the Indemnified Party that it elects to assume the defense, compromise or settlement of the
Proceeding described in such Claim Notice, the Indemnified Party shall have the right to undertake
the defense of such Proceeding for the account of and at the expense of the Indemnifying Party,
subject to the right of the Indemnifying Party to assume the defense of such Proceeding with
counsel reasonably satisfactory to the Indemnified Party at any time prior to the settlement,
compromise or final determination thereof upon written notice to the Indemnified Party and upon
immediate payment of all reasonable expenses t
heretofore incurred by the Indemnified Party in
connection therewith. The Indemnifying Party shall not, without the Indemnified Party’s prior
written consent, settle or compromise any Proceeding or consent to the entry of any judgment with
respect to any Proceeding; provided, however, that the Indemnifying

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Party may, without the Indemnified Party’s prior written consent, settle or compromise any such
Proceeding or consent to entry of any judgment with respect to any such Proceeding that requires
solely the payment of money damages by the Indemnifying Party and that includes as an unconditional
term thereof the release by the claimant or the plaintiff of the Indemnified Party from all
liability in respect of such Proceeding. If the Indemnified Party takes over and assumes control of
any Proceeding, the Indemnified Party shall not, without the Indemnifying Party’s prior written
consent, which consent shall not be unreasonably withheld or delayed, settle such Proceeding,
consent to entry of any judgment or enter into any settlement that provides for injunctive or other
non-monetary relief affecting the Indemnifying Party. The Indemnified Party shall cooperate, and
shall use its commercially reasonable efforts to cause its employees and the employees of any of
its respective affiliates to cooperate, with the Indemnifying Party in the defense of any
Proceeding assumed by the Indemnifying Party.

          (b) In the event any party should have a claim against any other party that does not involve a
third party claim, the party making the claim shall transmit to such other party, before expiration
of the applicable claims deadline specified in Section 6.1, a written notice describing in
reasonable detail the nature of the damage claim, an estimate of the amount of damages attributable
to such claim to the extent feasible (which estimate shall not be conclusive of the final amount of
such claim) and the basis of the party’s claim for damages under
this Article VI.

          6.4
Survival. Except as otherwise provided in this
Section 6.4, all representations and
warranties of Sellers and Purchaser contained herein shall each survive the Closing and terminate
and expire on the date that is 18 months after the Closing Date. The representations and
warranties of Sellers in Section 2.1 shall survive the Closing indefinitely. The representations
and warranties of Sellers in Section 2.6 and the
covenants of Sellers in Section 4.6 shall survive
the Closing and terminate and expire 90 days after the expiration of the applicable statute of
limitations (including extensions thereof). The representations and warranties of Purchaser in
Section 3.1 and 3.2 shall survive the Closing indefinitely. The indemnification obligations under
Article VI shall survive the Closing and expire on the date that is 18 months after the Closing
Date, except with respect to (A) indemnification claims relating
to Sections 2.1, 3.1, and 3.2,
which shall survive the Closing indefinitely, and
Sections 2.6 and 4.6, which shall survive
the Closing and terminate and expire 90 days after the expiration of the applicable statute of
limitations (including extensions thereof), and (B) any claims for, or any claims that may result
in, any liability, judgment claim, settlement loss, damage, fee, lien, tax, penalty, obligation or
expense for which indemnity may be sought hereunder of which the Indemnifying Party has received
written notice from the Indemnified Party on or before such expiration date. All agreements and
covenants of the parties in Sections 1.6, 1.7,
1.8, Article IV, Article VI and this
Article VII
shall survive the Closing until such agreements and covenants are performed or discharged in full.

          6.5 Limitation on Liability.

          (a) Sellers shall not be liable to a Purchaser Indemnified Party in respect of any
indemnification obligations under clause (i) of
Section 6.1 until the aggregate indemnification
obligation thereunder exceeds $175,000, whereupon Sellers shall be liable in full for the full
amount for which indemnification may be sought. Purchaser (on behalf of the

- 33 -

 

Purchaser Indemnified Parties) acknowledges and agrees that following the Closing: (A) the
indemnification provisions set forth in this Article VI shall be the sole and exclusive remedy for
monetary damages available to the Purchaser Indemnified Parties under this Agreement for breach of
representations and warranties, and (B) the maximum aggregate liability of Sellers shall not exceed
$3.4 million, regardless of whether the Purchaser Indemnified Parties seek indemnification or
monetary damages pursuant to this Agreement or otherwise and regardless of the form of action,
whether in contract or tort. Any indemnification claim made pursuant
to this Section 6.5(a) shall
first be set off against the proceeds of the Additional Purchaser Shares actually earned, if any,
on the date such liability is determined, priced on the basis of the average closing price of
shares of Purchaser Common Stock over the 20 trading days ending on the date that such liability is
determined.

          (b) Purchaser shall not be liable to a Seller Indemnified Party in respect of any
indemnification obligations under clause (i) of
Section 6.2 until the aggregate indemnification
obligation thereunder exceeds $175,000, whereupon Purchaser shall be liable in full for the full
amount for which indemnification may be sought. Sellers (on behalf of the Seller Indemnified
Parties) acknowledge and agree that following the Closing: (A) the indemnification provisions set
forth in this Article VI shall be the sole and exclusive remedy for monetary damages available to
the Seller Indemnified Parties under this Agreement for breach of representations and warranties,
and (B) the maximum aggregate liability of Purchaser shall not exceed $3.4 million, regardless of
whether the Seller Indemnified Parties seek indemnification or monetary damages pursuant to this
Agreement or otherwise and regardless of the form of action, whether in contract or tort.

          (c) The
provisions of Sections 6.5(a) and 6.5(b) (other than clause (A) thereof relating to
exclusive remedy) shall not apply to any indemnification obligation to the extent arising from a
liability for Taxes.

          6.6
Waiver of Certain Damages. Neither Sellers nor Purchaser shall have any obligation for
damages or to indemnify any Indemnified Party for lost profits or for consequential, incidental,
punitive or exemplary damages; provided, however, that there shall be such an indemnification
obligation, subject to the limitations and qualifications set forth
in this Article VI, with
respect to lost profits or for consequential, incidental, punitive or exemplary damages that are
awarded by a court of competent jurisdiction in a Proceeding brought or asserted by a third party
against an Indemnified Party.

ARTICLE VII

MISCELLANEOUS

          7.1 Entire Agreement. This Agreement and Exhibits hereto and the agreements to be delivered
pursuant to this Agreement contain the entire agreement among the parties with respect to the
transactions contemplated by this Agreement and, except for the Confidentiality Agreement (which
shall remain in full force and effect in accordance with its terms), supersede all prior agreements
or understandings among the parties.

          7.2 Termination. This Agreement may be terminated and the transactions contemplated hereby
may be abandoned at any time prior to the Closing as follows:

- 34 -

 

          (a) Mutual
Consent. Upon the mutual written consent of Purchaser and Sellers.

          (b) By
Purchaser.

               (i) By Purchaser, at any time after June 30, 2006, if any of the
conditions provided for in Section 5.1 shall not have been waived in writing by Purchaser or fully
satisfied prior to such date, other than by reason of a breach by Purchaser of its obligations
hereunder.

               (ii) By Purchaser, in the event of a material violation or breach by Sellers of their
agreements, representations or warranties contained in this Agreement that has rendered the
satisfaction of any condition to the obligations of Purchaser impossible, and Purchaser is not in
material violation or breach of its agreements, representations or warranties contained in this
Agreement; provided, that such violation or breach shall not have been waived or cured within 15
days following receipt by Sellers of written notice of such breach from Purchaser.

          (c) By
Sellers.

               (i) By Sellers, at any time after June 30, 2006, if any of the conditions
provided for in Section 5.2 shall not have been waived in writing by Sellers or fully satisfied
prior to such date, other than by reason of a breach by Sellers of their obligations hereunder.

               (ii) By Sellers, in the event of a material violation or breach by
Purchaser of its agreements, representations or warranties contained in this Agreement that
has rendered the satisfaction of any condition to the obligations of Sellers impossible, and
Sellers are not in material violation or breach of its agreements, representations or warranties
contained in this Agreement; provided, that such violation or breach shall not have been waived or
cured within 15 days following receipt by Purchaser of written notice of such breach from Sellers.

          (d) By
Either Purchaser or Sellers. By either Purchaser or Sellers if a court of competent
jurisdiction or other Governmental Authority shall have issued a final and nonappealable order,
decree or ruling, or shall have taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement.

          7.3
Effect of Termination. Except as provided in this
Section 7.3, in the event of termination
of this Agreement pursuant to Section 7.2, written notice thereof shall forthwith be given to the
other parties, and all further obligations of the parties hereunder shall terminate, except that
the obligations set forth in Section 4.1,
Section 4.5, and the Confidentiality Agreement shall
survive in full force and effect, and no such termination shall relieve a party of its liability
for breach of its obligations under this Agreement prior to such termination. If this Agreement is
terminated as provided herein each party will redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby, whether obtained
before or after the execution hereof to the party furnishing the same.

- 35 -

 

          7.4 Specific Performance. The parties acknowledge and agree that, as a result of the actual
damages a party would sustain by reason of a breach of this Agreement, such party could not be made
whole by monetary damages, and it is accordingly agreed that such party shall have the right to
elect, in addition to any and all other remedies at law or in equity, to enforce specific
performance under this Agreement, and the non-performing party waives the defense in any such
action for specific performance that a remedy at law would be adequate.

          7.5 Descriptive Headings; Certain Interpretations.

          (a) Descriptive headings are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.

          (b) Except where the context otherwise requires, the following rules of interpretation shall
apply to this Agreement: (i) the singular includes the plural and the plural includes the singular;
(ii) “or” and “either” are not exclusive and “include” and “including” are not limiting; (iii) a
reference to any Contract includes schedules and exhibits thereto and permitted supplements and
amendments thereto, (iv) a reference to a law includes any amendment or modification to such law
and any rules or regulations issued thereunder; (v) a reference to a Person includes its permitted
successors and assigns; (vi) a reference to “dollars” or “$” shall mean United States Dollars, and
(vii) a reference in this Agreement to an Article, Section or Exhibit is to the Article, Section or
Exhibit of this Agreement.

          (c) When representations and warranties are limited to “a party’s best knowledge” (or words of
similar effect), such phrase shall be interpreted to refer to the actual knowledge of any officer
or director of such party after due inquiry.

          7.6 Notices. All notices, requests and other communications to any party hereunder shall be
in writing and sufficient if delivered personally or sent by facsimile transmission (with
confirmation of receipt) or by overnight delivery service maintaining records of receipt, addressed
as follows:

If to Purchaser, to:

Telular Corporation

647 North Lakeview Parkway

Vernon Hills, Illinois 60061

Attention: Jeff Herrmann

Facsimile: 847-573-2011

With a copy to:

Covington & Burling

1201 Pennsylvania Ave., N.W.

Washington, D.C. 20004

Attn: Michael E. Cutler, Esq.

Facsimile: 202-778-5258

- 36 -

 

If to Sellers, to:

CSI Wireless Inc. 

4110-9th Street SE 

Calgary, Alberta T2G 3C4

Attn: President and CEO 

Facsimile: 403-259-8866

with a copy to:

Burnet, Duckworth and Palmer, LLP

1400, 350-7th Avenue SW

Calgary, Alberta T2P 3N9 

Attn: Brian Borich, Esq.

Facsimile: 403-260-0332

or to such other address or facsimile number as the party to whom notice is to be given may have
furnished to the other parties in writing in accordance herewith. Each such notice, request or
communication shall be effective when delivered to the address
specified in this Section 7.6.

          7.7 Counterparts, Facsimile Transmission. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which counterparts collectively
shall constitute one instrument. Signatures sent to the other parties by facsimile or other
electronic transmission shall be binding as evidence of acceptance of the terms hereof by such
signatory party.

          7.8
Waiver of Bulk Sales Laws. Without limitation of the
provisions of Section 6.1, Purchaser
hereby waives compliance by Sellers with any applicable bulk sales or bulk transfer laws.

          7.9 Benefits of Agreement. All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and assigns.
This Agreement is for the sole benefit of the parties hereto and not for the benefit of any third
party, other than any Person entitled to indemnity under
Article VI.

          7.10 Amendments and Waivers. No modification, amendment or waiver, of any provision of or
consent required by, this Agreement, nor any consent to any departure herefrom, shall be effective
unless it is in writing and signed by the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for the purpose for which given.

          7.11 Assignment. This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by any party hereto without the prior written consent of the other
parties hereto, provided, however, that Purchaser may assign all or part of its rights and
obligations hereunder to any Person directly or indirectly controlling, controlled by or under
common control with Purchaser, provided that no such assignment shall, without the consent of
Sellers, relieve Purchaser of its obligations hereunder.

- 37 -

 

          7.12 Governing Law. This Agreement shall be deemed to have been executed and delivered within
the State of New York, as if entered into by residents thereof and to be performed entirely
therein, and the rights and obligations of the parties hereto shall be shall be governed by and
construed in accordance with the law of the State of New York, without regard to any conflict of
laws principle that would apply a different state’s laws.

          7.13 Arbitration.

          (a) Any claim, action, dispute or controversy of any kind arising out of or relating to this
Agreement or concerning any aspect of performance by any party under the terms of this Agreement (a
“Dispute”) shall be resolved by mandatory and binding arbitration administered by the American
Arbitration Association (the “AAA”) pursuant to the Federal Arbitration Act (Title 9 of the United
States Code) in accordance with this Agreement and the then-applicable Commercial Arbitration Rules
of the AAA. The parties acknowledge and agree that the transactions evidenced and contemplated
hereby involve “commerce” as contemplated in Section 2 of the Federal Arbitration Act. If Title
9 of the United States Code is inapplicable to any such Dispute for any reason, such
arbitration shall be conducted pursuant to the Arbitration Act of the District of Columbia, this
Agreement and the then-applicable Commercial Arbitration Rules of the AAA. To the extent that any
inconsistency exists between this Agreement and the foregoing statutes or rules, this Agreement
shall control.

          (b) The party wishing to arbitrate a Dispute shall so advise the other party in writing, which
notice shall include the name of an arbitrator selected by such claiming party (the “Arbitration
Request Notice”). Within 30 days after its receipt of the Arbitration Request Notice, the party
receiving such notice shall notify the initiating party of the name of an arbitrator selected by
such receiving party (the “Response”). Within 30 days after the initiating party’s receipt of the
Response, the arbitrators selected by the parties shall select a third arbitrator and the three
arbitrators so determined shall constitute the arbitration panel (the “Arbitration Panel”). If the
arbitrators selected by the parties cannot agree on a third arbitrator, the third arbitrator shall
be selected in accordance with the procedures of the American Arbitration Association in Denver,
Colorado. All disputes referred to arbitration, the statute of limitations, and the remedies for
any wrongs that may be found, shall be governed by the law specified
in Section 7.12 of this
Agreement, and discovery will be allowed in connection with arbitration to the extent consistent
with the purpose of arbitration and as allowed by the Arbitration Panel. The Arbitration Panel
shall conduct a hearing within 30 days after its formation in Denver, Colorado. Within 30 days
after the hearing, the Arbitration Panel shall render a decision concerning all contested issues
considered during the arbitration and the Arbitration Panel shall notify the parties in writing of
its decision, setting forth the dollar amount awarded, if any. The Arbitration Panel shall not
grant or award any damages or compensation for loss of prospective profits or special, indirect,
consequential, punitive or exemplary damages in connection with disputes under this Agreement. The
Arbitration Panel may award attorney’s fees to a party that it determines to be the substantially
prevailing party, but only in the event the Arbitration Panel determines the non-prevailing party
did not contest the matter in good faith. The cost of the arbitration shall be borne equally by the
parties. The decision of the Arbitration Panel shall be final and binding on the parties, and
notice of award, if any, shall be given to the parties not later than 60 days after the date of the
hearing and shall set forth the award and the reasons for the award. Judgment upon the award
rendered in any arbitration may be entered in

- 38 -

 

any court of competent jurisdiction or application may be made to such court for a judicial
acceptance of the award and an enforcement, as the law of such jurisdiction may require or allow.

          (c) Confidential information disclosed during the proceedings by the parties or by witnesses
shall not be divulged by the Arbitration Panel, the administrator or the parties, unless otherwise
agreed by the parties or required by applicable law, the arbitrators, or the administrator.

          7.14 Invalid Provisions. If any provision of this Agreement is deemed or held to be illegal,
invalid or unenforceable, this Agreement shall be considered divisible and inoperative as to such
provision to the extent it is deemed to be illegal, invalid or
unenforceable, and in all other respects this Agreement shall remain in full force and effect;
provided, however, that if any provision of this Agreement is deemed or held to be illegal, invalid
or unenforceable there shall be added hereto automatically a provision as similar as possible to
such illegal, invalid or unenforceable provision and be legal, valid and enforceable. Further,
should any provision contained in this Agreement ever be reformed or rewritten by any judicial body
of competent jurisdiction, such provision as so reformed or rewritten shall be binding upon all
parties hereto.

          7.15 Remedies Cumulative. Except as otherwise specifically provided herein, the remedies of
the parties under this Agreement are cumulative and shall not exclude any other remedies to which
any party may be lawfully entitled.

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     IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed and
delivered as of the day and year first above written.

	 	 	 	 	 
	PURCHASER:	 	 
	 
	 	 	 	 
	TELULAR CORPORATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ Michael J. Boyle	 	 
	 

	 	 	 	 
	 

	 	Name: Michael J. Boyle	 	 
	 

	 	Title: President, CEO	 	 
	 
	 	 	 	 
	CANADIAN PARENT:	 	 
	 
	 	 	 	 
	CSI WIRELESS INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Cameron Olson	 	 
	 

	 	 	 	 
	 

	 	Name: Cameron Olson	 	 
	 

	 	Title: CFO and VP Finance	 	 
	 
	 	 	 	 
	US SELLER:	 	 
	 
	 	 	 	 
	CSI WIRELESS LLC	 	 
	 
	 	 	 	 
	By:

	 	/s/ Colin Maclellan	 	 
	 

	 	 	 	 
	 

	 	Name: Colin Maclellan	 	 
	 

	 	Title: Sr. Vice President &
General Manager	 	 

 

 

	 	 	 
	Schedule Index
	 	 
	 
	 	 
	Schedule 1.2(a)(i)

	 	Leased Real Property
	Schedule 1.2(b)

	 	Certain Excluded Assets
	Schedule 1.3(a)

	 	Warranty Obligations
	Schedule 2.2(a)

	 	Liens
	Schedule 2.2(b)

	 	Tangible Personal Property
	Schedule 2.3

	 	Consents and Approvals
	Schedule 2.4(a)

	 	Financial Statements
	Schedule 2.4(b)

	 	Financial Statement Principles
	Schedule 2.5

	 	Material Changes
	Schedule 2.8

	 	Intellectual Property
	Schedule 2.9

	 	Contracts
	Schedule 2.10

	 	Litigation
	Schedule 2.11(b)

	 	Permits
	Schedule 2.12(c)

	 	Severance Payments
	Schedule 2.12(e)

	 	Certain Employees
	Schedule 2.14

	 	Inventory
	Schedule 2.15

	 	Warranties
	Schedule 2.16(a)

	 	Significant Customers
	Schedule 2.16(b)

	 	Significant Vendors
	Schedule 4.14(a)

	 	Business Employees
	Schedule 4.14(b)

	 	Key Employees
	Schedule 4.14(c)

	 	Transition Staff and Transition Services
	 
	 	 
	Exhibit Index
	 	 
	 
	 	 
	Exhibit A

	 	Certain Definitions
	Exhibit B

	 	Form of Non-compete Agreement
	Exhibit C

	 	Form of Lock-up Agreement
	Exhibit D

	 	Form of Registration Rights Agreement

 

 

Exhibit A

CERTAIN DEFINITIONS

For purposes of this Agreement (including this Exhibit A):

“Business Day” means any day other than a Saturday, Sunday or any day on which banks located in the
States of New York, California and Illinois are authorized or required to be closed for the conduct
of regular banking business.

“Canadian GAAP” means the generally accepted accounting principles from time to time approved by
the Canadian Institute of Chartered Accountants, applied in a manner consistent with prior periods.

“Environment” means any and all environmental media, including without limitation ambient air,
surface water, ground water, drinking water supply, land surface and subsurface, and natural
resources.

“Environmental Laws” means any federal, state, national, provincial, regional or local Laws,
Permits, approvals, ordinances, judicial decisions, injunctions, decrees and directives pertaining
or relating to pollution, the Environment or the protection thereof, public or worker health and
safety, or to the manufacture, generation, presence, handling, storage, use, emission, discharge,
release, transportation, treatment, disposal or remediation of any Hazardous Substance or the
containment, removal or remediation thereof, all as amended and as in effect as of the date hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Governmental Authority” means any international, supranational, national, provincial, regional,
federal, state, municipal or local government, any instrumentality, subdivision, court,
administrative or regulatory agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing, importing or other
governmental or quasi-governmental authority.

“Hazardous Substances” means, whether alone or in combination, (1) any “hazardous substance,” as
defined by the United States Comprehensive Environmental Response, Compensation, and Liability Act,
(2) any “hazardous waste,” as defined by the United States Resource Conservation and Recovery Act,
or (3) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance or terms of similar import, including without limitation asbestos, lead-based paint,
deleterious substances, buried contaminants, regulated chemicals, flammable explosives, radioactive
materials, polychlorinated biphenyls, petroleum and petroleum products, and any and all other
sources of pollution or contamination, whether or not such substance is defined as hazardous under
any applicable Law.

“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended.

“Law” means any law, statute, rule, regulation, order, writ, injunction or decree.

“Nasdaq” means the Nasdaq National Market.

“Material Adverse Effect” means, with respect to a Person or a business, a material adverse effect
on the assets, financial condition, prospects, operations, results of operations of such Person or
business taken as a whole.

- A -1 -

 

“Person” means an individual, group of individuals, corporation, partnership, limited liability
company, trust, or other entity.

“Plan” shall mean any employment, change of control, severance, unemployment, insurance,
disability, death benefit or other similar plan, program, policy, practice, agreement or other
arrangement established, maintained, adopted, participated in, sponsored, contributed to, provided,
promised to provide or terminated by Sellers or under which Sellers have any current or future
obligation or liability, or under which any current or former employee, independent contractor,
officer, director or partner (or beneficiary thereof) of Sellers has or may have any current or
future right, whether
written or unwritten.

“Purchaser Common Stock” means the Common Stock, $.01 par value per share, of Purchaser.

“Purchaser Share Price” means the average closing price on Nasdaq of a share of Purchaser Common
Stock over the 25 trading days ending on the Business Day prior to the date of this Agreement.

“Purchaser Shares” means, collectively, the Initial Purchaser Shares, the India Additional
Purchaser Shares and the TDMA Additional Purchaser Shares.

“Securities Act” means the Securities Act of 1933, as amended.

“Tax” means any federal, state, provincial, local, or foreign income, gross receipts, license,
payroll, escheat, unclaimed property, employment, excise, severance, stamp, occupation, premium,
environmental, customs duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, whether computed on a separate or consolidated, unitary or combined basis or in any
other manner, including any interest, penalty, or addition thereto, whether disputed or not and
including any joint or several liability for Taxes or any obligation to indemnify or otherwise
assume or succeed to the Tax liability of any other person as a transferee or successor by contract
or otherwise, including by operation of law.

“Tax Return” means any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.

“US GAAP” means accounting principles generally accepted in the United States, applied in a manner
consistent with prior periods.

- A -2 -

 

EXHIBIT
B

Form of Non-compete Agreement

     THIS NON-COMPETE AGREEMENT (this “Agreement”), is entered into as of ___, 2006, by and
among TELULAR CORPORATION, a Delaware corporation
(“Purchaser”), CSI WIRELESS INC., a corporation incorporated under the laws of the Province of
Alberta (“Canadian Seller”), and CSI WIRELESS LLC, a limited liability company organized under the
laws of the State of Delaware (“US Seller” and together with Canadian Parent, as appropriate,
“Sellers”). Capitalized terms not otherwise defined herein shall have the respective meanings
assigned to them in the Purchase Agreement (as defined below).

WITNESSETH:

          WHEREAS, the parties have entered into that certain Asset Purchase Agreement, dated as of
April 21, 2006 (the “Purchase Agreement”), pursuant to which assets used and useful in connection
with the operation of Sellers’ fixed wireless telephone division business except the Excluded
Assets, defined in the Purchase Agreement (the “Business”), will be purchased by Purchaser (the
“Acquisition”).

          WHEREAS, Section 4.15 of the Purchase Agreement requires, as a condition to Purchaser’s
obligation to purchase the assets of Sellers at the Closing, that Sellers enter into this
Agreement.

          WHEREAS, the execution and delivery of this Agreement by the parties is a condition precedent
to complete the Acquisition under the Purchase Agreement and constitutes a material inducement for
the parties therefor .

          NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and
of the representations, warranties, conditions, agreements and premises contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:

     1. Non-competition and Non-solicitation. In order to protect the value of the goodwill and
other assets that Purchaser is acquiring pursuant to the Purchase Agreement, Sellers agree that,
during the period beginning on the Closing Date and ending on the fifth (5th)
anniversary of the Closing Date, except as otherwise provided herein or in the Purchase Agreement
with respect to the CSI Contract and the CTS Contract (each as defined in the Purchase Agreement),
Sellers shall not, directly, indirectly as a holder of at least a five percent (5%) or greater
equity interest (calculated after giving effect to the exercise of any options or the conversion of
any convertible securities issued or otherwise granted to Sellers directly or indirectly) of
another person, firm, corporation, partnership, joint venture, association or other entity
(governmental or private) (a “Person”), or as manager, agent, consultant, adviser, lender or
guarantor to or for another Person:

B-1

 

     (a) engage in the Business in the United States of America or Canada, and in each of the
states, provinces, and territories thereof;

     (b) call upon any customer or potential customer as of the Closing Date of the Business for
the purpose of soliciting, diverting or enticing away any Business of such Person from Purchaser,
or otherwise disrupting any previously established relationship existing between such Person and
Purchaser in connection with the Business;

     (c) solicit, induce, influence or attempt to influence any supplier, lessor, licensor, or any
other person who has a business relationship with Sellers on the Closing Date with respect to the
Business, or who on the Closing Date is engaged in discussions or negotiations to enter into a
business relationship with Sellers in connection with the Business, to refrain from entering into,
discontinue or reduce the extent or scope of such relationship with Purchaser; or

     (d) solicit, except through general advertisements, for employment or offer employment to any
person who is (i) an employee of or independent contractor to Sellers or Purchaser in connection
with the Business prior to the Closing and (ii) at the time of such solicitation or offer, is or
has been within 90 days prior to such solicitation or offer, an employee of or independent
contractor to Purchaser.

     2. Adequate Consideration. Sellers acknowledge that the consideration and benefits they will
receive as the result of the Closing under the Purchase Agreement are adequate consideration for
the agreements herein made by such Sellers, and that such covenants, and the time and other
limitations with respect thereto, are reasonable and properly required for the adequate protection
of Purchaser.

     3. Injunctive Relief. Sellers agree that a breach by such person of its obligations under this
Agreement would result in harm and injury to Purchaser for which damages would be an inadequate
remedy, and that Purchaser shall be entitled, as a matter of right, without limitation of any other
remedy available to it for a breach or violation of the provisions of this Agreement, to injunctive
relief in any court of competent jurisdiction, it being intended that all rights and remedies of
Purchaser under this Agreement are cumulative and nonexclusive of such other right or remedy.

     4. Termination. This Agreement shall terminate upon the fifth (5th)
anniversary of the Closing Date.

     5. Amendments and Waivers. No modification, amendment or waiver of any provision of this
Agreement, nor any consent to any departure herefrom, shall be effective unless it is in writing
and signed by the party against whom the enforcement of such modification, amendment or waiver is
sought. Such modification, amendment, waiver or consent shall be effective only in the specific
instance and for the purpose for which expressly given.

     6. Assignment. This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by any party hereto without the prior written consent

B-2

 

of the other parties hereto, provided, however, that Purchaser may assign all or part of its rights
and obligations hereunder to any Person acquiring all or substantially all of the assets of
Purchaser relating to the Business.

     7. Incorporated Provisions. The terms and provisions of Sections 7.5,
7.6, 7.7, 7.9, 7.12, 7.13, 7.14 and 7.15 of the Purchase Agreement are hereby incorporated by reference
herein and shall apply to this Agreement mutatis mutandis, as if expressly set forth herein.

[The remainder of this page is intentionally left blank]

B-3

 

     IN WITNESS WHEREOF, each of the parties has caused this Non-compete Agreement to be duly
executed and delivered as of the day and year first above written.

	 	 	 	 	 	 	 
	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	TELULAR CORPORATION	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	CANADIAN SELLER:	 	 
	 
	 	 	 	 	 	 
	CSI WIRELESS INC.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	US SELLER:	 	 
	 
	 	 	 	 	 	 
	CSI WIRELESS LLC	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

B-4

 

EXHIBIT C

Form of Lock-up Agreement

     THIS LOCK-UP AGREEMENT (this “Agreement”), is entered into as of ___, 2006, by and among
TELULAR CORPORATION, a Delaware corporation (“Purchaser”), CSI WIRELESS INC., a corporation
incorporated under the laws of the Province of Alberta (“Canadian Seller”), and CSI WIRELESS LLC, a
limited liability company organized under the laws of the State of Delaware (“US Seller” and
together with Canadian Parent, as appropriate, “Sellers”). Capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Purchase Agreement (as defined
below).

WITNESSETH:

     WHEREAS, the parties have entered into that certain Asset Purchase Agreement, dated as of
April 21, 2006 (the “Purchase Agreement”), pursuant to which assets used and useful in connection
with the operation of Sellers’ fixed wireless telephone division
business except the Excluded Assets, defined in the Purchase Agreement, will be purchased by
Purchaser (the “Acquisition”).

     WHEREAS, pursuant to the Acquisition, Purchaser will issues shares of Purchaser Common Stock
pursuant to the terms and subject to the conditions set forth in the Purchase Agreement.

     WHEREAS, Sellers have agreed to enter into this Agreement in exchange for certain rights with
respect to Purchaser’s board of directors (the “Board”).

     WHEREAS, the execution and delivery of this Agreement by the parties is a condition precedent
to complete the Acquisition under the Purchase Agreement and constitutes a material inducement for
the parties therefor.

     NOW, THEREFORE, in consideration of the foregoing recitals and for good and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:

ARTICLE I Transfer Restrictions

     Section 1.1 Transfer Restrictions. In addition to and not in substitution of the transfer
restrictions for the Purchaser Common Stock set forth in the Purchase Agreement and under
applicable federal and state securities and “blue sky” Law, Sellers hereby covenant and agree not
to, directly or indirectly, sell, offer, contract to sell, pledge, transfer the economic risk of
ownership, enter into any Contract for, or make any short sale, pledge, hypothecation or otherwise
transfer, any shares of Purchaser Common Stock acquired under the Purchase Agreement or any
Contracts or securities convertible into or exchangeable or exercisable for any other rights to
purchase or acquire

C-1

 

Purchaser Common Stock acquired under the Purchase Agreement (collectively, the “Purchaser
Securities”), until 180 days after the Closing Date (the “Lock-up Period”), except (i) with
Purchaser’s prior written consent, such consent to be granted or withheld in Purchaser’s sole and
absolute discretion or (ii) pursuant to a tender or exchange offer made to all of Purchaser’s
stockholders that the Board has recommended its stockholders accept by any person or related group
of persons which would result in the acquisition of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than
50% of the total combined voting power of Purchaser’s outstanding securities; provided, that if the
shares so tendered by Sellers are not accepted pursuant to such tender or exchange offer, upon
their return to Sellers they shall forthwith be held in accordance with the terms hereof. Without
limiting the generality of the foregoing, Sellers shall not engage in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in a transfer of
Purchaser Securities, or the economic risk of ownership thereof, during the Lock-up Period, even if
such Purchaser Securities would be disposed of by someone other than such holder or such beneficial
owner, including (A) entering into any Contract with respect to any Purchaser Securities or with
respect to any security (other than a broad-based market basket or index) that included, relates to
or derives any significant part of its value from shares of Purchaser Securities, and (B) any short
sale (whether or not
against the box) or any purchase, sale or grant of any right. Any attempted sale, assignment,
pledge, hypothecation or other transfer not in compliance with this Section 1.1 shall be null and
void and of no force or effect ab initio.

     Section 1.2 Legends.

          (a) Sellers acknowledge and agree that certificates evidencing the shares of Purchaser Common
Stock which are issued or to be issued to Sellers prior to the expiration of the Lock-up Period may
contain an appropriate restricted legend setting forth these restrictions, including the following
legend:

The shares evidenced by this Certificate may only be sold, assigned,
pledged, hypothecated or otherwise transferred in accordance with the
terms of that certain Lock-up Agreement, by and among the Corporation and
the record holder hereof (or its successors or permitted assigns). A copy
of such agreement may be obtained by any registered holder hereof upon
written request to the principal offices of the Corporation.

          (b) Sellers shall be entitled to have such restrictive legend removed from any certificates
evidencing the shares of Purchaser Common Stock or other Purchaser Securities subject hereto upon
expiration of the Lock-up Period.

     Section 1.3 No Registration of Transfers. Purchaser shall not register the transfer of any
shares of Purchaser Securities, or any Contracts therefor, of any Seller on its stock record books,
records or ledgers, at any time prior to the expiration of the Lock-up Period. Purchaser may, in it
sole discretion, issue stop-transfer instructions to each transfer agent for the Purchaser
Securities, instructing each such transfer agent not to register any transfer of any such shares
prior to the expiration of the Lock-up Period, except in strict compliance with the transfer
restrictions hereof.

C-2

 

ARTICLE II Board Rights

     Section 2.1 Until the expiry of the Lock-Up Period, Sellers shall be entitled to notice of and
to have one person attend all meetings of the Board and to have such person receive all written
resolutions of the Board, provided that (i) Sellers’ designee must be reasonably acceptable to the
Board, (ii) Sellers and Sellers’ designee shall be required to enter into an agreement with
appropriate confidentiality and insider trading restrictions, and (iii) Sellers’ designee shall not
be entitled to attend meetings or have access to information which is subject to attorney-client
privilege or in which Sellers have a conflict of interest with Purchaser. The chairman of any
meeting of the Board, in his sole discretion, may dismiss Sellers’ designee for portions of any
meeting due to the confidential nature of the matters to be discussed thereat.

ARTICLE III Miscellaneous

     Section 3.1 Voluntary Execution of Agreement. This Agreement is executed voluntarily and
without any duress or undue influence on the part or behalf of the parties hereto. Each of
Purchaser and the Sellers hereby acknowledges, represents and warrants that (i) it has read and
fully understood this Agreement and the implications and consequences thereof; (ii) it has been
represented in the preparation, negotiation, and execution of this Agreement by legal counsel of
its own choice, or it has made a voluntary and informed decision to decline to seek such counsel;
and (iii) it is fully aware of the legal and binding effect of this Agreement.

     Section 3.2 Notices. Except as otherwise provided herein, any notice, instruction or
instrument to be delivered hereunder shall be in writing and shall be effective upon receipt at the
address listed in the Purchase Agreement or at such other address specified in writing by the
addressee.

     Section 3.3 Amendment. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the parties hereto.

     Section 3.4 No Waiver. The failure of any party hereto to exercise any right, power or remedy
provided under this Agreement or otherwise available in respect hereof at law or in equity, or to
insist upon compliance by any other party hereto with its obligations hereunder, or any custom or
practice of the parties at variance with the terms hereof shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to demand such
compliance. No waiver by any party of any default, misrepresentation or breach hereunder, whether
intentional or not, shall be effective unless in writing and signed by the party against whom such
waiver is sought to be enforced, and no such waiver shall be deemed to extend to any prior or
subsequent default, misrepresentation or breach hereunder or affect in any way any rights arising
because of any prior or subsequent such occurrence.

     Section 3.5 Assignment. Neither party may assign any or all of its rights under this
Agreement, in whole or in part, to any other Person without obtaining the prior written consent or
approval of any other party hereto. Any purported assignment not in full compliance with this
Section 3.5 shall be null and void and of no force or effect ab initio. Subject to foregoing, this

C-3

 

Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and express beneficiaries hereof and their respective successors and permitted assigns.

     Section 3.6 Third-Party Beneficiaries. This Agreement is made solely for the benefit of the
parties to this Agreement and no other Person shall have or acquire any right or remedy by virtue
hereof except as otherwise expressly provided herein.

     Section 3.7 Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof; provided, that if any provision of this Agreement, as applied to any
party or to any circumstance, is adjudged by a court,
tribunal or other governmental body, arbitrator or mediator not to be enforceable in
accordance with its terms, the parties agree that such governmental body, arbitrator or mediator
making such determination shall have the power to modify the provision in a manner consistent with
its objectives such that it is enforceable, and to delete specific words or phrases, and in its
reduced form, such provision shall then be enforceable and shall be enforced.

     Section 3.8 Termination. This Agreement shall terminate upon the earlier of:

	 	(a)	 	the expiration of the Lock-up Period;
	 
	 	(b)	 	a material breach by Purchaser of the Purchase Agreement;
	 
	 	(c)	 	Purchaser’s insolvency, bankruptcy or assignment for the benefit of its creditors or the
appointment of a receiver over a material part of Purchaser’s assets; and
	 
	 	(d)	 	the mutual agreement of the parties.

     Section 3.9 Entire Agreement. This Agreement and, to the extent of the definitions defined in
the Purchase Agreement and used herein, the Purchase Agreement, constitute the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof and supersedes all
prior understandings, agreements or representations by or among the parties hereto, written or
oral, to the extent they relate in any way to the subject matter hereof or the transactions
contemplated by this Agreement. In case of any conflict between the Purchase Agreement and this
Agreement, the terms and provisions of this Agreement shall prevail.

     Section 3.10 Incorporated Provisions. The terms and provisions of Sections 7.5, 7.6, 7.7, 7.9,
7.12, 7.13, 7.14 and 7.15 of the Purchase Agreement are hereby incorporated by reference herein and
shall apply to this Agreement mutatis mutandis, as if expressly set forth herein.

[The remainder of this page is intentionally left blank]

C-4

 

     IN WITNESS WHEREOF, the parties hereto have caused this Lock-up Agreement to be duly executed
by their respective authorized officers as of the day and year first above written.

	 	 	 	 	 	 	 
	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	TELULAR CORPORATION	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	CANADIAN SELLER:	 	 
	 
	 	 	 	 	 	 
	CSI WIRELESS INC.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	US SELLER:	 	 
	 
	 	 	 	 	 	 
	CSI WIRELESS LLC	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

C-5

 

EXHIBIT D

Form of Registration Rights Agreement

     This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of ___, 2006,
by and among TELULAR CORPORATION, a Delaware corporation
(“Purchaser”), CSI WIRELESS INC., a corporation incorporated under the laws of the Province of
Alberta (“Canadian Seller”), and CSI WIRELESS LLC, a limited liability company organized under the
laws of the State of Delaware (“US Seller” and together with Canadian Parent, as appropriate,
“Sellers”).

     WHEREAS, the parties have entered into that certain Asset Purchase Agreement, dated as of
April 21, 2006 (the “Purchase Agreement”), pursuant to which assets used and useful in connection
with the operation of Sellers’ fixed wireless telephone division business will be purchased by
Purchaser (the “Acquisition”).

     WHEREAS, pursuant to the Acquisition, Purchaser will issues shares of Purchaser Common Stock
pursuant to the terms and subject to the conditions set forth in the Purchase Agreement.

     WHEREAS, Purchaser and Sellers have agreed to enter into this agreement to provide for the
registration under the Securities Act of the Purchaser Common Shares received by Sellers as
consideration in the Acquisition.

     WHEREAS, the execution and delivery of this Agreement by the parties is a condition precedent
to complete the Acquisition under the Purchase Agreement and constitutes a material inducement for
the parties therefor.

     NOW, THEREFORE, in consideration of the foregoing recitals and for good and other valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Definitions. All capitalized terms used but not defined in this Agreement have the
meanings ascribed to them in the Purchase Agreement. In addition, the following terms, as used
herein, shall have the following meanings:

          “1933 Act” means the Securities Act of 1933, as amended from time to time.

          “1934 Act” means the Securities Exchange Act of 1934, as amended from time to time.

D-1

 

          “Participating Sellers” means, with respect to a Shelf Registration Statement, the
Sellers for whom Registrable Securities have been included in such Shelf Registration Statement.

          “Prospectus” means the prospectus included in the Shelf Registration Statement, as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by the Shelf Registration Statement, and all other amendments
and supplements to the Prospectus, including post-effective amendments and all material
incorporated by reference or deemed to be incorporated by reference in the Prospectus.

          “Registrable Securities” means (i) the Purchaser Shares, and (ii) any shares of Purchaser
Common Stock issued with respect to the Purchaser Shares as a result of stock splits, stock
dividends, reclassifications, recapitalizations or similar events; provided, that such Purchaser
Shares and such shares of Purchaser Common Stock shall cease to be Registrable Securities (w) when
such shares have been sold or otherwise transferred by the Sellers pursuant to an effective
registration statement under the 1933 Act, (x) when such shares have been sold or otherwise
transferred by the Sellers in a private transaction in which the transferor’s rights under this
Agreement are not assigned, (y) following the date that the Registrable Securities are transferred
pursuant to Rule 144 under the 1933 Act (“Rule 144”) or any successor rule or (z) following the
date that the Registrable Securities are transferable pursuant to Rule 144(k) under the 1933 Act or
any successor rule.

     Section 1.2 Construction. Whenever the context requires, the gender of any word used in this
Agreement includes the masculine, feminine or neuter, and the number of any word includes the
singular or plural. Unless the context otherwise requires, all references to articles, sections and
paragraphs refer to articles, sections and paragraphs of this Agreement, and the terms “hereof,”
“herein” and other like terms refer to this Agreement as a whole.

     Section 1.3 Headings. The headings and subheadings in this Agreement are included for
convenience and identification only and are in no way intended to describe, interpret, define or
limit the scope, extent or intent of this Agreement or any provision hereof.

ARTICLE II

REGISTRATION RIGHTS

     Section 2.1 Registration Statement.

          (a) Purchaser shall prepare and file with the Securities and Exchange Commission (the
“Commission”) a shelf registration statement (as amended and supplemented from time to time, the
“Shelf Registration Statement”) with respect to the Registrable Securities in accordance with Rule
415 under the 1933 Act and will use its commercially reasonable efforts to cause such Shelf
Registration Statement to be declared effective within 180 days of the Closing Date and, except as
provided in Section 3.4(b) hereof, to keep such Shelf Registration Statement continuously effective
and in compliance with the 1933 Act and usable for resale of the Registrable Securities until the
date upon which all Registrable Securities held by the Sellers on the date of the Closing have been
sold pursuant to the Shelf Registration Statement or have

D-2

 

otherwise ceased to be “Registrable Securities” as defined herein (such period being called the
“Shelf Registration Period”).

          (b) The Shelf Registration Statement shall be on Form S-3 if Purchaser is eligible to use such
form to register the resale of the Registrable Securities. If Purchaser is not eligible to use Form
S-3, the Shelf Registration Statement shall be on such other appropriate form permitting
registration of such Registrable Securities for resale by Sellers.

          (c) Purchaser’s obligations under Section 2.1(a) hereof shall be subject to the Registration
Postponement Period as provided in Section 3.4(a) hereof.

     Section 2.2 Holding Period. Sellers acknowledge and agree that the shares of Purchaser Common
Stock received by Sellers in connection with the Purchase Agreement may not be sold or otherwise
transferred until 180 days after the Closing Date. Sellers further acknowledge and agree that any
attempted sale or transfer of any such shares of Purchaser Common Stock in violation of the
provisions of this Agreement or the share certificates shall be void, and Purchaser shall not
record any such attempted sale or transfer on its books or treat any purported transferee of such
shares of Purchaser Common Stock as the owner thereof for any purpose.

ARTICLE III

REGISTRATION PROCEDURES

     Section 3.1 Filings; Information.

          (a) In connection with any Shelf Registration Statement filed pursuant to
Section 2.1 hereof and subject to Section 3.4 hereof, Purchaser shall:

               (i) if requested by a Participating Seller, prior to filing the Shelf Registration Statement,
the Prospectus or any amendments or supplements thereto, furnish to such Participating Seller
copies thereof without charge;

               (ii) prepare and file with the Commission such amendments and supplements to the Shelf
Registration Statement and the Prospectus as may be necessary to keep the Shelf Registration
Statement effective during the Shelf Registration Period;

               (iii) furnish to each Participating Seller, without charge, such number of conformed copies of
the Shelf Registration Statement and of each amendment and supplement thereto (in each case
including all exhibits), such number of copies of the Prospectus (including each preliminary
prospectus), and such documents incorporated by reference in the Shelf Registration Statement or
the Prospectus as such Participating Seller may reasonably request in order to facilitate the
disposition of the Registrable Securities; and Purchaser hereby consents (except as otherwise
provided in Sections 3.1(b)(ii) or 3.4(b) hereof) to the use of the Prospectus or any amendment or
supplement thereto in accordance with applicable law by the Participating Sellers, in each case in
the form most recently provided by Purchaser, during the Shelf Registration Period in connection
with the offering and sale of the Registrable Securities covered by the Prospectus or any amendment
or supplement thereto in accordance with applicable law;

D-3

 

               (iv) use its commercially reasonable efforts to register or qualify all Registrable Securities
covered by the Shelf Registration Statement under the securities laws of such jurisdictions as the
Participating Sellers shall request, and to keep such registration or qualification in effect for
the Shelf Registration Period; provided, that Purchaser shall not be required to (A) qualify
generally to do business as a foreign corporation in any such jurisdiction wherein it is not so
qualified, (B) consent to general service of process in any such jurisdiction or (C) subject itself
to taxation in any jurisdiction where it would not otherwise be liable for such taxes;

               (v) promptly notify each Participating Seller in writing during the Shelf Registration Period
(A) of the happening of any event as a result of which the Prospectus included in the Shelf
Registration Statement, as then in effect, includes as to Purchaser an untrue statement of a
material fact or omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading, and at the written request of the Participating Seller, prepare and furnish to the
Participating Sellers a reasonable number of copies of a supplement to or an amendment of the
Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, the Prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading, (B) of the
issuance
by the Commission of any stop order suspending the effectiveness of the Shelf Registration
Statement or the initiation or threatening of any proceedings for that purpose, and (C) of the
receipt by Purchaser of any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or threat of any proceeding
for such purpose;

               (vi) use its commercially reasonable efforts to obtain the withdrawal of any order suspending
the effectiveness of the Shelf Registration Statement or any post-effective amendment thereto or
any order suspending or preventing the use of any Prospectus or suspending the qualification of any
Registrable Securities for sale in any jurisdiction, in each case as promptly as practicable; and

               (vii) if reasonably requested by the Participating Sellers, in writing, use its commercially
reasonable efforts to list prior to the effective date of the Shelf Registration Statement all
Registrable Securities covered by the Shelf Registration Statement, to the extent they are not
already so listed, on the Nasdaq, or if Purchaser Common Stock is not traded on the Nasdaq, the
principal exchange on which Purchaser Common Stock is traded.

          (b) In connection with the Shelf Registration Statement filed pursuant to Section 2.1 hereof,
each Participating Seller shall:

               (i) upon receipt of any notice from Purchaser in accordance with Section 3.1(a)(v)(A), (B) or
(C) hereof (with respect to (C), only with respect to the jurisdiction suspending qualification),
immediately discontinue the offer and sale of Registrable Securities pursuant to the Prospectus
until receipt by the Participating Sellers of copies of an amended or supplemented Prospectus or
until Purchaser notifies the Participating Sellers in writing that the

D-4

 

applicable suspension has been removed; and, if so directed by Purchaser, the Participating Sellers
will deliver to Purchaser all copies, other than permanent file copies then in the Participating
Sellers’ possession, of the most recent Prospectus at the time of receipt of such notice;

               (ii) cooperate with Purchaser in connection with the preparation and filing of any Shelf
Registration Statement and, upon written request from Purchaser, each Participating Seller shall
promptly furnish in writing to Purchaser such information regarding such Participating Seller, the
distribution of the Registrable Securities and other matters as may be required by applicable law,
rule or regulation for inclusion in the Shelf Registration Statement (or any amendment or
supplement thereto), it being agreed that the provision of such information by such Participating
Seller to Purchaser shall be a condition precedent to Purchaser’s obligations under Sections 2.1
and 3.1 hereof with respect to the Registrable Securities held by such Participating Seller.

               (iii) during the Shelf Registration Period, not (A) effect any stabilization transactions or
engage in any stabilization activity in connection with Purchaser Common Stock or other equity
securities of Purchaser in contravention of Regulation M under the 1934 Act, or (B) permit any
“Affiliated Purchaser” (as that term
is defined in Regulation M under the 1934 Act) to bid for or purchase for any account in which
such Participating Seller has a beneficial interest, or attempt to induce any other Person to
purchase, any shares of Purchaser Common Stock or other equity securities of Purchaser in
contravention of Regulation M under the 1934 Act; and

               (iv) (A) offer to sell, sell or otherwise distribute the Registrable Securities in reliance
upon the Shelf Registration Statement only after the Shelf Registration Statement is declared
effective under the 1933 Act, (B) distribute the Registrable Securities only in accordance with the
manner of distribution contemplated by the Prospectus (if such sale or distribution is made in
reliance upon the Shelf Registration Statement), and (C) promptly report to Purchaser in writing
distributions of Registrable Securities made by such Participating Seller pursuant to the
Prospectus.

          (c) Except as otherwise expressly provided herein, Purchaser shall not be required to take any
action or enter into any agreement with any Participating Seller or any third party for or on
behalf of any Participating Seller in connection with the disposition of Registrable Securities
(including, without limitation, underwriting agreements).

     Section 3.2 Registration Expenses. In connection with the Shelf Registration Statement,
Purchaser shall pay the following expenses incurred in connection with such registration: (i)
registration and filing fees and expenses associated with filings required by the Commission and
the Nasdaq, (ii) reasonable fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel for Purchaser in connection with blue sky
qualifications of the Registrable Securities), (iii) printing, messenger and delivery expenses,
(iv) fees and expenses incurred in connection with the listing of the Registrable Securities in
accordance with Section 3.1(a)(vii), (v) reasonable fees and expenses of counsel and independent
certified public accountants for Purchaser and (vi) the reasonable fees

D-5

 

and expenses of any additional experts retained by Purchaser in connection with such
registration.

     Section 3.3 Termination. This Agreement shall terminate and be of no further force or effect
upon the expiration of the Shelf Registration Period; provided, however, that the provisions of
Article IV hereof shall survive the termination of this Agreement for one year, after which such
provisions shall terminate and be of no further force and effect.

     Section 3.4 Information Blackout.

          (a) In the event that, prior to the filing or effectiveness of the Shelf
Registration Statement, (i) Purchaser, after consultation with counsel, determines reasonably and
in good faith that the sale of Registrable Securities pursuant to the Shelf Registration Statement
would require disclosure of non-public material information that
Purchaser is not prepared to disclose and (ii) Purchaser gives the Sellers written notice of such
determination, Purchaser shall, notwithstanding the provisions of Section 2.1 hereof, be entitled
to postpone the filing of the Shelf Registration Statement otherwise required to be prepared and
filed by it pursuant to Section 2.1(a) hereof or delay its efforts to cause such Shelf Registration
Statement to be declared effective by the Commission (the number of days of any such postponement
is hereinafter called a “Registration Postponement Period”). No individual Registration
Postponement Period shall last more than ninety (90) days and all Registration Postponement Periods
shall, in the aggregate, constitute less than one hundred eighty (180) days.

          (b) At any time when the Shelf Registration Statement is effective, upon written notice from
Purchaser to the Sellers that Purchaser, after consultation with counsel, has determined reasonably
and in good faith that the sale of Registrable Securities pursuant to the registration statement
would require disclosure of non-public material information that Purchaser is not prepared to
disclose, Sellers shall suspend sales of the Registrable Securities pursuant to the Shelf
Registration Statement until the earlier of (i) sixty (60) days after Purchaser notifies Sellers of
such good faith determination, or (ii) such time as Purchaser notifies Sellers that such material
information has been disclosed to the public or has ceased to be material or that sales pursuant to
the Shelf Registration Statement may otherwise be resumed (the number of days from such suspension
of sales by Sellers until the day when such sales may be resumed hereunder is hereinafter called a
“Sales Blackout Period”).

          (c) No Registration Postponement Period or Sales Blackout Period shall preclude any sales of
Registrable Securities that Sellers may effect in compliance with Rule 144; provided, that Sellers
otherwise conform with the requirements under the 1933 Act and the 1934 Act.

          (d) Sellers agree that, upon receipt of any notice from Purchaser pursuant to this Section
3.4, Sellers will (i) keep confidential such notice, its content and any information provided by
Purchaser in connection therewith, and (ii) if so directed by Purchaser, deliver to Purchaser all
copies then in Sellers’ possession, other than permanent file copies, of the Prospectus relating to
such Registrable Securities current at the time of receipt of such notice.

D-6

 

ARTICLE IV

INDEMNIFICATION AND CONTRIBUTION

     Section 4.1 Indemnification By Purchaser. Purchaser agrees to indemnify and hold harmless
each Seller and each Person, if any, who controls such Seller within the meaning of either Section
15 of the 1933 Act or Section 20 of the 1934 Act (each, a “Seller Indemnified Party”) from and
against any and all losses, claims, damages and liabilities, joint or several (including, without
limitation, any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim, except as otherwise provided in Section 4.3 hereof),
insofar as such losses, claims, damages or liabilities are caused by (i) any untrue statement or
alleged untrue statement
of a material fact contained in the Shelf Registration Statement or the Prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, or (ii) any violation by
Purchaser of the 1933 Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or any state securities law in connection with the
offering covered by the Shelf Registration Statement; provided, however, that Purchaser shall not
be liable insofar as such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission (a) made in reliance upon and in
conformity with written information furnished to Purchaser by any Seller Indemnified Party for use
in the Shelf Registration Statement or the Prospectus (or any amendment or supplement thereto) or
the plan of distribution furnished in writing to Purchaser by or on behalf of such Seller
Indemnified Party expressly for use therein, or (b) that was corrected in an amendment or
supplement to the Shelf Registration Statement or the Prospectus and Purchaser had furnished copies
thereof to the Sellers prior to the relevant date of sale by the Seller to the Person asserting
such loss, claim, damage or liability.

     Section 4.2 Indemnification By Sellers. Each Seller agrees to indemnify and hold harmless
Purchaser and each Person, if any, who controls Purchaser within the meaning of either Section 15
of the 1933 Act or Section 20 of the 1934 Act, and any other holder of Registrable Securities
selling securities under such Shelf Registration Statement from and against any and all losses,
claims, damages and liabilities, joint or several (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating any such action or
claim, except as otherwise provided in Section 4.3 hereof), insofar as such losses, claims, damages
or liabilities are caused by (i) any untrue statement or alleged untrue statement of a material
fact contained in the Shelf Registration Statement or the Prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, but only with reference to information
furnished in writing by or on behalf of such Seller expressly for use in the Shelf Registration
Statement or the Prospectus or any amendments or supplements thereto, or (ii) any violation by such
Seller of the 1933 Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the 1933 Act, the 1934 Act or any state securities law in connection with the
offering covered by the Shelf Registration Statement.

D-7

 

     Section 4.3 Conduct of Indemnification Proceedings. Each party indemnified under Sections 4.1
or 4.2 above shall, promptly after receipt of notice of a claim or action against such indemnified
party in respect of which indemnity may be sought hereunder, notify the indemnifying party in
writing of the claim or action; provided, that the failure to notify the indemnifying party shall
not relieve it from any liability that it may have to an indemnified party on account of the
indemnity agreement contained in Sections 4.1 or 4.2 above except to the extent that the
indemnifying party was actually prejudiced by such failure. If any such claim or action shall be
brought against an indemnified party, and it shall have notified the indemnifying party thereof,
unless in the indemnifying
party’s reasonable judgment a conflict of interest between such indemnified party and
indemnifying party may exist in respect of such claim, the indemnifying party shall be entitled to
participate therein, and, to the extent that it wishes to assume the defense thereof. After notice
from the indemnifying party to the indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to the indemnified party for any legal
or other expenses subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that the indemnifying party shall pay such expense, to the extent
reasonable, if representation of such indemnified party by counsel retained by the indemnifying
party would be reasonably likely to result in a conflict of interest between the indemnified party
and the indemnifying party. Any indemnifying party against whom indemnity may be sought under
Sections 4.1 or 4.2 shall not be liable to indemnify an indemnified party if such indemnified party
settles such claim or action without the written consent of the indemnifying party. No indemnifying
party shall consent to the entry of any judgment or enter into any settlement without the consent
of the indemnified party which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party a release from all liabilities in respect of such
claim or litigation and no indemnifying party may agree to any settlement of any such claim or
action, other than solely for monetary damages for which the indemnifying party shall be
responsible hereunder, the result of which shall be applied to or against the indemnified party,
without the prior written consent of the indemnified party, which consent shall not be unreasonably
withheld, delayed or conditioned. In any action hereunder as to which the indemnifying party has
assumed the defense thereof, the indemnified party shall continue to be entitled to participate in,
but not control, the defense thereof, with counsel of its own choice, but, except as otherwise
provided in the third sentence of this Section 4.3, the indemnifying party shall not be obligated
hereunder to reimburse the indemnified party for the costs thereof.

     Section 4.4 Limitation on Indemnity. The indemnity provided for hereunder shall not inure to
the benefit of any indemnified party to the extent that the claim is based on such indemnified
party’s failure to comply with the applicable prospectus delivery requirements of the 1933 Act as
then applicable to the Person asserting the loss, claim, damage or liability for which indemnity is
sought.

     Section 4.5 Contribution. If the indemnification provided for in this Article IV is held by a
court of competent jurisdiction to be unavailable to an indemnified party in respect of any losses,
claims, damages or liabilities referred to herein, then in lieu of such indemnification the
indemnifying party shall, to the extent permitted by applicable law, contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity in
such proportion as is appropriate to reflect the relative fault of the indemnifying

D-8

 

party, on the one hand, and the indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as
well as any other relevant equitable considerations. The relative fault of the indemnifying party
and the indemnified party shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information supplied by the
indemnifying party on one hand or by or on behalf of the indemnified party on the other and the
parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

     Purchaser and Sellers agree that it would not be just and equitable if contribution pursuant
to this Section 4.5 were determined by pro rata allocation or by any other method of allocation
that does not take account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending any such action or
claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. Neither Purchaser nor Sellers shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed.

ARTICLE V

MISCELLANEOUS

     Section 5.1 Rule 144. Purchaser covenants that it will timely file any reports required to be
filed by it under the 1934 Act and that it will take such further action as Sellers may reasonably
request to the extent required from time to time to enable Sellers to sell Registrable Securities
without registration under the 1933 Act within the limitations of the exemptions provided by Rule
144, as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission. Except as set forth in Section 2.2, nothing contained in this Agreement
shall preclude any sales of Registrable Securities that Sellers may effect in compliance with Rule
144.

     Section 5.2 Expenses. Except to the extent otherwise expressly provided in Section 3.2
hereof, each party shall pay its own expenses incident to the transactions contemplated hereby.

     Section 5.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD FOR THE CONFLICTS OF LAWS PRINCIPLES THEREOF
THAT MIGHT OTHERWISE REFER CONSTRUCTION OR INTERPRETATION OF THIS AGREEMENT TO THE SUBSTANTIVE LAW
OF ANOTHER JURISDICTION.

     Section 5.4 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY

D-9

 

ACTION OR OTHER PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED
HEREBY.

     Section 5.5 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY COURT
OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK IN RESPECT OF ANY ACTION, SUIT OR
PROCEEDING ARISING IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AND
AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE BROUGHT ONLY IN SUCH COURT (AND WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS OR ANY OTHER OBJECTION TO VENUE THEREIN); PROVIDED,
HOWEVER, THAT SUCH CONSENT TO JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO IN THIS SECTION
5.5 AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE
JURISDICTION OF SAID COURTS OR IN THE STATE OF NEW YORK OTHER THAN FOR SUCH PURPOSE. Any and all
process may be served in any action, suit or proceeding arising in connection with this Agreement
by complying with the provisions of Section 5.6. Such service of process shall have the same effect
as if the party being served were a resident in the State of New York and had been lawfully served
with such process in such jurisdiction. The parties hereby waive all claims of error by reason of
such service. Nothing herein shall affect the right of any party to service process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed against the other in
any other jurisdiction to enforce judgments or rulings of the aforementioned courts.

     Section 5.6 Notices. Except as otherwise provided herein, any notice, instruction or
instrument to be delivered hereunder shall be in writing and shall be effective upon receipt at the
addresses set forth in Section 7.6 of the Purchase Agreement or at such other address specified in
writing by the addressee.

     Section 5.7 Cumulative Remedies; Failure to Pursue Remedies. Except as otherwise provided in
Section 2.1(c) hereof, the rights and remedies provided by this Agreement are cumulative and the
use of any one right or remedy by any party shall not preclude or waive its right to use any or all
other remedies. Said rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise. Except where a time period is specified, no delay on
the part of any party in the exercise of any right, power, privilege or remedy hereunder shall
operate as a waiver thereof, nor shall any exercise or partial exercise of any such right, power,
privilege or remedy preclude any further exercise thereof or the exercise of any other right,
power, privilege or remedy.

     Section 5.8 Amendments and Waivers. Except as otherwise expressly provided
herein, no provision of this Agreement may be amended or modified except upon the written
consent of Purchaser and Sellers. Any provision of this Agreement may be waived by Purchaser and
any Seller to be bound by such waiver. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and

D-10

 

shall not affect the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.

     Section 5.9 Assignment; Binding Effect. This Agreement may not be assigned, in whole or in
part, by any party hereto without the prior written consent of Purchaser and Sellers, and any
attempt to do so will be void, except that Purchaser may assign any or all of its rights, interests
and obligations under this Agreement to any Affiliate provided that any Affiliate agrees in writing
to be bound by all of the terms, conditions and provisions contained in this Agreement. The terms
and conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereof or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

     Section 5.10 Severability. If any term or provision of this Agreement, or the application
thereof to any Person or circumstance, shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement, or application to other Persons or circumstances, shall not be
affected thereby, and each term and provision of this Agreement is hereby declared to be separate
and distinct and shall be enforced to the fullest extent permitted by law. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable. If any provision of this Agreement is declared invalid or unenforceable
for any reason other than overbreadth, the offending provision will be modified so as to maintain
the essential benefits of the bargain among the parties to the maximum extent possible, consistent
with applicable law and public policy.

     Section 5.11 Counterparts; Signatures. This Agreement may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same document, and all
counterparts shall be construed together and shall constitute one instrument. A facsimile or
photocopied signature shall be deemed to be the functional equivalent of an original for all
purposes.

     Section 5.12 Entire Agreement. This Agreement together with the Purchase Agreement constitute
the full and entire understanding and agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings pertaining thereto,
whether oral or written.

[The remainder of this page is intentionally left blank]

D-11

 

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

	 	 	 	 	 	 	 
	PURCHASER:	 	 
	 
	 	 	 	 	 	 
	TELULAR CORPORATION	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 

	 	 
	 
	 	 	 	 	 	 
	CANADIAN SELLER:	 	 
	 
	 	 	 	 	 	 
	CSI WIRELESS INC.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 

	 	 
	 
	 	 	 	 	 	 
	US SELLER:	 	 
	 
	 	 	 	 	 	 
	CSI WIRELESS LLC	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 

	 	 

D-12

 

Schedule 1.2(a)(i)

Leased Real Property

	 	 	 
	Lease	 	Real Property Address
	 
	Lease Between WB Murphy Ranch, L.L.C.

	 	Suite 110, Building 3
	and CSI Wireless LLC dated April 2003

	 	1001 Murphy Ranch Road
	(Expires August 2006)

	 	Milpitas, California

 

 

Schedule 1.2(b)

Certain Excluded Assets

	 	 	 	 	 	 	 
	Excluded Assets	 	 	 	 	 	Description
	1. Calgary Office Equipment and Furniture

	 	 	 	•
	 	Office furniture, office equipment, computer equipment, leasehold improvements used by Transition Staff located in the Calgary facilities.
	 
	 	 	 	 	 	 
	2. CSI Contract

	 	 	 	•
	 	The License Agreement referred to in Subsection 1.2(b)(viii). 
	 
	 	 	 	 	 	 
	3. CTS Contract

	 	 	 	•
	 	Purchase orders from CTS Development Services Inc.
	 
	 	 	 	 	 	 
	4. Telematics Assets

	 	 	 	•
	 	All tangible and intangible assets utilized in the Telematics business carried on by the Sellers.
	 
	 	 	 	 	 	 
	 

	 	 	 	•
	 	For clarity, all tangible personal property located in the Milpitas facilities relate to the Business and are not related to the Telematics business.
	 
	 	 	 	 	 	 
	5. “CSI Wireless” name, logo and trademark, except
as licensed to Purchaser under Section 1.2(a)(viii)
of the Agreement.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	6. “Wireless Link” name, logo and trademark
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	7. “CSI-Wireless” website, domain, URL
	 	 	 	 	 	 

 

 

Schedule 1.3(a)

Warranty Obligations

The warranty obligations to customers of the Seller at Closing, in accordance with Subsection
1.3(a)(ii) are agreed to be $40,000.00.

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