Document:

Exhibit 10.2

SHARE EXCHANGE AGREEMENT

This Share Exchange
Agreement (this “Agreement”) is entered into effective as of this 17th day of November, 2006, by and among Earth
Biofuels, Inc., a Delaware corporation (“Earth Biofuels”) and the
undersigned shareholders (the “Shareholders”) of Apollo LNG, Inc., a
Texas corporation (“ALNG”).

RECITALS

WHEREAS, the Shareholders
collectively own 24,019,608 shares of ALNG common stock, constituting
approximately 49% of the issued and outstanding shares of ALNG common stock as
of the date of this Agreement; and

WHEREAS, Earth
Biofuels and the Shareholders desire to effect an exchange of all of the ALNG shares
collectively held by the Shareholders for shares of Earth Biofuels common stock,
as provided for herein.

AGREEMENT

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

1.                                       Exchange
of ALNG Shares for Earth Biofuels Shares.

a.                                       On
the terms and subject to the conditions set forth in this Agreement, at the
Closing (defined below), Earth Biofuels shall issue to the Shareholders an
aggregate of nine-million-four-hundred-twenty-two-thousand-one-hundred-eleven
(9,422,111) shares of Earth Biofuels common stock, par value $0.001 per share
(the “EBI Shares”), in exchange for an aggregate of 24,019,608 shares of
ALNG common stock, par value $0.01 per share (the “ALNG Shares”)
currently held by the Shareholders.

b.                                      At
the Closing, each Shareholder shall deliver to Earth Biofuels the
certificate(s) representing the ALNG Shares held by such Shareholder,
accompanied by an executed stock power in a form reasonably satisfactory to
Earth Biofuels.  The number of ALNG
Shares to be delivered by each Shareholder is set forth opposite each Shareholder’s
name on Schedule 1.

c.                                       At
the Closing, Earth Biofuels shall deliver to each Shareholder a certificate,
registered in the name of such Shareholder, and representing such Shareholder’s
allocable portion of the aggregate EBI Shares to be exchanged pursuant to the
terms of this Agreement.  Each Shareholder’s
allocable portion of the aggregate EBI Shares is set forth opposite such Shareholder’s
name on Schedule 1.

d.                                      The
exchange contemplated by this Agreement shall take place on the date of this
Agreement (the “Closing”).

2.                                       Representations
and Warranties of Earth Biofuels.  Earth
Biofuels hereby represents and warrants as follows:

a.                                       Earth
Biofuels is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.  Earth Biofuels has the corporate power and
authority to own, use, license, lease and operate its properties and to carry
on its business as it is now being conducted and as currently proposed to be
conducted and is duly qualified, licensed or admitted to do business and is in
good standing in each jurisdiction in which the ownership, use, licensing,
leasing or operation of its properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary.

b.                                      Earth
Biofuels has all requisite corporate power and authority to enter into, execute
and deliver this Agreement, to consummate the transaction contemplated hereby,
and to perform its obligations hereunder.  The execution and delivery of this Agreement
and the consummation of the transaction contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Earth
Biofuels.  This Agreement has been duly
executed and delivered by Earth Biofuels.  This Agreement constitutes a legal, valid and
binding obligation of Earth

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Biofuels,
enforceable against Earth Biofuels in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy and insolvency laws, the
rights of creditors generally, and general principles of equity.

c.                                       The
authorized equity securities of the Earth Biofuels consists of 415,000,000
shares, consisting of 400,000,000 shares common stock, par value of $0.001, and
15,000,000 shares of preferred stock, par value of $0.001.  No third party has any right of first refusal,
preemptive right, right of participation, or any similar right to participate
in the transactions contemplated by this Agreement, which right has not been
complied with prior to the Closing.  The
issuance and sale of the EBI Shares pursuant to the terms of this Agreement
will not (i) obligate Earth Biofuels to issue shares of its common stock or
other securities to any third party or (ii) result in a right of any holder of Earth Biofuels common
stock or any other Earth Biofuels securities to adjust
the exercise, conversion, exchange or reset price under such securities.

d.                                      Earth
Biofuels has filed all reports required to be filed by it with the SEC under
Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) since October 7, 2005 (collectively, the “SEC Reports”).  Each SEC Report (i) complied as to form in all
material respects with the requirements of the Exchange Act as of its filing
date, and (ii) did not at the time it was filed (or, if amended, supplemented
or superseded, then as of the date of the last such amendment, supplement or
superseding filing) 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 light of the circumstances under which
they were made, not misleading.

e.                                       Except
as is provided in the SEC Reports, each of the financial statements (including,
in each case, any notes thereto) contained in the SEC Reports complied as to form
in all material respects with applicable accounting requirements, was prepared
in accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each presented
fairly the financial position of Earth Biofuels as of the respective dates
thereof and the results of operations and cash flows of Earth Biofuels for the
respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal year-end adjustments).

f.                                         When
issued in accordance with this Agreement, the EBI Shares will be duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights or similar contractual rights granted by Earth Biofuels.  Upon receipt of the EBI Shares, each Shareholder
will acquire good and valid title to such Shareholder’s allocable portion of the
EBI Shares, free and clear of any and all liens, claims and encumbrances.

3.                                       Representations
and Warranties of Shareholders.  Each
individual Shareholder (with respect to himself or itself only) hereby
represents and warrants as follows:

a.                                       Such
Shareholder has the requisite capacity to enter into, execute and deliver this
Agreement, to consummate the transactions contemplated hereby, and to perform its
obligations hereunder.  The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
other action on the part of such Shareholder.  This Agreement has been duly executed and
delivered by such Shareholder.  This
Agreement constitutes a legal, valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy and insolvency
laws, the rights of creditors generally, and general principles of equity.

b.                                      Such
Shareholder owns the ALNG Shares attributed to such Shareholder in Schedule
1, free and clear of all liens, restrictions and claims of any kind.  The ALNG Shares attributed to such
Shareholder are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of such shares.  To the extent the ALNG Shares attributed to
such Shareholder constitute community property with such Shareholder’s spouse,
such spouse has the requisite capacity to execute the spousal consent form
incorporated in the signature pages to this Agreement, and such spouse’s
execution of such spousal consent form is a legal, valid and binding obligation
of such spouse.

c.                                       Such
Shareholder is acquiring the EBI Shares for its own account for investment
purposes and not with a view to, or for sale in connection with, any
distribution thereof and has no present agreement or commitment providing for
the disposition thereof.  Such
Shareholder understands that (i) none of the EBI Shares has been registered 

 2
 

 

under the
Securities Act or any applicable state securities laws, by reason of their
issuance in a transaction exempt from the registration requirements of the
Securities Act and such state securities laws, (ii) the EBI Shares must be held
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration, (iii) the EBI Shares will
bear a legend to such effect, and (iv) Earth Biofuels will make a notation on
its transfer books to such effect.

d.                                      Such
Shareholder acknowledges that it has received all the information requested
from Earth Biofuels that such Shareholder considers necessary or appropriate
for deciding whether to consummate the transactions contemplated by this
Agreement.  Such Shareholder acknowledges
that its representatives have had an opportunity to ask questions and receive
answers concerning the EBI Shares and have had access to such other information
concerning Earth Biofuels as Such Shareholder has requested.  Such Shareholder further represents that its
representatives have knowledge and experience in financial and business matters
and that its representatives are capable of evaluating the merits and risk of
this transaction.

e.                                       Such
Shareholder acknowledges that it is an “accredited investor” within the meaning
of Rule 501 promulgated under the Securities Act.

f.                                         Such
Shareholder hereby acknowledges the accuracy of Schedule 1, as it
pertains to such Shareholder.

4.                                       Miscellaneous.

a.                                       The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.

b.                                      No
failure or delay on the part of any party in exercising any right, power or
privilege hereunder or under any of the other agreements, instruments or
documents delivered in connection with this Agreement shall operate as a waiver
of such right, power or privilege; nor shall any single or partial exercise of
any such right, power or privilege preclude any other or future exercise
thereof or the exercise of any other right, power or privilege.

c.                                       Each
of the parties agrees and covenants that it will promptly execute and deliver
to the other parties such further instruments and documents and take such further
action as the other parties may reasonably require in order to carry out the
full intent and purpose of this Agreement.

d.                                      All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, mailed by certified
mail (return receipt requested) or sent by overnight delivery service to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:

(i)                                     if
to Earth Biofuels:

Earth Biofuels,
Inc.

Attn:  General Counsel

3001 Knox Street, Suite 403

Dallas, Texas  75205

and

(ii)                                  if
to any individual Shareholder, to such Shareholder at the address set forth
below such Shareholder’s name on Schedule 1.

Notice so given
shall, in the case of notice so given by mail, be deemed to be given and
received on the third calendar day after posting, in the case of notice so
given by overnight delivery service, on the date of actual delivery.

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e.                                       Regardless
of any investigation at any time made by or on behalf of any party hereto or of
any information any party may have in respect thereof, all representations and
warranties made hereunder shall survive forever, subject, however, to any
applicable statute of limitations.

f.                                         This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas exclusive of conflicts of law principles.

g.                                      This
Agreement may be executed in any number of counterparts.  All such counterparts shall be deemed an
original, shall be construed together and shall constitute one and the same
instrument.

[Remainder
of Page Intentionally Left Blank]

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

	
   

  	
  Earth Biofuels, Inc.,

  	
   

  
	
   

  	
  a Delaware
  corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Darren Miles

  
	
   

  	
   

  	
   Name:

  	
  Darren Miles

  
	
   

  	
   

  	
   Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Apollo
  LNG, Inc. Shareholders

  
	
   

  	
   

  
	
   

  	
  Golden
  Spread Energy, Inc.,

  	
   

  
	
   

  	
  a Texas
  corporation

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Oliver Kendall Kelley

  
	
   

  	
   

  	
   Name:

  	
  Oliver Kendall Kelley

  
	
   

  	
   

  	
   Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Telluride
  Investments, Inc. f.k.a. GSEJKM, Inc.,

  
	
   

  	
  a Texas
  corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Judy K. Morgan

  
	
   

  	
   

  	
   Name:

  	
  Judy K. Morgan

  
	
   

  	
   

  	
   Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GSEKFT,
  Inc.,

  
	
   

  	
  a Texas
  corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Oliver Kendall Kelley

  
	
   

  	
   

  	
   Name:

  	
  Oliver Kendall Kelley

  
	
   

  	
   

  	
   Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GSESKO,
  Inc.,

  
	
   

  	
  a Texas
  corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sharon Kelley Oeschger

  
	
   

  	
   

  	
   Name:

  	
  Sharon Kelley Oeschger

  
	
   

  	
   

  	
   Title:

  	
  President

  
											

 5
 

 

 

	
  

  	
  Neptune
  Leasing, Inc.,

  
	
   

  	
  a Texas
  corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Oliver Kendall Kelley

  
	
   

  	
   

  	
   Name:

  	
  Oliver Kendall Kelley

  
	
   

  	
   

  	
   Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Oliver Kendall Kelley

  	
   

  
	
   

  	
  Oliver Kendall Kelly,
  Individually

  
							

 

SPOUSAL CONSENT

The
undersigned spouse of Oliver Kendall Kelley, a party to the foregoing Share
Exchange Agreement (the “Agreement”), acknowledges as follows:

I
have read the foregoing Agreement and I know its contents.  I am aware that by its provisions that my
husband, Oliver Kendall Kelley, transfers to Earth Biofuels, Inc. all of his
right, title and interest in the ALNG Shares (as such term is defined in the
Agreement) owned by him as specified in Schedule 1 attached hereto,
including my community interest (if any) in the ALNG Shares.  I hereby consent to the transfer, approve of
the provisions of the Agreement, and agree that the ALNG Shares and my interest
in the ALNG Shares (if any) are subject to the provisions of the Agreement and
that I will take no action at any time to hinder operation of the Agreement.

Executed
this 17th day of November, 2006.

	
  

  	
  /s/ Sherry
  Kelley

  	
   

  

 

 6

 

SCHEDULE
1

	
  

  Shareholder

  	
   

  	
  Shares of Apollo LNG, 

  Inc. Common Stock

  to be Exchanged

  	
   

  	
  Shares of Earth Biofuels,

  Inc. Common Stock

  to be Received in the 

  Exchange

  	
   

  
	
  Golden
  Spread Energy, Inc. 

  8101 West 34th Avenue 

  Amarillo, Texas 79121-1069

  	
   

  	
  2,756,971

  	
   

  	
  1,081,470

  	
   

  
	
  Telluride
  Investments, Inc. f.k.a. GSEJKM, Inc. 

  8101 West 34th Avenue 

  Amarillo, Texas 79121-1069

  	
   

  	
  2,764,176

  	
   

  	
  1,084,296

  	
   

  
	
  GSEKFT,
  Inc. 

  8101 West 34th Avenue 

  Amarillo, Texas 79121-1069

  	
   

  	
  1,637,176

  	
   

  	
  642,211

  	
   

  
	
  GSESKO,
  Inc. 

  8101 West 34th Avenue 

  Amarillo, Texas 79121-1069

  	
   

  	
  2,764,176

  	
   

  	
  1,084,296

  	
   

  
	
  Neptune
  Leasing, Inc. 

  8101 West 34th Avenue 

  Amarillo, Texas 79121-1069

  	
   

  	
  9,533,382

  	
   

  	
  3,739,636

  	
   

  
	
  Oliver Kendall Kelley 

  8101 West 34th Avenue 

  Amarillo, Texas 79121-1069

  	
   

  	
  4,563,725

  	
   

  	
  1,790,201Consultronics Asset Purchase Agreement

    
      

      

    

    

     

    ASSET
      PURCHASE AGREEMENT

    

    

    

    
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    TABLE
      OF CONTENTS

     

    

      
        	
                ARTICLE
                  I

              	
                INTERPRETATION

              
	
                ARTICLE
                  II

              	
                PURCHASE
                  AND SALE OF PURCHASED
                  ASSETS

              
	
                ARTICLE
                  III

              	
                PURCHASE
                  PRICE

              
	
                ARTICLE
                  IV

              	
                ASSUMPTION
                  OF LIABILITIES

              
	
                ARTICLE
                  V

              	
                REPRESENTATIONS
                  AND WARRANTIES OF THE
                  VENDOR

              
	
                ARTICLE
                  VI

              	
                REPRESENTATIONS
                  AND WARRANTIES OF THE
                  PURCHASER

              
	
                ARTICLE
                  VII

              	
                SURVIVAL
                  OF DECLARATIONS, REPRESENTATIONS AND
                  WARRANTIES

              
	
                ARTICLE
                  VIII

              	
                COVENANTS

              
	
                ARTICLE
                  IX

              	
                CONDITIONS
                  OF CLOSING

              
	
                ARTICLE
                  X

              	
                CLOSING
                  DATE AND TRANSFER OF
                  POSSESSION

              
	
                ARTICLE
                  XI

              	
                INDEMNIFICATION

              
	
                ARTICLE
                  XII

              	
                DISPUTE
                  RESOLUTION

              
	
                ARTICLE
                  XIII

              	
                MISCELLANEOUS

              

      

    

    

        

    

    

    
      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

    

    

    THIS
      AGREEMENT
      made the
      5th day of January, 2006,

     

    BETWEEN:

     

    CONSULTRONICS
      LIMITED,
      a
      corporation existing under the laws of the Province of Ontario,

     

    (hereinafter
      called the "Vendor")

     

    -
      and
      -

     

    EXFO
      ELECTRO-OPTICAL ENGINEERING INC. a
      corporation constituted under the laws of Canada;

     

    (hereinafter
      called the "Purchaser")

     

     

    WITH
      THE INTERVENTION OF :

     

    ANDRE
      REKAI,
      of the
      City of Scarborough, Province of Ontario

     

    (hereinafter
      called the "Vendor’s Party")

     

    -
      and
      -

     

    CONSULTRONICS
      EUROPE LIMITED,
      a
      corporation existing under the laws of England,

     

    (hereinafter
      called "Consultronics Europe")

     

    -
      and
      -

     

    CONSULTRONICS
      DEVELOPMENT KFT,
      a
      corporation existing under the laws of Hungary,

     

    (hereinafter
      called "Consultronics Hungary")

     

    (Consultronics
      Europe and Consultronics Hungary are hereinafter called the
      "Subsidiaries")

     

    -
      and
      -

     

    CONSULTRONICS
      INC.,
      a
      corporation existing under the laws of the State of Delaware,

     

    (hereinafter
      called "Consultronics USA")

     

    
      
         

      

      
        
        

        
          

        

      

      
        Table
          of Contents

      

    

    

     

    THIS
      AGREEMENT WITNESSES THAT
      in
      consideration of the respective covenants, agreements, representations,
      warranties and indemnities of the parties herein contained and for other good
      and valuable consideration (the receipt and sufficiency of which are
      acknowledged by each party), the parties agree as follows:

     

    ARTICLE
      I

    INTERPRETATION

     

    1.1  Defined
      Terms

     

    For
      the
      purposes of this Agreement, unless the context otherwise requires, the following
      terms shall have the respective meanings specified or referred to below and
      grammatical variations of such terms shall have corresponding
      meanings:

     

    
      	(a)  	
              "Act"
                means the Business
                Corporations Act
                (Ontario) as in effect on the date
                hereof;

            

    

     

    
      	(b)  	
              "Affiliate"
                has the meaning given to that term in the
                Act;

            

    

     

    
      	(c)  	
              "Agreement"
                means this Asset Purchase Agreement and all amendments made in writing
                by
                the parties hereto, "herein" and similar expressions mean and refer
                to
                this Agreement and not to any particular Article, section, subsection
                or
                Schedule;

            

    

     

    
      	(d)  	
              "Associate"
                has the meaning given to that term in the
                Act;

            

    

     

    
      	(e)  	
              "Assumed
                Liabilities" has the meaning set out in section 4.1;

            

    

     

    
      	(f)  	
              "Audited
                Financial Statements" means the audited consolidated financial statements
                of the Vendor as at and for the financial year ended May 31, 2005,
                including the notes thereto and the report of the Vendor's auditors
                thereon, copies of which are annexed hereto as Schedule
                1;

            

    

     

    
      	(g)  	
              "Business
                Day" means any day, other than a Saturday or a Sunday, on which the
                main
                branch of HSBC Bank Canada in Toronto, Ontario is open for
                business;

            

    

     

    
      	(h)  	
              "Claim"
                has the meaning set out in section 11.3;

            

    

     

    
      	(i)  	
              "Closing"
                has the meaning set out in section 10.2;

            

    

     

    
      	(j)  	
              "Closing
                Audited Financial Statements" has the meaning set out in subsection
                3.3(a);

            

    

     

    
      	(k)  	
              "Closing
                Date" means January 24th,
                2006, or such other date as the Vendor and the Purchaser may mutually
                determine;

            

    

     

    
      	(l)  	
              "Closing
                Statements" has the meaning set out in subsection 3.3(a);

            

    

     

    
      
         

      

      
        -2-

        
          

        

      

      
        Table
          of Contents

      

    

     

     

    
      	(m)  	
              "Contract"
                means any agreement, indenture, contract, lease, including, without
                limitation, the Leases, deed of trust, licence, option, instrument
                or
                other commitment, whether written or
                oral;

            

    

     

    
      	(n)  	
              "Employee
                Plans" has the meaning set out in section 5.29;

            

    

     

    
      	(o)  	
              "Employees"
                means those salaried and hourly paid employees of the Vendor and
                the
                Subsidiaries who are employed in the Purchased Business immediately
                prior
                to the Time of Closing;

            

    

     

    
      	(p)  	
              "Encumbrance"
                means any encumbrance, lien, charge, hypothec, pledge, mortgage,
                title
                retention agreement, security interest of any nature, adverse claim,
                exception, reservation, easement, right of occupation, any matter
                capable
                of registration against title, option, right of pre-emption, privilege
                or
                any Contract to create any of the
                foregoing;

            

    

     

    
      	(q)  	
              "ETA"
                means Part IX of the Excise
                Tax Act
                (Canada), as amended from time to
                time;

            

    

     

    
      	(r)  	
              "Excluded
                Assets" has the meaning set out in section 2.2;

            

    

     

    
      	(s)  	
              "Excluded
                Liabilities" has the meaning set out in section 4.1;

            

    

     

    
      	(t)  	
              "Existing
                Mortgage" means the Charge/Mortgage registered in the Land Registry
                Office
                for the Land Titles Division of York Region (No. 65), as instrument
                No.YR355014;

            

    

     

    
      	(u)  	
              "Financial
                Statements" means the Audited Financial Statements and the Interim
                Financial Statements;

            

    

     

    
      	(v)  	
              “Former
                Employees” has the meaning set out in subsection 8.9(b)

            

    

     

    
      	(w)  	
              "Governmental
                Authority" means any governmental or regulatory authority, body,
                agency or
                department, whether foreign or domestic federal, provincial or
                municipal;

            

    

     

    
      	(x)  	
              "GST"
                means all taxes payable under the ETA or under any provincial legislation
                similar to the ETA, and any reference to a specific provision of
                the ETA
                or any such provincial legislation shall refer to any successor provision
                thereto of like or similar effect;

            

    

     

    
      	(y)  	
              "Indemnified
                Party" has the meaning set out in section 11.3;

            

    

     

    
      	(z)  	
              "Indemnifying
                Party" has the meaning set out in section 11.3;

            

    

     

    
      	(aa)  	
              "Intellectual
                Property" has the meaning set out in subsection 2.1(j);

            

    

     

    
      
         

      

      
        -3-

        
          

        

      

      
        Table
          of Contents

      

    

     

     

    
      	(bb)  	
              "Independent
                Auditor" has the meaning given to such term in subsection 3.3(b);

            

    

     

    
      	(cc)  	
              "Interim
                Financial Statements" means the unaudited consolidated financial
                statements of the Vendor and the unaudited non-consolidated financial
                statements of the Vendor, Consultronics Europe and Consultronics
                Hungary
                as at and for the period from June 1st,
                2005 to November 30th,
                2005, copies of which are annexed hereto as Schedule
                2;
                in the event the Closing is delayed, such financial statements will
                be for
                the period from June 1st,
                2005 to the last day of the month preceding the
                Closing;

            

    

     

    
      	(dd)  	
              "Laws"
                means all applicable laws, by-laws, rules, regulations, orders,
                ordinances, protocols, codes, guidelines, policies, notices, directions
                and judgments or other requirements of any Governmental
                Authority;

            

    

     

    
      	(ee)  	
              "Leased
                Property" has the meaning set out in section 5.7;

            

    

     

    
      	(ff)  	
              "Leases"
                has the meaning set out in section 5.10;

            

    

     

    
      	(gg)  	
              "Licences"
                has the meaning set out in section 5.16;

            

    

     

    
      	(hh)  	
              "Losses"
                means, in respect of any matter, all claims, demands, proceedings,
                losses,
                damages, liabilities, deficiencies, costs and expenses (including,
                without
                limitation, all legal and other professional fees and disbursements,
                interest, penalties and amounts paid in settlement) arising directly
                or
                indirectly as a consequence of such
                matter;

            

    

     

    
      	(ii)  	
              "Objection
                Notice" has the meaning given to such term in subsection 3.3(b);

            

    

     

    
      	(jj)  	
              "Permitted
                Encumbrances" means all the Encumbrances described and disclosed
                in
                Schedule
                12;

            

    

     

    
      	(kk)  	
              "Purchase
                Price" has the meaning set out in section 3.1;

            

    

     

    
      	(ll)  	
              "Purchased
                Assets" has the meaning set out in section 2.1;

            

    

     

    
      	(mm)  	
              "Purchased
                Business" means the business carried on by the Vendor and each of
                the
                Subsidiaries consisting primarily of the design, manufacture and
                marketing
                of telecommunications and data communications test equipment, and
                turnkey
                network monitoring solutions for telecommunications access
                testing;

            

    

     

    
      	(nn)  	
              "Real
                Property" has the meaning set out in section 5.7;

            

    

     

    
      	(oo)  	
              "Remaining
                Employees" has the meaning set out in subsection 8.9(a);

            

    

     

    
      	(pp)  	
              "Replacement
                Plans" has the meaning set out in section 8.10;

            

    

     

    
      
         

      

      
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      	(qq)  	
              "Smart
                Grant" means the grant granted by the UK Secretary of State for Trade
                and
                Industry to Consultronics Europe dated August 15th,
                2003 and accepted on August 20th,
                2003.

            

    

     

    
      	(rr)  	
              "Subsidiaries"
                means Consultronics Europe and Consultronics
                Hungary;

            

    

     

    
      	(ss)  	
              "Tax"
                or "Taxes" means any federal, provincial, state, local, foreign or
                other
                income, gross receipts, profits, franchise, transfer, sales, use,
                customs,
                payroll, occupation, health, property, excise, GST or other taxes,
                fees,
                duties, assessments, withholdings or governmental charges of any
                nature,
                including employment insurance (including interest, penalties and
                additions to such taxes or
                charges);

            

    

     

    
      	(tt)  	
              "Tax
                Act" means the Income
                Tax Act
                (Canada), as amended from time to
                time;

            

    

     

    
      	(uu)  	
              "Time
                of Closing" means 10:00 a.m. Toronto time on the Closing Date, or
                such
                other time on the Closing Date as the Vendor and the Purchaser may
                mutually determine;

            

    

     

    
      	(vv)  	
              "Transaction
                Documents" has the meaning set out in section 1.6;
                

            

    

     

    
      	(ww)  	
              "Transferred
                Employees" has the meaning set out in section 8.10;

            

    

     

    
      	(xx)  	
              "Unaudited
                Financial Statements" means
                the unaudited non-consolidated financial statements of the Vendor,
                Consultronic Europe and Consultronics Hungary as at and for the financial
                year ended May 31, 2005, including the notes thereto,
                a
                copy of which is annexed hereto as Schedule
                27;
                and
                

            

    

     

    
      	(yy)  	
              "Working
                Capital" means the aggregate of consolidated accounts receivable,
                consolidated prepaids, consolidated inventory, consolidated deferred
                costs, consolidated current liabilities (including any income tax
                payable
                by the Subsidiaries but excluding any income tax liabilities of the
                Vendor), consolidated deferred revenue and all cash and cash equivalents
                as per the Subsidiaries’ audited financial statements as of the Closing
                Date.

            

    

     

    1.2  Currency

     

    Unless
      otherwise indicated, all dollar amounts in this Agreement are expressed in
      Canadian funds.

     

    1.3  Sections
      and Headings

     

    The
      division of this Agreement into Articles, sections and subsections and the
      insertion of headings are for convenience of reference only and shall not affect
      the interpretation of this Agreement. Unless otherwise indicated, any reference
      in this Agreement to an Article, section, subsection or Schedule refers to
      the
      specified Article, section or subsection of or Schedule to this
      Agreement.

     

    
      
         

      

      
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    1.4  Number,
      Gender and Persons

     

    In
      this
      Agreement, words importing the singular number only shall include the plural
      and
      vice versa, words importing gender shall include all genders and words importing
      persons shall include individuals, corporations, partnerships, associations,
      trusts, unincorporated organizations, governmental bodies and other legal or
      business entities of any kind whatsoever.

     

    1.5  Accounting
      Principles

     

    Any
      reference in this Agreement to generally accepted accounting principles refers
      to generally accepted accounting principles that have been established in
      Canada, including those approved from time to time by the Canadian Institute
      of
      Chartered Accountants or any successor body thereto.

     

    1.6  Entire
      Agreement

     

    This
      Agreement, together with the agreements and the other documents to be delivered
      pursuant to this Agreement (the “Transaction Documents”) constitute the entire
      agreement between the parties with respect to the subject matter hereof and
      supersedes all prior agreements, understandings, negotiations and discussions,
      whether written or oral. There are no conditions, covenants, agreements,
      representations, warranties or other provisions, express or implied, collateral,
      statutory or otherwise, relating to the subject matter hereof except as herein
      provided.

     

    1.7  Time
      of Essence

     

    Time
      shall be of the essence of this Agreement.

     

    1.8  Construction

     

    The
      parties agree that each party and its counsel have reviewed and revised this
      Agreement and that the normal rule of construction to the effect that any
      ambiguities are to be resolved against the drafting party shall not be employed
      in the interpretation of this Agreement or any amendments, schedules or exhibits
      thereto.

     

    1.9  Applicable
      Law

     

    This
      Agreement shall be construed, interpreted and enforced in accordance with,
      and
      the respective rights and obligations of the parties shall be governed by,
      the
      laws of the Province of Ontario and the federal laws of Canada applicable in
      Ontario, and each party irrevocably and unconditionally submits to the
      non-exclusive jurisdiction of the courts of such province and all courts
      competent to hear appeals therefrom.

     

    1.10  Successors
      and Assigns

     

    This
      Agreement shall enure to the benefit of and shall be binding on and enforceable
      by the parties and their respective successors and permitted assigns. The
      Purchaser may assign any rights hereunder to any of its Affiliates or
      Associates, but no such assignment shall relieve the Purchaser of any of its
      obligations under this Agreement. Except as otherwise provided herein, neither
      party may assign any of its rights or obligations hereunder without the prior
      written consent of the other party.

     

    
      
         

      

      
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    1.11  Amendments
      and Waivers

     

    No
      amendment or waiver of any provision of this Agreement shall be binding on
      either party unless consented to in writing by such party. No waiver of any
      provision of this Agreement shall constitute a waiver of any other provision,
      nor shall any waiver constitute a continuing waiver unless otherwise
      provided.

     

    1.12  Knowledge

     

    In
      this
      Agreement, any reference to the knowledge or awareness of any party means to
      the
      best of the knowledge, information and belief of the party after reviewing
      all
      relevant records and (except where such reference is to actual knowledge without
      inquiry) making due inquiries regarding the relevant matter of all relevant
      directors, officers, employees, agents and advisors of the party (or, in the
      case of the knowledge of the Vendor’s Party, of the Vendor).

     

    1.13  Schedules

     

    The
      following Schedules are attached to and form part of this
      Agreement:

     

    
      
        	
                Schedule
                  1  

                 

              	
                 

              	
                Audited
                  Financial Statements

                 

              
	
                Schedule
                  2  

                 

              	
                 

              	
                Interim
                  Financial Statements

                 

              
	
                Schedule
                  3  

                 

              	
                 

              	
                Owned
                  and Leased Real Property

                 

              
	
                Schedule
                  4  

                 

              	
                 

              	
                Machinery
                  and Equipment

                 

              
	
                Schedule
                  5  

                 

              	
                 

              	
                Vehicles

                 

              
	
                Schedule
                  6  

                 

              	
                 

              	
                Material
                  Contracts

                 

              
	
                Schedule
                  7  

                 

              	
                 

              	
                Employee
                  Matters

                 

              
	
                Schedule
                  8  

                 

              	
                 

              	
                Licences
                  and Permits

                 

              
	
                Schedule
                  9  

                 

              	
                 

              	
                Intellectual
                  Property

                 

              
	
                Schedule
                  10  

                 

              	
                 

              	
                Allocation
                  of Purchase Price

                 

              
	
                Schedule
                  11  

                 

              	
                 

              	
                Location
                  of Assets

                 

              
	
                Schedule
                  12  

                 

              	
                 

              	
                Permitted
                  Encumbrances

                 

              

      

      
        	
                Schedule
                  13  

                 

              	
                 

              	
                Insurance
                  Policies

              

      

      
        
           

        

        
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                Schedule
                  14  

                 

              	 	
                Legal
                  and Regulatory Proceedings

                 

              
	
                Schedule
                  15  

                 

              	 	
                Regulatory
                  Consents

                 

              
	
                Schedule
                  16  

                 

              	 	
                Third
                  Party Consents

                 

              
	
                Schedule
                  17  

                 

              	 	
                Major
                  Customers

                 

              
	
                Schedule
                  18  

                 

              	 	
                Product
                  Warranties

                 

              
	
                Schedule
                  19  

                 

              	 	
                Affiliates

                 

              
	
                Schedule
                  20  

                 

              	 	
                Prepaid
                  Expenses

                 

              
	
                Schedule
                  21  

                 

              	 	
                Purchase
                  Orders Issued for Goods or Services Not Received at Closing

                 

              
	
                Schedule
                  22  

                 

              	 	
                Backlog
                  of Purchase Orders Received and Not Fulfilled at Closing

                 

              
	
                Schedule
                  23  

                 

              	 	
                Lease
                  of Equipments, Machinery, Cars and Other Fixed Assets

                 

              
	
                Schedule
                  24  

                 

              	 	
                Environment

                 

              
	
                Schedule
                  25  

                 

              	 	
                Bank
                  accounts of the Subsidiaries

                 

              
	
                Schedule
                  26  

                 

              	 	
                Software
                  Licences

                 

              
	
                Schedule
                  27  

                 

              	 	
                Unaudited
                  Financial Statements

                 

              
	
                Schedule
                  28  

                 

              	 	
                Purchased
                  Assets Related to US Activities

                 

              
	
                Schedule
                  29  

                 

              	
                 

              	
                Purchase
                  Orders - Embedded Planets

                 

              
	
                Schedule
                  30  

                 

              	 	
                Post-closing
                  Assistance to the Vendor

                 

              
	 	 	 

      

    

    ARTICLE
      II

    PURCHASE
      AND SALE OF PURCHASED ASSETS

     

    2.1  Purchased
      Assets

     

    Subject
      to the provisions of this Agreement, the Vendor agrees to sell, assign and
      transfer to the Purchaser and the Purchaser agrees to purchase from the Vendor,
      effective as of the close of business on the Closing Date, all of the immovable
      and movable property, all personal property rights and other assets of the
      Vendor used in connection with, comprising part of or otherwise relating to
      the
      Purchased Business (other than the Excluded Assets), whether real or personal,
      tangible or intangible, of every kind and description and wheresoever situated
      and whether or not in possession of the Vendor, as a going concern
      (collectively, the "Purchased Assets"), including without
      limitation:

     

    
      
         

      

      
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      	(a)  	
              Real
                Property.
                All real property, together with the buildings, structures, improvements
                and appurtenances situated thereon, including, without limitation,
                the
                real property described in Schedule
                3;

            

    

     

    
      	(b)  	
              Leases
                of Real Property.
                All rights (whether as lessee or lessor) under leases of real property,
                together with all leasehold improvements relating thereto, including,
                without limitation, all rights under the leases described in Schedule
                3;

            

    

     

    
      	(c)  	
              Machinery
                and Equipment.
                All machinery, equipment, fixtures, furniture, furnishings, parts,
                tooling
                melds, dies, jigs or patterns and other fixed assets associated with
                the
                ongoing operation of the Purchased Business, whether or not located
                in or
                on the premises of the Vendor or elsewhere, including, without limitation,
                the machinery and equipment described in Schedule
                4;

            

    

     

    
      	(d)  	
              Vehicles.
                All trucks, cars and other vehicles, including, without limitation,
                the
                vehicles described in Schedule
                5;

            

    

     

    
      	(e)  	
              Inventories.
                All inventories, including, without limitation, raw materials,
                work-in-process, finished goods and replacement
                parts;

            

    

     

    
      	(f)  	
              Accounts
                Receivable.
                All accounts receivable, trade accounts, notes receivable, book debts
                and
                other debts due or accruing due to the Vendor and the benefit of
                all
                security for such accounts, notes and
                debts;

            

    

     

    
      	(g)  	
              Prepaid
                Expenses.
                All prepaid expenses, deferred costs and expenses relating to the
                Purchased Business and all other items relating to the Purchased
                Business
                of the type classified as current assets in accordance with generally
                accepted accounting principles, including those expenses and costs
                listed
                in Schedule
                20;

            

    

     

    
      	(h)  	
              Agreements.
                All rights under leases of personal property, orders or contracts
                for the
                provision of goods or services (whether as buyer or seller), distribution
                and agency agreements, employment and collective agreements, agreements
                and instruments relating to employee pension or benefit plans and
                other
                Contracts not otherwise referred to in this section 2.1,
                including, without limitation, the Contracts described in Schedule
                6
                and Schedule
                7;

            

    

     

    
      	(i)  	
              Licences
                and Permits.
                All licences, permits, approvals, consents, registrations, certificates
                and other authorizations of any kind required to conduct the Purchased
                Business, including, without limitation, those described in Schedule
                8;

            

    

     

    
      
         

      

      
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      	(j)  	
              Intellectual
                Property.
                All trade or brand names, business names, domain names, trade marks,
                trade
                mark registrations and applications, service marks, service mark
                registrations and applications, copyrights, copyright registrations
                and
                applications, patents, patent registrations and applications and
                other
                patent rights (including any patents issued on such applications
                or
                rights), trade secrets, proprietary manufacturing information, custom
                software, software not generally available to the public used in
                connection with the Purchased Business, source codes, fully annotated,
                for
                all custom software (including all software not generally available
                to the
                public used in connection with the Purchased Business) and know-how,
                equipment and parts lists and descriptions, instruction manuals,
                inventions, inventors' notes, research data, unpatented blue prints,
                drawings, logos and designs, formulae, processes, technology and
                other
                intellectual property, together with all rights under licences, technology
                transfer agreements and other agreements or instruments relating
                to any of
                the foregoing (collectively, "Intellectual Property"), including,
                without
                limitation, the trade marks, copyrights, patents, licences and agreements
                described in Schedule
                9;

            

    

     

    
      	(k)  	
              Computer
                Hardware and Software.
                All computer hardware and software associated with the ongoing operation
                of the Purchased Business, including all rights under licences and
                other
                agreements or instruments relating
                thereto;

            

    

     

    
      	(l)  	
              Books
                and Records.
                All books and records (other than those required by Laws to be retained
                by
                the Vendor, copies of which will be provided to the Purchaser no
                later
                than on Closing Date), including without limitation, customer lists,
                sales
                records, price lists and catalogues, sales literature, advertising
                material, manufacturing data, production records, employee manuals,
                personnel records, supply records, inventory records and correspondence
                files (together with, in the case of any such information that is
                stored
                electronically, the media on which the same is
                stored);

            

    

     

    
      	(m)  	
              Securities.
                All
                shares and other securities held by the Vendor in Affiliates listed
                in
                Schedule
                19;

            

    

     

    
      	(n)  	
              Goodwill.
                All goodwill, (including all rights in every telephone number used
                by the
                Vendor) together with the exclusive right for the Purchaser to represent
                itself as carrying on the Purchased Business in succession to the
                Vendor
                and the right to use any words indicating that the Purchased Business
                is
                so carried on, including the exclusive right to use the name
                "Consultronics", or any variation thereof, as part of the name or
                style
                under which the Purchased Business or any part thereof is carried
                on by
                the Purchaser; and

            

    

     

    
      	(o)  	
              Other
                Assets.
                Unless expressly excluded in this Agreement, all other or additional
                privileges, rights, interests and assets of the Vendor that are used
                in
                the Purchased Business.

            

    

     

    
      
         

      

      
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    Notwithstanding
      the foregoing, the parties agree that all above mentioned Purchased Assets
      related to the activities of the Vendor and its Subsidiaries in the United
      States, including those mentioned in Schedule
      28,
      may be
      sold to, and purchased by, any Affiliate of the Purchaser hereunder, provided
      that the Purchaser shall, in respect of such sale and purchase, remain subject
      to all of its obligations under this Agreement as if it were the purchaser
      of
      such Purchased Assets.

     

    2.2  Excluded
      Assets

     

    The
      Purchased Assets shall not include any of the following property and assets
      (collectively, the "Excluded Assets"):

     

    
      	(a)  	
              Cash.
                All cash and cash equivalents of the Vendor (except for cash and cash
                equivalents of the Subsidiaries);

            

    

     

    
      	(b)  	
              Income
                Taxes.
                All income tax instalments paid by the Vendor and the right to receive
                any
                refund of income taxes paid by the Vendor, however any income tax
                liability will be assumed by the Vendor and excluded from the Working
                Capital;

            

    

     

    
      	(c)  	
              Investment
                Tax Credits.
                All federal and provincial tax credits of the
                Vendor;

            

    

     

    
      	(d)  	
              Shares
                of Consultronics USA. All
                issued and outstanding shares of Consultronics USA provided that
                on the
                Closing Date, all Contracts to which Consultronics USA is a party
                are
                assigned to the Purchaser; and

            

    

     

    
      	(e)  	
              Insurance.
                All
                rights, titles and interests of the Vendor into the Key Man Insurance
                -
                Andre Rekai, the Accounts Receivable Insurance - Consultronics Limited
                and
                the directors and officers liability insurance
                policy.

            

    

     

    ARTICLE
      III 

    PURCHASE
      PRICE

     

    3.1  Purchase
      Price

     

    The
      aggregate purchase price (the "Purchase Price") payable by the Purchaser to
      the
      Vendor for the Purchased Assets shall be the sum of the following
      elements:

     

    
      	(a)  	
              an
                amount equal to the Working Capital of the Vendor estimated by the
                parties
                to be an aggregate amount of $3,000,000, such amount to be adjusted
                on the
                basis of the Closing Audited Financial
                Statements;

            

    

     

    
      	(b)  	
              an
                amount of $16,500,000; and

            

    

     

    
      	(c)  	
              an
                amount equal to the principal amount outstanding under the Existing
                Mortgage together with all accrued interest up to and including the
                Closing Date, plus an amount equal to two (2) months interest payable
                as a
                penalty on the prepayment of the Existing Mortgage;
                

            

    

     

    
      
         

      

      
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    less:

     

    
      	(d)  	
              any
                amount due by Consultronics Hungary, as the case may be, to the Vendor,
                as
                of the Closing Date, plus interest thereon, as the case may
                be.

            

    

     

    The
      Purchase Price shall be satisfied by the payment referred to in section
3.2
      (as such
      payment and Purchase Price may be adjusted pursuant to section 3.4).

     

    3.2  Closing
      Date Payment

     

    The
      Purchase Price shall be paid by the Purchaser to the Vendor as
      follows:

     

    
      	(a)  	
              An
                amount of two
                million dollars ($2,000,000) shall
                be deposited at Closing with the Purchaser’s legal counsel, in escrow, in
                order to ensure that all representations and warranties of the Vendor
                are
                true and correct and the agreements with the Purchaser are or will
                be
                performed. Seventy-five percent (75%) of the said sum shall be released
                twelve (12) months following the Closing Date and the balance shall
                be
                released eighteen (18) months following the Closing Date unless,
                in the
                meantime, the Purchaser has presented to the Vendor a Claim, in which
                case, the Purchaser shall be entitled to retain an amount equivalent
                to
                the amount of the Claim until such Claim is settled in accordance
                with
                Article XI hereof; and

            

    

     

    
      	(b)  	
              the
                balance of the Purchase Price shall be paid by certified cheque or
                bank
                draft payable to or to the order of the Vendor or, if the Vendor
                so
                directs at least two Business Days prior to the Closing Date, by
                way of
                electronic transfer of immediately available funds to such bank account
                in
                Toronto, Ontario as the Vendor may specify in such direction, subject
                to
                registration of the deed of sale for the Real Property and entering
                of
                such transfer, in the Land Titles Office, without any adverse entry
                other
                than Permitted Encumbrances.

            

    

     

    3.3  Closing
      Audited Financial Statements

     

    
      	(a)  	
              Closing
                Statements.
                As
                soon as possible, but not later than 90 days following the Closing
                Date,
                the Vendor's auditors shall deliver to the Purchaser, at Vendor’s expense,
                audited consolidated financial statements (the "Closing Audited Financial
                Statements") of the Vendor as of the close of business on the day
                immediately prior to the Closing Date, prepared in accordance with
                generally accepted accounting principles and Vendor’s accounting
                practices, applied on a basis consistent with the Audited Financial
                Statements together with a schedule setting out the adjustment amount,
                if
                any, calculated in accordance with section 3.4
                (that schedule and the Closing Audited Financial Statements, collectively,
                the "Closing Statements"). For the purpose of preparing the Closing
                Statements, the Purchaser shall grant to the Vendor’s authorized
                representatives reasonable access to relevant records, facilities
                and
                personnel of the Purchased Business. The Vendor and the Purchaser
                shall
                co-operate fully with each other in the preparation of the Closing
                Statements.

            

    

     

    
      
         

      

      
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      	(b)  	
              Approval
                of Closing Statements.
                The
                Purchaser shall have 30 days from receipt of the Closing Statements
                within
                which to review the Closing Statements. For the purposes of this
                review,
                the Vendor shall permit the Purchaser and the Purchaser's authorized
                representatives to examine the working papers, schedules and other
                documents and information used or prepared by the Vendor or the Vendor's
                auditors in connection with the preparation of the Closing Statements.
                The
                Purchaser may dispute any of the items in the Closing Statements
                by
                written notice (an "Objection Notice") to the Vendor within the same
                30
                days. If the Purchaser has not delivered an Objection Notice to the
                Vendor
                within this 30 day period, the Purchaser shall be deemed to have
                accepted
                the Closing Statements. If the Purchaser delivers an Objection Notice,
                the
                Vendor and the Purchaser shall attempt to resolve all of the items
                in
                dispute within 15 days
                of receipt of the Objection Notice. If all items in dispute are not
                resolved within this 15 day
                period, such unresolved items will be submitted to an independent
                third
                party arbitrator, which shall be a national audit firm (the "Independent
                Auditor"), appointed together by the Vendor and the Purchaser to
                resolve
                the remaining items in dispute.
                In
                case the parties fail to select the Independent Auditor within 15
                days,
                the Independent Auditor shall be appointed by a judge of the Superior
                Court of Justice of Ontario in the Toronto Region, upon application
                of
                either party.

            

    

     

    
      	(c)  	
              Each
                party shall furnish to the Independent Auditor those working papers,
                schedules and other documents, and information relating to the items
                in
                dispute, that are available to that party or its auditors as the
                Independent Auditor may require. The Independent Auditor shall be
                instructed that time is of the essence in proceeding with its
                determination of any dispute, and the decision of the Independent
                Auditor
                with respect to any item in dispute shall be in writing and shall
                be final
                and binding on the Vendor and the Purchaser with no rights of challenge,
                review or appeal to the courts in any manner. The Independent Auditor,
                in
                making its determination of any dispute, does not act as an arbitrator
                and
                is not required to engage in a judicial inquiry worked out in a judicial
                manner.

            

    

     

    
      	(d)  	
              On
                agreement or decision, as the case may be, with respect to all items
                in
                dispute, the Closing Statements shall be deemed to be amended as
                may be
                necessary to reflect the agreement or the decision, as the case may
                be. In
                this event, references in this Agreement to the Closing Statements
                shall
                be references to the Closing Statements, as so
                amended.

            

    

     

    
      	(e)  	
              The
                fees and expenses of the Independent Auditor shall be borne equally
                by the
                Vendor, on the one hand, and the Purchaser, on the other hand, but
                each
                party shall be responsible for its own costs and
                expenses.

            

    

     

    3.4  Adjustment
      of Closing Date Payment

     

    
      	(a)  	
              If
                the Working Capital of the Vendor, as set out in the Closing Audited
                Financial Statements (as accepted or amended under section 3.3 above)
                ,
                is:

            

    

     

    
      
         

      

      
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      	(i)  	
              less
                than $3,000,000, the Purchase Price shall be reduced;
                or

            

    

     

    
      	(ii)  	
              more
                than $3,000,000, the Purchase Price shall be
                increased;

            

    

     

    on
      a
      dollar for dollar basis;

     

    
      	(b)  	
              if
                any Purchased Asset(s) (including the Prepaid Expenses) cannot be
                transferred to the Purchaser, the Purchase Price shall be reduced
                by the
                book value assigned to such Purchased Assets in the preparation of
                the
                Closing Audited Financial Statements, which book values shall be
                set out
                in the Schedule forming part of the Closing
                Statements;

            

    

     

    
      	(c)  	
              in
                determining the adjustment to the Purchase Price for purposes of
                the
                schedule forming part of the Closing Statements, any reduction under
                subsection (b) shall be set off against any increase under clause
                (a)(ii);
                and

            

    

     

    
      	(d)  	
              the
                total (or net, as the case may be) amount of the increase or reduction
                in
                the Purchase Price shall be paid by the Purchaser to the Vendor,
                or by the
                Vendor to the Purchaser, as the case may be, within two (2) Business
                Days
                after the Closing Statements are finalized by deemed acceptance,
                agreement
                or arbitration under section 3.3, by way of electronic transfer of
                immediately available funds to such bank account in Canada as the
                payee
                specifies.

            

    

     

    3.5  Allocation
      of Purchase Price

     

    The
      Vendor and the Purchaser agree to allocate the Purchase Price among the
      Purchased Assets in accordance with Schedule
      10
      and to
      report the sale and purchase of the Purchased Assets for all federal, provincial
      and local tax purposes in a manner consistent with such allocation. The
      Purchaser and the Vendor agree that if any taxing authority does not agree
      with
      any allocation of the Purchase Price agreed to between the parties in accordance
      with the foregoing, the Vendor and the Purchaser shall use their best efforts
      and good faith to agree upon a different allocation acceptable to the relevant
      authority and, if the parties are so able to agree, they shall thereafter amend
      the allocation and their income tax returns accordingly; provided, however
      that
      nothing contained herein shall be construed so as to require any party to
      commence or participate in any litigation or administrative process challenging
      the determination so made by any applicable authority.

     

    3.6  ETA
      Election

     

    The
      Purchaser and the Vendor shall elect jointly under subsection 167(1) of the
      ETA,
      in the form prescribed for the purposes of that subsection, in respect of the
      sale and transfer of the Purchased Assets hereunder, and the Purchaser shall
      file such election in its GST return for its reporting period that includes
      the
      Closing Date.

     

    3.7  Transfer
      Taxes

     

    The
      Purchaser shall be liable for and shall pay all federal and provincial sales
      taxes (including any GST, retail sales taxes and land transfer taxes) and all
      other taxes, duties, fees or other like charges of any jurisdiction properly
      payable in connection with the transfer of the Purchased Assets by the Vendor
      to
      the Purchaser.

     

    
      
         

      

      
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    3.8  Income
      Tax Election

     

    The
      Purchaser and the Vendor agree to elect jointly in the prescribed form under
      section 22 of the Tax Act as to the sale of the accounts receivable and
      other assets that are referred to in subsection 2.1(f)
      and
      described in section 22 of the Tax Act and to designate in such election an
      amount equal to the portion of the Purchase Price allocated to such assets
      pursuant to section 3.5
      as the
      consideration paid by the Purchaser therefor.

     

    3.9  Tax
      Amounts Payable by Customers

     

    If
      and to
      the extent that the accounts receivable described in subsection 2.1(f)
      include
      amounts ("Tax Amounts") payable by the customer or other account debtor on
      account of GST or any other Taxes which the Vendor is required to collect from
      the account debtor in conjunction with such accounts, and which the Vendor
      has
      remitted or is obliged to remit to the relevant taxing authority (the
“Authority”), the Purchaser shall, upon collecting the relevant account, remit
      the Tax Amount:

     

    (a) if
      the
      Vendor has previously accounted for such amount in its returns to the relevant
      Authority (by remittance and/or by setoff of input tax credits), to the Vendor;
      or

     

    (b) otherwise,
      to the appropriate Authority.

     

    Notwithstanding
      the foregoing, Purchaser’s obligations pursuant to this section 3.9
      shall be
      limited to collecting the Taxes billed by Vendor and the Purchaser shall not
      be
      liable in any case where Taxes have not been billed or have been incorrectly
      billed. For greater certainty, Purchaser shall not be liable with respect to
      any
      Taxes regarding any sales completed prior to the Closing Date, save and except
      for the portion of Taxes billed and included in the accounts receivable
      indicated in the Closing Audited Financial Statements.

     

    3.10  Inter-company
      Accounts

     

    
      	(a)  	
              The
                Purchaser will ensure that any amount referred to in section 3.1(d)
                due by Consultronics Hungary to the Vendor as of the Closing Date
                will be
                repaid by Consultronics Hungary to the Vendor within ten (10) business
                days following the Closing Date.

            

    

     

    
      	(b)  	
              If,
                as a result of the repayment or forgiveness of intercorporate loans
                between the Vendor and Consultronics Europe, the amount of the tax
                losses
                available to Consultronics Europe is reduced, then the Purchase Price
                shall be reduced by an amount equal
                to:

            

    

     

    
      	(i)  	
              the
                amount of such reduction of tax
                losses;

            

    

     

    multiplied
      by

     

    
      
         

      

      
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      	(ii)  	
              the
                effective UK tax rate which would apply to taxable income of Consultronics
                Europe;

            

    

     

    multiplied
      by

     

    
      	(iii)  	
              two-thirds
                (66.67%).

            

    

     

    ARTICLE
      IV

    ASSUMPTION
      OF LIABILITIES

     

    4.1  Assumption
      of Certain Liabilities by the Purchaser

     

    Subject
      to the provisions of this Agreement, the Purchaser agrees to assume, pay,
      satisfy, discharge, perform and fulfil, from and after the Time of Closing,
      only
      those outstanding obligations and liabilities of the Vendor as at the Closing
      Date which, by their terms, are to be paid, satisfied, discharged, performed
      and
      fulfilled at and after the Time of Closing (the "Assumed Liabilities")
      under:

     

    
      	(a)  	
              the
                Contracts described in Schedule
                3,
                Schedule
                6,
                Schedule
                7
                and Schedule
                9;

            

    

     

    
      	(b)  	
              the
                licences, permits, approvals, consents, registrations, certificates
                and
                other authorizations described in Schedule
                8;

            

    

     

    
      	(c)  	
              the
                agreements entered into by the Vendor for the provision of services
                or
                goods to the Vendor which are detailed in Schedule
                21;

            

    

     

    
      	(d)  	
              the
                agreements entered into by the Vendor for the sale of inventories
                by the
                Vendor or the provision of services by the Vendor after the Closing
                Date
                which are detailed in Schedule
                22;

            

    

     

    
      	(e)  	
              the
                outstanding balance due on the capital leases (current and long term)
                as
                reflected in the Closing Audited Financial
                Statements;

            

    

     

    
      	(f)  	
              the
                current liabilities as reflected in the Closing Audited Financial
                Statements, excluding any income tax liabilities;
                and

            

    

     

    
      	(g)  	
              warranty
                claims in respect of products sold prior to the Closing Date, but
                only to
                the maximum number of units in respect of which a warranty reserve
                is
                included in the Closing Audited Financial
                Statements.

            

    

     

    For
      greater certainty, and without limiting the generality of the foregoing, the
      Vendor shall remain liable for and shall pay, satisfy, discharge, perform and
      fulfil, all obligations, liabilities covenants, commitments and undertakings
      of
      the Vendor, whether known, accrued or contingent, except the Assumed Liabilities
      (the "Excluded Liabilities"), including, without limitation, the obligations
      and
      liabilities of the Vendor:

     

    
      
         

      

      
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      	(h)  	
              for
                Taxes payable, collectible or remittable by the Vendor in respect
                of the
                Purchased Business and the Purchased Assets, provided that real property
                and other Taxes levied with respect to the Purchased Assets for a
                taxable
                period that includes but does not end on the Closing Date shall be
                apportioned between the Vendor and the Purchaser such that the Vendor
                shall be liable for the amount determined by multiplying the Taxes
                to be
                apportioned by a fraction, the numerator of which is the number of
                days in
                the taxable period up to the Closing Date and the denominator of
                which is
                the total number of days in the period, and the Purchaser shall be
                liable
                for the balance;

            

    

     

    
      	(i)  	
              pursuant
                to any default of the Vendor under any of the
                Contracts;

            

    

     

    
      	(j)  	
              pursuant
                to any warranty claim for any manufactured products prior to the
                Closing
                Date, in excess of the number of units recorded as warranty reserve
                in the
                Closing Audited Financial Statements and in Schedule
                18;
                such warranty claims will be tracked based on the number of products
                returned and the calculation of the claim will be based on the calculation
                of the reserve as set of in Schedule
                18;
                and

            

    

     

    
      	(k)  	
              pursuant
                to any other liabilities payable on or prior to the Closing Date
                and not
                included in the liabilities reflected in the Closing Audited Financial
                Statements.

            

    

     

    The
      Vendor hereby agrees to indemnify and save harmless the Purchaser, its
      representatives, successors and assigns, from and against any and all Losses
      incurred by it and arising out of the Excluded Liabilities or the failure of
      the
      Vendor to duly pay, perform and discharge the Excluded Liabilities as and when
      they become due.

     

    ARTICLE
      V

    REPRESENTATIONS
      AND WARRANTIES OF THE VENDOR

     

    Each
      of
      the Vendor and the Vendor’s Party, jointly and severally, represents and
      warrants to the Purchaser as follows and acknowledges that the Purchaser is
      relying on such representations and warranties in connection with its purchase
      of the Purchased Assets and the transactions contemplated by the
      Agreement:

     

    5.1  Organization

     

    Each
      of
      the Vendor and the Subsidiaries is a corporation duly incorporated and validly
      existing under the Laws of its respective jurisdiction, is not in default of
      filing any notice, report or return under such Laws the failure to file which
      could result in the cancellation of its corporate existence under such Laws,
      has
      the corporate power and holds the licences, permits, certificates and other
      approvals required to own or lease its property, to carry on the Purchased
      Business as now being conducted by it and to enter into this Agreement and
      to
      perform its obligations hereunder.

     

    
      
         

      

      
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    5.2  Authorization

     

    Each
      of
      the Vendor and the Subsidiaries has obtained all required consents, approvals
      and authorizations, including, without limitation, all shareholders’ consents,
      and has the full power and authority to sell, or cause the sale of the Purchased
      Assets and to execute, deliver and perform or cause to be executed, delivered
      or
      performed, and to enter into and consummate, or cause to be entered into or
      consummated, all transactions contemplated by this Agreement, and has duly
      authorized the execution, delivery and performance of this Agreement, and each
      of the Transaction Documents has been (or, in the case of those delivered after
      the date hereof, will at the time of such delivery have been) duly authorized,
      executed and delivered by each of the Vendor and the Subsidiaries and is (or
      will upon delivery be) a legal, valid and binding obligation of each of the
      Vendor and the Subsidiaries, enforceable by the Purchaser against each of the
      Vendor, the Subsidiaries and the Vendor’s Party by the Purchaser in accordance
      with its terms, except as enforcement may be limited by bankruptcy, insolvency
      and other laws affecting the rights of creditors generally and except that
      equitable remedies may be granted only in the discretion of a court of competent
      jurisdiction. No authorization is required to be obtained by the Vendor or
      any
      of the Subsidiaries from any Governmental Authority, regulatory agency or any
      other third party in connection with the execution, delivery or performance
      of
      this Agreement or any other document or agreement to be delivered under this
      Agreement.

     

    5.3  No
      Other Agreements to Purchase

     

    No
      person
      other than the Purchaser has any written or oral agreement or option or any
      right or privilege (whether by law, pre-emptive or contractual) capable of
      becoming an agreement or option for the purchase or acquisition from the Vendor
      of any of the Purchased Assets, other than pursuant to purchase orders accepted
      by the Vendor in the ordinary course of the Purchased Business.

     

    5.4  No
      Violation

     

    The
      execution and delivery of this Agreement by each of the Vendor, the Vendor’s
      Party and the Subsidiaries and the consummation of the transactions herein
      provided for or the fulfilment of or the compliance with the terms and
      conditions of any of the Transaction Documents will not result in:

     

    
      	(a)  	
              the
                breach or violation of any of the provisions of, or constitute a
                default
                under, or conflict with or cause the acceleration of any obligation
                of the
                Vendor or any of the Subsidiaries
                under:

            

    

     

    
      	(i)  	
              any
                Contract to which the Vendor, the Vendor’s Party or any of the
                Subsidiaries is a party or by which it is or its properties are bound;
                nor

            

    

     

    
      	(ii)  	
              any
                provision of the constating documents or by-laws or resolutions of
                the
                board of directors (or any committee thereof) or shareholders of
                the
                Vendor or any of the Subsidiaries;
                nor

            

    

     

    
      
         

      

      
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      	(iii)  	
              any
                judgment, decree, order or award of any court, governmental body
                or
                arbitrator having jurisdiction over the Vendor, the Subsidiaries
                or
                Vendor’s Party; nor

            

    

     

    
      	(b)  	
              a
                violation of any Laws to which the Vendor, the Vendor’s Party, the
                Subsidiaries, the Purchased Assets or the Purchased Business are
                subject,
                other than the Bulk
                Sales Act
                (Ontario).

            

    

     

    5.5  Sufficiency
      and Condition of Purchased Assets

     

    As
      from
      the purchase of the Purchased Business by the Purchaser and its Affiliate on
      the
      Closing Date, the Purchaser will hold and benefit from all the Purchased Assets
      owned or leased by the Vendor as well as the rights, titles and interest
      required in order to continue operating the Purchased Business as it was
      operated by the Vendor prior to the Closing Date. All Purchased Assets owned
      and
      used by the Vendor in connection with the Purchased Business are in good
      operating condition and are in a state of good repair and maintenance. The
      Purchased Assets and their use by the Vendor and the Subsidiaries are in
      compliance with the Laws applicable thereto or to the use thereof.

     

    5.6  Title
      to Personal Property

     

    The
      Purchased Assets (other than the Real Property) are owned beneficially by the
      Vendor with a good and marketable title thereto, free and clear of all
      Encumbrances other than Permitted Encumbrances. The assets of the Subsidiaries
      are beneficially owned by the Subsidiaries with good and marketable title
      thereto, free and clear of all Encumbrances other than Permitted Encumbrances.
      Each of the Vendor and the Subsidiaries has no equipment leases, leaseback
      agreements or machinery leases, other than those enumerated in Schedule
      23.

     

    5.7  Location
      of Real Property

     

    Schedule
      3 sets forth the municipal addresses and complete and accurate legal
      descriptions of all the real property that is used in the Purchased Business
      and
      of which the Vendor or any of the Subsidiaries is the beneficial or registered
      owner (the "Real Property"), free and clear of any Encumbrances except the
      Permitted Encumbrances and the real property that is used in the Purchased
      Business and leased by the Vendor (the "Leased Property").

     

    5.8  Title
      to Real and Leased Property

     

    The
      Vendor is not the beneficial or registered owner of and has not agreed to
      acquire any real property or any interest in any real property other than the
      Real Property and the Leased Property. The Vendor has the exclusive right to
      possess, use and occupy the Leased Property and has good and marketable title
      in
      fee simple to all the Real Property, free and clear of all Encumbrances,
      easements or other restrictions of any kind other than Permitted Encumbrances.
      Without limiting the generality of the foregoing:

     

    
      	(a)  	
              the
                Permitted Encumbrances constitute all of the Encumbrances, agreements,
                indentures and other matters, including, without limitation, all
                unregistered Encumbrances, that affect the Real Property or the Leased
                Property, and the Vendor has not received any notice of default under,
                or
                termination of, any of the Permitted
                Encumbrances;

            

    

     

    
      
         

      

      
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      	(b)  	
              each
                of the Real Property and the Leased Property (including all buildings,
                improvements and fixtures) is in good state of repair and is fit
                for its
                present use, and with the exception that it may be advisable to replace
                the heating and air conditioning units at the Concord facility in
                the
                Spring of 2006 (the costs of which shall not exceed $80,000), there
                are no
                faults in design, material or structural repairs, defects or replacements
                that are necessary or advisable and, without limiting the foregoing,
                there
                are no repairs to, or replacements of, the roof or the mechanical,
                electrical, heating, ventilating, air-conditioning, plumbing or drainage
                equipment or systems that are necessary or advisable; and none of
                the Real
                Property or the Leased Property is currently undergoing any alteration
                or
                renovation nor is any such alteration or renovation
                contemplated;

            

    

     

    
      	(c)  	
              the
                Real Property and the Leased Property, with regard to the location,
                construction, occupancy and use thereof, are in compliance with all
                of the
                applicable Laws and regulations, municipal or otherwise; no buildings
                or
                other structures located on the Real Property encroaches upon any
                land not
                owned by the Vendor; no buildings or other structures located on
                adjacent
                property encroaches upon the Real Property; and there are no restrictive
                covenants, municipal by-laws or other laws or regulations which in
                any way
                restrict or prohibit the use of the Real Property or Leased Property
                or
                the buildings or structures located thereon for the purposes for
                which
                they are presently being used, other than Permitted Encumbrances;
                and

            

    

     

    
      	(d)  	
              there
                are no expropriation or similar proceedings, actual or threatened,
                of
                which the Vendor has received notice against the Real Property or
                the
                Leased Property.

            

    

     

    5.9  Environmental
      Matters

     

    
      	5.9.1  	
              In
                this section,

            

    

     

    
      	(a)  	
              "Environment"
                means the
                ambient air, all layers of the atmosphere, surface water, underground
                water, all land, all living
                organisms and the
                interacting natural systems that include components of air, land,
                water,
                organic and inorganic matter and living organisms, and includes indoor
                spaces;

            

    

     

    
      	(b)  	
              "Environmental
                Law"
                means all federal, provincial, municipal or local statutes, regulations,
                by-laws, Environmental Permits, orders or rules,
                and any policies or guidelines of any Governmental Authority or regulatory
                body or agency, and any requirements or obligations arising under
                the
                common law, relating to the Environment, the transportation of dangerous
                goods and occupational health and
                safety;

            

    

     

    
      
         

      

      
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      	(c)  	
              "Environmental
                Permits"
                means all permits, licences, approvals, consents, authorizations,
                registrations and certificates issued by or provided
                to, as the case may be, any government or Governmental Authority
                pursuant
                to an Environmental Law;

            

    

     

    
      	(d)  	
              "Premises"
                means all real property, buildings and facilities, including any
                part of
                any such property, building or facility owned, leased,
                or
                operated by the Vendor or any of the Subsidiaries in connection with
                the
                Purchased Business; and

            

    

     

    
      	(e)  	
              "Substance"
                means any substance or material which under any Environmental Law
                is
                defined to be "hazardous", "toxic", "deleterious", "caustic",
                "dangerous", a "contaminant", a "pollutant", a "dangerous good",
                a
                "waste", a "source of contamination" or a source of a
                "pollutant".

            

    

     

    
      	5.9.2  	
              Except
                as disclosed in Schedule
                24,

            

    

     

    
      	(a)  	
              neither
                the Vendor nor any other Person has emitted, discharged,
                deposited
                or released or caused or permitted to be emitted, discharged,
                deposited
                or released, any Substances on or to the Premises, or in connection
                with
                the operation of the Purchased Business, except in compliance with
                Environmental Law;

            

    

     

    
      	(b)  	
              the
                soil and subsoil, and the surface and ground water in, on or under
                the
                Premises do not contain any Substances, nor do the Premises
                contain
                any underground storage tanks; all Substances which have been or
                are being
                treated or stored on the Premises have been generated, treated and
                stored
                in compliance with Environmental
                Law;

            

    

     

    
      	(c)  	
              no
                polychlorinated biphenyls, asbestos containing materials, lead or
                urea-formaldehyde is or has ever been on, at, in or under the
                Premises;
                and

            

    

     

    
      	(d)  	
              neither
                the Vendor nor any of the Subsidiaries has permitted the Premises
                to be
                used for the disposal of any
                Substance.

            

    

     

    
      	5.9.3  	
              All
                Environmental Permits obtained by the Vendor in
                connection with the Purchased Business (including any applicable
                expiry
                dates) are listed in Schedule
                24
                and are valid and in full force and
                effect.

            

    

     

    
      	5.9.4  	
              There
                are no proceedings against or involving the
                Vendor or any of the Subsidiaries either in progress, pending, or
                threatened which allege the violation of, or non-compliance with,
                any
                Environmental Law.

            

    

     

    
      	5.9.5  	
              For
                greater certainty, the representations and warranties contained in
                section
                5.2,
                5.4,
                5.16
                and 5.17
                apply to Environmental Permits.

            

    

     

    
      
         

      

      
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    5.10  Leased
      Property

     

    The
      Vendor is not a party to any lease or agreement to lease or sublease in respect
      of any real property, whether as lessor or lessee or sublessor or sublessee,
      other than the leases and subleases (the "Leases") described in Schedule
      3
      relating
      to the Leased Property. Schedule
      3
      sets out
      the parties to each of the Leases, their dates of execution and expiry dates,
      any options to renew, the locations of the leased lands and premises and the
      rent payable thereunder. The Vendor or the Subsidiaries, as the case may be,
      has
      quiet possession of all the property which it operates under the Leases and
      each
      of such Leases is fully enforceable in accordance with the terms thereof and
      none of the Vendor nor any of the Subsidiaries is in default under any of such
      Leases.

     

    5.11  Inventories

     

    The
      inventories were acquired in the normal course of business. The inventories
      of
      the Vendor relating to the Purchased Business do not include any items that
      are
      slow moving, below standard quality or of a quality or quantity not usable
      or
      saleable in the normal course of business, the value of which has not been
      written down on its books of account to net realizable market
      value.

     

    5.12  Accounts
      Receivable

     

    All
      accounts receivable, book debts and other debts due or accruing to the Vendor
      in
      connection with the Purchased Business are bona fide, valid and good and,
      subject to an allowance for doubtful accounts that has been reflected on the
      books of the Vendor in accordance with generally accepted accounting principles,
      collectible without set-off or counterclaim.

     

    5.13  Intellectual
      Property

     

    Schedule
      9 sets out all registered or pending Intellectual Property (including
      particulars of registration or application for registration) and all licences
      and other Contracts that comprise or relate to Intellectual Property, including
      all Intellectual Property registered or owned by the Subsidiaries. The
      Intellectual Property comprises all trade or brand names, business names, trade
      marks, service marks, copyrights, patents, trade secrets, know-how, inventions,
      designs and other industrial or intellectual property necessary to conduct
      the
      Purchased Business. The Vendor or any of the Subsidiaries, as indicated in
      Schedule
      9,
      is the
      beneficial owner of the Intellectual Property free and clear of all
      Encumbrances, and is not a party to or bound by any Contract or any other
      obligation whatsoever that limits or impairs its ability to sell, transfer,
      assign or convey, or that otherwise affects, the Intellectual Property,
      including, without limitation, all rights and interests of the Vendor in the
      Acterna
      Settlement Agreement
      dated
      October 1st,
      2004.
      No person has been granted any interest in or right to use all or any portion
      of
      the Intellectual Property. The conduct of the Purchased Business does not
      infringe upon the industrial or intellectual property rights, domestic or
      foreign, of any other person. The Vendor is not aware of a claim of any
      infringement or breach of any industrial or intellectual property rights of
      any
      other person, nor has the Vendor received any notice that the conduct of the
      Purchased Business, including the use of the Intellectual Property, infringes
      upon or breaches any industrial or intellectual property rights of any other
      person, and the Vendor has no knowledge of any infringement or violation of
      any
      of its rights in the Intellectual Property. The Vendor is not aware of any
      state
      of facts that casts doubt on the validity or enforceability of any of the
      Intellectual Property. The Vendor has provided to the Purchaser a true and
      complete copy of all Contracts and amendments thereto that comprise or relate
      to
      the Intellectual Property.

     

    
      
         

      

      
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    5.14  Insurance

     

    The
      Vendor has the Purchased Assets and the Subsidiaries insured against loss or
      damage by all insurable hazards or risks on a replacement cost basis.
Schedule
      13
      sets out
      all insurance policies (specifying the insurer, the amount of the coverage,
      the
      type of insurance, the policy number and any pending claims thereunder)
      maintained by the Subsidiaries or the Vendor on the Purchased Assets or
      personnel as of the date hereof and true and complete copies of the most recent
      inspection reports, if any, received from insurance underwriters or others
      as to
      the condition of the Purchased Assets. Each of such policies covers the risks
      (including liability for latent product defects) normally covered by enterprises
      operating businesses which are similar to the Purchased Business. Each of such
      policies covers all reasonable risks, the coverage provided is such as would
      be
      maintained by a prudent administrator carrying on a similar business and each
      of
      such policies is in full force and effect. The Vendor is not in default with
      respect to any of the provisions contained in any such insurance policy and
      has
      not failed to give any notice or present any claim under any such insurance
      policy, in due and timely fashion. The Vendor has provided a true copy of each
      insurance policy referred to in Schedule
      13
      to the
      Purchaser.

     

    5.15  Agreements
      and Commitments

     

    Except
      as
      described in Schedule
      3,
      Schedule
      6,
      Schedule
      7,
      Schedule
      9
      and
Schedule
      18,
      the
      Vendor and the Subsidiaries are not a party to or bound by any Contract relating
      to the Purchased Business or Purchased Assets. Each of the Vendor and the
      Subsidiaries has performed all of the obligations required to be performed
      by it
      and is entitled to all benefits under, and is not in default or alleged to
      be in
      default in respect of, any Contract relating to the Purchased Business or
      Purchased Assets to which it is a party or by which it is bound and all such
      Contracts are in good standing and in full force and effect. The Vendor has
      provided to the Purchaser a true and complete copy of each Contract listed
      or
      described in Schedule
      3,
      Schedule
      6,
      Schedule
      7,
      Schedule
      9
      and
Schedule
      18,
      and all
      amendments thereto.

     

    5.16  Compliance
      With Laws; Governmental Authorization

     

    Each
      of
      the Vendor and the Subsidiaries has complied with all Laws applicable to the
      Purchased Business or the Purchased Assets. Schedule
      8
      sets out
      a complete and accurate list of all licences, permits, approvals, consents,
      certificates, registrations and authorizations (whether governmental, regulatory
      or otherwise) (the "Licences") held by or granted to the Vendor or any of the
      Subsidiaries, and there are no other licences, permits, approvals, consents,
      certificates, registrations or authorizations necessary to carry on the
      Purchased Business or to own or lease any of the Purchased Assets.Each licence
      is in good standing.

     

    
      
         

      

      
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    5.17  Consents
      and Approvals

     

    There
      is
      no requirement to make any filing with, give any notice to or to obtain any
      licence, permit, certificate, registration, authorization, consent or approval
      of, any governmental or regulatory authority as a condition to the lawful
      consummation of the transactions contemplated by this Agreement. There is no
      requirement under any Contract relating to the Purchased Business or Purchased
      Assets to which the Vendor or any of the Subsidiaries is a party or by which
      it
      is bound to give any notice to, or to obtain the consent or approval of, any
      party to such agreement, instrument or commitment relating to the consummation
      of the transactions contemplated by this Agreement, except for the
      notifications, consents and approvals described in Schedule
      16
      that
      will be obtained no later than the Closing Date.

     

    5.18  Financial
      Statements

     

    The
      Financial Statements have been prepared in accordance with generally accepted
      accounting principles and Vendor’s accounting practices, applied on a basis
      consistent with prior periods, are true, correct and complete, and present
      fairly and accurately the assets, liabilities (whether accrued, absolute,
      contingent or otherwise) and financial condition of the Vendor and the
      Subsidiaries as at the respective dates of the Financial Statements and the
      sales, earnings and results of operations of the Vendor and the Subsidiaries
      for
      the respective periods covered by the Financial Statements.

     

    5.19  Books
      and Records

     

    The
      books
      and records of each of the Vendor and the Subsidiaries accurately and correctly
      set out and disclose, in accordance with generally accepted accounting
      principles, the financial position of the Vendor and the Subsidiaries as at
      the
      date hereof, and all financial transactions of the Vendor and the Subsidiaries
      relating to the Purchased Business have been accurately recorded in such books
      and records.

     

    5.20  Closing
      Audited Financial Statement

     

    The
      Closing Audited Financial Statements will be prepared in accordance with
      generally accepted accounting principles and Vendor’s accounting practices,
      applied on a basis consistent with those used in the preparation of the Audited
      Financial Statements and will present fairly and accurately the Purchased Assets
      and Assumed Liabilities as at the close of business on the Closing
      Date.

     

    5.21  Absence
      of Changes

     

    Since
      May
      31, 2005, the Purchased Business has been carried on only in the ordinary and
      normal course consistent with past practice and there has not been:

     

    
      	(a)  	
              any
                material adverse change in the financial condition of the Purchased
                Business;

            

    

     

    
      	(b)  	
              any
                material obligation or liability incurred by the Vendor or any of
                the
                Subsidiaries in connection with the Purchased Business, other than
                those
                incurred in the ordinary and normal course of the Purchased Business
                and
                consistent with past practice and with the exception of a 5 year
                lease
                commitment in the amount of approximately $635,000 for certain production
                machinery;

            

    

     

    
      
         

      

      
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      	(c)  	
              any
                payment, discharge or satisfaction of any Encumbrance, liability
                or
                obligation of the Vendor or any of the Subsidiaries in relation to
                the
                Purchased Business or the Purchased Assets other than payment of
                accounts
                payable and tax liabilities incurred in the ordinary and normal course
                of
                business consistent with past
                practice;

            

    

     

    
      	(d)  	
              any
                licence, sale, assignment, transfer, disposition, pledge, mortgage
                or
                granting of a security interest or other Encumbrance on or over any
                Purchased Assets, other than sales of inventory to customers in the
                ordinary and normal course of the Purchased
                Business;

            

    

     

    
      	(e)  	
              any
                general increase in the compensation of employees of the Vendor or
                any of
                the Subsidiaries, involved in the Purchased Business (including,
                without
                limitation, any increase pursuant to any Employee Plan or commitment),
                or
                any increase in any such compensation or bonus payable to any officer,
                employee, consultant or agent thereof, with the exception of a general
                salary review in September 2005 resulting in increases in salaries
                averaging approximately 5%;

            

    

     

    
      	(f)  	
              any
                change in the employment conditions, benefit, bonus and severance
                packages
                for management personnel of the Purchased
                Business;

            

    

     

    
      	(g)  	
              any
                forward purchase commitments in excess of the requirements of the
                Purchased Business for normal operating inventories or at prices
                higher
                than the current market prices;

            

    

     

    
      	(h)  	
              any
                forward sales commitments other than in the ordinary and normal course
                of
                the Purchased Business;

            

    

     

    
      	(i)  	
              any
                change in the accounting or tax practices followed by the Vendor
                or any of
                the Subsidiaries;

            

    

     

    
      	(j)  	
              any
                change adopted in the depreciation or amortization policies or rates;
                or
                

            

    

     

    
      	(k)  	
              any
                change in the credit terms offered to customers of, or by suppliers
                to,
                the Purchased Business.

            

    

     

    5.22  Non-Arm's
      Length Transactions

     

    With
      respect to the Purchased Business, the Vendor has not, since May 31, 2005,
      made
      any payment or loan to, or borrowed any moneys from or is otherwise indebted
      to,
      any officer, director, employee, shareholder or any other person not dealing
      at
      arm's length with the Vendor or any of the Subsidiaries (within the meaning
      of
      the Tax Act) or any Affiliate or Associate of any of the foregoing, except
      as
      disclosed on the Audited Financial Statements and except for usual employee
      reimbursements and compensation paid in the ordinary course of the Purchased
      Business. All loans or other indebtedness of the Vendor in favour of the
      Subsidiaries or of any of the Subsidiaries in favour of the Vendor will have
      been reimbursed on or prior to the Closing Date.

     

    
      
         

      

      
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    5.23  Taxes

     

    Each
      of
      the Vendor and the Subsidiaries is not in default of filing its income Tax
      or
      Tax returns with the competent Governmental Authority; all of the Taxes and
      all
      of the income Taxes levied, either by the Government of Canada, the U.S.
      Government or the government of any other country, the government of a province
      or a state or by a municipality or any other authority incorporated or empowered
      to do so, which are due and payable by the Vendor or any of the Subsidiaries,
      have been discharged in full or have been the subject of appropriate reserves,
      the amounts of which have been recorded in the Financial Statements; in respect
      of all such Taxes or income Taxes, none of the Vendor nor the Subsidiaries
      has
      received any notice of assessment nor has been the subject of an audit,
      investigation or threatened assessment for Taxes which are owing in respect
      of
      previous years to this date and which could be added to the amounts indicated
      in
      the books and records of the Vendor and of the Subsidiaries in respect of Taxes
      and income Taxes payable.

     

    5.24  Litigation

     

    Except
      as
      described in Schedule
      14,
      there
      are no actions, suits, audits, investigations, assessments or proceedings
      (whether or not purportedly on behalf of the Vendor) pending or, to the best
      knowledge of the Vendor, after due enquiry, threatened against or affecting
      the
      Vendor or any of the Subsidiaries or any of their employees and directors in
      their capacities as such, at law or in equity or before or by any federal,
      provincial, municipal or other governmental department, court, commission,
      board, bureau, agency or instrumentality, domestic or foreign, or before or
      by
      an arbitrator or arbitration board. There is not currently outstanding against
      or affecting the Purchased Assets or the Purchased Business or the Vendor’s or
      the Subsidiaries’ employees or directors in their capacities as such, any
      judgment, decree, injunction, ruling or order of any court, arbitrator,
      governmental department, commission, agency or instrumentality.

     

    5.25  Residency

     

    The
      Vendor is not a non-resident of Canada for the purposes of the Tax
      Act.

     

    5.26  GST
      Registration

     

    The
      Vendor is a registrant for purposes of the ETA whose registration number is
      122604119RT0001. Following completion of this Agreement, the Purchaser will
      have
      ownership, possession or use of all or substantially all of the property that
      can reasonably be regarded as being necessary for the Purchaser to be able
      to
      carry on the Purchased Business.

     

    
      
         

      

      
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    5.27  Customers
      and Suppliers

     

    Schedule
      17 sets out the major customers of the Purchased Business, and there has been
      no
      termination or cancellation of, and no modification or change in, the Vendor's
      business relationship with any major customer or group of major customers.
      There
      has not been any material adverse change in relations with clients or suppliers
      of the Purchased Business since May 31, 2005 and, to the knowledge of the
      Vendor’s Party, no such change is anticipated including, without limitation, as
      a result of the transactions contemplated herein. The agreements entered into
      by
      the Vendor or any of the Subsidiaries for the sale of inventories or the
      provision of services by the Vendor or any of the Subsidiaries are upon
      reasonable terms and conditions and have been entered into in the ordinary
      course of the Purchased Business. Each of the Vendor and the Subsidiaries has
      not had a significant problem in obtaining in a timely manner and at reasonable
      cost any and all services used or to be used in the Purchased Business, nor
      do
      the Vendor or Vendor’s Party have any reason to believe each of the Vendor and
      the Subsidiaries will have any significant problem in obtaining such services
      in
      the future. The agreements entered into by the Vendor or any of its Subsidiaries
      for the provision of services or goods to the Vendor or any of the Subsidiaries
      are for quantity, terms and quality reasonable with the level of the Purchased
      Business and have been entered into in the ordinary course of the Purchased
      Business. None of the Vendor nor any of the Subsidiaries has received written
      notice of intent to terminate any Contracts or agreements for the purchase
      of
      the products or services of any of the Vendor or the Subsidiaries, nor do they
      have actual knowledge, without inquiry, of any circumstances which are likely
      to
      result in the major customers materially decreasing their purchases of products
      or services during the 12 months immediately after the
      Closing.

     

    5.28  Product
      Warranties

     

    Schedule
      18 is a complete list of all express, written warranties given to purchasers
      of
      products supplied by the Vendor in connection with the Purchased Business.
      The
      books and records of each of the Vendor and the Subsidiaries accurately and
      correctly set out and disclose, in accordance with generally accepted accounting
      principles, the provisions with respect to the written warranties as at the
      date
      hereof.

     

    5.29  Employee
      Plans

     

    Schedule
      7 identifies each deferred compensation, bonus or incentive compensation, share
      option or purchase, severance, termination pay, hospitalization or other medical
      benefit, life or other insurance, vision, dental, drug, sick leave, disability,
      salary continuation, vacation, supplemental unemployment benefits, profit
      sharing, incentive or other compensation, mortgage assistance, pension or
      supplemental pension plan, retirement compensation arrangement, group registered
      retirement savings plan, deferred profit sharing plan, employee profit sharing
      plan, savings, retirement or supplemental retirement plan, program or
      arrangement, whether funded or unfunded, formal or informal, written or oral,
      that is maintained, contributed to or required to be contributed to, by the
      Vendor or any of the Subsidiaries, or to which the Vendor or any of the
      Subsidiaries is a party, or bound by, or under which the Vendor or any of the
      Subsidiaries has any liability or contingent liability with respect to or
      relating to the Purchased Business or the Purchased Assets for the benefit
      of
      employees or former employees of the Vendor and any of the Subsidiaries, and
      their beneficiaries and dependents (the "Employee Plans"). The Employee Plans
      have been established under, and are registered as required, maintained and
      administered in accordance with applicable Laws relating to such plans and
      the
      terms and conditions of such plans, and all filings, reports and disclosures
      with respect thereto required by applicable Laws have been filed, made or
      distributed. All obligations required by applicable laws, the Employee Plans
      or
      by contract to be performed in connection with the Employee Plans have been
      performed and there are no outstanding defaults or violations by any party
      to
      any Employee Plan nor any Taxes, penalties or fees owing or exigible under
      any
      Employee Plan. All obligations of the Vendor and the Subsidiaries with respect
      to Employee Plans are reflected in the Financial Statements in accordance with
      generally accepted accounting principles. True and complete copies of all
      Employee Plans, or where such Employee Plans are oral commitments, written
      summaries of their terms, together with all related documents including, if
      applicable, funding agreements, actuarial reports, funding returns and
      statements, plan summaries, employee booklets and personnel manuals have been
      provided to the Purchaser and attached as Schedule
      7.
      Where
      required by applicable Laws, the Employee Plans or by contract, each Employee
      Plan has been fully funded or fully insured. All Employee data necessary to
      administer the Employee Plans is in the possession and control of the Vendor
      and
      the Subsidiaries and has been made available to the Purchaser and is complete
      and accurate.

     

    
      
         

      

      
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    No
      amendments or improvements have been made or promised respecting any Employee
      Plan since May 31, 2005 other than those required by applicable Laws. Except
      as
      set out on Schedule
      7,
      no
      Employee Plan provides for any payment or the acceleration of any right or
      benefit as a consequence of the transaction contemplated by this Agreement.
      

     

    The
      Vendor and its Subsidiaries are not a party to, or bound by, and have no actual
      or contingent liability in respect of any retirement or retirement savings
      plans
      including, without limitation, any registered or unregistered pension plan,
      pensions, supplemental pensions, registered retirement savings plans or any
      retirement compensation arrangements. No Employee Plan is a defined benefit
      pension plan. No Employee Plan provides benefits beyond retirement or any other
      cessation of service to retirees or any current or former directors, employees
      or consultants of the Vendor or its Subsidiaries, or to their dependents or
      beneficiaries. No Employee Plan provides for retroactive charges or premium
      increases.

     

    5.30  Collective
      Agreements

     

    There
      are
      no unions or employee associations, whether certified or voluntarily recognized,
      that represent the employees of the Vendor or any of the Subsidiaries. The
      Vendor and the Subsidiaries have not made any Contracts with any labour union
      or
      employee association nor made commitments to or conducted negotiations with
      any
      labour union or employee association with respect to any future agreements.
      The
      Vendor and the Subsidiaries are not aware of any current attempts or any
      attempts in the last three years, to organize or establish any labour union
      or
      employee association with respect to any Employees of the Vendor or the
      Subsidiaries. There is no labour dispute involving the employees, including,
      without limitation, with respect to workers’ compensation. There are no pending
      unfair labour practice complaints involving any employee of the Vendor or the
      Subsidiaries, nor any related or successor employer’s applications or
      proceedings involving the Vendor or the Subsidiaries, nor have there been for
      the past three years.

     

    
      
         

      

      
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    5.31  Employees

     

    Schedule
      7 contains a true, complete and accurate list of all individuals who are
      employees, sales and other agents or representatives of the Vendor or of any
      of
      the Subsidiaries employed or engaged in the Purchased Business as of the date
      of
      this Agreement specifying with respect to salaried employees and sales or other
      agents or representatives, the length of service, age, title, rate of salary
      or
      other pay and commission or bonus structure or other security-based compensation
      participation for each such employee, agent or representative. Other than as
      set
      out in Schedule
      7,
      the
      engagement of all of the employee of the Vendor and the Subsidiaries can be
      terminated at any time for cause or upon providing reasonable notice of
      termination upon termination without cause. The Vendor and the Subsidiaries
      have
      not incurred, and no circumstances exist, under which the Vendor and the
      Subsidiaries could incur any liability for the misclassification of employees
      as
      independent contractors.

     

    5.32  Employee
      Accruals

     

    All
      accruals for unpaid vacation pay, premiums for unemployment insurance, workers’
compensation, health premiums, Canada Pension Plan or other pension plan
      premiums, accrued wages, salaries and commissions and employee benefit plan
      payments and other source deductions have been reflected in the books and
      records of each of the Vendor and the Subsidiaries.

     

    5.33  Ownership
      of Subsidiaries’ Shares

     

    The
      Vendor has the right, power and authority to sell, transfer, assign and deliver
      all the shares of the Subsidiaries (the "Subsidiaries’ Shares"). Immediately
      prior to the delivery of the Subsidiaries’ Shares, the Vendor will be the sole
      registered and beneficial owner of all the Subsidiaries’ Shares and will have
      good and valid title to such Subsidiaries’ Shares, free and clear of all
      Encumbrances and restrictions on transfer other than those in the articles
      of
      any of the Subsidiaries, which shall have been complied with at Closing. There
      are no outstanding options, warrants, convertible securities, calls, rights,
      commitments, preemptive rights or agreements or instruments or understandings
      of
      any character to which the Vendor is a party, obligating the Vendor to deliver
      or sell, or cause to be delivered or sold, contingently or otherwise, such
      Subsidiaries’ Shares. There are no voting trust agreements or other contracts,
      agreements, arrangements, commitments, plans or understandings to which the
      Vendor is a party restricting or otherwise relating to voting, dividend or
      other
      rights with respect to the Subsidiaries’ Shares.

     

    5.34  Absence
      of Undisclosed Liabilities

     

    Each
      of
      the Vendor and the Subsidiaries is not now subject to any liabilities or
      obligations, direct or indirect, absolute or, to the best of Vendor’s knowledge,
      contingent, other than the liabilities or obligations set forth in the Financial
      Statements,
      and
      those arising since May 31, 2005 in the ordinary course of business, none of
      which is materially adverse to the Purchased Business and all of which in the
      aggregate are not materially adverse to the Purchased Business. To the Vendor’s
      knowledge, there are no facts or circumstances which might reasonably serve
      as
      the basis for, or give rise to, any material liabilities or obligations on
      the
      part of the Purchased Business other than liabilities or obligations disclosed
      in the Audited Financial Statements,
      or
      arising thereafter in the ordinary course of business (none of which is
      materially adverse to the Purchased Business). None of the Vendor nor any of
      the
      Subsidiaries has given or agreed to give, nor is it a party to or bound by,
      any
      guarantee or indemnity in respect of indebtedness, or other obligations, of
      any
      Person, or any other commitment by which any of the Vendor or the Subsidiaries
      is, or is contingently, liable for such indebtedness or other
      obligations.

     

    
      
         

      

      
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    5.35  No
      Joint Venture Interests, etc.

     

    None
      of
      the Vendor nor any of the Subsidiaries is a partner, beneficiary, trustee,
      co-tenant, joint-venturer or otherwise a participant in any partnership, trust,
      joint venture, co-tenancy or similar jointly owned business undertaking and
      none
      of the Vendor nor any of the Subsidiaries has significant investment interests
      in any business owned or controlled by any third party.

     

    5.36  Articles
      and By-Laws

     

    The
      Articles and by-laws of each of the Subsidiaries, including any and all
      amendments have been delivered or made available to the Purchaser and such
      Articles and by-laws as so amended are in full force and effect and no
      amendments are being made to same.

     

    5.37  Bank
      Accounts, etc. 

     

    Schedule
      25
      sets
      forth a complete list of every financial institution in which the Subsidiaries
      maintain any depository account, trust account or safety deposit box and the
      names of all persons authorized to draw on or who have access to such accounts
      or safety deposit box as well as a complete list and brief description of each
      power of attorney currently in force and given by the Vendor or any of the
      Subsidiaries.

     

    5.38  No
      Bankruptcy/Insolvency

     

    None
      of
      the Vendor nor any of the Subsidiaries is insolvent, has committed an act of
      bankruptcy, has proposed a compromise or arrangement to its creditors generally,
      has had any petition for a receiving order in bankruptcy filed against it,
      has
      taken any proceeding with respect to a compromise or arrangement, has taken
      any
      proceeding to have itself declared bankrupt or wound-up, has taken any
      proceeding to have a receiver appointed on any part of its assets, has had
      any
      encumbrance registered on any of its property, nor has it had any execution
      or
      distress become enforceable or become levied upon any of its
      property.

     

    5.39  Distributions

     

    No
      directors fees and no dividends or other distributions (in cash or other
      property) on any of the Shares of any of the Subsidiaries have been authorized,
      declared, paid or proposed since May
      31,
      2005.

     

    
      
         

      

      
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    5.40  Computer
      Systems

     

    The
      computer systems of each of the Vendor and the Subsidiaries, including but
      not
      limited to, mainframes, mini-computers, personal computers and special purpose
      systems are fully operational and have adequate documentation describing, among
      other things, the operation of the hardware, required maintenance,
      daily/weekly/monthly/quarterly/annual “run books” or other operational
      procedures, all operating systems, applications and utilities. The documentation
      matches the implementation of the hardware and software in use as of the date
      thereof. Each of the Vendor and the Subsidiaries is in material compliance
      with
      all legal obligations with respect to all software used by it and has license
      to
      use all software currently used by it which it does not own as disclosed in
      Schedule
      26.
      Further, each of the Vendor and the Subsidiaries has a copy of all source codes,
      fully annotated, for all custom software and all other software not generally
      available to the public, used by each of the Vendor and the Subsidiaries in
      connection with the Purchased Business.

     

    5.41  Full
      Disclosure

     

    The
      Vendor and the Vendor’s Party have made available to the Purchaser, to the best
      of Vendor’s and Vendor’s Party’s knowledge, all information, including the
      financial, marketing, sales and operational information on a historical basis
      relating to the Purchased Business which would be material to a purchaser of
      the
      Purchased Business. All information contained in this Agreement, or in any
      Schedule hereto or which has been provided to the Purchaser is true and correct
      in all material respects to the best of Vendor’s and Vendor’s Party’s knowledge,
      and no material fact or facts have been omitted therefrom which would make
      such
      information, taken as a whole, false or misleading in light of the circumstances
      in which such information was provided. Without limiting the generality of
      the
      foregoing, the Vendor and the Vendor’s Party have not failed to disclose to the
      Purchaser any fact or information, to the best of Vendor’s and Vendor’s Party’s
      knowledge, which would reasonably be considered to be material to a purchaser
      of
      the Purchased Business, acting reasonably, or likely to deter the Purchaser
      from
      completing the transactions contemplated herein.

     

    ARTICLE
      VI

    REPRESENTATIONS
      AND WARRANTIES OF THE PURCHASER

     

    The
      Purchaser represents and warrants to the Vendor as follows and acknowledges
      and
      confirms that the Vendor is relying on such representations and warranties
      in
      connection with its sale of the Purchased Assets:

     

    6.1  Organization

     

    The
      Purchaser is a corporation validly subsisting under the laws of Canada and
      has
      the corporate power to enter into this Agreement and to perform its obligations
      hereunder.

     

    6.2  Authorization

     

    This
      Agreement has been duly authorized, executed and delivered by the Purchaser
      and
      is a legal, valid and binding obligation of the Purchaser, enforceable against
      the Purchaser by the Vendor in accordance with its terms, except as such
      enforcement may be limited by bankruptcy, insolvency and other laws affecting
      the rights of creditors generally and except that equitable remedies may only
      be
      granted in the discretion of a court of competent jurisdiction.

     

    
      
         

      

      
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    6.3  No
      Violation

     

    The
      execution and delivery of this Agreement by the Purchaser and the consummation
      of the transactions herein provided for will not result in the violation of,
      or
      constitute a default under, or conflict with or cause the acceleration of any
      obligation of the Purchaser under:

     

    
      	(a)  	
              any
                Contract to which the Purchaser is a party or by which it is
                bound;

            

    

     

    
      	(b)  	
              any
                provision of the constating documents or by-laws or resolutions of
                the
                board of directors (or any committee thereof) or shareholders of
                the
                Purchaser;

            

    

     

    
      	(c)  	
              any
                judgment, decree, order or award of any court, governmental body
                or
                arbitrator having jurisdiction over the Purchaser;
                or

            

    

     

    
      	(d)  	
              any
                applicable law, statute, ordinance, regulation or
                rule.

            

    

     

    6.4  Consents
      and Approvals

     

    There
      is
      no requirement for the Purchaser to make any filing with, give any notice to
      or
      obtain any licence, permit, certificate, registration, authorization, consent
      or
      approval of, any Governmental Authority as a condition to the lawful
      consummation of the transactions contemplated by this Agreement, or such filing,
      notice, consent or approval will have been obtained or filed on or prior to
      the
      Closing Date.

     

    6.5  Investment
      Canada

     

    The
      Purchaser is a Canadian within the meaning of the Investment
      Canada Act.

     

    6.6  GST
      Registration

     

    The
      Purchaser is a registrant for purposes of the ETA whose registration number
      is
      102487287RT0001.

     

    ARTICLE
      VII

    SURVIVAL
      OF DECLARATIONS, REPRESENTATIONS AND WARRANTIES

     

    7.1  Survival
      of Declarations, Representations and Warranties

     

    
      	 	
              All
                of the declarations, representations and warranties made or given
                herein,
                and in any document or certificate ancillary hereto, will continue
                to have
                full force and effect from the Closing Date for the period indicated
                hereinbelow, notwithstanding any investigation which the Purchaser
                may
                have made prior to the Closing, the whole subject to the following
                terms
                and conditions:

            

    

     

    
      	(a)  	
              the
                representations and warranties set out in paragraphs 5.1
                to
                5.4,
                5.6,
                5.8,
                5.9,
                5.13
                and 5.17
                will continue to have full force and effect from the Closing Date,
                without
                any time limitation;

            

    

     

    
      
         

      

      
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      	(b)  	
              all
                of the declarations, representations and warranties set out in Article
                V,
                excluding those referred to in sub-paragraphs 7.1 (a) and 7.1 (c)
                or and
                in Article VI, will continue to have full force and effect for a
                period of
                two years from the Closing Date;

            

    

     

    
      	(c)  	
              all
                of the Vendor and the Vendor’s Party’s declarations, representations and
                warranties herein that are related directly or indirectly to taxation
                will
                continue to have full force and effect for the prescribed fiscal
                prescription period and, without any time limitation in the event
                of any
                re-assessment of prior years, notice of assessment, or misrepresentation
                of facts, through negligence, carelessness or voluntary omission,
                or where
                a return has been filed or information has been furnished fraudulently
                for
                the purposes of any Tax law.

            

    

     

    ARTICLE
      VIII

    COVENANTS

     

    8.1  Access
      to Purchased Business and Purchased Assets

     

    The
      Vendor shall forthwith make available to the Purchaser and its authorized
      representatives and, if requested by the Purchaser, provide a copy to the
      Purchaser of, all title documents, Contracts, financial statements, policies,
      plans, reports, licences, orders, permits, books of account, accounting records
      and all other documents, information and data relating to the Purchased Business
      (the "Due Diligence Process"). The Vendor shall afford the Purchaser and its
      authorized representatives every reasonable opportunity to have free and
      unrestricted access to the Purchased Assets and all other property and assets
      utilized in the Purchased Business. At the request of the Purchaser, the Vendor
      shall execute such consents, authorizations and directions as may be necessary
      to permit any inspection of the Purchased Business or any of the Purchased
      Assets or to enable the Purchaser or its authorized representatives to obtain
      full access to all files and records relating to any of the Purchased Assets
      maintained by governmental or other public authorities. At the Purchaser's
      request, the Vendor shall co-operate with the Purchaser in arranging any such
      meetings at times agreeable to the Vendor and as the Purchaser should reasonably
      request with:

     

    
      	(a)  	
              employees
                employed in the Purchased Business;

            

    

     

    
      	(b)  	
              customers,
                suppliers, distributors or others who have or have had a business
                relationship with the Vendor in respect of the Purchased Business;
                and

            

    

     

    
      	(c)  	
              the
                auditors, solicitors or any other persons engaged or previously engaged
                to
                provide services to the Vendor who have knowledge of matters relating
                to
                the Purchased Business or Purchased
                Assets.

            

    

     

    8.2  Delivery
      of Books and Records

     

    At
      the
      Time of Closing, there shall be delivered to the Purchaser by the Vendor all
      the
      books and records described in subsection 2.1(l).
      The
      Purchaser agrees that it will preserve the books and records so delivered to
      it
      for a period of six years from the Closing Date, or for such longer period
      as is
      required by any applicable law, and will permit the Vendor or its authorized
      representatives reasonable access thereto in connection with the affairs of
      the
      Vendor relating to its matters, but the Purchaser shall not be responsible
      or
      liable to the Vendor for or as a result of any accidental loss or destruction
      of
      or damage to any such books or records.

     

    
      
         

      

      
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    8.3  Change
      and Use of Name

     

    The
      Vendor agrees that within 5 days from the Closing Date it shall file articles
      of
      amendment or such other corporate action necessary to change its name and the
      names of any of its Associates or Affiliates to a name that does not include
      the
      words "Consultronics" or any part thereof or any similar words. The Vendor
      agrees that from and after the Closing Date neither the Vendor nor any of its
      Associates or Affiliates will use the words "Consultronics" or any part thereof
      or any similar words.

     

    8.4  Conduct
      of Purchased Business Prior to Closing

     

    Without
      in any way limiting any other obligations of the Vendor hereunder, during the
      period from the date hereof to the Time of Closing:

     

    
      	(a)  	
              Conduct
                Business in the Ordinary Course.
                Each of the Vendor and the Subsidiaries shall conduct the Purchased
                Business only in the ordinary and normal course consistent with past
                practice and each of the Vendor and the Subsidiaries shall not, without
                the prior written consent of the Purchaser, enter into any transaction
                or
                refrain from doing any action that, if effected before the date of
                this
                Agreement, would constitute a breach of any representation, warranty,
                covenant or other obligation of the Vendor contained herein, and
                each of
                the Vendor and the Subsidiaries shall not enter into any material
                supply
                arrangements relating to the Purchased Business or make any material
                decisions or enter into any material Contracts with respect to the
                Purchased Business without the consent of the
                Purchaser;

            

    

     

    
      	(b)  	
              Continue
                Insurance.
                Until the Time of Closing each of the Vendor and the Subsidiaries
                shall
                continue to maintain in full force and effect all policies of insurance
                or
                renewals thereof now in effect;

            

    

     

    
      	(c)  	
              Regulatory
                Consents. The
                Vendor shall obtain, at or prior to the Time of Closing, from all
                appropriate federal, provincial, municipal or other governmental
                or
                regulatory bodies, licences, permits, consents, approvals, certificates,
                registrations, and authorizations described in Schedule
                15.

            

    

     

    
      	(d)  	
              Contractual
                Consents.
                The Vendor shall give or obtain, at or prior to the Time of Closing,
                the
                notices, consents and approvals described in Schedule
                16;

            

    

     

    
      	(e)  	
              Preserve
                Goodwill.
                The Vendor shall use its best efforts to preserve intact the Purchased
                Business and Purchased Assets and to carry on the Purchased Business
                as
                currently conducted, and the Vendor shall use its best efforts to
                promote
                and preserve for the Purchaser the goodwill of suppliers, customers
                and
                others having business relations with the
                Vendor;

            

    

     

    
      
         

      

      
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      	(f)  	
              Discharge
                Liabilities.
                The Vendor shall pay and discharge the liabilities of the Vendor
                relating
                to the Purchased Business in the ordinary course in accordance and
                consistent with the previous practice of the Vendor, except those
                contested in good faith by the
                Vendor;

            

    

     

    
      	(g)  	
              Corporate
                Action.
                The Vendor shall take or cause to be taken all necessary corporate
                action,
                steps and proceedings to approve or authorize, validly and effectively,
                the transfer of the Purchased Assets to the Purchaser and the execution
                and delivery of this Agreement and the other agreements and documents
                contemplated hereby and to cause all necessary meetings of directors
                and
                shareholders of the Vendor to be held for such purpose;
                and

            

    

     

    
      	(h)  	
              Best
                Efforts.
                The Vendor shall use its best efforts to satisfy the conditions of
                Closing
                in favour of the Purchaser mentioned in section 9.1
                hereof, excluding however the condition contained in subsection
                9.1(b).

            

    

     

    8.5  Delivery
      of Conveyancing Documents

     

    On
      the
      Closing Date, the Vendor shall deliver to the Purchaser all necessary deeds,
      conveyances, bills of sale, assurances, transfers, assignments, discharges
      and
      any other documentation necessary or reasonably required to transfer the
      Purchased Assets to the Purchaser with a good and marketable title, free and
      clear of all Encumbrances whatsoever except for Permitted
      Encumbrances.

     

    8.6  Retail
      Sales Tax Certificate

     

    On
      the
      Closing Date, the Vendor shall deliver to the Purchaser a certificate issued
      by
      the Minister of Revenue of Ontario under subsection 6(1) of the
Retail
      Sales Tax Act
      (Ontario).

     

    8.7  Delivery
      of Vendor's Closing Documentation

     

    On
      the
      Closing Date, each of the Vendor and the Subsidiaries shall deliver to the
      Purchaser a current certificate of status with respect to the Vendor and two
      copies, certified by a senior officer of it as of the Closing Date, of its
      respective constating documents and by-laws and of the resolutions authorizing
      the execution, delivery and performance by the each of the Vendor and the
      Subsidiaries of this Agreement and any documents to be provided by it pursuant
      to the provisions hereof.

     

    8.8  Delivery
      of Purchaser's Closing Documentation

     

    The
      Purchaser shall deliver to the Vendor a current certificate of status, with
      respect to the Vendor, and two copies, certified by a senior officer of the
      Purchaser as of the Closing Date, of its constating documents and by-laws and
      of
      the resolution authorizing the execution, delivery and performance by the
      Purchaser of this Agreement and any documents to be provided by it pursuant
      to
      the provisions hereof. The Purchaser shall also execute and deliver or cause
      to
      be executed and delivered [two] copies of such other documents relevant to
      the
      closing of the transactions contemplated hereby as the Vendor, acting
      reasonably, may request.

     

    
      
         

      

      
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    8.9  Employees

     

    
      	(a)  	
              The
                Vendor and the Subsidiaries agree to provide the Purchaser with an
                up-to-date list of the names of the Employees at least two Business
                Days
                and not more than four Business Days prior to the Closing Date. The
                Purchaser agrees that it shall offer employment to all Employees,
                effective as at the Time of Closing and conditional on the Closing
                of this
                Agreement and the transactions contemplated in the Agreement (the
                "Remaining Employees"), on substantially the same terms and conditions
                of
                employment in aggregate as are then applicable to the
                Employees.
                However, nothing herein shall reduce the Purchaser’s management rights in
                the pursuit of the Purchased Business, including, without limitation,
                the
                right to terminate or dismiss any of the Remaining
                Employees.

            

    

     

    
      	(b)  	
              The
                Vendor and the Subsidiaries shall employ all of the employees set
                out in
                Schedule
                7
                until the Time of Closing, except for any employees who prior to
                the Time
                of Closing (the "Former
                Employees"):

            

    

     

    
      	(i)  	
              are
                terminated for cause;

            

    

     

    
      	(ii)  	
              are
                terminated with the Purchaser's consent, which consent shall not
                be
                unreasonably withheld;

            

    

     

    
      	(iii)  	
              voluntarily
                resign;

            

    

     

    
      	(iv)  	
              retire;
                or

            

    

     

    
      	(v)  	
              do
                not accept the Purchaser’s offer of
                employment.

            

    

     

    The
      Vendor and the Subsidiaries shall not attempt in any way to discourage any
      of
      the Employees from accepting any offer of employment to be made by the
      Purchaser. The Vendor and the Purchaser will cooperate with one another in
      presenting the offers of employment.

     

    The
      Vendor agrees that up to and including the Closing Date, all amounts of salary,
      commissions, sick leave, bonuses or other amounts owed to or in respect of
      the
      Remaining Employees shall be paid in full by the Vendor or accrued in the
      Audited Closing Financial Statements. Accrued amounts for vacation pay, workers’
compensation, employment insurance, income tax and all employee benefits for
      Remaining Employees shall be assumed by the Purchaser and the Vendor agrees
      to
      properly accrue in the Closing Audited Financial Statements all vacation pay,
      workers compensation, employment insurance, income tax, employee benefits and
      other payments owing to any such person or agency in respect of such employment
      up to the Closing Date. 

     

    The
      Purchaser shall have no obligations to or any liability for any Former Employee.
      The Vendor agrees to indemnify and hold harmless the Purchaser from and against
      (i) all claims made by Remaining Employees based on acts or omissions by the
      Vendor during the period of time prior to the Closing Date, and (ii) all claims
      made by Former Employees.

     

    
      
         

      

      
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    8.10  Employee
      Plans

     

    Plans
      listed in Schedule
      7
      will be
      transferred to the Purchaser excluding, however, any stock option plan, such
      as
      the employee stock option plan dated April 1st,
      1997
      and any bonus plan for senior management such as the SMART bonus plan dated
      February 3rd,
      2005
      (the "SMART Bonus Plan"), which shall be terminated by the Vendor at Vendor’s
      expense. Purchaser may amend any plan listed in Schedule
      7
      to
      reflect Purchaser’s current employee plans. In the event a plan cannot be
      transferred, the Purchaser agrees that it will establish replacement plans
      (the
      "Replacement Plans") or offer participation in the Purchaser’s current employee
      plans for those Remaining Employees who accept the offers of employment to
      be
      made by the Purchaser pursuant to section 8.9
      and who
      commence working for the Purchaser pursuant to such offers (the "Transferred
      Employees") in respect of their employment by the Purchaser from and after
      the
      Time of Closing. The Replacement Plans, any amendment to any plan listed in
      Schedule 7 or Purchaser’s current employee plans shall provide to the
      Transferred Employees benefits that are, at least, similar in the aggregate
      to
      benefits currently provided by the Vendor, as disclosed in Schedule
      7;
      however, the Transferred Employees will become eligible to any of the
      Purchaser’s stock option plan, deferred share unit plan and/or senior management
      bonus plan, on the same basis and criteria applicable for Purchaser’s current
      employees. It is agreed that the Purchaser’s senior management bonus plan will
      provide, at least, the same targeted bonus as in the SMART Bonus Plan. For the
      purpose of determining the eligibility of a Transferred Employee for membership
      or benefits under the Employee Plans, under the Replacement Plans or under
      the
      Purchaser’s current employee plans:

     

    
      	(a)  	
              their
                period of employment shall include employment with both the Vendor
                and the
                Purchaser and shall be deemed not to have been interrupted at the
                Time of
                Closing; and

            

    

     

    
      	(b)  	
              their
                period of membership shall include membership in both the Employee
                Plans
                and the Replacement Plans and shall be deemed not to have been interrupted
                at the Time of Closing.

            

    

     

    The
      Transferred Employees shall begin to accrue full benefits under the Replacement
      Plans as of the Time of Closing in respect of their employment by the Purchaser.
      The Purchaser agrees to use its best effort to obtain the required approvals
      of
      the applicable federal and provincial regulatory authorities in connection
      with
      the establishment and registration of the Replacement Plans or the assignment
      to
      the Purchaser of the Employee Plans (excluding, however, any stock option plan
      and senior management bonus plan).

     

    8.11  Post-closing
      Assistance
      to the Vendor

     

    The
      Purchaser agrees to provide the Vendor, at Vendor’s expense, with assistance and
      access to the relevant books and records in order to allow the Vendor and its
      outside consultants to prepare, within 30 days from the Closing Date, all
      required filings, including any schedules, regarding the research and
      development report to be filed by the Vendor for the period beginning on June
      1,
      2005 and ending on the Closing Date, and, as soon as practicable following
      the
      Closing Date and in any event within the legally prescribed periods, all
      schedules required for the corporate income tax return, the branch tax return
      and all other required filings by the Vendor. The terms and conditions on which
      the services of the Remaining Employees will be made available to the Vendor
      are
      set out in Schedule
      30.

     

    
      
         

      

      
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    ARTICLE
      IX

    CONDITIONS
      OF CLOSING

     

    9.1  Conditions
      of Closing in Favour of the Purchaser

     

    The
      sale
      and purchase of the Purchased Assets is subject to the following terms and
      conditions for the exclusive benefit of the Purchaser, to be performed or
      fulfilled to the Purchaser’s satisfaction at or prior to the Time of
      Closing:

     

    
      	(a)  	
              Due
                Diligence Process.
                The Purchaser shall have completed and shall, acting reasonably,
                be fully
                satisfied with its Due Diligence
                Process;

            

    

     

    
      	(b)  	
              Representations
                and Warranties.
                The representations and warranties of the Vendor contained in this
                Agreement shall be true and correct at the Time of Closing with the
                same
                force and effect as if such representations and warranties were made
                at
                and as of such time, and a certificate of the President of the Vendor,
                dated the Closing Date, to that effect shall have been delivered
                to the
                Purchaser, such certificate to be in form and substance satisfactory
                to
                the Purchaser, acting reasonably;

            

    

     

    
      	(c)  	
              Covenants.
                All of the terms, covenants and conditions of this Agreement to be
                complied with or performed by the Vendor at or before the Time of
                Closing
                shall have been complied with or performed, and a certificate of
                the
                President of the Vendor, dated the Closing Date, to that effect shall
                have
                been delivered to the Purchaser, such certificate to be in form and
                substance satisfactory to the Purchaser, acting
                reasonably;

            

    

     

    
      	(d)  	
              Regulatory
                Consents.
                There shall have been obtained from all appropriate federal, provincial,
                municipal or other governmental or administrative bodies such licences,
                permits, consents, approvals, certificates, registrations and
                authorizations as are required to be obtained by the Vendor or any
                of the
                Subsidiaries to permit the change of ownership of the Purchased Assets
                contemplated hereby, including, without limitation, those described
                in
                Schedule
                15,
                in each case in form and substance satisfactory to the Purchaser,
                acting
                reasonably;

            

    

     

    
      	(e)  	
              Contractual
                Consents.
                The Vendor shall have given or obtained all the notices, consents
                and
                approvals described in Schedule
                16,
                including consents to assignment of Leases, shareholders' consent
                to
                proceed with the transactions contemplated herein and renunciation
                by each
                outside investor, including every shareholder being a party to any
                shareholders agreements or similar agreement, to any right thereunder,
                in
                each case in form and substance satisfactory to the Purchaser, acting
                reasonably;

            

    

     

    
      
         

      

      
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      	(f)  	
              Non-Competition
                Agreement.
                The Vendor, the Vendor’s Party and the current senior management team
                shall have executed and delivered to the Purchaser a non-competition
                agreement upon such terms and conditions to be negotiated between
                the
                parties, acting reasonably;

            

    

     

    
      	(g)  	
              No
                Action or Proceeding.
                No legal or regulatory action or proceeding shall be pending or threatened
                by any person to enjoin, restrict or prohibit the purchase and sale
                of the
                Purchased Assets contemplated
                hereby;

            

    

     

    
      	(h)  	
              No
                Material Damage.
                No material damage by fire or other hazard to the whole or any material
                part of the Purchased Assets shall have occurred from the date of
                the
                preliminary offer with respect to the transactions contemplated herein
                presented by the Purchaser to the Vendor on October 27, 2005, to
                the time
                of Closing;

            

    

     

    
      	(i)  	
              No
                Material Adverse Change.
                There shall have been no material adverse change in the Purchased
                Business
                since May 31, 2005;

            

    

     

    
      	(j)  	
              Instruments
                of Transfer.
                The Vendor shall have received from its Affiliates such instruments
                of
                transfer necessary (including the share certificates) to transfer
                the
                securities of such Affiliates held by the Vendor from the Vendor
                to the
                Purchaser;

            

    

     

    
      	(k)  	
              Legal
                Opinion from Vendor’s Legal Counsel.
                The Purchaser will have received, at Closing, a legal opinion from
                the
                Vendor’s legal counsel, the form and content of which are satisfactory to
                the Purchaser and its counsel; such opinion will deal, among other
                things,
                but without restricting the generality of the foregoing, with questions
                of
                law relating to the corporate and legal status of each of the Vendor
                and
                the Subsidiaries, the authority of each of the Vendor and the Subsidiaries
                in respect of the transactions contemplated by this Agreement, and
                its
                power and capacity, and will attest to the validity of the Vendor’s
                registered title of ownership to the Real Property, the Subsidiaries’
                Shares and any patents part of the Intellectual
                Property;

            

    

     

    
      	(l)  	
              Title
                to Real Property.
                On Closing, the Purchaser shall acquire good and marketable title
                to the
                Real Property, free and clear of all Encumbrances, including the
                Existing
                Mortgage and any interest and penalty thereon which shall have been
                paid
                by Vendor, other than Permitted
                Encumbrances;

            

    

     

    
      	(m)  	
              Employment
                Agreements.
                Employment Agreements will be signed by the key employees, as determined
                by the Purchaser;

            

    

     

    
      	(n)  	
              Environment.
                A
                phase 1 environment study with respect to the Real Property, without
                any
                reserve or any potential liability mentioned therein, will be delivered
                by
                the Vendor to the Purchaser no later than on the Closing
                Date;

            

    

     

    
      
         

      

      
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      	(o)  	
              Customer
                Purchase Orders. The
                Purchaser will have received from the Vendor evidence of sufficient
                and
                normal backlog (customer purchase orders) and work in progress in
                accordance with current practices of the Vendor on the Closing
                Date;

            

    

     

    
      	(p)  	
              Good
                Standing.
                The Vendor will deliver to the Purchaser certificates of good standing
                with respect to the Vendor and each of the
                Subsidiaries;

            

    

     

    
      	(q)  	
              Retail
                Sales Tax.
                Delivery
                of Evidence Relating to Retail Sales Tax. The
                Vendor shall have delivered to the Purchaser the certificate contemplated
                by section 8.6
                representing evidence that all governmental charges required to be
                withheld and remitted by the Vendor in respect of the Purchased Business
                under the Retail
                Sales Tax Act (Ontario)
                have been paid;

            

    

     

    
      	(r)  	
              Health
                and Safety. Delivery
                of Evidence Relating to Workplace Safety and Insurance
                Compliance.
                The Vendor shall have delivered to the Purchaser a Clearance Certificate
                from the Ontario Workplace Safety and Insurance Board and any similar
                certificate from other provincial workers’ compensation boards where there
                are Employees in such province confirming that the Vendor has made
                all
                payments in respect of workers’ compensation up to the Closing Date and
                there are no outstanding amounts owing;

            

    

     

    
      	(s)  	
              Inter-company
                accounts.
                Consultronics Europe must have paid or transferred as share capital
                all
                its inter-company balances due to the Vendor on or prior to the Closing
                Date;

            

    

     

    
      	(t)  	
              Cash
                -
                Subsidiaries.
                All cash and cash equivalents of the Subsidiaries, as of the Closing
                Date
                as per the Subsidiaries’ audited financial statements, will remain with
                the Subsidiaries;

            

    

     

    
      	(u)  	
              Termination.
                Save and except for any confidentiality undertakings in favour of
                the
                Purchaser, all agreements between the Vendor and the Purchaser executed
                before the date of this Agreement will be terminated as of the Closing
                Date, and each of the Vendor and the Purchaser will grant in favour
                of the
                other a release and discharge with respect to such
                agreements;

            

    

     

    
      	(v)  	
              Additional
                Agreements.
                The execution by the Vendors of all required documents and agreements
                to
                register the assignment of the Purchased Assets, including, without
                limitation, a Deed of transfer with respect to the Real Property
                and the
                required documentation with respect to the Intellectual
                Property;

            

    

     

    
      	(w)  	
              Schedules.
                The Purchaser shall have received and approved updated Schedules
                to this
                Agreement; and

            

    

     

    
      	(x)  	
              Authorizations
                and Other Documentation.
                All of the documents relating to the authorization and execution
                of the
                transactions provided for herein and all of the actions and measures
                taken
                on or prior to the Closing Date in respect of the fulfilment by the
                Vendor
                of its obligations pursuant hereto will be satisfactory to the Purchaser
                and its counsel, and the Purchaser will have received copies of all
                such
                documents in a form which is satisfactory to the Purchaser and its
                counsel.

            

    

     

    
      
         

      

      
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    If
      any of
      the conditions contained in this section 9.1
      shall
      not be performed or fulfilled at or prior to the Time of Closing to the
      satisfaction of the Purchaser, acting reasonably, the Purchaser may, by notice
      to the Vendor, terminate this Agreement and the obligations of the Vendor and
      the Purchaser under this Agreement, other than the obligations contained in
      sections 13.2
      and
13.3,
      provided that the Purchaser may also bring an action pursuant to Article
      XI
      against
      the Vendor for damages suffered by the Purchaser where the non-performance
      or
      non-fulfilment of the relevant condition is as a result of a breach of covenant,
      representation or warranty by the Vendor. Any such condition may be waived
      in
      whole or in part by the Purchaser without prejudice to any claims it may have
      for breach of covenant, representation or warranty. The Purchaser may also
      request postponement of the Closing Date by 15 days, pursuant to a written
      notice to the Vendor, to allow the Vendor to remedy the alleged default and
      fulfil all of the conditions set out herein, it being understood that such
      new
      date will then become the Closing Date for the purposes hereof and that if
      such
      alleged default is not remedied within such delay, the Buyer may, at the expiry
      of the said 15-day period, exercise anew any of the options provided
      herein.

     

    9.2  Conditions
      of Closing in Favour of the Vendor 

     

    The
      sale
      and purchase of the Purchased Assets is subject to the following terms and
      conditions for the exclusive benefit of the Vendor, to be performed or fulfilled
      at or prior to the Time of Closing:

     

    
      	(a)  	
              Representations
                and Warranties.
                The representations and warranties of the Purchaser contained in
                this
                Agreement shall be true and correct in all material respects at the
                Time
                of Closing with the same force and effect as if such representations
                and
                warranties were made at and as of such time, and a certificate of
                the
                President of the Purchaser, dated the Closing Date, to that effect
                shall
                have been delivered to the Vendor, such certificate to be in form
                and
                substance satisfactory to the Vendor, acting
                reasonably;

            

    

     

    
      	(b)  	
              Covenants.
                All of the terms, covenants and conditions of this Agreement to be
                complied with or performed by the Purchaser at or before the Time
                of
                Closing shall have been complied with or performed in all material
                respects, and a certificate of the President of the Purchaser, dated
                the
                Closing Date, to that effect shall have been delivered to the Vendor,
                such
                certificate to be in form and substance satisfactory to the Vendor,
                acting
                reasonably;

            

    

     

    
      	(c)  	
              Regulatory
                Consents.
                There shall have been obtained from all appropriate federal, provincial,
                municipal or other governmental or administrative bodies such licences,
                permits, consents, approvals, certificates, registrations and
                authorizations as are required to be obtained by the Purchaser to
                permit
                the change of ownership of the Purchased Assets contemplated hereby,
                including those described in Schedule
                15;

            

    

     

    
      
         

      

      
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      	(d)  	
              Bulk
                Sales Compliance. It
                is agreed that the Purchaser shall not require the Vendor to comply,
                or to
                assist the Purchaser to comply, with the requirements of the Bulk
                Sales Act (Ontario),
                provided that, at the Closing Date, the Vendor will apply (or direct
                the
                Purchaser to apply) any payment made pursuant to section 3.2(b)
                to
                satisfy amounts owing by the Vendor to creditors of the Vendor not
                accounted for in the Closing Audited Financial Statements. Notwithstanding
                the foregoing, the Vendor agrees to indemnify and save harmless the
                Purchaser from and against any Claims (including Third Party Claims)
                the
                Purchaser may suffer or be exposed to by virtue of non-compliance
                with the
                Bulk
                Sales Act (Ontario);
                and

            

    

     

    
      	(e)  	
              No
                Action or Proceeding.
                No legal or regulatory action or proceeding shall be pending or threatened
                by any person to enjoin, restrict or prohibit the purchase and sale
                of the
                Purchased Assets contemplated
                hereby.

            

    

     

    If
      any of
      the conditions contained in this section 9.2
      shall
      not be performed or fulfilled at or prior to the Time of Closing to the
      satisfaction of the Vendor acting reasonably, the Vendor may, by notice to
      the
      Purchaser, terminate this Agreement and the obligations of the Vendor and the
      Purchaser under this Agreement, other than the obligations contained in sections
      13.2
      and
13.3,
      provided that the Vendor may also bring an action pursuant to Article XI against
      the Purchaser for damages suffered by it where the non-performance or
      non-fulfilment of the relevant condition is as a result of a breach of covenant,
      representation or warranty by the Purchaser. Any such condition may be waived
      in
      whole or in part by the Vendor without prejudice to any claims it may have
      for
      breach of covenant, representation or warranty.

     

    ARTICLE
      X

    CLOSING
      DATE AND TRANSFER OF POSSESSION

     

    10.1  Transfer

     

    Subject
      to compliance with the terms and conditions hereof, the transfer of possession
      of the Purchased Assets shall be deemed to take effect as at the close of
      business on the day immediately prior to the Closing Date. 

     

    10.2  Place
      of Closing

     

    The
      closing shall take place at the Time of Closing at the offices of Borden Ladner
      Gervais LLP, counsel for the Vendor, Scotia Plaza, 40 King Street West, Suite
      4200, Toronto, Ontario, M5H 3Y4 (the "Closing").

     

    10.3  Further
      Assurances

     

    Each
      party to this Agreement covenants and agrees that it will at all times after
      the
      Closing Date, at the expense of the requesting party, promptly execute and
      deliver all such documents, including, without limitation, all such additional
      conveyances, transfers, consents and other assurances and do all such other
      acts
      and things as the other party, acting reasonably, may from time to time request
      be executed or done in order to better evidence or perfect or effectuate any
      provision of this Agreement or of any agreement or other document executed
      pursuant to this Agreement or any of the respective obligations intended to
      be
      created hereby or thereby.

     

    
      
         

      

      
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    10.4  Risk
      of Loss

     

    From
      the
      date hereof up to the Time of Closing, the Purchased Assets shall be and remain
      at the risk of the Vendor. If, prior to the Time of Closing, all or any part
      of
      the Purchased Assets that are necessary to carry on the Purchased Business
      as
      currently conducted are destroyed or damaged by fire or any other casualty
      or
      shall be appropriated, expropriated or seized by governmental or other lawful
      authority, unless the Purchaser terminates its obligations under this Agreement
      as contemplated by section 9.1,
      the
      Purchaser may complete the purchase without reduction of the Purchase Price,
      in
      which event all proceeds of insurance or compensation for expropriation or
      seizure shall be paid to the Purchaser at the Time of Closing and all right
      and
      claim of the Vendor to any such amounts not paid by the Closing Date shall
      be
      assigned at the Time of Closing to the Purchaser. For greater certainty, the
      Purchased Assets shall be at the risk of the Purchaser from and after the Time
      of Closing.

     

    ARTICLE
      XI

    INDEMNIFICATION

     

    11.1  Indemnification
      by the Vendor
      and
      the Vendor’s Party

     

    Subject
      to section 11.10,
      the
      Vendor and the Vendor’s Party, jointly and severally, agree to indemnify and
      save harmless the Purchaser from all Losses suffered or incurred by the
      Purchaser as a result of or arising directly or indirectly out of or in
      connection with:

     

    
      	(a)  	
              any
                breach by the Vendor of or any inaccuracy of any representation or
                warranty of the Vendor contained in this Agreement or in any agreement,
                certificate or other document delivered pursuant hereto (provided
                that the
                Vendor shall not be required to indemnify or save harmless the Purchaser
                in respect of any breach or inaccuracy of any representation or warranty
                unless the Purchaser shall have provided notice to the Vendor in
                accordance with section 11.3
                on
                or prior to the expiration of the applicable time period related
                to such
                representation and warranty as set out in section 7.1);

            

    

     

    
      	(b)  	
              any
                breach or non-performance by the Vendor of any covenant to be performed
                by
                it that is contained in this Agreement or in any agreement, certificate
                or
                other document delivered pursuant
                hereto;

            

    

     

    
      	(c)  	
              the
                operations of the Purchased Business before the Time of Closing including,
                without limitation, any failure by the Vendor to pay, satisfy, discharge,
                perform or fulfil any of the Excluded
                Liabilities;

            

    

     

    
      	(d)  	
              all
                losses, costs and damages suffered by the Purchaser as a result of
                the
                failure of the Vendor to perform any of its obligations relating
                to or in
                respect of the Purchased Business not assumed by the Purchaser pursuant
                to
                this Agreement, or arising under contracts or other agreements assumed
                by
                the Purchaser pursuant to this Agreement but relating to or arising
                out of
                action or inaction of the Vendor and relating to events which occurred
                prior to the Closing Date; and

            

    

     

    
      
         

      

      
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      	(e)  	
              all
                losses, costs and damages suffered by the Purchaser arising from
                any claim
                by or on behalf of any Former
                Employees.

            

    

     

    11.2  Indemnification
      by the Purchaser

     

    Subject
      to section 11.10,
      the
      Purchaser agrees to indemnify and save harmless the Vendor from all Losses
      suffered or incurred by the Vendor as a result of or arising directly or
      indirectly out of or in connection with:

     

    
      	(a)  	
              any
                breach by the Purchaser of or any inaccuracy of any representation
                or
                warranty contained in this Agreement or in any agreement, instrument,
                certificate or other document delivered pursuant hereto (provided
                that the
                Purchaser shall not be required to indemnify or save harmless the
                Vendor
                in respect of any breach or inaccuracy of any representation or warranty
                unless the Vendor shall have provided notice to the Purchaser in
                accordance with section 11.3
                on
                or prior to the expiration of the applicable time period related
                to such
                representation and warranty as set out in section 7.1);

            

    

     

    
      	(b)  	
              any
                breach or non-performance by the Purchaser of any covenant to be
                performed
                by it that is contained in this Agreement or in any agreement, certificate
                or other document delivered pursuant hereto;
                and

            

    

     

    
      	(c)  	
              the
                operations of the Purchased Business after the Time of Closing including,
                without limitation, any failure by the Purchaser to pay, satisfy,
                discharge, perform or fulfil any of the Assumed
                Liabilities.

            

    

     

    11.3  Notice
      of Claim

     

    In
      the
      event that a party (the "Indemnified Party") shall become aware of any claim,
      proceeding or other matter (a "Claim") in respect of which the other party
      (the
      "Indemnifying Party") agreed to indemnify the Indemnified Party pursuant to
      this
      Agreement, the Indemnified Party shall promptly give written notice thereof
      to
      the Indemnifying Party. Such notice shall specify whether the Claim arises
      as a
      result of a claim by a person against the Indemnified Party (a "Third Party
      Claim") or whether the Claim does not so arise (a "Direct Claim"), and shall
      also specify with reasonable particularity (to the extent that the information
      is available):

     

    
      	(a)  	
              the
                factual basis for the Claim; and

            

    

     

    
      	(b)  	
              the
                amount of the Claim, if known.

            

    

     

    If,
      through the voluntary fault of the Indemnified Party, the Indemnifying Party
      does not receive notice of any Claim in time to effectively contest the
      determination of any liability reasonably susceptible of being contested, the
      Indemnifying Party shall be entitled to set off against the amount claimed
      by
      the Indemnified Party the amount of any Losses incurred by the Indemnifying
      Party resulting from the Indemnified Party's failure to give such notice on
      a
      timely basis.

     

    
      
         

      

      
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    11.4  Direct
      Claims

     

    With
      respect to any Direct Claim, following receipt of notice from the Indemnified
      Party of the Claim, the Indemnifying Party shall have 60 days to make such
      investigation of the Claim as is considered necessary or desirable. For the
      purpose of such investigation, the Indemnified Party shall make available to
      the
      Indemnifying Party the information relied upon by the Indemnified Party to
      substantiate the Claim, together with all such other information as the
      Indemnifying Party may reasonably request. If both parties agree at or prior
      to
      the expiration of such 60-day period (or any mutually agreed upon extension
      thereof) to the validity and amount of such Claim, the Indemnifying Party shall
      immediately pay to the Indemnified Party the full agreed upon amount of the
      Claim (plus all accrued interest since the date of the Claim), failing which
      the
      matter shall be referred to binding arbitration in such manner as the parties
      may agree or shall be determined by a court of competent
      jurisdiction.

     

    11.5  Third
      Party Claims

     

    With
      respect to any Third Party Claim, the Indemnifying Party shall have the right,
      at its expense, to participate in the negotiation, settlement or defence of
      the
      Claim and, in such event, the Indemnifying Party shall reimburse the Indemnified
      Party for all the Indemnified Party's out-of-pocket expenses as a result of
      such
      participation. If any Third Party Claim is of a nature such that the Indemnified
      Party is required by applicable law to make a payment to any person (a "Third
      Party") with respect to the Third Party Claim before the completion of
      settlement negotiations or related legal proceedings, the Indemnified Party
      may
      make such payment and the Indemnifying Party shall, forthwith after demand
      by
      the Indemnified Party, reimburse the Indemnified Party for such payment. If
      the
      amount of any liability of the Indemnified Party under the Third Party Claim
      in
      respect of which such a payment was made, as finally determined, is less than
      the amount that was paid by the Indemnifying Party to the Indemnified Party,
      the
      Indemnified Party shall, forthwith after receipt of the difference from the
      Third Party, pay the amount of such difference to the Indemnifying
      Party.

     

    11.6  Settlement
      of Third Party Claims

     

    The
      Indemnified Party shall have the exclusive right to contest, settle or pay
      the
      amount of any Third Party Claim. The Indemnified Party shall not settle any
      Third Party Claim without the written consent of the Indemnifying Party, which
      consent shall not be unreasonably withheld or delayed; provided, however, that
      the liability of the Indemnified Party shall be limited to the proposed
      settlement amount if any such consent is not obtained for any
      reason.

     

    11.7  Co-Operation

     

    The
      Indemnified Party and the Indemnifying Party shall co-operate fully with each
      other with respect to Third Party Claims, and shall keep each other fully
      advised with respect thereto (including supplying copies of all relevant
      documentation promptly as it becomes available).

     

    
      
         

      

      
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    11.8  Inventories

     

    The
      Purchase Price will be reduced by the book value of any item of inventories
      that
      was computed as of the Closing Date that has not been consumed by the Purchaser
      within eighteen (18) months following the Closing Date (the «Amount
      A»).
      This
      amount will be offset by the book value of any item of inventories included
      in
      the inventories as of the Closing Date and reserved for, but that has been
      consumed within eighteen (18) months following the Closing Date (the
«Amount
      B»).
      If
      the difference between Amount A and Amount B is within the range of ($37,500)
      and $37,500, then no amount will be reimbursed by the Vendor to the Purchaser.
      If the difference between these two amounts is greater than $37,500, the total
      aggregate amount of such difference will be reimbursed by the Vendor to the
      Purchaser within thirty (30) days of a notice to such effect from the Purchaser
      to the Vendor. If the difference between these two amounts is a larger negative
      number than ($37,500), then the total aggregate amount of such difference will
      be reimbursed by the Purchaser to the Vendor within thirty (30) days of a notice
      to such effect from the Vendor to the Purchaser. For the purposes hereof, dollar
      figures in brackets denote negative numbers.

     

    Products,
      including their sub-assembly parts and component parts, that have been
      discontinued by the Purchaser will be excluded as part of this calculation.
      In
      addition, the items included in Schedule
      29
      that
      have been received into inventories and are still included as part of
      inventories within eighteen (18) months of the Closing Date will be included
      as
      part of this calculation, provided, however, that the Purchaser will cooperate
      with the Vendor and the Vendor’s Party in managing such inventories with the
      supplier(s), so as to minimize the levels thereof on such date.

     

    11.9  Accounts
      receivable

     

    The
      Purchaser may, no later than 120 days after the Closing Date, give a notice
      to
      the Vendor listing accounts (“Uncollected Accounts”) which were included in the
      Purchased Assets pursuant to subsection 2.1(f) but which have not been
      collected. The Vendor and the Vendor’s Party shall have the right to use their
      best efforts to collect the Uncollected Accounts for and on behalf of the
      Purchaser. On the date which is 180 days after the Closing Date, the Purchaser
      shall sell, and the Vendor shall purchase, all Uncollected Accounts which are
      then still uncollected, for a purchase price equal to the excess, if any, of
      the
      aggregate amount of such Uncollected Accounts over the amount of the allowance
      for doubtful accounts included in the Closing Audited Financial
      Statements.

     

    11.10  Threshold

     

    
      	(a)  	
              Notwithstanding
                any other provision of this Article
                XI,
                but subject to subsection (b)
                below, no claim for Losses may be made unless the amount thereof
                exceeds
                cumulatively and in aggregate $20,000, in which event the Indemnifying
                Party shall become liable for the full amount of all Losses on a
                dollar
                for dollar basis, as from the first dollar
                claimed.

            

    

     

    
      	(b)  	
              For
                greater certainty, subsection (a) above shall not apply
                to:

            

    

     

    
      	(i)  	
              the
                Purchaser’s rights to sell Uncollected Accounts under section 11.9;

            

    

     

    
      
         

      

      
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      	(ii)  	
              claims
                in respect of warranty obligations or inventories for which no reserve
                has
                been included in the Closing Audited Financial Statements, pursuant
                respectively to sections 4.1(j)
                and 11.8;

            

    

     

    
      	(iii)  	
              any
                amount payable as Purchase Price and any adjustment
                thereof;

            

    

     

    
      	(iv)  	
              any
                Tax Amounts or other Taxes; and

            

    

     

    
      	(v)  	
              any
                amount claimed by the Purchaser for Excluded
                Liabilities.

            

    

     

    
      	(c)  	
              The
                Vendor and the Vendor’s Party shall be entitled to set off, against any
                amount otherwise payable to or for the account of the Purchaser pursuant
                to section 11.1,
                the amount by which any accrual or reserve included in the Closing
                Audited
                Financial Statements is conclusively determined to have exceeded
                the
                actual loss or liability in respect of which it was so included,
                with the
                exclusion of the warranty reserve referred to in section 4.1(j)
                and the inventory reserve referred to in section 11.8.

            

    

     

    11.11  Smart
      Grant

     

    The
      parties acknowledge that the Smart Grant by its terms is repayable in certain
      circumstances. The Vendor and the Vendor’s Party shall use their best efforts to
      obtain confirmation from the relevant Governmental Authority that the sale
      to
      the Purchaser of the Shares of Consultronics Europe will not be considered
      as
      disqualifying Consultronics Europe as a grant recipient under the “Grant for
      Research and Development” program, and that accordingly the Smart Grant will not
      have to be repaid in whole or part. If such Governmental Authority does require
      repayment of the Smart Grant in whole or part (whether by reason of such sale
      or
      by reason of alleged non-compliance by Consultronics Europe with the terms
      and
      conditions of the Smart Grant) then the Vendor and the Vendor’s Party, jointly
      and severally, shall, within five (5) Business Days after receipt of notice
      from
      the Purchaser of such requirement, pay to Consultronics Europe or to the
      Purchaser, as the Purchaser may instruct, an amount (in pounds sterling) equal
      to 50% of the amount required to be repaid. 

     

    ARTICLE
      XII

    DISPUTE
      RESOLUTION

     

    12.1  Arbitration

     

    Except
      for disputes contemplated by section 3.3,
      all
      disputes over the validity or the amount of Claims made pursuant to Article
      XI
      and all
      other disputes, disagreements, controversies, questions or claims arising out
      of
      or relating to this Agreement, including, without limitation, with respect
      to
      its formation, execution, validity, application, interpretation, performance,
      breach, termination or enforcement ("Disputes") shall be determined by
      arbitration under the Arbitration
      Act, 1991
      (Ontario) (the "Arbitration Act"), provided that:

     

    
      	(a)  	
              any
                hearing in the course of the arbitration shall be held in Toronto,
                Ontario;

            

    

     

    
      	(b)  	
              the
                application of section 7(2) of the Arbitration Act is expressly
                excluded;

            

    

     

    
      
         

      

      
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      	(c)  	
              subject
                to section 44 of the Arbitration Act, any award or determination of
                an arbitrator shall be final and binding on the parties and there
                shall be
                no appeal on any ground, including, for greater certainty, any appeal
                on a
                question of law, a question of fact, or a question of mixed fact
                and
                law;

            

    

     

    
      	(d)  	
              despite
                section 28(1) of the Arbitration Act, an arbitrator shall not,
                without the written consent of all parties to the arbitration, retain
                any
                expert;

            

    

     

    
      	(e)  	
              an
                arbitrator may apportion the costs of the arbitration, including
                the
                reasonable fees and disbursements of the parties, between or among
                the
                parties in such manner as the arbitrator considers reasonable, provided
                that an arbitrator shall not award costs on a distributive
                basis;

            

    

     

    
      	(f)  	
              all
                awards for the payment of money shall include prejudgment and postjudgment
                interest in accordance with sections 127 to 130 of the Courts
                of Justice Act
                (Ontario) with necessary modifications;
                and

            

    

     

    
      	(g)  	
              all
                matters relating to the arbitration shall be kept confidential to
                the full
                extent permitted by law and no individual shall be appointed as an
                arbitrator unless he or she agrees in writing to be bound by this
                dispute
                resolution provision.

            

    

     

    

     

    ARTICLE
      XIII

    MISCELLANEOUS

     

    13.1  Notices

     

    
      	(a)  	
              Any
                notice or other communication required or permitted to be given hereunder
                shall be in writing and shall be delivered in person, transmitted
                by
                telecopy [or similar means of recorded electronic communication]
                or sent
                by registered mail, charges prepaid, addressed as
                follows:

            

    

     

    
      
         

      

      
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      	(i)  	
              if
                to the Vendor:

            

    

     

    Consultronics
      Limited

    160
      Drumlin Circle

    Concord,
      Ontario

    L4K
      2E5

    

    Attention: Mr.
      André
Rekai, President & CEO

    Fax
      No.: 905
      760-7075

    

    with
      a
      copy to:

    

    Borden
      Ladner Gervais LLP

    Scotia
      Plaza

    40
      King
      Street West, Suite 4200

    Toronto,
      Ontario

    M5H
      3Y4

    

    Attention: Graham
      King

    Fax
      No.: 416-682-2840

    

    
      	(ii)  	
              if
                to the Purchaser:

            

    

     

    EXFO
      Ingénierie électro-optique / Electro-Optical Engineering 

    400,
      avenue Godin

    Vanier
      (Québec)

    G1M
      2K2

    

    Attention: Mr.
      Germain Lamonde, president

    Fax
      No.: 418-683-8484

    

    with
      a
      copy to:

    

    Desjardins
      Ducharme, LLP

    70
      Dalhousie, Suite 300

    Québec
      City, Quebec

    G1K
      4B2

    

    Attention: Me
      Jean
      Brunet

    Fax
      No.: 418-523-5391

    

    
      	(b)  	
              Any
                such notice or other communication shall be deemed to have been given
                and
                received on the day on which it was delivered or transmitted (or,
                if such
                day is not a Business Day, on the next following Business Day) or,
                if
                mailed, on the third Business Day following the date of mailing;
                provided,
                however, that if at the time of mailing or within three Business
                Days
                thereafter there is or occurs a labour dispute or other event that
                might
                reasonably be expected to disrupt the delivery of documents by mail,
                any
                notice or other communication hereunder shall be delivered or transmitted
                by means of recorded electronic communication as
                aforesaid.

            

    

     

    
      
         

      

      
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      	(c)  	
              Either
                party may at any time change its address for service from time to
                time by
                giving notice to the other party in accordance with this section
                13.1.

            

    

     

    13.2  Non-Transferability

     

    
      	(a)  	
              Subject
                to subsections 13.2(b)
                and 13.2(c),
                to the extent that any Purchased Asset is not capable of being sold,
                assigned, transferred, delivered or subleased without the consent
                or
                waiver of any person, or if such sale, assignment, transfer, delivery
                or
                sublease, or attempted sale, assignment, delivery or sublease would
                constitute a breach thereof or a violation of any law, statute, ordinance,
                regulation, rule, judgment or order, this Agreement shall not constitute
                a
                sale, assignment, transfer, delivery or sublease thereof, or an attempted
                sale, assignment, transfer, delivery or sublease thereof until such
                consent or waiver of the applicable person is
                received.

            

    

     

    
      	(b)  	
              Each
                of the Vendor and the Vendor’s Party shall use its best efforts (and the
                Purchaser shall reasonably cooperate with the Vendor) on or before
                the
                Closing Date and thereafter as required, to obtain the consents and
                waivers referred to in subsection 13.2(a)
                and to resolve the impediments to the sale, assignment, transfer,
                delivery
                or sublease referred to in subsection 13.2(a)
                and to obtain any other consents and waivers necessary to convey
                to the
                Purchaser any of the Purchased
                Assets.

            

    

     

    
      	(c)  	
              To
                the extent that the consents and waivers referred to in subsection
                13.2(a)
                are not obtained by the Vendor, or until the impediments to the sale,
                assignment, transfer, delivery or sublease referred to therein are
                resolved, the Vendor shall, after the Closing
                Date:

            

    

     

    
      	(i)  	
              hold
                the benefits of any Purchased Asset referred to in subsection 13.2(a)
                in
                trust for the Purchaser in accordance with the provisions of this
                subsection 13.2(c);

            

    

     

    
      	(ii)  	
              cooperate
                in any reasonable and lawful arrangement, approved by the Purchaser,
                designed to provide such benefits to the Purchaser;
                and

            

    

     

    
      	(iii)  	
              enforce
                and perform for the account of the Purchaser, any rights or obligations
                of
                the Vendor arising from any Purchased Asset referred to in subsection
                13.2(a)
                against or in respect of any person, including the right to elect
                to
                terminate in accordance with the terms thereof upon the advice of
                the
                Purchaser;

            

    

     

    provided,
      however, that this subsection 13.2(c)
      shall
      not constitute a waiver of any right of the Purchaser to require delivery of
      all
      consents and waivers on the Closing Date pursuant to section 9.1.

     

    
      
         

      

      
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      	(d)  	
              If
                the Vendor provides the Purchaser with the use of any Purchased Asset
                referred to in subsection 13.2(a)
                without having obtained the necessary consents and waivers referred
                to in
                that subsection, and if the use by the Purchaser constitutes a breach
                or
                violation of any Contract, permit, authorization or approval to which
                the
                Vendor is a party or by which the Vendor or such Purchased Asset
                is bound,
                the Vendor shall be responsible for any losses arising as a direct
                consequence of such breach or violation under any such Contract,
                permit,
                authorization or approval.

            

    

     

    13.3  Consultation

     

    The
      parties shall consult with each other before issuing any press release or making
      any other public announcement with respect to this Agreement or the transactions
      contemplated hereby and, except as required by any applicable law or any
      regulatory authority or stock exchange having jurisdiction, neither of them
      shall issue any such press release or make any such public announcement without
      the prior written consent of the other, which consent shall not be unreasonably
      withheld or delayed.

     

    13.4  Disclosure

     

    Prior
      to
      any public announcement of the transaction contemplated hereby pursuant to
      section 13.2,
      neither
      party shall disclose this Agreement or any aspects of such transaction except
      to
      its board of directors, its senior management, its legal, accounting, financial
      or other professional advisors, any financial institution contacted by it with
      respect to any financing required in connection with such transaction and
      counsel to such institution, or as may be required by any applicable law or
      any
      regulatory authority or stock exchange having jurisdiction.

     

    13.5  Confidentiality

     

    Both
      the
      Vendor and the Purchaser shall maintain the confidentiality of any information
      received from each other in connection with the transactions contemplated by
      this Agreement, whether received before or after the date of this Agreement.
      If
      the transfer of the Purchased Assets to the Purchaser is not consummated, each
      shall return to the other any confidential schedules, documents, or other
      written information obtained from the other in connection with this Agreement
      whether received before or after the date of this Agreement and the Purchaser
      agrees that, except as otherwise authorized by the Vendor, neither the Purchaser
      nor its representatives, agents or employees will disclose to third parties
      any
      confidential information or confidential data relating to the Vendor or the
      Purchased Assets discovered by the Purchaser or its representatives as a result
      of the Vendor making available to the Purchaser and its representatives the
      information requested by them in connection with the transactions contemplated
      herein.

     

    13.6  Best
      Efforts

     

    The
      parties acknowledge and agree that, for all purposes of this Agreement, an
      obligation on the part of either party to use its best efforts to obtain any
      waiver, consent, approval, permit, licence or other document shall not require
      such party to make any payment to any person for the purpose of procuring the
      same, other than payments for amounts due and payable to such person, payments
      for incidental expenses incurred by such person and payments required by any
      applicable law or regulation.

     

    
      
         

      

      
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    13.7  Counterparts

     

    This
      Agreement may be executed in counterparts, each of which shall constitute an
      original and all of which taken together shall constitute one and the same
      instrument.

     

    [THE
      NEXT PAGE IS THE SIGNATURE PAGE]

     

    

    
      
        
           

        

        
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    IN
      WITNESS WHEREOF
      this
      Agreement has been executed by the parties.

     

    

      
        	 	
                CONSULTRONICS
                  LIMITED

              	 
	 	
                By:

              	
                /s/Andre
                  Rekai

              
	 	 	
                Andre
                  Rekai

                President

                 

                 

              
	 	
                By:

              	
                /s/Brenda
                  McLennan

              
	 	 	
                Brenda
                  McLennan

                Chief
                  Financial Officer

                 

                 

              
	 	
                EXFO
                  ELECTRO-OPTICAL ENGINEERING INC.

              
	 	
                By:

              	
                /s/Germain
                  Lamonde

              
	 	 	
                Germain
                  Lamonde

                President
                  and Chief Executive Officer

                 

                 

              
	
                WITH
                  THE INTERVENTION OF/

              	
                CONSULTRONICS
                  EUROPE LIMITED

              
	
                /s/Andre
                  Rekai

                Andre
                  Rekai

              	
                By:

              	
                /s/Andre
                  Rekai

                 

                 

              
	 	
                CONSULTRONICS
                  DEVELOPMENT KFT

              
	 	
                By:

              	
                /s/Andre
                  Rekai

                 

                 

              
	 	
                CONSULTRONICS
                  INC.

              	 
	 	
                By:

              	
                /s/Andre
                  Rekai

              

      

       

      
        
          
          

        

        
          -53-

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