Document:

assetpurchase-bsl.htm

    
      

      

      EXHIBIT 10.1

     

    ASSET
PURCHASE AGREEMENT

    

    

    BY AND
AMONG

    

    

    AZZ
incorporated

    

    PARENT,

    

    AZZ
BLENKHORN & SAWLE LIMITED

    

    

    BUYER,

    

    

    BLENKHORN
AND SAWLE LIMITED

    

    

    SELLER

    

    

    and

    

    

    CHRISCOT
HOLDINGS LIMITED

    

    

    SOLE
SHAREHOLDER

    

    

    

    

    

    

    Execution
Date: June 26, 2008

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      TABLE
OF CONTENTS

      
 

      
        
          	
                  1.

                	
                  Purchase
      and Sale

                	
                  1

                
	 
      	
                  1.1

                	
                  Purchased
      Assets

                	
                  1

                
	 
      	
                  1.2

                	
                  Assumption
      of Specified Liabilities

                	
                  4

                
	 
      	
                  1.3

                	
                  Non-Assumption
      of Certain Liabilities

                	
                  5

                
	 
      	
                  1.4

                	
                  Employee
      Liability

                	
                  8

                
	 
      	
                  1.5

                	
                  No
      Expansion of Third-Party Rights

                	
                  9

                
	
                  2.

                	
                  Closing
      Consideration; Adjustment; Allocation of Consideration

                	
                  9

                
	 
      	
                  2.1

                	
                  Closing
      Consideration

                	
                  9

                
	 
      	
                  2.2

                	
                  Adjustment

                	
                  11

                
	 
      	
                  2.3

                	
                  The
      Closing

                	
                  12

                
	
                  3.

                	
                  Representations
      and Warranties of Seller and the Sole Shareholder

                	
                  13

                
	 
      	
                  3.1

                	
                  Existence;
      Good Standing; Corporate Authority; Compliance With Law

                	
                  13

                
	 
      	
                  3.2

                	
                  Authorization,
      Validity and Effect of Agreements

                	
                  13

                
	 
      	
                  3.3

                	
                  Ownership
      of Stock of Seller

                	
                  14

                
	 
      	
                  3.4

                	
                  Financial
      Statements

                	
                  14

                
	 
      	
                  3.5

                	
                  Absence
      of Certain Changes or Events

                	
                  15

                
	 
      	
                  3.6

                	
                  Taxes

                	
                  16

                
	 
      	
                  3.7

                	
                  Personal
      Property

                	
                  17

                
	 
      	
                  3.8

                	
                  Accounts
      Receivable

                	
                  17

                
	 
      	
                  3.9

                	
                  Inventory

                	
                  17

                
	 
      	
                  3.10

                	
                  Business
      Property Rights

                	
                  17

                
	 
      	
                  3.11

                	
                  Leased
      Real Property

                	
                  18

                
	 
      	
                  3.12

                	
                  Title
      of Property; Encumbrances; Sufficiency of Purchased Assets

                	
                  18

                
	 
      	
                  3.13

                	
                  Licenses
      and Permits

                	
                  18

                
	 
      	
                  3.14

                	
                  Compliance
      with Law

                	
                  19

                
	 
      	
                  3.15

                	
                  Litigation

                	
                  19

                
	 
      	
                  3.16

                	
                  Contracts

                	
                  19

                
	 
      	
                  3.17

                	
                  Labor
      Matters

                	
                  20

                
	 
      	
                  3.18

                	
                  Employee
      Plans

                	
                  22

                
	 
      	
                  3.19

                	
                  Insurance

                	
                  23

                
	 
      	
                  3.20

                	
                  Environmental
      Matters

                	
                  23

                
	 
      	
                  3.21

                	
                  Customers
      and Suppliers

                	
                  23

                
	 
      	
                  3.22

                	
                  No
      Brokers

                	
                  24

                
	 
      	
                  3.23

                	
                  No
      Other Agreements to Sell the Purchased Assets

                	
                  24

                
	 
      	
                  3.24

                	
                  Accuracy
      of Information

                	
                  24

                
	 
      	
                  3.25

                	
                  Knowledge

                	
                  24

                
	 
      	
                  3.26

                	
                  Books
      and Records; Internal Controls

                	
                  24

                
	 
      	
                  3.27

                	
                  Residence
      of Seller

                	
                  25

                
	 
      	
                  3.28

                	
                  Privacy

                	
                  25

                
	 
      	
                  3.29

                	
                  Foreign
      Corrupt Practices Act

                	
                  25

                
	
                  4.

                	
                  Representations
      and Warranties of Buyer and Parent

                	
                  25

                
	 
      	
                  4.1

                	
                  Existence;
      Good Standing; Corporate Authority; Compliance With Law

                	
                  25

                
	 
      	
                  4.2

                	
                  Authorization,
      Validity and Effect of Agreements

                	
                  25

                
	
                  5.

                	
                  Survival
      of Provisions/Indemnification

                	
                  26

                

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

        
          	 
      	
                  5.1

                	
                  Survival
      of Provisions

                	
                  26

                
	 
      	
                  5.2

                	
                  Indemnification
      by Seller and the Sole Shareholder

                	
                  26

                
	 
      	
                  5.3

                	
                  Indemnification
      by Buyer and Parent

                	
                  27

                
	 
      	
                  5.4

                	
                  Conditions
      of Indemnification

                	
                  28

                
	 
      	
                  5.5

                	
                  Limitations
      on Indemnification

                	
                  29

                
	
                  6.

                	
                  Other
      Covenants and Agreements

                	
                  30

                
	 
      	
                  6.1

                	
                  Restrictive
      Covenants

                	
                  30

                
	 
      	 
      	
                  6.1.1  Customer
      Restriction

                	
                  30

                
	 
      	 
      	
                  6.1.2  No-Raid

                	
                  30

                
	 
      	 
      	
                  6.1.3  Non-Competition

                	
                  31

                
	 
      	 
      	
                  6.1.4  Reformation

                	
                  31

                
	 
      	 
      	
                  6.1.5  Injunctive
      Relief

                	
                  31

                
	 
      	
                  6.2

                	
                  Public
      Announcements

                	
                  32

                
	 
      	
                  6.3

                	
                  Execution
      of Additional Documents

                	
                  32

                
	 
      	
                  6.4

                	
                  Costs
      and Expenses

                	
                  32

                
	 
      	
                  6.5

                	
                  Transfer
      Taxes

                	
                  32

                
	 
      	
                  6.6

                	
                  Cooperation
      of Tax matters; Business Records

                	
                  33

                
	 
      	
                  6.7

                	
                  Allocation
      of Total Purchase Price

                	
                  33

                
	 
      	
                  6.8

                	
                  Offer
      of Employment

                	
                  34

                
	 
      	
                  6.9

                	
                  Guaranty
      of Receivables

                	
                  34

                
	 
      	
                  6.10

                	
                  Real
      Estate Covenants and Conditions

                	
                  34

                
	 
      	
                  6.11

                	
                  Additional
      Tax Covenants

                	
                  35

                
	 
      	
                  6.12

                	
                  Bulk
      Sales Act Compliance

                	
                  35

                
	
                  7.

                	
                  Closing
      Deliveries

                	
                  35

                
	 
      	
                  7.1

                	
                  Seller's
      and Sole Shareholder's Closing Deliveries

                	
                  35

                
	 
      	
                  7.2

                	
                  Buyer's
      Closing Deliveries

                	
                  36

                
	
                  8.

                	
                  Miscellaneous

                	
                  36

                
	 
      	
                  8.1

                	
                  Notices

                	
                  36

                
	 
      	
                  8.2

                	
                  Binding
      Effect; Benefits

                	
                  38

                
	 
      	
                  8.3

                	
                  Entire
      Agreement

                	
                  39

                
	 
      	
                  8.4

                	
                  Governing
      Law

                	
                  39

                
	 
      	
                  8.5

                	
                  Counterparts

                	
                  39

                
	 
      	
                  8.6

                	
                  Headings

                	
                  39

                
	 
      	
                  8.7

                	
                  Waivers

                	
                  39

                
	 
      	
                  8.8

                	
                  Merger
      of Documents

                	
                  40

                
	 
      	
                  8.9

                	
                  Incorporation
      of Exhibits and Schedules

                	
                  40

                
	 
      	
                  8.10

                	
                  Severability

                	
                  40

                
	 
      	
                  8.11

                	
                  Assignability

                	
                  40

                
	 
      	
                  8.12

                	
                  Drafting

                	
                  41

                
	 
      	
                  8.13

                	
                  References

                	
                  41

                
	 
      	
                  8.14

                	
                  Calendar
      Days, Weeks and Months

                	
                  41

                
	 
      	
                  8.15

                	
                  Gender;
      Plural and Singular

                	
                  41

                
	 
      	
                  8.16

                	
                  Cumulative
      Rights

                	
                  41

                
	 
      	
                  8.17

                	
                  No
      Implied Covenants

                	
                  41

                
	 
      	
                  8.18

                	
                  Attorney's
      Fees

                	
                  41

                
	 
      	
                  8.19

                	
                  Indirect
      Action

                	
                  41

                
	 
      	
                  8.20

                	
                  Currency

                	
                  41

                

        

      

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      Exhibit

      
        	
                A

              	
                Form
      of Bill of Sale, Assignment and Assumption

              
	
                B

              	
                Form
      of Escrow Agreement

              
	
                C

              	
                Financial
      Statements

              
	
                D

              	
                Form
      of Receivables Guaranty

              
	
                E

              	
                Form
      of Employment Agreement

              
	
                F

              	
                Form
      of Transition Services Agreement

              
	
                G

              	
                Estimated
      Net Purchased Assets Value

              

      

      

      

      Schedule

      
        	
                1.1.1

              	
                Certain
      Purchased Assets

              
	
                1.1.2

              	
                Excluded
      Assets

              
	
                1.2A

              	
                Certain
      Assumed Liabilities

              
	
                1.2B

              	
                Assumed
      Contracts

              
	
                3.2

              	
                Seller's
      and Sole Shareholder's Third party Consents Required

              
	
                3.3

              	
                Ownership
      of Capital Stock of Seller

              
	
                3.4.2

              	
                Exceptions
      of GAAP

              
	
                3.6

              	
                Tax
      Matters

              
	
                3.7

              	
                Condition
      of Purchased Assets

              
	
                3.10

              	
                Business
      Property Rights

              
	
                3.11

              	
                Description
      of Lease Terms

              
	
                3.12

              	
                Encumbrances

              
	
                3.13

              	
                Licenses
      and Permits

              
	
                3.15

              	
                Pending
      or Threatened Litigation or Claims

              
	
                3.16

              	
                Contracts

              
	
                3.17

              	
                Employment
      and labor Agreements; Employees of Seller and Annual Compensation
      Rates

              
	
                3.18

              	
                Employee
      Plans

              
	
                3.19

              	
                Insurance

              
	
                3.26

              	
                Internal
      Controls

              
	
                6.5

              	
                Transfer
      Taxes

              
	
                6.7(a)

              	
                Canadian
      Purchase Price Allocation

              
	
                6.7(b)

              	
                United
      States Purchase Price Allocation

              
	
                6.8

              	
                Form
      of Employment Offer

              

      

    

    
 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ASSET
PURCHASE AGREEMENT

    

    

    THIS ASSET PURCHASE AGREEMENT
(the “Agreement”) is
executed and delivered on June 26, 2008 (the “Execution Date”),
made to be effective as of June 30, 2008 (the “Effective Date”), by
and among AZZ Blenkhorn & Sawle Limited, a corporation existing
under the laws of the New Brunswick (“Buyer”), AZZ
incorporated, a Texas corporation (“Parent”), Blenkhorn
and Sawle Limited, a corporation existing under the laws of the Province of
Ontario (“Seller”), and
Chriscot Holdings Limited, a corporation existing under the laws of the Province
of Ontario and sole shareholder of Seller (the “Sole
Shareholder”).

    

    WHEREAS,
the Sole Shareholder is the record and beneficial owner of all of the issued and
outstanding capital stock of Seller; and

    

    WHEREAS,
Seller is engaged in the switchgear and controls, modular buildings and motor
rewind business (the “Business”) and
desires to sell to Buyer, and Buyer desires to acquire from Seller, all of the
Purchased Assets (as such term is hereinafter defined) in accordance with the
terms and conditions hereinafter set forth;

    

    NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:

    

    1.           Purchase
and Sale.

    

    1.1           Purchased
Assets.

    

    1.1.1  On the terms
and subject to the conditions contained in this Agreement, at the Closing (as
such term is hereinafter defined), Seller shall sell, assign, grant, convey,
transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller,
all of the assets and properties of Seller of every kind, nature and description
as are existing as of the Closing Date (as hereinafter defined)(wherever
located) free of any Encumbrance (as hereafter defined), except the Excluded
Assets (as such term is hereinafter defined).  The assets and
properties to be sold, granted, conveyed, transferred, assigned and delivered by
Seller to Buyer hereunder are hereinafter referred to collectively as the “Purchased
Assets”.  Without limiting the generality of the foregoing, the
Purchased Assets shall include, without limitation, the following assets and
properties of Seller, (except any of the following which are Excluded
Assets):

    

    (i)           all
accounts, notes, vendor rebates, agency commissions, credit card and other
receivables (including, without limitation, amounts due from Seller’s customers
whether recorded as accounts, notes, vendor rebate, agency commission, credit
card or other receivables or reductions in accounts payable) and related
deposits, security or collateral therefor (including, without limitation,
recoverable customer deposits of Seller) reflected on the Audited Financial
Statements (as hereinafter defined) (collectively, the “Purchased
Receivables”);

    
      
        
          EX10.1
AZZ_ BS Asset Purchase Agreement (Form 8-K Version) (3).DOC

        

         

      

      
         

        
          

        

      

      
         

      

    

     

     

    (ii)           all
machinery, inventories, inventories of parts, computers, furniture, furnishings,
fixtures, office supplies and equipment, automobiles, trucks, vehicles,
returnable containers, tools and parts, raw materials and work in
process;

    

    (iii)           all
drawings, blueprints, specifications, designs and data of Seller;

    

    (iv)           all
technology, know-how, designs, devices, processes, methods, inventions,
drawings, schematics, specifications, standards, trade secrets and other
proprietary information, and all patents and applications therefor;

    

    (v)           all
right, title and interest of Seller in and to the names “Blenkhorn and Sawle
Limited”, “Blenkhorn & Sawle” and all other derivations thereof and all
trademarks and trade names, trademark and trade name registrations, service
marks and service mark registrations, copyrights and copyright registrations
relating specifically to such names, the applications therefor and the licenses
thereto, together with the goodwill and the business appurtenant
thereto;

    

    (vi)           all
catalogues, brochures, sales literature, promotional material, samples and other
selling material of Seller;

    

    (vii)          all
books and records and all files, documents, papers, agreements, books of account
and other records pertaining to the Purchased Assets or to Seller’s Business
(other than those required by law to be retained by Seller, copies of which will
be made available to Buyer);

    

    (viii)         all
right, title and interest of Seller under all contracts, agreements, licenses,
leases, sales orders, permits, purchase orders and other commitments (whether
oral or written) by which any of the Purchased Assets are bound or affected, or
to which Seller is a party or by which it is bound (the “Contracts”),
including any employment contract to which any Transferred Employee (as
hereinafter defined) is a party (the “Employment
Contracts”), and that Buyer has requested be assigned to it pursuant to
Section 1.2 hereof;

    

    (ix)           The
leasehold interest of Seller in and to property known principally as 100 and 124
Grantham Avenue, St. Catharines, Ontario (the “Grantham Property”)
and leased by the Seller in connection with Business and all right, title and
interest of Seller in and benefits of Seller to and under the lease of the
Grantham Property;

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (x)           
all lists of past, present and qualified prospective customers of
Seller;

    

    (xi)          
all goodwill relating to the Purchased Assets or Business as a going
concern;

    

    (xii)          all
governmental, establishment and product licenses and permits, approvals, license
and permit applications and license and permit amendment applications which are
permitted to be transferred or assigned pursuant to the terms thereof or
applicable law;

    

    (xiii)         all
claims against third parties, whether or not asserted and whether now existing
or hereafter arising, related to the Business or the Purchased Assets
(including, without limitation, all claims based on any indemnities or
warranties in favor of Seller relating to the Business or any of the Purchased
Assets); and

    

    (xiv)         all
other assets and rights of every kind and nature, tangible or intangible, of
Seller.

    

    Without
limiting the generality of the foregoing, the Purchased Assets shall, except as
set forth in Section 1.1.2 hereof, include all assets which are held in
connection with, or used or held for use in the operations of the Business,
including those set forth in a detailed list of plant and equipment as of the
Balance Sheet Date (as such term is hereinafter defined) prepared from the
accounting records of Seller and attached hereto as Schedule 1.1.1, and
all such assets of Seller as may have been acquired by Seller which would be
included on a list prepared in like manner from such accounting records as of
the Closing Date, except any such assets which may have been disposed of since
the Balance Sheet Date in the ordinary course of business on a basis consistent
with past practice.

    

    1.1.2                      Anything
herein contained to the contrary notwithstanding, certain other non-operating
assets of Seller (including certain artwork located on the premises of the
Business), which are not used in, or relevant to, the Business (collectively the
“Excluded
Assets”) are specifically excluded from the Purchased Assets and shall be
retained by Seller.  The Excluded Assets are listed on Schedule 1.1.2
hereof.

    

    1.1.3                      Subject
to Section 1.1.4 hereof, at the Closing (as such term is hereinafter defined),
Seller shall execute and deliver to Buyer (i) a Bill of Sale, Assignment and
Assumption Agreement, in the form attached hereto as Exhibit A (the “Bill of Sale, Assignment and
Assumption Agreement”), under the terms of which Seller shall sell,
grant, convey, assign, transfer and deliver the Purchased Assets to Buyer, and
(ii) such other bills of sale, deeds, instruments of assignment and other
appropriate documents as may be requested by Buyer in order to carry out the
intentions and purposes hereof.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    1.1.4                      Notwithstanding
the foregoing, this Agreement shall not constitute an agreement to assign or
transfer any Contract if an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof or affect adversely the rights of Buyer or Seller
thereunder; and any transfer or assignment to Buyer by Seller of any interest
under any such Contract that requires the consent or approval of a third party
shall be made subject to such consent or approval being obtained.  In
the event any such consent or approval is not obtained on or prior to the
Closing Date and Buyer waives as of the Closing Date the condition that such
consent or approval be obtained, each of Seller and the Sole Shareholder shall
continue to use all reasonable efforts to obtain any such consent or approval
after the Closing Date until such time as such consent or approval has been
obtained or until Buyer shall have waived in writing the requirement to obtain
such consent or approval, and each of Seller and the Sole Shareholder will
cooperate with Buyer in any lawful and economically feasible arrangement to
provide that Buyer shall receive the interest of Seller in all benefits under
any such Contract, including without limitation performance by Seller as agent
if economically feasible; provided, however, that Buyer
shall undertake to pay or satisfy the corresponding liabilities for the
enjoyment of such benefit to the extent Buyer would have been responsible
therefor hereunder if such consent or approval had been obtained as of the
Closing Date.  Seller and the Sole Shareholder shall, jointly and
severally, pay and discharge, and shall indemnify and hold Buyer harmless from
and against, any and all out-of-pocket costs of seeking to obtain or obtaining
any such contractual consent or approval whether before or after the Closing
Date.  Nothing in this Section 1.1.4 shall be deemed a waiver by Buyer
of its right to have received on or before the Closing Date an effective
assignment of all of the Contracts it has requested be assigned to it nor shall
this Section 1.1.4 be deemed to constitute an agreement to exclude any Contracts
from the terms of this Agreement.

    

    1.2           Assumption
of Specified Liabilities.  Upon the terms
and subject to the conditions set forth herein, subject however to Sections
1.1.4, 1.3 and 1.4.2 hereof, and as additional consideration for Buyer’s
purchase of the Purchased Assets, Buyer shall, at Closing, assume, and covenant
and agree to pay, perform and discharge when due, only the following liabilities
and obligations of Seller (the “Assumed Liabilities”)
listed on Schedule
1.2A hereof:

    

    (i)           liabilities
for accounts payable and accrued wages associated with the operation of the
Business and reflected on the Audited Financial Statements;

    

    (ii)           those
liabilities or obligations of Seller accruing after the Closing Date under the
terms of a Contract or other obligation which is listed on Schedule 1.2B
hereof;

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (iii)           Liabilities
under any contract included in the Purchased Assets thatare not disclosed herein
or in any Schedule hereto, where such non-disclosure isnot a breach of this
Agreement;

     

           
(iv)   Subject to
Section 1.4 hereof, all obligations arising under any of the Employment
Contracts to which any Transferred Employee is a party; and

     

    
      
                                                        (v)           all
other obligations and liabilities expressly assumed under this
Agreement.

      

    

    

    Subject
to Sections 1.1.4, 1.3 and 1.4.2 hereof, at the Closing, Buyer shall execute and
deliver to Seller the Bill of Sale, Assignment and Assumption Agreement assuming
the Assumed Liabilities.

    

    1.3           Non-Assumption
of Certain Liabilities.  Notwithstanding
any other provision of this Agreement, Buyer shall not assume, and shall not be
deemed to have assumed or be in any way liable for or subject to or have any
obligation for or with respect to, any liabilities or obligations of Seller of
any kind, nature or description whatsoever, except as expressly provided in this
Section 1.3 or in Sections 1.2 and 1.4.1 hereof (the “Excluded
Liabilities”).  Anything in Sections 1.2 or 1.4.1 hereof or
elsewhere herein to the contrary notwithstanding and without limiting the
generality of the foregoing, Buyer shall not assume, and shall not be deemed to
have assumed or be in any way liable for or subject to or have any obligation
for or with respect to, any of the following Excluded Liabilities:

    

    (i)           any
and all liabilities or obligations of Seller in respect of (x) any Taxes (as
such term is hereinafter defined) attributable to periods or events prior to or
ending or occurring on the Closing Date, or (y) any Taxes, legal, accounting,
brokerage, finder’s fees, or other expenses of whatsoever kind or nature
incurred by Seller or any partner, affiliate, director, employee or officer of
Seller as a result of the execution of this Agreement or the consummation of the
transactions contemplated hereby; or

    

    (ii)           any
and all liabilities or obligations of Seller arising out of any litigation,
action, suit or proceeding based upon an event occurring, a condition existing
or a claim arising (x) on or prior to the Closing Date (including, without
limitation, the litigation, actions, suits, proceedings and claims listed on
Schedule 3.15
hereof), or (y) after the Closing Date in the case of claims, litigation,
actions, suits or proceedings in respect of products sold or services provided
by Seller on or prior to the Closing Date and attributable to acts performed or
omitted by Seller on or prior to the Closing Date; or

    

    (iii)           all
warranties, liabilities or obligations to customers with respect to the repair
or replacement of any products which have been manufactured, sold or otherwise
provided by Seller on or prior to the Closing Date and which have been shipped
by Seller on or prior to the Closing Date, provided however that Buyer shall
provide any products and services required to satisfy any such warranties,
liabilities or obligations and will charge Seller for all associated direct
costs; or

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    (iv)           all
warranties, liabilities or obligations to customers with respect to the repair
or replacement of any products which have been manufactured, sold or otherwise
provided by Seller on or prior to the Closing Date and which are shipped by
Buyer after the Closing Date, provided however that Buyer shall provide any
products and services required to satisfy any such warranties, liabilities or
obligations and will charge Seller for all associated direct costs;
or

    

    (v)           any
and all liabilities or obligations of Seller under any of the Contracts assigned
to Buyer hereunder based upon an event occurring, a condition existing or a
claim arising (x) on or prior to the Closing Date, or (y) after the Closing Date
in the case of liabilities or obligations thereunder attributable to acts
performed or omitted by Seller on or prior to the Closing Date, unless such acts
omitted by Seller were not required to be done prior to the Closing Date;
or

    

    (vi)           any
and all liabilities or obligations of Seller arising out of or related to this
Agreement; or

    

    (vii)           any
environmental liability or obligation of Seller relating to any Release (as such
term is hereinafter defined) or threat of Release into the environment of a
Hazardous Material (as such term is hereinafter defined) attributable to any
condition or circumstance, known or unknown, existing or occurring at or on any
real property or premises (1) owned, leased or occupied by Seller on or prior to
the Closing Date, or (2) to which Hazardous Material has been sent or arranged
for shipment by Seller on or prior to the Closing Date (hereafter an “Environmental
Condition”), including without limitation (x) any suits, causes of
action, proceedings, judgments, administrative and judicial orders arising out
of any matter relating to such Environmental Condition, (y) any liability
arising in tort (strict or otherwise) resulting from any such Environmental
Condition, and (z) any required cleanup or full or partial remediation of such
Environmental Condition in accordance with the provisions or requirements of any
Environmental Law (as such term is hereinafter defined);

    

    (viii)          (a)
all obligations of the Seller for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of the Seller evidenced by bonds,
debentures, notes or similar instruments, including, without limitation, any
industrial revenue bonds, (c) all obligations of the Seller upon which interest
charges are customarily paid (excluding current accounts payable in the ordinary
course of business) other than equipment leases assumed by Buyer pursuant hereto
which are included in the Assumed Liabilities, (d) all obligations of the Seller
under conditional sale or other title retention agreements relating to property
acquired by the Seller, unless such property is included in the Purchased Assets
and its corresponding liability is included in the Assumed Liabilities, (e) all
obligations of the Seller in respect of the deferred purchase price of property
or services (excluding current accounts payable in the ordinary course of
business), unless the property is included in the Purchased Assets and its
corresponding liability is included in the Assumed Liabilities or the services
will continue to be

    
      
         

      

      
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    performed
after the Closing Date, (f) all other indebtedness of the types described herein
of other persons or entities secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Encumbrance on property owned or acquired by the Seller, whether or not such
indebtedness secured thereby has been assumed, (g) all guarantees by the Seller
of the indebtedness of any other person or entity, (h) all capital lease
obligations of the Seller, (i) all obligations, contingent or otherwise, of the
Seller as an account party in respect of letters of credit and letters of
guaranty, (j) all obligations, contingent or otherwise, of the Seller, in
respect of bankers’ acceptances and (k) all of the Seller’s and Sole
Shareholder’s costs and expenses, including legal and accounting fees, relating
to or incurred in connection with, the transaction contemplated by this
Agreement (collectively, the items described in clauses (a) through (k), the
“Seller’s
Indebtedness”). The Seller’s Indebtedness shall include the indebtedness
of any other entity (including any partnership in which the Seller is a general
partner) to the extent the Seller is liable or could be liable therefor as a
result of the Seller’s ownership in, or other relationship with, such other
entity; and

    

    (ix)           any
and all liabilities or obligations of Seller occurring prior to or after the
Closing Date with respect to any Contract, including, without limitation, any
Contract pursuant to which any counterparty to such Contract is related to
Seller in any way whatsoever, except for any such Contract that is assumed by
Buyer and set forth on Schedule
1.2B.

    

    (x)           
all liabilities and obligations of the Seller described in Section 1.4.1 hereof;
and

    

    (xi)           all
liabilities and obligations arising out of the Employment Contracts, with the
exception of any liability expressly assumed by the Buyer under this Agreement
in respect of any Transferred Employee, as hereinafter defined, including
Buyer’s obligations arising under any of the Employment Contracts to which any
Transferred Employee is a party.

    

    As used
herein, the term “Environmental Laws”
shall mean all applicable laws and regulations (federal, provincial and local)
relating to pollution or to the protection of public safety, public health,
public welfare, industrial hygiene, or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including without limitation (i) those laws and regulations relating to
the Release or threatened Release of Hazardous Materials and to the manufacture,
generation, management, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, (ii) duties or
requirements arising out of common law, and (iii) judicial and administrative
interpretations thereof.

    

    As used
herein, the term “Governmental Entity”
means any (i)  international, multinational, national, federal,
provincial, state, municipal, local or other governmental or public department,
central bank, court, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) any subdivision or authority of any of the
above,

    
      
         

      

      
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    and (iii)
any quasi-governmental, self-regulatory organization or private body exercising
any regulatory, expropriation or taxing authority under or for the account of
its members or any of the above.

    

    As used
herein, the term “Hazardous Material”
shall mean (i) any chemicals, materials, wastes or substances that are defined,
regulated, determined or identified as toxic or hazardous in any Environmental
Law (including, without limitation, substances defined as contaminant in the
Environmental Protection
Act (Ontario) or in the regulations adopted and publications promulgated
pursuant to that act), and (ii) any asbestos, polychlorinated biphenyls, urea
formaldehyde, lead based paint, petroleum, petroleum products, oil or solid
waste (whether or not regulated under any Environmental Law).

    

    As used
herein, the term “Release” shall mean
emitting, depositing, leaking, spilling, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, dumping or disposing.

    

    As used
herein, the terms “Tax” or “Taxes” means all
federal, foreign, state, provincial, county, local or other net or gross income,
gross receipts, sales, use, transfer, transfer gains, goods and services,
employment insurance, health insurance and government pension plan premiums or
contributions, ad valorem, value-added, franchise, production, severance,
windfall profit, withholding, payroll, employment, excise or similar taxes,
assessments, duties, fees, levies or other governmental charges (together with
any interest thereon, any penalties, additions to tax or additional amounts with
respect thereto and any interest in respect of such penalties, additions or
additional amounts).

    

    1.4           Employee Liability

    

    1.4.1       Without
limiting Seller’s obligations in respect of individuals employed in the Business
prior to the Closing Date and listed on Schedule 3.17 hereof
(the “Employees”), Seller shall be responsible for:

    

    (i)     all liabilities for
salary, wages, bonuses, commissions, vacation pay and other compensation
relating to employment of all individuals in the Business prior to the Closing
Date and all liabilities under or in respect of the Employee Plans, as
hereinafter defined;

    

    (ii)           all
severance payments, damages for wrongful dismissal and all related costs in
respect of the termination by Seller of the employment of any Employee (as
hereinafter defined) who does not become a Transferred Employee, as defined in
Section 6.9 hereof;

    

    (iii)           all
liabilities for claims for injury, disability, death or workers’ compensation
arising from or related to employment in the Business prior to the Closing Date;
and

    
      
         

      

      
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    (iv)           all
employment- and labour-related claims, penalties and assessments in respect of
the Business, including but not limited to proceedings before the Ontario Labour
Relations Board, arising out of matters which occurred prior to the Closing
Date.

     

    1.4.2  Without limiting Buyers
obligations in respect of the Transferrred Employees, as hereinafter defined, on
and after the Closing Date Buyer shall be responsible for.

     

     

    (i)      all liabilities for
salary, wages, bonuses, commissions, vacation pay, and other compensation and
statutory withholdings relating to employment of all Transferred Employees on
and after the Closing Date or such later date on which a Transferred Employee
commences active employment with Buyer;

    

    (ii)           
all severance payments, termination pay, pay in lieu of notice, damages for
wrongful dismissal and all related costs in respect of the termination by Buyer
of the employment of any or all of the Transferred Employees;

    

    (iii)           all
liabilities and costs for claims for injury, disability, death or workers’
compensation arising from or related to employment of the Transferred Employees
following the Closing Date;

    

    (iv)           all
employment- and labour-related claims, penalties and assessments in respect of
the Business, including but not limited to proceedings before the Ontario Labour
Relations Board or Ontario Human Rights Tribunal, arising out of matters which
occur on or subsequent to the Closing Date.

    

    1.5           No
Expansion of Third-Party Rights. The assumption by Buyer of any
liabilities of Seller hereunder shall in no way expand the rights or remedies of
any third party against Buyer as compared to the rights and remedies that such
third party would have had against Seller had Buyer not assumed such
liabilities. Without limiting the generality of the preceding sentence, the
assumption by Buyer of such liabilities shall not create any third-party
beneficiary rights.

    

    2.           Closing
Consideration; Adjustment; Allocation of Consideration.

    

    2.1           Closing
Consideration.  The total
consideration for the Purchased Assets shall consist of the
following:

    

    2.1.1  At the
Closing, Buyer shall pay to Seller an amount equal to $14,110,000, as adjusted
pursuant to this Section 2.1.1 and Section 6.5 (as adjusted, the “Purchase Price”),
less (i) the Deposit (as defined in Section 2.1.2) and (ii) $1,000,000 United
States Dollars previously paid by Buyer to Lang Michener LLP, Seller's law firm,
to hold in escrow for the benefit of Seller, plus interest earned thereon (the
“Buyer
Prepayment”), which Buyer Prepayment shall be paid by Lang Michener LLP
to Seller on the Closing Date (the “Initial

    
      
         

      

      
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    Payment”).  The
Initial Payment shall be made by wire transfer to an account or accounts
designated by Seller by written notice to Buyer given at least two (2) business
days prior to the Closing Date.  Seller shall deliver to Buyer an
estimated balance sheet of the Seller as of May 31, 2008 (the “Estimated Balance
Sheet”), such balance sheet to be prepared in accordance with GAAP (as
defined below). Seller shall determine the “Estimated Net Purchased
Assets Value” by subtracting the liabilities shown on the Estimated
Balance Sheet that would be Assumed Liabilities (as set forth on Exhibit G) if the
transaction were closing on the date of the Estimated Balance Sheet from the
assets shown on the Estimated Balance Sheet that would be Purchased
Assets  (as set forth on Exhibit
G)  if the transaction were closing on the date of the
Estimated Balance Sheet.  If the Estimated Net Purchased Assets Value
is greater than -0-, the Initial Payment shall be increased by the amount by
which the Estimated Net Purchased Assets Value is greater than
-0-.  If the Estimated Net Purchased Assets Value is less than -0-,
the Initial Payment shall be decreased by the amount by which the Estimated Net
Purchased Assets Value is less than -0-.

    

    2.1.2  (a)  At
the Closing, Buyer also shall deposit $750,000 (such amount, the “Deposit”) with
Stikeman Elliott LLP, as escrow agent (the “Escrow Agent”), which
amount shall be held and disposed of pursuant to the terms of this Agreement and
an escrow agreement in substantially the form attached hereto as Exhibit B (the “Escrow Agreement”).
The Escrow Agreement shall be executed and delivered by Buyer, Seller and the
Escrow Agent at the Closing.  $250,000 of the Escrow Fund (as defined
below) will be released to Seller on the earlier of (i) the date that all
Purchased Receivables (net of any allowance for doubtful accounts on the Audited
Financial Statements) have been collected or (ii) the date that Seller and
Shareholder have made payment to Buyer of an amount in cash equal to the
difference between the Purchased Receivables (net of any allowance for doubtful
accounts on the Audited Financial Statements) and the amount collected in
respect of such Purchased Receivables in accordance with Section 6.10 hereof.
Provided no dispute then exists as to any claim by Buyer of all or a portion of
the Escrow Fund and after giving effect to any additional payments in
satisfaction of Seller’s and the Sole Shareholder’s representations, warranties,
covenants and obligations under this Agreement, $250,000 of the remaining Escrow
Fund will be released to Seller on the one year anniversary of the Closing Date.
Provided no dispute then exists as to any claim by Buyer of all or a portion of
the Escrow Fund and after giving effect to any additional payments in
satisfaction of Seller’s and the Sole Shareholder’s representations, warranties,
covenants and obligations under this Agreement, the remaining Escrow Fund will
be released to Seller on the eighteen month anniversary of the Closing Date and
the Escrow Agreement shall thereupon terminate. To the extent a dispute does
exist as to a claim or claims on any either of the one year, or eighteen month
anniversaries of
the Closing Date described above, an amount equal to the amount of such claim or
claims will be withheld from such remaining Escrow Fund and will continue to be
held in accordance with the provisions of this Agreement and the Escrow
Agreement until such claim or claims have been fully
resolved.  Seller’s obligations under this Agreement shall not be
affected by any termination

    
      
         

      

      
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    of the
Escrow Agreement.  As used herein, the term “Escrow Fund” shall
mean the Deposit delivered as provided above, together with all interest and
other income earned thereon.  Notwithstanding anything to the contrary
contained in the Escrow Agreement, as among Seller, the Sole Shareholder and
Buyer, the fees, costs and expenses of the Escrow Agent under the Escrow
Agreement shall be borne 50% by Seller and the Sole Shareholder (jointly and
severally) and 50% by Buyer.

    

    (b)  For
United States and Canadian federal income tax purposes (and any relevant state,
local or provincial income, franchise or sales and use taxes purposes), Seller
and Buyer shall (x) treat all amounts deposited into the Escrow Fund as the
property of Seller or Buyer, as determined pursuant to the Escrow
Agreement  and (y) Seller or Buyer, as the case may be, shall report
and pay any Taxes due and payable on any income earned on or with respect to the
funds deposited in the Escrow Fund and payable to it in accordance with the
Escrow Agreement. Buyer shall report and pay any Taxes due and payable on any
income earned on or with respect to the Buyer Prepayment.

    

    2.2           Adjustment.

    

    2.2.1  Within
seventy-five (75) days after the Closing Date, Seller shall deliver to
Buyer financial statements for Seller as of the Closing Date which have been
prepared in accordance with, and reflect all audit adjustments (regardless of
amounts or materiality and whether or not waived in prior periods) required by,
GAAP and audited by BDO Dunwoody LLP (the “Audited Financial
Statements”).  Promptly upon Buyer’s request, Seller shall make
available to Buyer copies of the work papers and back-up materials used by BDO
Dunwoody LLP in preparing the Audited Financial Statements and such other
documents as Buyer may reasonably request in connection with its review of the
Audited Financial Statements.  The fees and expenses payable to BDO
Dunwoody LLP shall be paid 50% by Seller and the Sole Shareholder (jointly and
severally) and 50% by Buyer.

    

    2.2.2  Within thirty
(30) days after Buyer’s receipt of the Audited Financial Statements, Buyer shall
review the Audited Financial Statements and notify Seller in writing whether or
not Buyer accepts the Audited Financial Statements.  If Buyer accepts
the Audited Financial Statements, the Audited Financial Statements shall become
final and binding on all parties.

    

    2.2.3  If Buyer in
good faith objects to any item set forth on the Audited Financial Statements,
Buyer shall give notice thereof to Seller in writing within thirty (30) days
after receipt of the Audited Financial Statements, specifying in reasonable
detail the nature and extent of such disagreement, and Buyer and Seller shall
have a period of thirty (30) days from Seller’s receipt of such notice in which
to resolve such disagreement.  If such notice of objection is not
received by Seller within thirty (30) days after receipt of the Audited
Financial Statements, it shall be deemed that Buyer has accepted the Audited
Financial Statements with

    
      
         

      

      
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    respect
to all items set forth therein and the Audited Financial Statements shall become
final and binding on all parties.  Any disputed items which cannot be
agreed to by the parties within thirty (30) days from Seller’s receipt of
Buyer’s notice of objection to any of the items set forth in the Audited
Financial Statements shall be determined by a nationally recognized accounting
firm mutually acceptable to Buyer and Seller (the “Accountant”).  The
engagement of and the determination by Accountant shall be completed within
sixty (60) days after such assignment is given to Accountant and shall be final
and binding and shall be nonappealable by Seller and Buyer.  The fees
and expenses payable to Accountant in connection with such determination will be
borne 50% by Seller and the Sole Shareholder (jointly and severally) and 50% by
Buyer, unless (i) the determination of Accountant with respect to the disputed
amounts is favorable to the Buyer by more than $50,000, in which case the fees
and expenses payable to Accountant shall be paid by Seller and the Sole
Shareholder (jointly and severally), or (ii) the determination of
Accountant with respect to the disputed amounts is favorable to Seller by more
than $50,000, in which case the fees and expenses payable to Accountant shall be
paid by Buyer.

    

    2.2.4  Within three
(3) business days after the date that the Audited Financial Statements become
final and binding in accordance with Section 2.2.2 or 2.2.3, as the case may be,
either (i) Buyer shall pay to Seller in cash (by means of federal funds wire or
interbank transfer in immediately available funds) the amount by which the
Audited Net Purchased Assets Value (as defined below) exceeds the Estimated Net
Purchased Assets Value or (ii) Buyer shall be entitled to receive first from the
Escrow Fund a portion of the Deposit equal to the amount by which the Audited
Net Purchased Assets Value is less than the Estimated Net Purchased Assets Value
(the “Buyer Owed
Amount”), and Buyer and Seller shall promptly execute and deliver a joint
instruction letter to the Escrow Agent to such effect; provided, however, if the Buyer
Owed Amount exceeds the amount of the Deposit remaining at that time (the “Excess Buyer Owed
Balance”), Seller shall pay to Buyer in cash (by means of federal funds
wire or interbank transfer in immediately available funds) the Excess Buyer Owed
Balance. For purposes of this Agreement, “Audited Net Purchased Assets
Value” shall be calculated by subtracting the liabilities shown on the
Audited Financial Statements that are Assumed Liabilities (calculated
consistently with Exhibit G) from the
assets shown on the Audited Financial Statements that are Purchased Assets
(calculated consistently with Exhibit G). The
parties agree that any adjustments made pursuant to this Section 2.2.4 shall be
considered to be adjustments to the Purchase Price.

    

    2.3           The
Closing.  The execution of
this Agreement and the other documents contemplated herein shall occur on the
Execution Date and the closing of the purchase and sale of the Purchased Assets
provided herein (the “Closing”) shall occur
at 10:00 a.m., CDT time, on the Effective Date or at such other time and place
or on such other date as Seller and Buyer may mutually agree (such date and time
of Closing being herein referred to collectively as the “Closing Date”) and
shall be effected by the electronic exchange of such documents (whether by fax,
PDF or otherwise),
with originally executed documents to follow. The Closing shall be deemed to
have occurred as of 11:59 p.m. on the Closing Date.

    
      
         

      

      
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    3.           Representations
and Warranties of Seller and the Sole Shareholder. Seller and the Sole
Shareholder, jointly and severally, represent and warrant to Buyer as
follows:

    

    3.1           Existence;
Good Standing; Corporate Authority; Compliance With Law.  Seller (i) is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation; (ii) is duly licensed, qualified or
registered to do business under the laws of any jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary; (iii) has all
requisite corporate power and authority to own and operate its properties and
carry on its business as now conducted; (iv) is not in default with respect to
any order of any court, governmental authority or arbitration board or tribunal
to which Seller is a party or is subject; (v) is not in violation in any
material respect of any laws, ordinances, governmental rules or regulations to
which it is subject; and (vi) has obtained all material licenses, permits and
other authorizations and has taken all actions required by applicable laws or
governmental regulations in connection with its business as now
conducted.

    

    3.2           Authorization, Validity and
Effect of Agreements.

    

    3.2.1  The execution
and delivery of this Agreement and all agreements and documents contemplated
hereby by Seller, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by the board of directors of Seller and the
Sole Shareholder, and no other corporate proceedings on the part of Seller or
the Sole Shareholder are necessary to authorize this Agreement and the
transactions contemplated hereby.

    

    3.2.2  This
Agreement constitutes, and all agreements and documents contemplated hereby when
executed and delivered pursuant hereto for value received will constitute, the
valid and legally binding obligations of Seller and the Sole Shareholder (but
only with respect to such agreements and documents actually executed by such
party) enforceable in accordance with their terms, except that enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium, bulk sales, preference, equitable subordination,
marshalling or other similar laws of general application now or hereafter in
effect relating to the enforcement of creditors’ rights generally and except
that the remedies of specific performance, injunction and other forms of
equitable relief are subject to certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before which any proceeding therefor
may be brought.

    
      
         

      

      
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          3.2.3  The
execution and delivery of this Agreement by each of Seller and the Sole
Shareholder does not, and the consummation of the transactions contemplated
hereby by each of Seller and the Sole Shareholder will not (i) except as set
forth on Schedule
3.2 hereof, require the consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority or any third party; (ii) result in the breach of any term or provision
of, or constitute a default under, or result in the acceleration of or entitle
any party to accelerate (whether after the giving of notice or the lapse of time
or both) any obligation under any Seller Indebtedness, or result in the creation
or imposition of any Encumbrance (as such term is hereinafter defined) upon any
part of the property of Seller pursuant to any provision of, any Seller
Indebtedness, order, judgment, arbitration award, injunction, decree, indenture,
mortgage, lease, license, lien, or other agreement or instrument to which Seller
or the Sole Shareholder is a party or by which any of them is bound; or (iii)
violate or conflict with any provision of the bylaws or certificate of
incorporation of Seller as amended to the date hereof.  As used
herein, the term “Encumbrance” means
any security interest, pledge, mortgage, lien (including without limitation,
environmental and tax liens), charge, adverse claim, preferential arrangement,
or restriction of any kind, including, without limitation, any restriction on
the use, transfer, or other exercise of any attributes of
ownership.

    

    3.3           Ownership
of Capital of Seller.

    

    3.3.1  The Sole
Shareholder is the record and beneficial owner of the issued and outstanding
shares of Seller set forth on Schedule 3.3,
constituting all of the issued and outstanding capital of Seller.

    

    3.3.2  There are no
options, warrants, convertible securities or other rights, agreements,
arrangements or commitments of any character relating to the capital of Seller
or obligating Seller or the Sole Shareholder to issue or sell any shares,
unissued shares or other securities of, or any other interest in,
Seller.

    

    3.4           Financial
Statements.

    

    3.4.1  Seller has
furnished to Buyer (i) a balance sheet of Seller as of April 30, 2007; (ii) a
statement of operations of Seller for the year ended April 30, 2007; (iii) a
balance sheet of Seller as of May 31, 2008 (the “Balance Sheet Date”);
and (iv) a statement of operations of Seller for the one month ended on the
Balance Sheet Date; copies of which are attached hereto as Exhibit
C.  The financial statements referred to in (iii) and (iv)
above are herein collectively referred to as the “Interim Financial
Statements”.  The financial statements referred to in (i)
through (iv) above are herein collectively referred to as the “Financial
Statements”.

    

    3.4.2  Except as set
forth on Schedule
3.4.2, the Financial Statements fully and fairly set forth, in all
material respects, the financial condition of Seller as of the dates indicated,
and the results of its operations for the periods indicated, in accordance with
accounting principles generally accepted in Canada as recommended in the
Handbook of the Canadian Institute of Chartered

    
      
         

      

      
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    Accountants
at the relevant time applied on a consistent basis (“GAAP”), except as
otherwise stated therein.

    

    3.4.3  Other than
the Assumed Liabilities, there are no liabilities or obligations of any nature
whatsoever, whether known, unknown, due, to become due, direct, indirect,
absolute, contingent or otherwise and whether or not required to be accrued on
the Financial Statements, and no matter, fact, circumstance or event has
occurred which will give rise to any liability or obligation, in respect of
which Buyer may become liable on or after consummation of the transactions
contemplated by this Agreement.

    

    3.4.4  Neither the
value of the Purchased Assets in Canada nor the gross revenues from sales in or
from Canada generated by the Purchased Assets exceeds CDN$50 million, as
determined in accordance with the Competition Act (Canada) and
the regulations promulgated thereunder.

    

    3.5           Absence
of Certain Changes or Events.  Since April 30, 2008, there has
not been: (i) any material adverse change in the business, operations or
properties, condition (financial or other) of Seller, and no factor or condition
exists and no event has occurred that would be likely to result in any such
change, (ii) any material loss, damage or other casualty to the Purchased Assets
(other than any for which insurance awards have been received or guaranteed), or
(iii) any loss of the employment, services or benefits of any key employee of
the Business.  Since April 30, 2008, Seller has operated its Business
in the ordinary course of business consistent with past practice and has not:
(i) incurred or failed to pay or satisfy any material obligation or liability
(whether accrued, contingent or otherwise) except in the ordinary course of
business consistent with past practice, (ii) incurred or failed to discharge or
satisfy any Encumbrance other than Encumbrances arising in the ordinary course
of business consistent with past practice, (iii) sold or transferred any of the
assets of the Business or canceled any debts or claims or waived any rights
material to the operations of its business, (iv) defaulted on any material
obligation, (v) entered into any transaction material to its Business, or
materially amended or terminated any arrangement material to its Business or
relating to its Business, except in the ordinary course of business consistent
with past practice, (vi) redeemed any of its capital stock or declared, made or
paid any dividends or distributions (whether in cash, securities or other
property) to the holders of its capital stock or otherwise, or (vii) settled,
released or forgiven any claim or litigation or waived any right thereto; (viii)
made, changed or revoked any election or method of accounting with respect to
Taxes affecting or relating to its Business; (ix) entered into, or permitted to
be entered into, any closing or other agreement or settlement with respect to
Taxes, or (x) entered into any agreement or made any commitment to do any of the
foregoing.

     

    
      
         

      

      
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    3.6           Taxes. 

    

    (i)           Except
as provided in Schedule 3.6 attached
hereto, the Seller has timely filed all returns and reports required to be filed
for Taxes for all taxable years or periods that end on or before the Closing
Date and, with respect to any taxable year or period beginning before and ending
after the Closing Date, the portion of such taxable year or period ending on and
including the Closing Date (“Pre-Closing
Periods”) (collectively, the
“Returns”) and such Returns as
filed are accurate and complete in all material respects.

    

    (ii)           Except
as provided in Schedule 3.6 attached
hereto, the Seller has correctly computed timely paid all Taxes due and payable
(whether or not shown on a Return) and provided evidence of such, for all
Pre-Closing Periods or adequately disclosed and fully provided for such Taxes on
the balance sheet of the Seller as of the Balance Sheet Date.  Seller
has made adequate and timely installments of Taxes required to be
made.

    

    (iii)           Except
as provided in Schedule 3.6 attached
hereto, there is no action, suit, proceeding, investigation, audit, or claim now pending or, to
the knowledge of the Seller, threatened by any Governmental Entity regarding any
Taxes relating to the Seller or the Purchased Assets for any Pre-Closing
Period.

    

    (iv)           No
claim has been made in the ten years preceding the date
of this Agreement by any Governmental Entity in a jurisdiction where the Seller
does not file Returns that the Seller or any of the Purchased Assets are or may
be subject to taxation by that jurisdiction.

    

    (v)           There
are no liens or security interests on any of the Purchased Assets that arose in
connection with any failure (or alleged failure) to pay any Taxes.

    

    (vi)           Except
as provided in Schedule 3.6 attached
hereto, there are no agreements for the extension or waiver of the time for
assessment of any Taxes relating to the Seller or the Purchased Assets for any
Pre-Closing Period and the Seller has not been requested to enter into any such
agreement or waiver.

    

    (vii)          All
Taxes which the Seller is required by law to withhold or collect have been duly
withheld or collected, and have been timely paid over to the proper authorities
to the extent due and payable.

    

    (viii)         Except
pursuant to this Agreement, Seller is not now and has never been a party to any
tax indemnification, tax allocation or tax sharing agreement that could result
in any liability to Buyer.

    

    (ix)           Except
as provided in Schedule 3.6 attached
hereto, Seller has not been included in any “consolidated,” “unitary” or
“combined” Return provided for under the law of the United States or any other
foreign jurisdiction or any state, province or other locality with respect to
Taxes for any taxable period for which the statute of limitations has not
expired.

    
      
         

      

      
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    (x)           
Seller is a registrant for purposes of any taxes imposed under Part IX of the
Excise Tax Act (Canada) and its registration number is 100 544 980
RT0001.

    

    3.7           Personal
Property.  The machinery,
equipment, furniture, fixtures and other tangible personal property owned,
leased or used by Seller in its Business are sufficient and adequate to carry on
its Business as presently conducted and, except as provided in Schedule 3.7 attached
hereto, are in good operating condition and repair and are suitable for the
purposes for which they are used, normal “wear and tear” excepted.

    

    3.8           Accounts
Receivable.  All Purchased
Receivables have arisen in the ordinary course of business and represent bona
fide, undisputed indebtedness (subject to no counterclaim, right of setoff or
warranty claim, or to the extent subject to any counterclaim, right of setoff or
warranty claim, are net of appropriate reserves therefor properly reflected in
the Balance Sheet) incurred by the applicable account debtor for goods held
subject to delivery instructions or heretofore shipped or delivered pursuant to
a contract of sale or for services heretofore performed by Seller.

    

    3.9           Inventory.  The inventories
of the Business reflected in the Interim Financial Statements and included in
the Purchased Assets, or acquired by Seller between the Balance Sheet Date and
the date hereof and included in the Purchased Assets, are carried on a FIFO
basis, and do not include any inventory (other than the amount of normal
shrinkage in inventory since the Balance Sheet Date) which is not usable or
saleable in the ordinary course of business as heretofore conducted, unless full
and adequate reserves have been provided therefor on such Interim Financial
Statements in accordance with generally accepted accounting principles
consistently applied.

    

    3.10           Business
Property Rights.

    

    3.10.1  Schedule 3.10 hereof
sets forth (i) all computer software, patents, and registrations for trademarks,
trade names, service marks and copyrights which are unexpired as of the date
hereof and which are used or held for use in connection with the Business, as
well as all applications pending on said date for patents or for trademark,
trade name, service mark or copyright registrations, and all other proprietary
rights, owned or held by Seller; and (ii) all licenses granted by or to
Seller and all other agreements to which Seller is a party and which relate, in
whole or in part, to any items of the categories mentioned in (i) above or to
other proprietary rights of Seller which are used or held for use in connection
with the Business.

    

    3.10.2  The property
referred to in Section 3.10.1 hereof, together with (i) all designs, methods,
inventions and know-how, related thereto and (ii) all trademarks,
trade names, service marks, and copyrights claimed or used by Seller which have
not been registered (collectively, “Business Property
Rights”), constitute all such proprietary rights owned or held by
Seller.

    
      
         

      

      
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    3.10.3  Seller owns
or has valid rights to use all such Business Property Rights without conflict
with the rights of others.  Except as set forth in Schedule 3.15 hereof,
no person or entity has made or, to the best of Seller’s and the Sole
Shareholder’ knowledge, threatened to make any claims that Seller is in
violation of or infringes any other proprietary or trade rights of any third
party.  To the best of Seller’s and the Sole Shareholder’ knowledge,
no third party is in violation of or is infringing upon any Business Property
Rights.

    

    3.11           Leased
Real Property. The leasehold interest of Seller in the Grantham Property
is the only leased real property of Seller, in respect of which there is no
formal, written lease (the “Lease”).  Schedule 3.11
describes the material terms of the Lease (e.g. monthly rent, term of Lease
etc.).

    

    3.12           Title to
Property; Encumbrances; Sufficiency of Purchased Assets.  Seller has good,
valid and marketable title to all the properties and assets shown on the Interim
Financial Statements or thereafter acquired up to the date hereof, including the
Purchased Assets (except for (i) inventory subsequently sold or otherwise
disposed of for fair value in the ordinary course of business consistent with
past practice, (ii) accounts receivable subsequently collected in the ordinary
course of business consistent with past practice and (iii) immaterial amounts of
inventory, machinery and equipment that have been determined to be obsolete or
otherwise not necessary and have been disposed of in the ordinary course of
business consistent with past practice), in each case free and clear of all
Encumbrances except for any Encumbrance reflected in Schedule 3.12 hereof.
Except for certain services provided by Sayers and Associates Ltd. to Seller
pursuant to a management services agreement, no part of Seller’s Business is
operated by Seller through any person or entity other than
Seller.  The Purchased Assets comprise all assets and services
required for the continued conduct of the Business as now being
conducted.  The Purchased Assets are adequate for the purposes for
which such assets are currently used or are held for use, and there are no facts
or conditions affecting the Purchased Assets which could, in the aggregate,
interfere with the use or operation thereof as currently used or operated, or
their adequacy for such use.

    

    3.13           Licenses
and Permits.  Schedule 3.13 hereof
sets forth a true and complete list of all of Seller’s licenses, permits,
franchises, authorizations, registrations, approvals and certificates of
occupancy (or their equivalent) issued or granted to it with respect to the
Business by the government of the United States, Canada or of any province,
state, city, municipality, county or town thereof, or of any foreign
jurisdiction, or any department, agency, board, division, subdivision, audit
group or procuring office, commission, bureau or instrumentality of any of the
foregoing (the “Licenses and
Permits”), and all pending applications therefor.  Except as
set forth on Schedule
3.13, each of Seller’s Licenses and Permits has been duly obtained, is
valid and in full force and effect, and is not subject to any pending or, to the
best of
Seller’s and the Sole Shareholder’ knowledge, threatened administrative or
judicial proceeding to revoke, cancel, suspend or declare such License and
Permit invalid in any respect.

    
      
         

      

      
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    3.14           Compliance
with Law.  The operations of Seller’s business are being and
have always been conducted in all material respects in accordance with all
applicable laws, regulations, orders and other requirements of all courts and
other governmental or regulatory authorities, domestic or foreign, having
jurisdiction over Seller and its assets, properties and operations. Neither
Seller nor the Sole Shareholder has received notice of any violation of any such
law, regulation, order or other legal requirement, or is in default with respect
to any order, writ, judgment, award, injunction or decree of any national,
state, provincial or local court or governmental or regulatory authority or
arbitrator, domestic or foreign, applicable to the Business or the Purchased
Assets.

    

    3.15           Litigation.  Except as set
forth in Schedule
3.15 hereof, there are no claims, actions, suits, proceedings, orders,
complaints, grievances or investigations pending or, to the best of Seller’s and
the Sole Shareholder’s knowledge, threatened before any federal, state,
provincial or local court or governmental or regulatory authority, domestic or
foreign, or before any arbitrator of any nature, brought by or against Seller or
any of its officers, directors, employees, or agents involving, affecting or
relating to any of the Purchased Assets or the transactions contemplated by this
Agreement, nor, to the best of Seller’s and Sole Shareholder’s knowledge, does
there exist any fact which might reasonably be expected to give rise to any such
suit, proceeding, dispute, order, complaint, grievance or
investigation.  Neither Seller nor any of the Purchased Assets is
subject to any order, audit, writ, judgment, award, injunction or decree of any
federal, state, provincial or local court or governmental or regulatory
authority, domestic or foreign, or any arbitrator of any nature, that affects or
might affect the Purchased Assets, or that would or might interfere with the
transactions contemplated by this Agreement.

    

    3.16           Contracts.  Schedule 3.16 hereof
sets forth a true and complete list of all Contracts, including but not limited
to:  (i) leases, licenses, permits, insurance policies and other
arrangements concerning or relating to machinery, equipment or real estate; (ii)
employment, consulting, collective bargaining or other similar arrangements
relating to or for the benefit of current employees, agents, and independent
contractors or consultants; (iii) brokerage or finder’s agreements; (iv)
contracts involving a sharing of profits or expenses; (v) acquisition or
divestiture agreements; (vi) service agreements, manufacturer’s representative,
or distributorship agreements; (vii) arrangements limiting or restraining Seller
from engaging or competing in any lines of business or with any person or
entity; (viii) documents granting a power of attorney; (ix) agreements with
customers or suppliers; and (x) any other agreements or arrangements that are
material to the Business or the Purchased Assets.

    

    
      
         

      

      
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      All of
the Contracts are in full force and effect and are valid, binding and
enforceable against the parties thereto in accordance with their
terms.  Seller has performed in all material respects all of the
obligations required to be performed by it and  is entitled to
all benefits under the Contracts. To the best of the Seller’s knowledge, each
other party to the Contracts has performed all obligations required to be
performed by it to date under, and is not in default or delinquent in
performance, status or any other respect (claimed or actual) in connection with,
the Contracts, and no event has occurred which, with due notice or lapse of time
or both, would constitute such a default.  Subject to the receipt of
the consents set forth on Schedule 3.16 hereof,
the Contracts are assignable from Seller to Buyer (and/or its affiliates)
without payment of penalties or impositions of restrictions or other adverse
effects of any kind and the enforceability of the Contracts will not be affected
in any manner by the execution, delivery and performance of this Agreement and
the assignment of the Contracts pursuant hereto.  Seller has delivered
to Buyer or its representatives true and complete originals or copies of all the
Contracts.

    

    

    3.17           Labour
Matters.

    

    (i)    Seller is in compliance
with all terms and conditions of employment and all laws respecting employment,
including pay equity, wages, hours of work, overtime and occupational health and
safety, and there are no outstanding claims, complaints, investigations or
orders under any such laws, and to Seller’s and the Sole Shareholder’s knowledge
there is no basis for such claims.

    

    (ii)       Seller
has not and is not engaged in any unfair labour practice and no unfair labour
practice complaint, grievance or arbitration proceeding is pending or, to
Seller’s and the Sole Shareholder’s knowledge, threatened against the
Seller.

    

    (iii)    Except as set forth in Schedule 3.17, no
collective agreement is currently being negotiated by Seller or any other person
in respect of the Business or the employees of Seller (the “Employees”) and the
only collective agreements in force with respect to the Employees are the
collective agreements listed in Schedule 3.17 (the “Collective
Agreements”), true, correct and complete copies of which have been
provided to the Purchaser.  To Seller’s and the Sole Shareholder’s
knowledge, Seller has not committed any breaches of its obligations under the
Collective Agreements, there are no grievances or arbitration proceedings
thereunder and there are no written or oral agreements or course of conduct
which materially modify the terms of the Collective Agreements.

    

    (iv)      Except
in respect of the Collective Agreements, no trade union, council of trade
unions, employee bargaining agency or affiliated bargaining agent holds
bargaining rights with respect to any of the Employees by way of certification,
interim certification, voluntary recognition, or succession rights, or has
applied or, to Seller’s and the Sole Shareholder’s knowledge, threatened to
apply to be certified as the bargaining agent of the Employees. Except in
respect of the Collective Agreements, to Seller’s and the Sole Shareholder’s
knowledge, there are no threatened or pending union organizing activities
involving any Employees.  There is no labour strike, dispute, work
slowdown or stoppage pending or involving or, to Seller’s and the Sole
Shareholder’s knowledge, threatened against or affecting Seller, in respect of
the Business and Seller has not experienced any strike, material slowdown or
material work stoppage, lockout or other collective labour action by
or with respect to the Employees in the twenty-four month period preceding the
date hereof.

    
      
         

      

      
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    (v)           No
trade union has applied to have Seller declared a common or related employer
pursuant to the Labour Relations Act (Ontario) or any similar legislation in any
jurisdiction in which Seller carries on business.

    

    (vi)           All
amounts due or accrued due for all salary, wages, bonuses, commissions, vacation
with pay, and benefits under the Employee Plans, as hereinafter defined, have
either been paid or are accurately reflected in Seller’s books and
records.

    

    (vii)          Schedule 3.17 hereof
contains a correct and complete list of each Employee and independent contractor
of Seller employed or retained in connection with the Business, whether actively
at work or not, showing their salaries, wage rates, commissions and consulting
fees, bonus arrangements, benefits, positions, ages, status as full-time or
part-time employees, location of employment, their annual vacation entitlement
in days, vacation days taken and vacation days remaining, their annual sick day
entitlement, sick days taken and sick days remaining and cumulative length of
service and any written employment contract they have.  In addition,
Schedule 3.17
lists any Employee currently on leave and in receipt of disability benefits,
applicable workplace safety and insurance legislation benefits and those
Employees currently on pregnancy or parental leave or other leave approved by
Seller, together with the type of leave and their expected date of return to
work if known.

    

    (viii)        Except
as disclosed in Schedule 3.17 hereof,
no Employee has any agreement as to length of notice or severance payment
required to terminate his or her employment, other than such as results by law
from the employment of an employee without an agreement as to notice, pay in
lieu of notice or severance.

    

    (ix)          There
are no outstanding assessments, penalties, fines, liens, charges, surcharges, or
other amounts due or owing pursuant to any workplace safety and insurance
legislation in respect of the Business and Seller has not been reassessed in any
material respect under such legislation during the past three (3) years and, to
Seller’s and the Sole Shareholder’s knowledge, no audit of the Business is
currently being performed pursuant to any applicable workplace safety and
insurance legislation.  There are no claims or potential claims which
may materially adversely affect Seller’s accident cost experience in respect of
the Business.

    

    (x)           Seller
has provided to Buyer all orders and inspection reports under applicable
Occupational Health and Safety legislation (“OHSA”) relating to
the Business together with the minutes of Seller’s joint health and safety
committee meetings for the past three (3) years. There are no charges pending
under OHSA in respect of the Business. Seller has complied in all material
respects with any orders issued under OHSA in respect of the Business and there
are no appeals of any orders under OHSA currently outstanding.

    

    (xi)          Seller
has furnished Buyer with a complete and accurate list of all its employee
manuals, policies, procedures and work-related rules affecting employees of
Seller (“Employee
Policies and Procedures”).  Seller has provided Buyer with a
copy of all its material written Employee Policies and Procedures and a written
description of all unwritten Employee Policies and Procedures.  Each
of the Employee Policies and Procedures can be amended or terminated at will by
reasonable notice from Seller.

    
      
         

      

      
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    (xii)           Seller
has provided Buyer with all written policies or in the case of oral policies,
has described same on Schedule 3.17
relating to expense reimbursement for Employees whether they are reimbursed on
an individual or collective basis.

    

    (xiii)           Each
independent contractor who is disclosed on Schedule 3.17 and any
former independent contractor has, to Seller’s knowledge, been properly
classified by Seller as an independent contractor and Seller has not received
any notice from any governmental entity disputing such
classification.

    

    (xiv)           Except
as disclosed on Schedule 3.17, no
Employee is employed pursuant to a work permit issued by Canada Immigration and
Schedule 3.17
discloses in respect of each Employee who is employed pursuant to a work permit
the expiry date of such work permit and whether Seller has made any attempts to
renew such work permit.

    

    3.18           Employee
Plans.

    

    (i)           
Schedule 3.18
lists and describes all employee benefit, fringe benefit, supplemental
unemployment benefit, bonus, incentive, profit sharing, termination, change of
control, pension, retirement, stock option, stock purchase, stock appreciation,
health, welfare, medical, dental, disability, life insurance and similar plans,
programmes, arrangements or practices relating to the current employees,
officers or directors of the Business maintained, sponsored or funded by Seller,
whether written or oral, funded or unfunded, insured or self-insured, registered
or unregistered under which Seller may have any liability contingent or
otherwise, other than benefit plans established pursuant to statute (the “Employee
Plans”).

    

    (ii)           
Seller has furnished to the Buyer true, correct and complete copies of all
written Employee Plans and written descriptions of any unwritten Employee Plans,
as amended as of the date hereof.

    

    (iii)           No
Employee Plan is or is intended to be a “registered pension plan” as such term
is defined in the Income Tax Act (Canada) and none of the Employee Plans provide
for retiree benefits or for benefits to retired employees or to the
beneficiaries or dependants of retired employees.

    

    (iv)           All
Employee Plans have been established, registered, administered, communicated,
funded and invested in accordance in all material respects with all laws. No
fact or circumstance exists which could materially and adversely affect the
registered status of any such Employee Plan.

    
      
         

      

      
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    3.19           Insurance.  Schedule 3.19 hereof
lists the fidelity bonds and the aggregate coverage amount and type and
generally applicable deductibles of all insurance policies insuring Seller
and/or the Purchased Assets or relating to employees of the
Business.  All policies and bonds listed in Schedule 3.19 hereof
are in full force and effect through the date hereof.

    

    3.20           Environmental
Matters. All Licenses and Permits required under all Environmental Laws
have been obtained and maintained in effect for Seller and the Purchased
Assets.  To Seller’s and the Sole Shareholder’ knowledge, Seller and
the Purchased Assets are in compliance in all material respects with all
Environmental Laws and with all such Licenses and Permits. Seller has not
performed or suffered any act which could give rise to, or has otherwise
incurred, material liability to any Person under any Environmental Law, nor has
Seller or the Sole Shareholder received notice of any such liability nor
provided information in response to a request for information in respect of any
such potential liability. No Hazardous Material has been released, placed,
dumped or otherwise come to be located on, at, beneath or near any of the Leased
Properties or any surface waters or groundwaters thereon or
thereunder.  The Purchased Assets are capable of, and are not
restricted by any License or Permit from, being operated at maximum daily and
annual production capacity while remaining in compliance with Environmental
Laws.  There have been and are no aboveground or underground storage
tanks or asbestos-containing materials located at or within the Grantham
Property.  Seller has furnished Buyer with copies of all environmental
studies, assessments or reports in its possession or control relating to the
Grantham Property.  None of the properties previously owned or leased
by Seller, or any current or previous business operations conducted by it, are
the subject of any investigation respecting any violation of any Environmental
Law, or any Releases of Hazardous Material into any surface water, ground water
drinking water supply, land surface or subsurface strata, or ambient
air.  Seller has not reported any material violation of any applicable
Environmental Law to any governmental authority.  Seller has not sent,
transported, or directly arranged for the transport of any garbage, solid waste
or Hazardous Material, whether generated by it or another Person, to any site in
the United States.  There are no Environmental Conditions on any of
Seller’s properties requiring full or partial remediation under any
Environmental Law.

    

    3.21           Customers
and Suppliers.  Neither Seller
nor the Sole Shareholder has received notice that, nor does Seller or the Sole
Shareholder have any knowledge that, any material customer of the Business has,
will or plans to discontinue doing business with Seller.  Except as
has been disclosed by Seller in writing to Buyer, Seller does not have any
outstanding purchase contracts or commitments or unaccepted purchase orders
which are in excess of the normal, ordinary and usual
requirements.  Seller has not received payment for any services to be
performed after the Closing or any products to be delivered or manufactured
after the Closing.  No material supplier or subcontractor has reduced
its shipments of orders issued by Seller, or threatened to discontinue,
supplying such items or services to Seller on reasonable
terms.  Neither Seller nor the Sole Shareholder has received notice
that, nor does Seller or the Sole Shareholder have any knowledge that, any such
supplier or subcontractor
to Seller has, will or plans to discontinue doing business with Seller on
substantially the same terms as are consistent with its past
practices.

    
      
         

      

      
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    3.22           No
Brokers. Neither
Seller nor any related party has entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
Buyer to pay any finder’s fees, brokerage or agent’s commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.

    

    3.23           No Other
Agreements to Sell the Purchased Assets.  Neither Seller
nor any related party has any commitment or legal obligation to any other person
other than Buyer to sell, assign, transfer or effect a sale of any of the
Purchased Assets (other than inventory in the ordinary course of business), to
effect any merger, consolidation, liquidation, dissolution or other
reorganization of Seller, or to enter into any agreement or cause the entering
into of an agreement with respect to any of the foregoing.

    

    3.24           Accuracy
of Information.  None of Seller’s or the Sole Shareholder’
representations, warranties or statements contained in this Agreement or in the
Schedules and Exhibits hereto contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make any of such
representations, warranties or statements, in light of the circumstances under
which they were made, not misleading.  All information relating to
Seller that is known or would on reasonable inquiry be known to Seller and/or
the Sole Shareholder and that may be material to a purchaser of the Purchased
Assets has been disclosed in writing to Buyer.

    

    3.25           Knowledge.  Where
any representation or warranty contained in this Agreement is expressly
qualified by reference to the knowledge of Seller or the Sole Shareholder, it
shall be deemed to refer to the knowledge of Seller and the Sole
Shareholder.  Each of Seller and the Sole Shareholder confirms that it has
made due and diligent inquiry of such persons (including appropriate officers of
Seller and the Sole Shareholder) as it considers necessary as to the matters
that are the subject of the representations and warranties contained in this
Agreement.

    

    3.26           Books and
Records; Internal Controls.  All accounting and financial books
and records of Seller relating to the Business have been fully, properly and
accurately kept and completed in all material respects. Except as set forth in
Schedule 3.26,
Seller maintains a system of internal controls that provide reasonable assurance
regarding the reliability of financial reporting and preparation of financial
statements in accordance with GAAP, and includes policies and procedures that
(i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions, liabilities and dispositions of assets of
Seller, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures of Seller are being made only in accordance
with authorizations of the management and Sole Shareholder; and (iii) provide
reasonable assurance regarding the prevention
or timely detection of unauthorized acquisition, use or disposition of assets of
Seller that could have a material effect on its financial
statements.

    
      
         

      

      
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    3.27           Residence
of Seller.   Seller is not a non-resident of Canada within
the meaning of the Income Tax Act (Canada).

    

    3.28           Privacy.  Seller
is, and has been since January 1, 2007, conducting the Business in compliance
with all applicable laws governing privacy and the protection of personal
information.

    

    3.29           Foreign Corrupt Practices Act.
Neither the Seller, the Sole Shareholder nor any of their respective
subsidiaries, nor any of their respective  directors, officers,
employees or agents has taken any action, directly or indirectly, that would
result in a violation of the Foreign Corrupt Practices Act of 1977, as amended
(such act, including the rules and regulations thereunder, the “FCPA”), including,
without limitation, offered, paid, promised to pay or authorized the payment of
any money, or offer, gift, promise to give, or authorized the giving of anything
of value to any “foreign official” (as such term is defined in the FCPA) or any
foreign political party or official thereof or any candidate for foreign
political office, in contravention of the FCPA.

    

    4.           Representations
and Warranties of Buyer and Parent.  Buyer and Parent
represent and warrant, jointly and severally, to Seller and the Sole Shareholder
as follows:

    

    4.1           Existence;
Good Standing; Corporate Authority; Compliance With Law.  Buyer (i) is a
corporation duly organized under the laws of its jurisdiction of organization;
(ii) is duly licensed or qualified to do business as a corporation under the
laws of all other jurisdictions in which the character of the properties owned
or leased by it therein or in which the transaction of its business makes such
qualification necessary; (iii) has all requisite corporate power and authority
to own its properties and carry on its business as now conducted; (iv) is not in
default with respect to any order of any court, governmental authority or
arbitration board or tribunal to which Buyer is a party or is subject; (v) is
not in violation of any laws, ordinances, governmental rules or regulations to
which it is subject; and (vi) has obtained all licenses, permits and other
authorizations and has taken all actions required by applicable laws or
governmental regulations in connection with its business as now
conducted.

    

    4.2           Authorization, Validity and
Effect of Agreements.

    

    4.2.1  The execution
and delivery of this Agreement and all agreements and documents contemplated
hereby by Buyer, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by all requisite corporate
action.

    
      
         

      

      
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4.2.2  This Agreement constitutes, and all agreements
and documents contemplated hereby when executed and delivered pursuant hereto
for value received will constitute, the valid and legally binding obligations of
Buyer and Parent (but only with respect to such agreements and documents
actually executed by Buyer and Parent) enforceable in accordance with their
terms, except that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium, bulk sales,
preference, equitable subordination, marshalling or other similar laws of
general application now or hereafter in effect relating to the enforcement of
creditors’ rights generally and except that the remedies of specific
performance, injunction and other forms of equitable relief are subject to
certain tests of equity jurisdiction, equitable defenses and the discretion of
the court before which any proceeding therefor may be brought.

    

      4.2.3  The execution
and delivery of this Agreement by Buyer and Parent do not, and the consummation
of the transactions contemplated hereby will not, (i) require the consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority or any third party, (ii) result in the
breach of any term or provision of, or constitute a default under, or result in
the acceleration of or entitle any party to accelerate (whether after the giving
of notice or the lapse of time or both) any obligation under, or result in the
creation or imposition of any Encumbrance upon any part of the property of Buyer
pursuant to any provision of, any order, judgment, arbitration award,
injunction, decree, indenture, mortgage, lease, license, lien, or other
agreement or instrument to which Buyer is a party or by which it is bound, and
(iii) violate or conflict with any provision of the bylaws or certificate of
incorporation of Buyer as amended to the date hereof.

    

    4.2.4  The Buyer is
a registrant for the purposes of any Taxes imposed under Part IX of the Excise Tax Act (Canada) and
its registration number is 859454696 RT0001.

    

    5.           Survival of
Provisions/Indemnification.

    

    5.1           Survival
of Provisions.  All the
respective representations, warranties covenants and agreements of each of the
parties to this Agreement made herein or in any certificate or other document
furnished or to be furnished by the parties pursuant hereto (except covenants
and agreements which are expressly required to be performed and are performed in
full on or before the Closing Date) shall be considered to have been relied upon
by the other party hereto, as the case may be, shall survive delivery by the
parties hereto of the consideration to be given by them hereunder, and shall
survive the execution hereof, the Closing hereunder and the Closing Date for a
period of eighteen months, except for the representations and warranties of
Seller and the Sole Shareholder contained in Sections 3.6 and 3.20 which shall
survive until the expiration of the statute of limitations applicable
thereto.

    

    5.2           Indemnification
by Seller and the Sole Shareholder.  Upon the terms
and subject to the conditions set forth in Sections 5.4 and 5.5 hereof and this
Section 5.2, Seller and the Sole
Shareholder, jointly and severally, agree to indemnify, defend, protect, save
and hold harmless each Buyer Indemnitee (as such term is hereinafter defined)
against, and will reimburse each Buyer Indemnitee on demand for, any and all
Losses (as such term is hereinafter defined) made or incurred by or asserted
against such Buyer Indemnitee, at any time after the Closing Date, directly or
indirectly, arising out of, related to, caused by, or resulting from any of the
following (“Seller
Indemnifiable Claims”):

    
      
         

      

      
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    (a)  any
and all Excluded Liabilities;

    

    (b)  any
and all Excluded Assets;

    

    (c)  subject
to the period of survival provided for in Section 5.1, any inaccuracy, omission,
misrepresentation, breach of representation or warranty, or nonfulfillment of
any term, provision, covenant or agreement on the part of Seller or the Sole
Shareholder contained herein or in any certificate or other instrument furnished
or to be furnished by Seller or the Sole Shareholder to Buyer pursuant hereto;
or

    

    (d) the
failure of Seller to comply with its obligations  pursuant to the
Bulk Sales Act
(Ontario) unless such failure results from the Buyer not providing Seller with
sufficient funds to satisfy the claims of the unsecured trade creditors
disclosed on the statement to be provided by Seller pursuant to Section
7.1.9.

    

    As used
herein, the term “Losses” shall mean,
with respect to any person or party, any payment, loss, liability, obligation,
damage (including, without limitation, consequential, punitive, special or
otherwise), deficiency, lien, claim, suit, cause of action, judgment, cost
(including, without limitation, any cost relating to remediation of
Environmental Conditions) or expense (including, without limitation, reasonable
attorneys’ fees and court costs) of any kind, nature or
description.

    

    As used
herein, the term “Buyer Indemnitee”
shall mean Buyer and any entity controlling, controlled by or under common
control with Buyer and their respective affiliates and direct and indirect
partners (including partners of partners and shareholders and members of
partners), members, shareholders, directors, officers, employees, agents and
representatives.

    

    As used
herein, the term “control,” “controlling,” and
“controlled”
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person or party, whether
through the ownership of voting securities or voting interests, by contract or
otherwise.

    

    5.3           Indemnification
by Buyer and Parent.  Upon the terms
and subject to the conditions set forth in Section 5.4 hereof and this Section
5.3, Buyer and Parent, jointly and severally, agree to indemnify, defend,
protect, save and hold harmless Seller and Sole Shareholder Indemnitee (as such
term is hereinafter defined) against, and will reimburse Seller on demand for,
any and all Losses
made or incurred by or asserted against Seller, at any time after the Closing
Date, directly or indirectly, arising out of, related to, caused by, or
resulting from any of the following (“Buyer Indemnifiable
Claims”):

    
      
         

      

      
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    (a)  any
Assumed Liability;

    

    (b)  subject
to the period of survival provided for in Section 5.1, any
inaccuracy, omission, misrepresentation, breach of representation or warranty,
or nonfulfillment of any term, provision, covenant or agreement on the part of
Buyer contained herein or in any certificate or other instrument furnished or to
be furnished by Buyer to Seller pursuant hereto;

    

    (c)  any
event occurring subsequent to the Closing related to the Purchased Assets or
Seller other than as a result of or relating to the continuation of a condition
or occurrence that existed or took place prior to Closing; or

    

    (d) the
failure of Buyer to (i) comply with section 11(1) of the Bulk Sales Act (Ontario) in
every county and district set out in the certificate to be provided by Seller
pursuant to Section 7.1.9 and (ii) provide Seller with sufficient funds to
satisfy the claims of the unsecured trade creditors disclosed on the statement
to be provided by Seller pursuant to Section 7.1.9.

    

    As used
herein, the term “Seller and Sole Shareholder
Indemnitee” shall mean Seller and Sole Shareholder and any entity
controlling, controlled by or under common control with Seller or Sole
Shareholder and their respective affiliates and direct and indirect partners
(including partners of partners and shareholders and members of partners),
members, shareholders, directors, officers, employees, agents and
representatives.

    

    5.4           Conditions
of Indemnification.  With respect to any
actual or potential claim, any written demand, the commencement of any action,
or the occurrence of any other event which involves any Seller Indemnifiable
Claim or Buyer Indemnifiable Claim (a “Claim”):

    

    (a)  Promptly
after the party seeking indemnification (the “Indemnified Party”)
first receives written documents pertaining to the Claim, or if such Claim does
not involve a third party Claim (a “Third Party Claim”),
promptly after the Indemnified Party first has actual knowledge of such Claim,
the Indemnified Party shall give written notice to the party from whom
indemnification is sought (the “Indemnifying Party”)
of such Claim in reasonable detail and stating the amount involved, if known,
together with copies of any such written documents.

    

    (b)  The
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to any Claim shall not be affected by the failure of the Indemnified
Party to give the notice with respect thereto in accordance with Section 5.4(a)
hereof unless the Indemnifying Party shall establish that it has been
irretrievably prejudiced thereby.

    
      
         

      

      
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    (c)  If
the Claim involves a Third Party Claim, then the Indemnifying Party shall have
the right, at its sole cost, expense and ultimate liability regardless of the
outcome, and through counsel of its choice (which counsel shall be reasonably
satisfactory to the Indemnified Party), to litigate, defend, settle or otherwise
attempt to resolve such Third Party Claim; provided, however, that if both
the Indemnifying Party and the Indemnified Party are named in any action or
proceeding and it would be inappropriate for Buyer and Seller to be represented
by the same counsel, due to actual or potential differing interests between them
(such as the availability of different defenses), then the Indemnified Party
shall be entitled to select counsel of its own choosing to represent it,
reasonably satisfactory to the Indemnifying Party, in which event the
Indemnifying Party shall be obligated to pay the fees and expenses of such
counsel.  Notwithstanding the preceding sentence, the Indemnified
Party may elect, at any time and at the Indemnified Party’s sole cost, expense
and ultimate liability, regardless of the outcome, and through counsel of its
choice, to litigate, defend, settle or otherwise attempt to resolve such Third
Party Claim.  If the Indemnified Party so elects (for reasons other
than the Indemnifying Party’s failure or refusal to provide a defense to such
Third Party Claim), then the Indemnifying Party shall have no obligation to
indemnify the Indemnified Party with respect to such Third Party Claim, but such
disposition will be without prejudice to any other right the Indemnified Party
may have to indemnification under Section 5.2 or 5.3 hereof with respect to
other Third Party Claims, regardless of the outcome of such Third Party
Claim.  If the Indemnifying Party fails or refuses to provide a
defense to any Third Party Claim, then the Indemnified Party shall have the
right to undertake the defense, compromise or settlement of such Third Party
Claim, through counsel of its choice, on behalf of and for the account and at
the risk of the Indemnifying Party, and the Indemnifying Party shall be
obligated to pay the costs, expenses and attorney’s fees incurred by the
Indemnified Party in connection with such Third Party Claim.  In any
event, the Indemnifying Party and the Buyer Indemnitees or the Seller and Sole
Shareholder Indemnitees, as applicable, shall fully cooperate with each other
and their respective counsel in connection with any such litigation, defense,
settlement or other attempted resolution.

    

    5.5           Limitations
on Indemnification.  Notwithstanding
anything to the contrary contained herein, rights to indemnification under
Section 5.2 hereof are subject to the following limitations:

    

    5.5.1  The Seller
and the Sole Shareholder shall not be liable for Losses in respect of any Seller
Indemnifiable Claims made by any Buyer Indemnitee unless the total of all Losses
in respect of such Seller Indemnifiable Claims made by the Buyer Indemnitees
shall exceed $141,100 in the aggregate (the “Indemnity
Threshold”), at which point the Seller and the Sole Shareholder shall be
obligated to indemnify all claims by each Buyer Indemnitee for all Losses,
including the amount of Indemnity Threshold, but subject to the other
limitations established by Section 5.5.2.

     

    
      5.5.2  Except for
Losses incurred by Buyer Indemnitees with respect to Seller Indemnifiable Claims
relating to (i) an intentional misrepresentation or intentional omission by any
Seller or the Sole Shareholder, or (ii) a breach of a representation or warranty
of Seller or the Sole Shareholder contained in Sections 3.1, 3.2, 3.3, 3.12,
3.15 or 3.20, the aggregate amount payable by Seller and the Sole Shareholder
pursuant to Section 5.2 hereof shall not exceed $5,000,000 (the “Cap”).

    

    
      
         

      

      
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    5.5.3  With respect
to any Losses incurred by any Buyer Indemnitee with respect to any Seller
Indemnifiable Claims relating to (i) an intentional misrepresentation or
intentional omission by Seller or the Sole Shareholder, (ii) Section 5.2(d) or
(iii) a breach of a representation or warranty of Seller or the Sole Shareholder
contained in Sections 3.1, 3.2, 3.3, 3.12, 3.15 or 3.20, such Buyer Indemnitee
shall be entitled to indemnification under Section 5.2 hereof for all such
Losses incurred by such Buyer Indemnitee with respect to such Seller
Indemnifiable Claim without limitation as to the amount of such Losses and
without reference to the Indemnity Threshold or the Cap.

    

    6.           Other Covenants and
Agreements.

    

    6.1  Restrictive
Covenants.

    

    6.1.1  Customer
Restriction.  Each of Seller
and the Sole Shareholder covenants and agrees that it shall not, for a period of
five years from and after the Closing Date, directly or indirectly, working
alone or in conjunction with one or more other persons or entities, for
compensation or not, (i) provide or offer to provide to any Customer (as such
term is hereinafter defined) any product or service similar to that offered by
the Business immediately prior to the Closing Date, or (ii) induce or attempt to
induce any Customer to withdraw, curtail or cancel its business with Buyer or
any of its subsidiaries or affiliates or in any manner modify or fail to enter
into any actual or potential business relationship with Buyer or any of its
subsidiaries or affiliates.  As used in this Section 6.1, the term
“Customer”
means (i) any person or entity for whom Seller provided services relating to the
Business on or prior to the Closing Date or to whom Seller provided any Business
related product on or prior to the Closing Date; or (ii) any person or entity
for whom Buyer or any of its subsidiaries or affiliates provided or provides
services relating to the Business after the Closing Date or to whom Buyer or any
of its subsidiaries or affiliates provided or provides a Business related
product after the Closing Date.

    

    6.1.2  Non-Raid.  Each of Seller
and the Sole Shareholder covenants and agrees that it shall not, for a period of
five (5) years from and after the Closing Date, directly or indirectly, working
alone or in conjunction with one or more other persons or entities, for
compensation or not, hire, recruit or otherwise solicit or induce any person or
entity who is an employee or Vendor of the Business on the Closing Date or
within the six (6) months immediately preceding the Closing Date had been an
employee or Vendor of the
Business, or who is an employee or Vendor of Buyer or any of its subsidiaries or
affiliates after the Closing Date, to terminate their employment with, or
otherwise cease or reduce their relationship with, Buyer or any of its
subsidiaries or affiliates, as the case may be,  provided that the
foregoing shall in no way prevent or preclude Seller or Sole Shareholder,
directly or indirectly, from doing business with any such Vendor so long as such
business is in no way competitive with the Business.  As used in this
Section 6.1, the term “Vendor” means (i) any
third party selling or licensing a product or service to a Customer or to the
Business on or prior to the Closing Date; or (ii) any third party selling or
licensing a product or service to a Customer or to Buyer or any of its
subsidiaries or affiliates after the Closing Date.

      

    

    
      
         

      

      
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    6.1.3  Non-Competition.  Each of Seller
and the Sole Shareholder covenants and agrees that it shall not, for a period of
five (5) years from and after the Closing Date, directly or indirectly, working
alone or in conjunction with one or more other persons or entities, for
compensation or not, permit Seller’s or such Sole Shareholder’ name to be used
by or engage in or carry on, directly or indirectly, either for itself or as a
member of a partnership or other entity or as a shareholder, member, investor,
agent, associate or consultant of any person, partnership, corporation, limited
liability company or other entity (other than Buyer or a subsidiary or affiliate
of Buyer), any business in competition with the Business purchased hereunder in
the United States, Canada or any other country in which the Seller and Sole
Shareholder have historically conducted business (but only for as long as the
Business is carried on by (i) Buyer and/or any of its subsidiaries or affiliates
or (ii) any person, corporation, limited liability company, partnership, trust
or other organization or entity deriving title from Buyer and/or any of its
subsidiaries or affiliates to the assets and goodwill of the Business), provided
that the foregoing shall not prevent Seller or Sole Shareholder from, directly
or indirectly, holding less than 5% of the shares of a company which offers its
shares to the public and which is engaged in a business similar to, or
competitive with, the Business.

    

    6.1.4  Reformation.  If, in any
judicial proceeding, the court shall refuse to enforce any of the separate
covenants contained in Section 6.1.1, 6.1.2 or 6.1.3 hereof because the time
limit is too long, it is expressly understood and agreed between the parties
hereto that for purposes of such proceeding such time limitation shall be deemed
reduced to the extent necessary to permit enforcement of such
covenants.  If, in any judicial proceeding, the court shall refuse to
enforce any of the separate covenants contained in Section 6.1.1, 6.1.2 or 6.1.3
hereof because it is more extensive (whether as to geographic area, scope of
business or otherwise) than necessary to protect the business and goodwill of
Buyer, it is expressly understood and agreed between the parties hereto that for
purposes of such proceeding the geographic area, scope of business or other
aspect shall be deemed reduced to the extent necessary to permit enforcement of
such covenants.

     

    6.1.5  Injunctive
Relief.  Each
of Seller and the Sole Shareholder acknowledge that a breach of Section 6.1.1,
6.1.2 or 6.1.3 hereof would cause irreparable damage to Buyer, and in the event
of its actual or threatened breach of the provisions of Section 6.1.1, 6.1.2 or
6.1.3 hereof, Buyer shall be entitled to a temporary restraining order and an
injunction restraining Seller and/or the Sole Shareholder from breaching such
covenants without the necessity of posting bond or proving irreparable harm,
such being conclusively admitted by Seller and the Sole
Shareholder.  Nothing shall be construed as prohibiting Buyer from
pursuing any other available remedies for such breach or threatened breach,
including the recovery of damages from Seller and/or the Sole
Shareholder.  Each of Seller and the Sole Shareholder acknowledge that
the restrictions set forth in Sections 6.1.1, 6.1.2 and 6.1.3 hereof are
reasonable in scope and duration, given the nature of the business of
Buyer.

    
      
         

      

      
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    6.2           Public
Announcements.  Upon execution of
this Agreement, Buyer shall be entitled to issue such press releases or make any
public statements or reports concerning the Agreement or the transactions
contemplated hereby required or advisable under any applicable law or by any
governmental authority having jurisdiction over such matters with such content
and wording as Buyer shall in its sole discretion deem appropriate; provided, however, that Seller
shall have a reasonable opportunity to review any such
release.  Neither Seller nor the Sole Shareholder shall make any
disclosure of the terms of this Agreement that is inconsistent with the public
statements of Buyer described in the preceding sentence.

    

    6.3           Execution
of Additional Documents.  Each party hereto
will at any time, and from time to time after the Closing Date, upon request of
the other party hereto, execute, acknowledge and deliver, without payment, all
such further deeds, assignments, transfers, conveyances, powers of attorney and
assurances, and take all such further action, as may be required to carry out or
effectuate the intentions and purposes of this Agreement, and to transfer and
vest title to any Purchased Asset being transferred hereunder, and to protect
the right, title and interest in and enjoyment of all of the Purchased Assets
sold, granted, assigned, transferred, delivered and conveyed pursuant hereto;
provided, however, that this
Agreement shall be effective regardless of whether any such additional documents
are executed.

    

    6.4           Costs and
Expenses.  Except as
otherwise provided herein, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.

    

    6.5           Transfer
Taxes. Buyer agrees to pay and/or remit as applicable any and all goods
and services, harmonized, value-added, sales, use, transfer, registration,
transfer gains, or similar Taxes or fees, imposts, charges or other levies
(including any interest and penalties thereon) (“Transfer Taxes”) that
arise in connection with, or are a result of, or in respect of, the
transactions contemplated by this Agreement.  With respect to Transfer
Taxes payable and/or remittable under the laws of the province of Ontario, Buyer and Seller have
detailed in Schedule
6.5 to this Agreement the amounts of Transfer Taxes payable pursuant to
the Retail Sales Tax Act (Ontario)
in respect of the Purchased Assets pursuant to this Agreement.  Further,
Schedule
6.5 to this Agreement details the full amount of any and all Transfer
Taxes payable or remittable by Buyer payable pursuant to the Retail Sales Tax Act
(Ontario) in connection with the transactions contemplated under this
Agreement.  Seller agrees to a reduction of the Purchase Price equal to
fifty percent (50%) of the amount of Transfer Taxes detailed in Schedule
6.5 to this Agreement.

    
      
         

      

      
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    6.6           Cooperation
on Tax Matters; Business Records.  Buyer, Seller and
the Sole Shareholder agree to furnish or cause to be furnished to each other, as
promptly as practicable, such information and assistance relating to Seller as
is reasonably necessary for the preparation and filing of any Tax Return, claim
for refund or other required or optional filings relating to Tax matters, for
the preparation for and proof of facts during any Tax audit, for the preparation
for any Tax protest, for the  prosecution or defense of any suit or
other proceeding relating to Tax matters and for the answer to any Governmental
Entity inquiry relating to Tax matters. Buyer has the right to control the
investigation, defense and response of any claim by a Governmental
Entity.

    

    Buyer
agrees to retain possession of all accounting, business, financial and Tax
records and information being transferred to it (i) relating to the Purchased
Assets and Seller’s Business in existence on the Closing Date and which are
transferred to Buyer hereunder and (ii) coming into existence after the Closing
Date which relate to the Purchased Assets and Seller’s Business prior to or on
the Closing Date, for the period not to be less than seven years from the
Closing Date.  In addition, from and after the Closing Date, Buyer
agrees that it will not unreasonably withhold access by Seller and its
attorneys, accountants and other representatives (after reasonable notice and
during normal business hours and with reasonable charge), to such personnel,
books, records, documents and any or all other information relating to the
Purchased Assets and Seller’s Business as Seller or the Sole Shareholder may
reasonably deem necessary to properly prepare for, file, prove, answer,
prosecute and/or defend any such Tax Return, filing, audit, protest, claim,
suit, inquiry or other proceeding. Such access shall include without limitation
access to any computerized information retrieval systems relating to Seller’s
Business.

    

    6.7           Allocation
of Total Purchase Price.  Seller and Buyer
agree to allocate the Purchase Price in accordance with the provisions of Schedule
6.7(a).  If the value attributed to any item in the Audited
Financial Statements (once determined to be final and binding in accordance with
the terms of Section 2.2) differs materially from its corresponding value in the
Financial Statements, the Parties agree to adjust the allocation of the Purchase
Price on a basis consistent with the original allocation specified in Schedule
6.7(a).  The Parties agree to execute and file all of their own
Tax Returns and prepare all of their own financial statements and other
instruments on the basis of this allocation. For United States Tax purposes,
each of Buyer and Seller agree to allocate the Purchase Price in accordance with
the provisions of Schedule
6.7(b).

    
      
         

      

      
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        6.8           Offer of
Employment.  Directly or
indirectly, Buyer may, but shall not be required to, offer employment to all of
the Employees on the Closing Date, with such offers to be in substantially the
form provided in Schedule 6.8. Set
forth on Schedule
3.17 hereof is a list of all Employees as of the date hereof and their
annual rate of Compensation (as such term is hereinafter defined) as of the date
hereof.  As used herein, the term “Compensation” shall
mean all forms of direct and indirect remuneration and include, without
limitation, salaries, commissions, bonuses, securities, property, insurance
benefits, personal benefits and contingent forms of
remuneration.  Seller shall cooperate with all requests made by Buyer
for the purpose of facilitating Buyer’s hiring of such Employees. As used
herein, “Transferred
Employees” shall mean all such Employees to whom employment is offered by
Buyer as provided above and who accept employment with Buyer, as well as any
Employees who attend at work following the Closing Date with the intention of
working with the Buyer, which Employees will be deemed to have accepted the
Buyer's offer of employment,  including without limitation those on
medical, disability or other leave of absence, provided that Employees on leave
shall not be considered Transferred Employees until the date on which each such
Employee is released by the Employee’s physician to return to work and the
Employee actually returns to work.  Effective as of the later of the
Closing Date and the date on which an Employee becomes a Transferred Employee,
Transferred Employees shall cease to participate and accrue benefits under the
Employee Plans.  From and after the later of the Closing Date and the
date on which an Employee becomes a Transferred Employee, Transferred Employees
shall begin participation in the benefits plans offered by the
Buyer.  To the extent allowable under Buyer’s policies and procedures,
Buyer shall provide each Transferred Employee credit for years of service prior
to the Closing with Seller for all purposes including, but not limited to, (i)
eligibility and vesting (but not for benefit accrual) under Buyer’s group health
plans and vacation programs and policies and (ii) any and all pre-existing
condition limitations and eligibility waiting periods under group health plans
of Buyer, and shall cause to be credited to any deductible or out-of-pocket
expenses (which are applicable in the plan year of Buyer in which the Closing
Date falls) under any group health plans of Buyer any deductibles or
out-of-pocket expenses incurred by Transferred Employee and their beneficiaries
and dependents under health plans of Seller during the plan year of Seller in
which the Closing Date falls. Other than as required by applicable law, nothing
herein expressed or implied shall confer upon any Transferred Employee or any
Employee or former employee of Seller or legal representatives thereof, any
rights or remedies, including without limitation any right to employment or
continued employment for any specified period, of any nature or kind whatsoever,
or, except as otherwise provided in this Section 6.8, any right to specific
terms or conditions of employment (including rate of pay, fringe benefits or
position) under or by reason of this Agreement. With respect to certain
non-employees of Seller designated by Buyer, Seller and the Sole Shareholder
covenant and agree to cooperate with and to assist Buyer in obtaining the
agreement of those non-employees to continue to be available to Buyer during a
transition period of six months beginning on the Closing Date.

    

    6.9  Guaranty
of Receivables.  At the Closing,
Seller and the Sole Shareholder shall execute and deliver to Buyer a Guaranty in
the form attached as Exhibit D hereto (the
“Receivables
Guaranty”), under the terms of which Seller and the Sole Shareholder
shall, jointly and severally, unconditionally guarantee that all Purchased
Receivables (net of any allowance for doubtful
accounts on the Audited Financial Statements) will be paid by the respective
debtors to Buyer, all as more particularly set out in the Receivables
Guaranty.

      

      6.10           Real
Estate Covenants and Conditions.  At the Closing,
or as soon as practicable thereafter, Buyer may purchase from Sole
Shareholder the
Grantham Property for $890,000 pursuant to a definitive agreement to be entered
into between Buyer and Sole Shareholder. In the event that the Grantham Property
is unable to be purchased at the Closing, either (i) the Lease shall be assumed
by Buyer or (ii) the Lease shall be terminated by Seller and Sole Shareholder
without penalty and Sole Shareholder shall make the Grantham Property available
for lease by Buyer at the Closing on substantially similar lease terms as those
that are described in Schedule 3.11
hereof.

    

     

    
      
         

      

      
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    6.11           Additional
Tax Covenants.

    

    (a)           Seller
and Buyer will use their best efforts to minimize any Taxes payable under the
Excise Tax Act (Canada)
in respect of the closing by making such elections and taking such steps as may
be provided for under that Act (including, for greater certainty, making a joint
election in a timely manner under section 167 of Excise Tax Act) as may
reasonably be requested by the Buyer in connection with the
closing.

    

    (b)           Seller
and Buyer shall, with respect to any accounts receivable acquired by Buyer
pursuant to this Agreement, jointly execute and file such election in the
prescribed form and within the prescribed time under section 22 of the Income Tax Act (Canada), and
any equivalent provision under applicable provincial tax
legislation.

    

    (c)           To
the extent that such an election is available, the Seller and Buyer agree to
jointly elect under subsection 20(24) and 20(25) of the Income Tax Act (Canada), and
any equivalent provision under applicable provincial tax legislation, in respect
of amounts allocated for future obligations of the Seller that are assumed by
the Buyer hereunder.

    

    6.12           Bulk Sales Act
Compliance  Each of Buyer and Seller will comply with their
respective obligations pursuant to the Bulk Sales Act (Ontario),
including, without limitation, the filing by Buyer of an affidavit in accordance
with Section 11 of the Bulk
Sales Act (Ontario) within 5 days following Closing and the provision by
Buyer to Seller on or prior to Closing of sufficient funds to pay the amounts
owing to the unsecured trade creditors disclosed on the statement to be provided
by Seller pursuant to Section 7.1.9.

     

    
      7.           Closing
Deliveries.

      

      7.1           Seller’s
and Sole Shareholder’s Closing Deliveries.

       

      
        7.1.1   Seller
shall deliver all authorizations, consents, waivers andapprovals as may be
required in connection with the assignment of those Contracts and Leases to be
assigned to Buyer pursuant hereto, including, but not limited to, a Landlord
Estoppel Certificate from each landlord under the Leases, in form and substance
reasonably acceptable to Buyer in its sole discretion.

      

      

      7.1.2  Seller shall
execute and deliver the Bill of Sale, Assignment and Assumption Agreement and
such other bills of sale, deeds, instruments of assignment and other appropriate
documents as may be requested by Buyer in order to carry out the intentions and
purposes hereof.

      

      7.1.3  Seller and
the Sole Shareholder shall execute and deliver the Escrow
Agreement.

      

    

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

     

    7.1.4  Seller shall
deliver the approval and all consents from third parties and governmental
agencies required to consummate the transactions contemplated
hereby.

    

    7.1.5  Seller and
the Sole Shareholder shall execute and deliver the Receivables
Guaranty.

    

    7.1.6  Tom Murad
shall execute and deliver an Employment and Noncompetition Agreement in
substantially the form attached hereto as Exhibit E (the
“Form of Employment
Agreement”).

    

    7.1.7  Seller shall
deliver or cause to be delivered to Buyer, in form and substance satisfactory to
Buyer, a certificate of payment issued by the Minister of Finance of Ontario
under section 6 of the Retail
Sales Tax Act (Ontario) or similar legislation in other relevant
provinces to the effect that all requisite Taxes under such Act and similar
legislation relating to the Purchased Assets (other than relating to the
conveyance and transfer of the Purchased Assets to the Buyer) have been paid by
the Seller.

    

    7.1.8  Seller shall
deliver or cause to be delivered to Buyer, in form and substance satisfactory to
Buyer, (i) a Purchase Certificate issued by the Ontario Workplace Safety and
Insurance Board in respect of the Business, and (ii) documentation in a form
acceptable to Buyer from the workers’ compensation boards in the other
jurisdictions in which the Business is carried on, confirming that as at the
Closing Date, the relevant boards have no claim against Seller for which Buyer
will be or could be liable in respect of any amounts payable pursuant to the
relevant workers compensation legislation in respect of the Business, if
applicable.

     

    
      

      7.1.9   Seller
shall have delivered to Buyer a statement contemplated by Section 4 of the Bulk Sales Act (Ontario)
together with a certificate from a senior officer of the Seller setting forth
the county and district in which all or any part of the Purchased Assets are
located and shall have otherwise made adequate provision for payment immediately
following Closing of the amounts owing to the creditors as set out in such
statement.

       

      7.1.10 Seller shall cause
its affiliate, Sayers and Associates Limited to execute and deliver a Transition
Services Agreement in substantially the form attached hereto as Exhibit F (the
“Transition Services
Agreement”).

      

    

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

     

    7.2           Buyer’s
Closing Deliveries.

    

    7.2.1  Buyer shall
deliver (i) the Initial Payment to Seller in accordance with Section 2.1 hereof
and (ii) the Deposit to the Escrow Agent.

    

    7.2.2  Buyer shall
execute and deliver the Bill of Sale, Assignment and Assumption
Agreement.

    

    7.2.3  Buyer and the
Escrow Agent shall execute and deliver the Escrow Agreement.

    

    7.2.4  Buyer shall
execute and deliver an Employment and Noncompetition Agreement in substantially
the form attached hereto as Exhibit E with Tom
Murad.

    

    7.2.5  Buyer shall
execute and deliver the Transition Services Agreement in substantially the form
attached hereto as Exhibit F.

    

    8.           Miscellaneous.

    

    8.1           Notices.  Any notice,
consent, approval, request, demand, declaration or other communication required
hereunder shall be in writing to be effective and shall be given and shall be
deemed to have been given if (i) delivered in person with receipt acknowledged,
(ii) telexed or telecopied and electronically confirmed, (iii) deposited in the
custody of a nationally recognized overnight courier for next day delivery, or
(iv) placed in the federal mail, postage prepaid, certified or registered mail,
return receipt requested, in each case addressed as follows:

    

    If
to Buyer:

    

    c/o AZZ
incorporated

    University
Centre I

    Suite
200

    
      Fort
Worth, Texas 76107

      Attention:
David H. Dingus, Chief Executive Officer

      Facsimile
#: 817/336-4211

      Confirming
#: 817/810-0095

       

      Copies
to:

       

      F.
Richard Bernasek, Esq.

      Kelly
Hart & Hallman LLP

      201 Main
Street

      Suite
2500

      Fort
Worth, Texas 76102

      Facsimile
#: 817/878-9709

      Confirming
#: 817/878-3509

       

      and

       

      S. Benton
Cantey, Esq.

      Kelly
Hart & Hallman LLP

      201 Main
Street

      Suite
2500

      Fort
Worth, Texas 76102

      Facsimile
#: 817/878-9759

      Confirming
#: 817/878-3559

      

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

     

     

    If
to Seller or the Sole Shareholder:

     

    Mr. Chris
Sayers

    President

    Chriscot
Holdings Ltd.

    2240
Argentia Road

    Mississauga,
Ontario  L5N 2X6

    Facsimile
#: 905/821-0664

    Confirming
#: 905/821-4500

    

    Copy
to:

    

    Eric B.
Friedman, Esq.

    Lang
Michener LLP

    Brookfield
Place

    181 Bay
Street, Suite 2500

    Toronto,
Ontario  M5J 2T7

    Facsimile
#:  416/304-3753

    Confirming
#:  416/307-4030

    

    or at
such other address as may be substituted by giving the other parties not fewer
than five (5) business days’ advance written notice of such change of address in
accordance with the provisions hereof. The giving of any notice required
hereunder may be waived in writing by the party entitled to receive such notice.
Every notice, demand, request, consent,
approval, declaration or other communication hereunder shall be deemed to have
been duly served, delivered and received on the date on which personally
delivered with receipt acknowledged or telecopied or telexed and electronically
confirmed, or 48 hours after being deposited into the custody of a nationally
recognized overnight courier for next day delivery, or five (5) business days
after the same shall have been placed in the federal mail as aforesaid. Failure
or delay in delivering copies of any consent, notice, demand, request, approval,
declaration or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other
communication.

      

      8.2           Binding
Effect; Benefits.  This Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and permitted assigns.  Notwithstanding anything
contained herein to the contrary, nothing in this Agreement, expressed or
implied, is intended to confer on any person (other than the parties hereto, the
Buyer Indemnitees and the Seller and Sole Shareholder Indemnitees (but only with
respect to Section 5 hereof), or their respective successors and permitted
assigns) any rights, remedies, obligations or liabilities under or by reason of
this Agreement.

      

    

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    8.3           Entire
Agreement.  This Agreement,
together with the Exhibits, Schedules and other agreements and documents
contemplated hereby, constitutes the final written expression of all of the
agreements between the parties, and is a complete and exclusive statement of
those terms.  Except as specifically included or referred to herein,
this Agreement and the Exhibits, Schedules and other agreements and documents
contemplated hereby supersede all prior understandings, negotiations and
agreements concerning the matters specified herein.  Any
representations, promises, warranties or statements made by any party that
differ in any way from the terms of this written Agreement, and the Exhibits,
Schedules and other agreements and documents contemplated hereby, shall be given
no force or effect (except as specifically included or referred to
herein).  The parties specifically represent, each to the others, that
there are no additional or supplemental agreements between them related in any
way to the matters herein contained unless specifically included or referred to
herein.  No addition to or modification or amendment of any provision
hereof shall be binding upon any party hereto unless made in writing and signed
by all parties hereto.

    

    8.4           Governing Law.  This Agreement
will be governed by and interpreted and enforced in accordance with the laws of
the Province of Ontario and the federal laws of Canada applicable therein. 
Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of
the Ontario courts situated in the City of Toronto and waives objection to the
venue of any proceeding in such court or that such court provides an
inconvenient forum.

    

    8.5           Counterparts.  This Agreement
may be executed in any number of counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same instrument; but in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.  It is not necessary that each
party execute the same counterpart, so long as identical
counterparts are executed by all parties.  Executed signature pages to
any counterpart instrument may be detached and affixed to a single counterpart,
which single counterpart with multiple signature pages affixed thereto
constitutes an original counterpart instrument. All such counterpart signature
pages shall be read as though one and they shall have the same force and effect
as if all of the parties had executed a single signature page.

      

      8.6           Headings.  Headings of the
Sections of this Agreement are for the convenience of reference only, and shall
be given no substantive or interpretive effect whatsoever.

      

      8.7           Waivers.  Any party may, by
written notice to the other parties, (i) extend the time for the performance of
any of the obligations or other actions of the other parties hereunder; (ii)
waive any inaccuracies in the representations or warranties of the other parties
contained herein or in any other agreement or document delivered pursuant
hereto; (iii) waive compliance with any of the conditions or covenants of the
other parties contained herein; or (iv) waive performance of any of the
obligations of the other parties hereunder.  Except as provided in the
preceding sentence, no action taken pursuant hereto, including without
limitation any 

    

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    investigation
by or on behalf of any party, shall be deemed to constitute a waiver by the
party taking such action of compliance with any representations, warranties,
covenants or agreements contained herein.  No failure or delay on the
part of any party in exercising any right, privilege, power or remedy under this
Agreement, and no course of dealing among the parties, shall operate as a waiver
of such right, privilege, power or remedy; nor shall any single or partial
waiver or exercise of any right, privilege, power or remedy under this Agreement
preclude any other or further exercise of such right, privilege, power or
remedy, or the exercise of any other right, privilege, power or
remedy.  No notice or demand on any party in any case shall entitle
such party to any other or future notice or demand in any similar or other
circumstances or constitute a waiver of the right of the party giving such
notice or making such demand to take any other or future action in any
circumstances without notice or demand.

    

    8.8           Merger of
Documents.  This Agreement
and all agreements and documents contemplated hereby constitute one agreement
and are interdependent upon each other in all respects.

    

    8.9           Incorporation
of Exhibits and Schedules.  All Exhibits and
Schedules attached hereto are by this reference incorporated herein and made a
part hereof for all purposes as if fully set forth herein.

    

    8.10           Severability.  If for any reason
whatsoever, any one or more of the provisions hereof shall be held or deemed to
be illegal, inoperative, unenforceable or invalid as applied to any particular
case or in all cases, such circumstances shall not have the effect of rendering
such provision illegal, inoperative, unenforceable or invalid in any other case
or of rendering any of the other provisions hereof illegal, inoperative,
unenforceable or invalid.  Furthermore, in lieu of each illegal, invalid,
unenforceable or inoperative provision, there shall be added automatically, as
part of this Agreement, a provision similar in terms of such illegal, invalid,
unenforceable or inoperative provision as may be possible and as shall be legal,
valid, enforceable and operative.

     

    
      8.11           Assignability.  Neither this
Agreement nor any of the parties’ rights hereunder may be assigned or otherwise
transferred by any party without the prior written consent of the other parties;
provided, however, that Buyer’s
or its successors’ or assigns’ rights hereunder may be assigned or otherwise
transferred, in whole or in part, without any other party’s consent (i) to any
successor by merger or consolidation, (ii) to any bank or other financial
institution, or to any individual, partnership, corporation or other entity,
providing any financing to Buyer, its successors or assigns, or (iii) to any
individual, partnership, corporation or other entity deriving title from Buyer,
or its successors or assigns, to all or substantially all of the Purchased
Assets as constituted on the date of any such transfer.  No assignment
or other transfer permitted by this Section 8.11 shall operate as a release of
the assignor’s obligations or liabilities hereunder, and the assignor shall
remain liable hereunder notwithstanding such assignment or other transfer. In
the event of any assignment or other transfer permitted by this Section 8.11, an
instrument of assignment shall be executed by the assignee and shall expressly
state that the assignee assumes all of the applicable obligations and
liabilities of the assignor contained herein.

    

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

     

    8.12           Drafting. The parties acknowledge and
confirm that each of their respective attorneys have participated jointly in the
review and revision of this Agreement and that it has not been written solely by
counsel for one party.  The parties therefore stipulate and agree that
the rule of construction to the effect that any ambiguities are to be or may be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement to favor any party against another.

    

    8.13           References.  The use of the
words “hereof,” “herein,” “hereunder,” “herewith,” “hereto,” “hereby,” and words
of similar import shall refer to this entire Agreement, and not to any
particular article, section, subsection, clause, or paragraph of this Agreement,
unless the context clearly indicates otherwise.

    

    8.14           Calendar
Days, Weeks and Months.  Unless otherwise,
specified herein, any reference to “day,” “week,” or “month” herein shall mean a
calendar day, week or month.

    

    8.15           Gender;
Plural and Singular.  Where the context
clearly indicates otherwise, the singular shall include the plural and vice
versa.  Whenever the masculine, feminine or neuter gender is used
inappropriately in this Agreement, this Agreement shall be read as if the
appropriate gender had been used.

    

    8.16           Cumulative
Rights.  All rights and
remedies specified herein are cumulative and are in addition to, not in
limitation of, any rights or remedies the parties may have at law, in equity, or
otherwise, and all such rights and remedies may be exercised singularly or
concurrently.

     

    
      

      8.17           No
Implied Covenants.  Each party,
against the other, waives and relinquishes any right to assert, either as a
claim or as a defense, that the other party is bound to perform or liable for
the nonperformance of any implied covenant or implied duty or implied
obligation.

      

      8.18           Attorneys’
Fees.  The prevailing
party in any dispute between the parties arising out of the interpretation,
application or enforcement of any provision hereof shall be entitled to recover
all of its reasonable attorney’s fees and costs whether suit be filed or not,
including without limitation costs and attorneys’ fees related to or arising out
of any trial or appellate proceedings.

      

      8.19           Indirect
Action. Where any
provision hereof refers to action to be taken by any person or party, or which
such person or party is prohibited from taking, such provision shall be
applicable whether the action in question is taken directly or indirectly by
such person or party.

      

      8.20           Currency.  Except with
respect to the Buyer Prepayment, which has been made in United States Dollars,
when used herein $ or “Dollars” shall mean and refer to Canadian
Dollars.

      

    

     

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement on the Execution Date to be
effective as of the Effective Date.

    

    

    BUYER:

    

    AZZ
BLENKHORN & SAWLE LIMITED

    

    

    By: /s/
David H. Dingus

    Name:
David H. Dingus

    Title:
President

    

    

    

    PARENT:

    

    AZZ
incorporated

    

    

    By: /s/
David H. Dingus

    Name:
David H. Dingus

    Title:
President and Chief Executive Officer

    

    

    

    SELLER:

    

    BLENKHORN
AND SAWLE LIMITED

    

    

    By: /s/
Chris Sayers

    Name:
Chris Sayers

    Title:
President

    

    

    SOLE
SHAREHOLDER:

    

    

    CHRISCOT
HOLDINGS LIMITED

    

    

    By: /s/
Chris Sayers

    Name:
Chris Sayers

    Title:
President

    
      
        
          Signature
Page for Asset Purchase Agreement

        

         

      

      
         

        
          

        

      

      
         

      

    

    The
following Exhibits and Schedules are omitted pursuant to Item 601(b)(2) of
Regulation S-K. A supplemental copy of such Exhibits and Schedules shall be
furnished to the Securities and Exchange Commission upon request.

    

    Exhibit

    
      
        	
                A

              	
                Form
      of Bill of Sale, Assignment and Assumption

              
	
                B

              	
                Form
      of Escrow Agreement

              
	
                C

              	
                Financial
      Statements

              
	
                D

              	
                Form
      of Receivables Guaranty

              
	
                E

              	
                Form
      of Employment Agreement

              
	
                F

              	
                Form
      of Transition Services Agreement

              
	
                G

              	
                Estimated
      Net Purchased Assets
Value

              

      

     

    Schedule

    
      
        	
                1.1.1

              	
                Certain
      Purchased Assets

              
	
                1.1.2

              	
                Excluded
      Assets

              
	
                1.2A

              	
                Certain
      Assumed Liabilities

              
	
                1.2B

              	
                Assumed
      Contracts

              
	
                3.2

              	
                Seller's
      and Sole Shareholder's Third party Consents Required

              
	
                3.3

              	
                Ownership
      of Capital Stock of Seller

              
	
                3.4.2

              	
                Exceptions
      of GAAP

              
	
                3.6

              	
                Tax
      Matters

              
	
                3.7

              	
                Condition
      of Purchased Assets

              
	
                3.10

              	
                Business
      Property Rights

              
	
                3.11

              	
                Description
      of Lease Terms

              
	
                3.12

              	
                Encumbrances

              
	
                3.13

              	
                Licenses
      and Permits

              
	
                3.15

              	
                Pending
      or Threatened Litigation or Claims

              
	
                3.16

              	
                Contracts

              
	
                3.17

              	
                Employment
      and labor Agreements; Employees of Seller and Annual Compensation
      Rates

              
	
                3.18

              	
                Employee
      Plans

              
	
                3.19

              	
                Insurance

              
	
                3.26

              	
                Internal
      Controls

              
	
                6.5

              	
                Transfer
      Taxes

              
	
                6.7(a)

              	
                Canadian
      Purchase Price Allocation

              
	
                6.7(b)

              	
                United
      States Purchase Price Allocation

              
	
                6.8

              	
                Form
      of Employment Offerex10-1.htm

     

    
 

    FOURTH
AMENDMENT

     

    TO

     

    SECOND
AMENDED AND RESTATED REVOLVING CREDIT

     

    AND
SECURITY AGREEMENT

     

    THIS
FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY
AGREEMENT (this “Amendment”) is
entered into as of June 26, 2008, by and among GEOKINETICS INC., a Delaware
corporation (“Geokinetics”),
GEOKINETICS PROCESSING, INC. (formerly known as GEOPHYSICAL DEVELOPMENT
CORPORATION), a Texas corporation (“Processing”),
GEOKINETICS USA, INC. (formerly known as QUANTUM GEOPHYSICAL, INC.), a Texas
corporation (“USA”), GEOKINETICS
EXPLORATION INC., an entity organized under the laws of Canada (“Exploration”),
GEOKINETICS INTERNATIONAL HOLDINGS, INC. (formerly known as GRANT GEOPHYSICAL,
INC.), a Delaware corporation (“International
Holdings”), GEOKINETICS INTERNATIONAL, INC. (formerly known as GRANT
GEOPHYSICAL (INT’L), INC.), a Texas corporation (“International”),
GEOKINETICS MANAGEMENT, INC. (formerly known as GRANT GEOPHYSICAL CORP.), a
Texas corporation (“Management”),
GEOKINETICS SERVICES CORP., a Texas corporation (“Geokinetics
Services”), and ADVANCED SEISMIC TECHNOLOGY, INC., a Texas corporation
(“Advanced
Seismic”, and together with Geokinetics, Processing, USA, Exploration,
International Holdings, International, Management and Geokinetics Services, each
a “Borrower”
and collectively, the “Borrowers”), PNC
BANK, NATIONAL ASSOCIATION (“PNC”), the various
financial institutions named therein or which hereafter become a party thereto,
(together with PNC, collectively, “Lenders”) and PNC, as
agent for the Lenders (in such capacity, “Agent”).

     

    BACKGROUND

     

    WHEREAS,
Borrowers, Agent and Lenders are parties to a Second Amended and Restated
Revolving Credit and Security Agreement, dated as of May 25, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Loan
Agreement”), pursuant to which Agent and Lenders provide Borrowers with
certain financial accommodations.

     

    WHEREAS,
Borrowers have advised Agent that Undrawn Availability Events occurred in May
and June, 2008 (collectively, the “Existing Undrawn
Availability Event”);

     

    WHEREAS,
Borrowers have requested that the Lenders waive the Existing Undrawn
Availability Event, subject to the terms and conditions set forth
herein;

     

    WHEREAS,
subject to the satisfaction of the conditions set forth herein, Agent and the
Lenders are willing to amend the Loan Agreement and waive the Existing
Undrawn Availability Event as provided herein;

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as
follows:

     

    
      
        
          
            Fourth
Amendment

            009125.0135\479564

          

        

      

      
        
          

        

      

      
        
        

      

    

    1. Definitions.  All capitalized
terms not otherwise defined herein shall have the meanings given to them in the
Loan Agreement.

     

    2. Amendment
to Section 1.2.  Effective as of
the date hereof, the following definitions set forth in Section 1.2 of
the Loan Agreement are hereby amended and restated in their entirety to read as
follows:

     

    “ ‘Applicable Revolving
Domestic Rate Margin’ shall mean one and one-half percent (1.50%) per
annum, payable in addition to the Alternate Base Rate with respect to Domestic
Rate Loans.”

    

    “ ‘Applicable Revolving
Eurodollar Rate Margin’ shall mean three percent (3.00%) per annum,
payable in addition to the Eurodollar Rate with respect to Eurodollar Rate
Loans.”

    

    “ ‘Cash Balance’ shall
mean (i) all cash in Blocked Accounts and Depository Accounts for which Agent
has received an executed account control agreement, in form and substance
acceptable to Agent in its sole discretion and (ii) all proceeds of Collateral
maintained in the Blocked Accounts and Depository Accounts for which Agent has
received an executed account control agreement, in form and substance acceptable
to Agent in its sole discretion, that have been applied to reduce the Formula
Amount less outstanding checks.

    

    “ ‘Depository Accounts’
shall mean, collectively, all deposit accounts of Borrowers.

    

    “ ‘Eurodollar Rate’
shall mean, with respect to the Eurodollar Rate Loans for any Interest Period,
the greater of (A) three percent (3.00%) per annum or (B) the interest
rate per annum determined by the Agent by dividing (the resulting quotient
rounded upwards, if necessary, to the nearest 1/100th of 1% per annum)
(i) the rate which appears on the Bloomberg Page BBAM1 (or on such other
substitute Bloomberg page that displays rates at which US dollar deposits are
offered by leading banks in the London interbank deposit market), or the rate
which is quoted by another source selected by the Agent which has been approved
by the British Bankers’ Association as an authorized information vendor for the
purpose of displaying rates at which US dollar deposits are offered by leading
banks in the London interbank deposit market (an “Alternate Source”), at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period as the London interbank offered rate for
U.S. Dollars for an amount comparable to such Eurodollar Rate Loan and having a
borrowing date and a maturity comparable to such Interest Period (or if there
shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or
any substitute page) or any Alternate Source, a comparable replacement rate
determined by the Agent at such time (which determination shall be conclusive
absent manifest error)), by (ii) a number equal to 1.00 minus the Reserve
Percentage.  Eurodollar Rate may also be expressed by the following
formula:

    

    Average
of London interbank offered rates quoted

    by
Bloomberg or appropriate successor as shown on

    LIBOR =
Bloomberg Page BBAM1

    

    1.00 -
Reserve Percentage

    

    
      
        
          
            Fourth
Amendment

            009125.0135\479564

          

          2

          
            

          

        

      

       

      
        
        

      

    

    The
Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that
is outstanding on the effective date of any change in the Reserve Percentage as
of such effective date.  The Agent shall give prompt notice to the
Borrowing Agent of the Eurodollar Rate as determined or adjusted in accordance
herewith, which determination shall be conclusive absent manifest
error.”

    

    “ ‘Fourth Amendment Effective
Date’ means June 26, 2008.”

    

    “ ‘Undrawn
Availability Event’ shall mean such time as
(i) Undrawn Availability falls below $6,000,000 for a period of ten (10)
consecutive Business Days or (ii) average Undrawn Availability falls below
$10,000,000 for a period of thirty (30) consecutive days.  Testing of
the Undrawn Availability Event will begin on that date which is sixty (60) days
after the Fourth Amendment Effective Date.”

    

    3. Amendment
to Section 2.1.  Effective as of the date hereof, Section 2.1(a)(ii)(B)
of the Loan Agreement is hereby amended by replacing “$10,000,000” with
“$7,000,000”.

     

    4. Amendment
to Section 3.1.  Effective as of the date hereof, Section 3.1 of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:

     

    “3.1.            Interest.  Interest
on Advances shall be payable in arrears on the first day of each month with
respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at
the end of each Interest Period.  Interest charges shall be computed
on the actual principal amount of Advances outstanding during the month at a
rate per annum equal to the applicable Revolving Interest Rate (the “Contract
Rate”).  Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Contract Rate
shall be similarly changed without notice or demand of any kind by an amount
equal to the amount of such change in the Alternate Base Rate during the time
such change or changes remain in effect.  The Eurodollar Rate shall be
adjusted with respect to Eurodollar Rate Loans without notice or demand of any
kind on the effective date of any change in the Reserve Percentage as of such
effective date.  Upon and after the occurrence of an Event of Default,
and during the continuation thereof, at the option of Agent or at the direction
of Required Lenders, the Obligations shall bear interest at the Contract Rate
plus two percent (2%) per annum (as applicable, the “Default
Rate”).”

    

    5. Amendment
to Section 4.15.  Effective as of the date hereof, clause (h) of Section 4.15 of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:

     

    “(h)           Establishment of a Lockbox
Account, Dominion Account.  All proceeds of Collateral shall be
deposited by Borrowers into either (i) a lockbox account, full dominion
account or such other “blocked account” in which no Borrower has access to the
funds contained therein (“Blocked Accounts”) established at a bank or banks
(each such bank, a “Blocked Account Bank”) pursuant to an arrangement with such
Blocked Account Bank as may be selected by Borrowing Agent and be acceptable to
Agent or (ii) depository accounts established at the Agent for the deposit
of such proceeds.  Each applicable Borrower (other than Exploration),
Agent and each Blocked Account Bank shall enter into a deposit account control
agreement in form and substance satisfactory to Agent directing such Blocked
Account Bank to transfer such funds so deposited to Agent, either to any account
maintained by Agent at said Blocked Account Bank or by wire transfer to
appropriate account(s) of Agent.  Exploration shall enter into a
deposit account control agreement with Agent and each Blocked Account Bank in
form and substance satisfactory to Agent directing such Blocked Account Bank,
upon notice from Agent (“Notice”), to transfer such funds so deposited to Agent,
either to any account maintained by Agent at said Blocked Account Bank or by
wire transfer to appropriate account(s) of Agent.  Agent may deliver
such Notice at anytime (i) upon the occurrence and during the continuation
of a Default or Event of Default, (ii) upon or after the occurrence of an
Undrawn Availability Event.  All funds deposited in such Blocked
Accounts shall immediately become the property of Agent and Borrowing Agent
shall obtain the agreement by such Blocked Account Bank to waive any offset
rights against the funds so deposited.  Neither Agent nor any Lender
assumes any responsibility for such blocked account arrangement, including any
claim of accord and satisfaction or release with respect to deposits accepted by
any Blocked Account Bank thereunder.  All deposit accounts and
investment accounts of each Borrower and its Subsidiaries are set forth on
Schedule 4.15(h).”

    

    
      
        
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    6. Amendment
to Section 7.4.  Effective as of the date hereof, Section 7.4 of the
Loan Agreement is hereby amended and restated in its entirety to read as
follows:

              

              
“7.4        Investments.  Purchase
or acquire obligations or Equity Interests of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not
more than 270 days and a published rating of not less than A-1 or P-1 (or the
equivalent rating), (c) certificates of time deposit and bankers’
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000,
or (ii) its debt obligations, or those of a holding company of which it is
a Subsidiary, are rated not less than A (or the equivalent rating) by a
nationally recognized investment rating agency, (d) U.S. money market funds
that invest solely in obligations issued or guaranteed by the United States of
America or an agency thereof and (e) so long as no Undrawn Availability Event
has occurred, investments in Foreign Subsidiaries.  Also excepted from
this Section 7.4 are any deemed purchases of Equity Interests resulting
from (i) the cashless exercise of stock options by the holders thereof and any
repurchases of shares resulting from the cashless exercise of stock options and
(ii) the withholding of vested restricted stock in order to satisfy the tax
obligations of the holders of such vested restricted stock.”

    

    7. Amendment
to Section 7.5.  Effective as of the date hereof, Section 7.5 of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:

     

        
“7.5        Loans. 
Make
advances, loans or extensions of credit to any Person, including any Parent,
Subsidiary or Affiliate except with respect to (a) the extension of commercial
trade credit in connection with the sale of Inventory in the Ordinary Course of
Business (b) loans to its employees in the Ordinary Course of Business not to
exceed the aggregate amount of $100,000 at any time outstanding, (c) loans to
other Borrowers provided that (1)
such loans shall be evidenced by a demand note (collectively, the “Intercompany Notes”),
which Intercompany Notes shall be in form and substance reasonably satisfactory
to Agent and shall be pledged and delivered to Agent pursuant to the applicable
Pledge Agreement as additional collateral security for the Obligations;
(2) Borrowers shall record all intercompany transactions on their Books and
Records in a manner reasonably satisfactory to Agent; (3) the obligations of any
Borrower under any such Intercompany Notes shall be subordinated to the
Obligations of Borrowers hereunder in a manner reasonably satisfactory to Agent;
(4) at the time any such intercompany loan or advance is made by a Borrower to
any other Borrower and after giving effect thereto, such Borrowers shall be
solvent and (5) no Default or Event of Default would occur and be continuing
after giving effect to any such proposed intercompany loan and (d) loans to
Foreign Subsidiaries provided that (1)
such loans shall be evidenced by  Intercompany Notes, which
Intercompany Notes shall be in form and substance reasonably satisfactory to
Agent and shall be pledged and delivered to Agent pursuant to the applicable
Pledge Agreement as additional collateral security for the Obligations;
(2) Borrowers shall record all intercompany transactions on their Books and
Records in a manner reasonably satisfactory to Agent; (3) the obligations of any
Borrower under any such Intercompany Notes shall be subordinated to the
Obligations of Borrowers hereunder in a manner reasonably satisfactory to Agent;
(4) at the time any such intercompany loan or advance is made by a Borrower to
any Foreign Subsidiary and after giving effect thereto, such Borrowers shall be
solvent; (5) no Default or Event of Default would occur and be continuing after
giving effect to any such proposed intercompany loan; and (6) no Undrawn
Availability Event has occurred or would result from such proposed intercompany
loan.  Notwithstanding the foregoing, with respect to intercompany
loans made to Foreign Subsidiaries pursuant to clause (d) of this Section 7.5
that are existing on the Fourth Amendment Effective Date, the Intercompany Notes
evidencing such intercompany loans shall not be required to be delivered to
Agent until the earlier of (x) the date upon which any such Intercompany Notes
are executed or (y) the 90th day following the Fourth Amendment Effective Date
unless such 90 day period is extended by the Agent in its sole
discretion.”

    

    
      
        
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    8. Amendment
to Section 7.6.  Effective as of June 1, 2008, Section 7.6 of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:

     

    “7.6           Capital
Expenditures.  Permit the aggregate amount of Capital
Expenditures made by Geokinetics and its Subsidiaries in any fiscal year set
forth below to exceed the amount set forth for such fiscal year:

    

    
      	
              Fiscal
      Year

            	
              Amount

            
	
              2007

            	
              $110,000,000

               

            
	
              2008

               

            	
               $80,000,000

            
	
              2009

              and
      each fiscal year thereafter

            	
               $50,000,000

            

    

    ; provided, however, that for
fiscal year 2008, unfinanced Capital Expenditures (i.e. Capital Expenditures
other than Capital Expenditures (a) made with the proceeds from the issuance of
Equity Interests and (b) financed by a third party financing source) shall not
exceed $50,000,000.”

    

    9. Amendment
to Section 7.7.  Effective as of the date hereof, Section 7.7 of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:

     

    “7.7.                      Dividends.  Declare,
pay or make any dividend or distribution on any shares of the common stock or
preferred stock of any Borrower (other than (i) dividends and distributions
by Subsidiaries of Borrower paid to Borrower and dividends or distributions
payable in its stock, or split-ups or reclassifications of its stock and
(ii) cash dividends paid in connection with the Preferred Equity, provided
that (a) there is no Default or Event of Default existing at the time of
the dividend payment and no Default or Event of Default shall occur as a result
of such dividend payment, (b) no Undrawn Availability Event has occurred or
will result from the making of such dividends or distributions, (c) Undrawn
Availability shall be at least $6,000,000 after giving effect to such dividend
or distribution payment and (d) Borrowers are in compliance with the Fixed
Charge Coverage Ratio, on a pro forma basis, after giving effect to such
dividend payments) or apply any of its funds, property or assets to the
purchase, redemption or other retirement of any common or preferred stock, or of
any options to purchase or acquire any such shares of common or preferred stock
of any Borrower.  Also excepted from this Section 7.7 are any
deemed dividends or distributions resulting from (i) the cashless exercise of
stock options by the holders thereof and any repurchases of shares resulting
from the cashless exercise of stock options or (ii) the withholding of vested
restricted stock in order to satisfy the tax obligations of the holders of such
vested restricted stock.”

    

    
      
        
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    10. Amendment
to Section 7.12.  Effective as of the date hereof, Section 7.12 of the
Loan Agreement is hereby amended and restated in its entirety to read as
follows:

     

    “7.12     Subsidiaries.

     

    (a)           Form
any Subsidiary (other than a Foreign Subsidiary, provided that with respect to
any Foreign Subsidiary that is formed, (i) Borrowers shall give Agent not less
than 30 days prior written notice of the intention to form such Foreign
Subsidiary, (ii) no Borrower shall advance monies to such Foreign Subsidiary
except to the extent permitted by Section 7.4(e) and (iii) such Foreign
Subsidiary is in the same line of business as the Borrowers as of the Second
Restated Closing Date) unless (i) such Subsidiary expressly joins in this
Agreement as a borrower and becomes jointly and severally liable for the
obligations of Borrowers hereunder, under the Notes, and under any other
agreement between any Borrower and Lenders and (ii) Agent shall have
received all documents, including legal opinions, it may reasonably require to
establish compliance with each of the foregoing conditions.

     

    (b)           Enter
into any partnership, joint venture or similar arrangement, except in the
ordinary course of business for specific project requirements so long as (i)
Borrowers provide prior written notice to Agent, (ii) any liabilities of
Borrowers with respect to such arrangement are otherwise permitted under this
Agreement, (iii) any investments in such entities are no more than $5,000,000
individually or $10,000,000 in the aggregate, (iv) no Undrawn Availability Event
has occurred, (v) no Event of Default has occurred and is continuing, in each
case, both before and after giving effect to such arrangement, and (vi) such
partnership, joint venture or similar arrangement is in the same line of
business as the Borrowers as of the Second Restated Closing Date.”

     

    11. Amendment
to Section 7.17.  Effective as of the date hereof, Section 7.17 of the
Loan Agreement is hereby amended and restated in its entirety to read as
follows:

     

    
      
        
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    (a) Prepayment of Indebtedness. 
At any time, (i) directly or indirectly,
prepay, repurchase, redeem, retire or otherwise acquire any subordinated
Indebtedness, (ii) use the proceeds of any Indebtedness to prepay, repurchase,
redeem, retire or otherwise acquire any other Indebtedness (including
subordinated Indebtedness), (iii) make or receive any payments whatsoever with
respect to any Intercompany Note without the prior written consent of Agent,
except, that, a Borrower may
make or receive payments in satisfaction of such Intercompany Note in the form
of the Equity Interests of the debtor with respect to such Intercompany Note,
(iv) prepay, repurchase, redeem, retire or otherwise acquire any Indebtedness of
any Borrower, but (a) if (1) no Default or Event of Default has occurred and is
continuing and no Default or Event of Default would result from such payment or
transaction, (2) no Undrawn Availability Event has occurred or would result from
such payment and (3) Undrawn Availability is at least $6,000,000 after giving
effect to such prepayment, repurchase, redemption, retirement or acquisition,
then Borrowers may prepay, repurchase, redeem, retire or otherwise acquire any
Indebtedness (other than the Investor Notes) of any Borrower, or (b) if (1) no
Default or Event of Default has occurred and is continuing and no Default or
Event of Default would result from such payment or transaction, (2) no Undrawn
Availability Event has occurred or would result from such payment, (3) Undrawn
Availability is at least $6,000,000 after giving effect to such prepayment,
repurchase, redemption, retirement or acquisition and (4) the funds used to make
such prepayment, repurchase, redemption, retirement or acquisition are the
proceeds of new equity issued by Geokinetics, then Borrowers may prepay the
Permitted Capital Lease Facility.”

    

    12. Amendment
to Section 9.10.  Effective as of the date hereof, Section 9.10 of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:

     

    “9.10.                   
Borrowing Base
Certificate.  Deliver to Agent on or before the last Business
Day of (i) each month, calculated as of the last day of the prior month, if
no Undrawn Availability Event has occurred or (ii) each week, if an Undrawn
Availability Event has occured, as applicable, a Borrowing Base Certificate in
form and substance satisfactory to Agent (which shall not be binding upon Agent
or restrictive of Agent’s rights under this Agreement), including reporting of
sales, collection, credits, Equipment purchases (including invoices for such
Equipment) based on hard costs, Equipment sales (including a reference to the
appraised Net Orderly Liquidation Value and sales price) and information under
Section 9.2 requested by Agent”.

    

    13. Amendment
to Section 9.13.  Effective as of the date hereof, Section 9.13 of
the Loan Agreement is hereby amended to replace “thirty (30) days” with “sixty
(60) days”.

     

    14. Amendment
to Article 9.  Effective as of the date hereof, a new Section 9.20 is
hereby added at the end of Article 9 of the
Loan Agreement, to read in its entirety as follows:

     

    “9.20                      Foreign Subsidiary
Reports.  Furnish Agent within thirty (30) days after the end
of each month a report detailing all loans, transfers and investments made by
the Borrowers to or in (as applicable) any Foreign Subsidiary.”

    

    15. Amendment
to Section 10.10.  Effective as of the date hereof, Section 10.10 is
hereby amended and restated in its entirety to read as follows:

     

    “10.10                  
Material Adverse
Effect.  At any
time during which Undrawn Availability is less than $6,000,000 for a period of
ten (10) consecutive Business Days, any change in any Borrower’s or any
Guarantor’s results of operations or condition (financial or otherwise) which in
Agent’s opinion has a Material Adverse Effect;”

    

    
      
        
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    16. Limited
Waiver.

     

    (a) Upon
satisfaction of the terms and conditions in Section 17 hereof,
Agent and the Required Lenders hereby waive the Existing Undrawn Availability
Event.

     

    (b) The
Borrowers are hereby notified that irrespective of (i) any waivers
previously granted by Agent and Lenders regarding the Loan Agreement and the
Other Documents, (ii) any previous failures or delays of Agent and Lenders
in exercising any right, power or privilege under the Loan Agreement or the
Other Documents, or (iii) any previous failures or delays of Agent and
Lenders in the monitoring or in the requiring of compliance by the Borrowers
with the duties, obligations, and agreements of the Borrowers in the Loan
Agreement and the Other Documents, hereafter the Borrowers will be expected to
comply strictly with its duties, obligations and agreements under the Loan
Agreement and the Other Documents.

     

    17. Conditions
of Effectiveness of Amendment.  The effectiveness
of this Amendment is subject to the satisfaction of the following conditions
precedent, unless specifically waived in writing by the Agent:

     

    (a) The Agent
shall have received the following documents or items, each in form and substance
satisfactory to the Agent and its legal counsel:

     

    (1) this
Amendment, duly executed by each Borrower; and

     

    (2) all other
documents Agent may reasonably request with respect to any matter relevant to
this Amendment or the transactions contemplated hereby;

     

    (b) The
representations and warranties contained herein and in the Loan Agreement and
the Other Documents, as each is amended hereby, shall be true and correct in all
material respects as of the date hereof, as if made on the date
hereof;

     

    (c) Each
document (including any Uniform Commercial Code financing statement) required by
the Loan Agreement, any related agreement or under law or reasonably requested
by the Agent to be filed, registered or recorded in order to create, in favor of
Agent, a perfected security interest in or lien upon the Collateral shall have
been properly filed, registered or recorded in each jurisdiction in which the
filing, registration or recordation thereof is so required  or
requested, and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation
and satisfactory evidence of the payment of any necessary fee, tax or expense
relating thereto;

     

    (d) No
Default or Event of Default shall have occurred and be continuing or shall be in
existence after giving effect to this Amendment;

     

    (e) All fees
and expenses due and owing by Borrowers to Agent shall have been paid in full;
and

     

    (f) All
corporate proceedings taken in connection with the transactions contemplated by
this Amendment and all documents, instruments and other legal matters incident
thereto shall be satisfactory to the Agent and its legal counsel.

     

    
      
        
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    18. No
Consent.   Except as
set forth in Section
16 hereof, nothing contained herein
shall be construed as a waiver by Agent or Lenders of any covenant or provision
of the Loan Agreement, the Other Documents, this Amendment, or of any other
contract or instrument between the Borrowers, Lenders and Agent, and the failure
of Agent or Lenders at any time or times hereafter to require strict performance
by the Borrowers of any provision thereof shall not waive, affect or diminish
any right of Agent or Lenders to thereafter demand strict compliance
therewith.  Agent and Lenders hereby reserve all rights granted under
the Loan Agreement, the Other Documents, this Amendment and any other contract
or instrument among the Borrowers, Lenders and Agent.

     

    19. Representations
and Warranties.  Each Borrower
hereby represents and warrants to Agent and Lenders as of the date of this
Amendment as follows:  (A) it is duly incorporated or organized,
validly existing and in good standing under the laws of its jurisdiction of
organization; (B) the execution, delivery and performance by it of this
Amendment, the Loan Agreement and all Other Documents executed and/or delivered
in connection herewith are within its powers, have been duly authorized, and do
not contravene (i) its articles of organization, operating agreement, or
other organizational documents, or (ii) any applicable law; (C) no
consent, license, permit, approval or authorization of, or registration, filing
or declaration with any Governmental Body or other Person, is required in
connection with the execution, delivery, performance, validity or enforceability
of this Amendment, the Loan Agreement or any of the Other Documents executed
and/or delivered in connection herewith by or against it; (D) this
Amendment, the Loan Agreement and all Other Documents executed and/or delivered
in connection herewith have been duly executed and delivered by it;
(E) this Amendment, the Loan Agreement and all Other Documents executed
and/or delivered in connection herewith constitute its legal, valid and binding
obligation enforceable against it in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally or by general principles of equity; (F) after
giving effect to this Amendment, it is not in default under the Loan Agreement
or any of the Other Documents and no Default or Event of Default exists, has
occurred and is continuing or would result by the execution, delivery or
performance of this Amendment; and (G) the representations and warranties
contained in the Loan Agreement and the Other Documents are true and correct in
all material respects as of the date hereof as if then made, except for such
representations and warranties limited by their terms to a specific
date.

     

    
      
        
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    20. Effect on
the Agreement.  Except as
specifically amended, consented and/or waived hereby, the Loan Agreement and the
Other Documents shall remain in full force and effect and are hereby ratified
and confirmed as so amended.  Except as expressly set forth herein,
this Amendment shall not be deemed to be a waiver, amendment or modification of
any provisions of the Loan Agreement or any Other Document or any right, power
or remedy of Agent or Lenders, nor constitute a waiver of any provision of the
Loan Agreement or any Other Document, or any other document, instrument and/or
agreement executed or delivered in connection therewith or of any Default or
Event of Default under any of the foregoing, in each case whether arising before
or after the date hereof or as a result of performance hereunder or
thereunder.  This Amendment also shall not preclude the future
exercise of any right, remedy, power, or privilege available to Agent and/or
Lenders whether under the Loan Agreement, the Other Documents, at law or
otherwise.  All references to the Loan Agreement shall be deemed to
mean the Loan Agreement as modified hereby.  This Amendment shall not
constitute a novation or satisfaction and accord of the Loan Agreement and/or
the Other Documents, but shall constitute an amendment thereof.  The
parties hereto agree to be bound by the terms and conditions of the Loan
Agreement and the Other Documents as amended by this Amendment, as though such
terms and conditions were set forth herein.  Each reference in the
Loan Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of
similar import shall mean and be a reference to the Loan Agreement as amended by
this Amendment, and each reference herein or in any Other Document to the “Loan
Agreement” or “Credit Agreement” shall mean and be a reference to the Loan
Agreement as amended and modified by this Amendment.

     

    21. Governing
Law.  This Amendment
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns and shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to any conflicts
of laws principles thereto that would call for the application of the laws of
another jurisdiction.

     

    22. Headings.  Section headings
in this Amendment are included herein for convenience of reference only and
shall not constitute a part of this Amendment for any other
purpose.

     

    23. Counterparts;
Facsimile.  This Amendment
may be executed by the parties hereto in one or more counterparts, each of which
shall be deemed an original and all of which when taken together shall
constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature
hereto.

     

    
      
        
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    24. Release.  EACH OF THE
BORROWERS HEREBY ACKNOWLEDGES THAT THE BORROWERS’ PAYMENT OBLIGATIONS ARE
ABSOLUTE AND UNCONDITIONAL WITHOUT ANY RIGHT OF RECISSION, SETOFF, COUNTERCLAIM,
DEFENSE, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE “OBLIGATIONS” OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM THE AGENT OR ANY LENDER.  THE BORROWERS HEREBY
VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER DISCHARGE AGENT AND EACH LENDER
AND ITS PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS (COLLECTIVELY,
THE “RELEASED
PARTIES”), FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION,
DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN,
ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR
CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE
THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWERS MAY NOW OR HEREAFTER
HAVE AGAINST THE RELEASED PARTIES, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY “LOANS”, INCLUDING, WITHOUT LIMITATION, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR OTHER DOCUMENTS,
AND NEGOTIATION FOR AND EXECUTION OF THIS AMENDMENT.

     

    [Signatures
follow.]

     

    

     

    
      
        
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    IN
WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first written above.

     

    PNC BANK,
NATIONAL ASSOCIATION,

    as Agent
and as a Lender

     

    By:_____________________________                                                                           

     

    Name:___________________________                                                                           

     

    Title:____________________________                                                                           

     

     

    LASALLE
BUSINESS CREDIT, LLC,

    as a
Lender

     

     

    By:_____________________________                                                                           

     

    Name:___________________________                                                                           

     

    Title:____________________________                                                                           

     

     

    WELLS
FARGO FOOTHILL, INC.,

    as a
Lender

     

     

    By:_____________________________                                                                           

     

    Name:___________________________                                                                           

     

    Title:____________________________                                                                           

     

     

    SIEMENS
FINANCIAL SERVICES, INC.,

    as a
Lender

     

     

    By:_____________________________                                                                           

     

    Name:___________________________                                                                           

     

    Title: ____________________________                                                                          

     

    

     

    
      
        
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    ACKNOWLEDGED
AND AGREED:

     

    GEOKINETICS
INC.,

    as
Borrowing Agent and as a Borrower

     

     

    By:___________________________                                                           

         Chin
Yu

         Vice
President

     

     

    GEOKINETICS
PROCESSING, INC.,

    as a
Borrower

     

     

    By:___________________________                                                           

         Chin
Yu

         Vice
President

     

     

     

    GEOKINETICS
USA, INC.,

    as a
Borrower

     

     

    By:___________________________                                                           

         Chin
Yu

         Vice
President

     

     

    GEOKINETICS
EXPLORATION INC.,

    as a
Borrower

     

     

    By: ___________________________                                                          

         Chin
Yu

         Vice
President

     

    
      
        
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    GEOKINETICS
INTERNATIONAL HOLDINGS, INC.,

    as a
Borrower

     

     

    By:____________________________                                                           

         Chin
Yu

         Vice
President

     

     

    GEOKINETICS
INTERNATIONAL, INC.,

    as a
Borrower

     

     

    By:____________________________                                                           

         Chin
Yu

         Vice
President

     

     

    GEOKINETICS
MANAGEMENT, INC.,

    as a
Borrower

     

     

    By:____________________________                                                           

         Chin
Yu

         Vice
President

     

     

    ADVANCED
SEISMIC TECHNOLOGY, INC.,

    as a
Borrower

     

     

    By:____________________________                                                           

         Chin
Yu

         Vice
President

     

     

    GEOKINETICS
SERVICES CORP.,

    as a
Borrower

     

     

    By:____________________________                                                           

         Chin
Yu

         Vice
President

     

    
      
        
          Fourth
Amendment

          009125.0135\479564

        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Addresses
for Notices:

     

    1500 City
West Blvd.

    Suite
800

    Houston,
Texas 77042

    Attention:
Chin Yu

    Telephone:  (281)
848-6829

    Fax:
(713) 850-7330

    

     

    
      
        
          Fourth
Amendment

          009125.0135\479564

        

         

      

      
        15

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